Beonic Limited (BEO) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. My name is Andrew Johnson, and I'm the Chairman of Skyfii Limited. On behalf of the Board, it is a pleasure to welcome you all to Skyfii's 2020 Annual General Meeting. I'm advised by the company's secretary that this meeting has been validly convened. And that we have a quorum of shareholders present. It is just after 10:00 a.m. declare this 2020 Annual General Meeting of Skyfii Limited open. Ladies and gentlemen, I propose to give a brief address, then ask our CEO, Wayne Arthur; and our COO, John Rankin, to give you some more detailed insights into our success this year, and importantly, the outlook for our business in 2021. The financial year 2020 was another year of significant progress for Skyfii as the company continues to strengthen its position as the world's leading omnidata intelligent company through rapid organic growth and strategic acquisitions. The second half of the financial year posed some unprecedented challenges to physical venues around the world. With COVID-19 social distancing policies restricting their operation, Skyfii has supported its customers throughout this pandemic and pleasingly, no material customer contracts have been lost. In fact, Skyfii experienced a significant lift in inbound customer inquiries towards the end of the financial year as more businesses recognize the benefits of using Skyfii's data intelligence tools to understand venue activity. The momentum has continued into the new financial year, and we are pleased to have secured several new customers over the past few months. Skyfii has truly demonstrated the relevance of its products and services and the agility of its business during this time where understanding customer movement in real-time has become a crucial part of running venue safely and in compliance with local restrictions. One example of Skyfii's ability to react to new customer needs is our OccupancyNow toolkit, which was launched in April to address the increased need for monitoring customer numbers and social distancing in physical venues. Skyfii delivered a strong financial result in FY '20 with operating revenue growth of 44% and recurring revenue growth of 72% on prior year. The company also achieved a positive operating EBITDA of $2.1 million, up 142% on prior year. And we expect to deliver another positive result in FY '21. Today, Skyfii operates in 35 countries across 5 continents, delivering solutions to a portfolio of over 10,000 venues from small hospitality and retail stores, the large stadiums and airports. Over 40% of Skyfii's revenue is now sourced from offshore, which demonstrates increasing geographical diversity of the customer portfolio. The success in global markets can be attributed to the significant investment we have made in people on the ground and channel partners, particularly in the U.S. and in Europe. So expanding our reach. Before I hand over to our CEO and Founder, Wayne Arthur, who will take you through a business update in more detail. I wanted to briefly take you through some of the successes we have had in delivering on our growth strategy through organic and acquisitive growth initiatives. At the start of FY '20, we completed the acquisition of Beonic Technologies. This acquisition has proven to be highly value-adding with the Beonic Technology complementing our product offering with valuable tools to respond at a time of heightened focus on people counting in physical venues. Skyfii has also been successful in upselling its full suite of subscription services to Beonic's client base of blue-chip customers in assisting them and improving visitor experience and making better business-critical decisions. In September 2020, we announced the acquisition of Blix, an Australian business specializing in cost-effective venue analytics to small and medium-sized retail venues. Blix comes with an impressive list of existing customers ranging from auto dealerships, such as Porsche and Volkswagen to fashion and jewelry labels, Chanel, Swarovski, Country Road Group and Watches of Switzerland. There is a significant opportunity to Skyfii to roll out Blix's technology global -- globally as well as an opportunity to upsell Skyfii's full suite of services to Blix's customers. We were successful in integrating Beonic's customers with a wider suite of products, and I am confident that we can deliver a similar outcome with Blix and their existing customers. Beonic and Blix are both highly complementary to our strategy, and we'll continue to assess attractive acquisition opportunities as they arise. As a priority, we look for businesses that broaden our offering to existing customers, attract new customers and drive further growth through new verticals. To support growth, Skyfii continues to innovate and build on its offering with new products and services. Skyfii delivered 48 major product releases during FY '20 and the company continues to improve its products with frequent upgrades and new features to maintain its competitive advantage. As I mentioned earlier, Skyfii launched occupancy now in April this year, to address the demand for increased venue monitoring in real time. And we signed our first large customer, a multinational grocery chain for the product in July. Since July, we have released new innovative products that encompass both machine learning and artificial intelligence. Stop & Go and Mask Detection are our latest products that will assist venues in ensuring compliance with occupancy levels and mandatory mask wearing. We've also developed a product for heating, ventilation and air conditioning, known as HVAC optimization. This groundbreaking technology uses predictive analytics around occupancy and visitor behavior to optimize HVAC utilization, resulting in reduced costs and lower carbon footprint. We look to introduce more analytical products in coming months to drive new revenue streams across different markets and verticals. On culture and governance. The privacy and security of the data we collect on behalf of our customers remains at the utmost importance to Skyfii. We take our responsibility in data production, privacy and security very seriously. We also support our customers' compliance with General Data Protection Regulation, GDPR. Most importantly, our people. Our continued success in creating world-leading software-based solutions and providing them to our customers successfully is reliant on Skyfii having a talented and motivated team in place. We have a strong team of data scientists and data analysts who tirelessly continue to develop our suite of products and services. Enabling Skyfii to be a global leader in omnidata intelligence. We will continue to invest in our team as we expand our global presence. Whilst also ensuring that our team remains healthy and safe during the pandemic with stringent safety measures. A key element of the company's approach to the initial warning signs of difficult trading conditions ahead earlier this year was the Board's commitment to do all we could to ensure that while prudently reducing our costs of operation, we maintained absolutely intact, the highly capable and dedicated team of employees worldwide, which is core to the company's ongoing success. So in conclusion, Skyfii has started the new financial year with significant momentum. We have secured several new contracts, and I'm excited about the pipeline of growth opportunities ahead of us. Skyfii's data capture and analytics tools are now more relevant than ever, given the continued focus on venue technology business, such as Skyfii. The ability to react to the changing needs of our customers rapidly has meant that Skyfii has been able to excel and grow during these unprecedented times. The company is in a better position than ever before with a leading range of omnidata intelligence tools and diversified customer portfolio and a range of growth opportunities that will no doubt see Skyfii continue to achieve an exciting rate of growth. I would like to thank the entire Skyfii team for all of their hard work and commitment during the year that has been both challenging and rewarding. Skyfii's products and services are increasingly better placed to support our large and expanding customer base, and we're in a great position to be able to continue to grow the business. I would also like to thank the Board and our shareholders for their continued support. It is very encouraging to be able to look back on a year of such achievement, particularly in light of the challenges that COVID-19 presented. I look forward to another successful year in FY '21 and what I think we all believe will be less difficult circumstances. I now hand over to Wayne to take you through the FY '20 financial year and an operational outlook for the coming period.

Thank you, Andrew, and good day to everyone joining the Skyfii 2020 AGM presentation. My name is Wayne Arthur. I'm the CEO of Skyfii, and I'm excited to take you all through a summary of the financial and operating performance of the business during FY '20. As Andrew highlighted in his note, despite the global challenges that FY '20 presented due to the impacts of COVID-19, it was a very solid year of growth and operating performance by the business. Today, I look forward to taking you all through a brief recap of who we are, and what we do and how we generate our revenues. I'll then spend some time articulating the products and services we have built. And most importantly, we'd like to focus on some of the key outcomes these products and services deliver for our customers. This will help to explain why Skyfii continues to grow and remains a critical product during even the most uncertain times. And also why we continue to maintain an extremely high customer retention rate. Moving to Slide #2. Our vision is to improve visitor experiences in physical and digital environments through providing a better understanding of consumer behavior. We help our customers deliver value to their customers and in their operations through the application and use of data. This practice is called omnidata intelligence, and this category best defines our business offering since it refers to the practice of collecting, analyzing and actioning data from a multitude of data sets, most of which exists currently within physical and digital spaces. And I'll go on to explain some of these data sets and their use cases later in the presentation. We believe that for any of our current and prospective customers, the pathway to a successful customer experience data strategy requires a combination of 3 key elements: number one, choose the right data; number two, ensuring that you deploy the appropriate technology together and analyze the data; and number three, collaborating with experienced people to help you action the insights delivering through the data. On Slide 3, the technology that we have developed, which collects all of this data and underpins our services offering is called the IO platform. And it is 100% proprietary to Skyfii. Now data without context is not always very valuable unless it can be analyzed, contextualized and visualized in a form that delivers insights or action for a business. This is why Skyfii's IO platform is such a critical tool for our customers, many of whom are not technology companies and therefore, do not traditionally possess the in-house capability to harness value from and often action their data. And our suite of software-as-a-service products includes Connect, which refers to our data collection and centralization product; Insights, which is our BI dashboard and behavioral reporting product. Engage, which is our multichannel marketing product suite and IO Labs, which is our research and innovation environment. And each of these products can be bought individually since each of them [indiscernible] buying life cycle. Moving to Slide 4. So what are the kinds of data sets that we collect and analyze? We most often work with data from cameras, people counting sensors, WiFi access points, our Bluetooth beacons, mobile device applications, social media platforms and point-of-sale systems to name a few. And what we do with all this data is we stitch it together to form a holistic picture of a customer to be able to deliver actionable insights around customer behavior. And I'll go on to highlight some of the key use cases that our technology delivers and to some of the key verticals we work with later in the presentation. On Slide 5, our industry experience. Our products and services offering continues to drive significant value within the growing number of key verticals, including the commercial real estate vertical, where we deliver a suite of services particularly focused on audience analysis and segmentation, leasing optimization, stock loss prevention, and also delivering trade area analytics. We've converted significant enterprise customer contracts now within 11 industry verticals, including those listed here today. And we are now contracted at well over 10,000 venues across 35 countries throughout the world. Our largest region is Asia Pacific, which currently represents about 60% of our total revenues. And we are accelerating our growth and revenue contribution from our other markets, particularly EMEA and the Americas, which have begun to contribute meaningfully to the overall revenue growth. On Slide 7, I will outline some of the main reasons why our customers rely on our products and services. So I'll kick off with smart buildings. With the continued evolution of the IoT or the Internet of Things sector, buildings are becoming more and more connected and ultimately, more automated and more efficient. Skyfii software has a very, very large role to play in this evolution. For many smart buildings, the use cases are centered around managing occupancy in meeting rooms, common areas, desks and lift lobbies. Delivering more workspace efficiency through integrating things like meeting room booking systems and automating climate control inside the buildings to use cases centered more recently around occupancy management. Skyfii seamlessly integrates with all of the data sources that collectively deliver against these use cases, including WiFi access points, IoT sensors, such as those that deliver HVAC monitoring or manage air quality. We work with people counters to manage occupancy and integrate with various reservation systems that can manage meeting room bookings. All of these data sets are connected, correlated and visualized via a single dashboard through our IO platform, analyzing flow of traffic between precincts, managing occupancy levels and ensuring that social distance practices are being met, analyzing classroom, lecture room or meeting room attendance and more recently, helping to facilitate contact tracing. To break it down further, the existence of WiFi ensures that all campus visitors are generally connected and through our location technology, we are able to locate anyone on-campus using their MAC address or access control card. Next, using people counting analytics through CCTV and people counting sensors, we can assess occupancy levels at different areas on the campus and deliver alerts to visitors or staff via the WiFi or through a mobile app. And finally, in the current climate, if there is a visitor who tests positive for COVID-19, using our MAC address tracking capability, we can historically map out where that person traveled on their campus. To make sure those areas are completely sanitized and also to notify any other people that person may have come into contact with during their visit. And these are all the most powerful use cases that are driving leads and customer conversions, particularly on campuses and educational facilities at the moment. Slide 9 and airports or transit hubs. So airports and transport hubs like train stations, for example, are generally very busy spaces, which means there is generally a great need by venue operators to manage flow of passengers and optimize the passenger journey from start to finish. Skyfii solutions integrates with WiFi, people counters, car parking systems, for things like number plate recognition and ticketing and flight scheduling information, which we obtain generally from the airports and/or the airline carriers themselves. We provide venue operators with a complete view of the passenger from the moment they park through check-in process, security into the gate lounge or concession and right through to boarding their flights. And we do this analysis for both arriving and departing passengers to help optimize that passenger experience. And our analysis helps these venue operators [Technical Difficulty] Moving to Slide #10. Smart cities like smart buildings have also become completely connected and integrated. In many cities like London and New York, for example, the need to monitor and surveil cities are a key part of delivering public safety. We currently work with over 35 cities and municipalities around the world to deliver solutions focused around traffic counting, object detection, public safety and parks and on beaches, and use cases around crowd management. We deliver these solutions using a combination of technologies such as WiFi access points, people counters, CCTV cameras and our own artificial intelligence video analytics software that delivers accurate object detection and classification to help our customers better manage their cities and to plan for the future. On Slide 11, retail. Retail is still a large part of our current customer portfolio. This is largely because our technology helps equip brick-and-mortar retailers with the kinds of tools that online and e-commerce stores get from tools like Google Analytics. Our role is in helping retailers understand and connect with their customers to manage their staffing rosters, optimize their store layout, improve merchandising and ultimately the tenancy mix, all of which are critical components of their retail and customer strategy. We utilize WiFi location data, sales transaction data, which is often gathered through direct integration with the point-of-sale, people counter data, and often mobile app and loyalty and rewards data to provide retailers with a holistic view of who their customers are, how they behave in their stores and what drives them to purchase. We'll now move on to Slide 13 and take you through some of the key operating highlights delivered throughout the financial year '20. So in line with our stated objectives to grow both organically and via accretive acquisitions, we successfully completed 2 acquisitions during the last 15 months. First was our acquisition of the assets and select balance sheet items of Beonic. Customer insight solution provider specializing in sophisticated camera and people counting technology and focused on high-traffic retail venues, including shopping centers and enterprise retail brands. This was a deal that we announced in July of 2019. Our second was the recently announced acquisition of Blix, an Australian-based venue analytics company with a strong leadership position in both the automated -- automotive, sorry, and specialty retail verticals. Both of these acquisitions were concluded on favorable commercial terms and both have added significant recurring revenue and introduced strong talent to our business. Strategically, these 2 businesses combined have provided Skyfii with a very credible base of both customers and deep experience in the fast-growing people counting industry, which we absolutely now lead in the Australian market and are starting to grow into the EMEA and Americas markets. Moving to Slide 14. Despite an unusual year in the history of the world, the Skyfii business continued to grow, and we welcome several new customers to our portfolio this year. Some of the notable contract wins included: The 31 shopping center rollout with ISPT; a second REIT currently unnamed, where we have delivered our people counting solution across 21 shopping centers. Our first win in the gambling vertical with Betfred in the U.K. alongside a rollout with U.K. high street retailer, TJ Morris. We announced 3 new major stadium wins, including the iconic Wembley Stadium and the SCG as well as the HTFC stadium in Switzerland, which was our first contract win in the Swiss region. We further extended our airport footprint to include a large regional U.S. airport and through a partnership with Boingo Wireless in the U.S., we delivered our services into 26 new airports across Brazil. Finally, we renewed our contracts with Italy's leading petrol convenience operator, Autostrade to cap off a very strong year and 1 during which, despite the circumstances, we not only maintained our existing customer base, but we actually grew that customer base over the course of the year. So we'll now move to Slide #16, where I will take you through a summary of the new product offerings that we released during FY '20 and into the first quarter of FY '21. Some that have actually been fast-tracked due to the effects of the COVID-19 pandemic. So first up and something that we discussed and announced at the end of March this year. In response to the guidelines that were being -- beginning to be imposed -- sorry, on physical venues by the CDC in response to the COVID-19 situation, we launched a product toolkit off of our existing technology called OccupancyNow, which focuses on real-time occupancy counts and alerting as well as social distancing and monitoring and contact tracing facilitation. We utilize WiFi or camera infrastructure to deliver this software toolkit, which has resulted in several new contract wins in some new verticals that prior to COVID-19 were not as relevant to Skyfii. As various venue types and countries have experienced delayed openings or indeed impacts from the second wave, we have certainly seen this toolkit continue to drive lead generation for the business and pipeline activity. And we actually announced our first major grocery retail win in the U.S.A. with OccupancyNow during Q4 of FY '20. On Slide 17 and as a follow-on from the OccupancyNow toolkit, which we launched, we -- which was focused mainly on venue operators themselves. We built out a customer-facing application, which gives customers a simple indicator of when it's safe to enter a space with a stop-and-go feature. This has been very well received by venue operators that need to manage live occupancy limits and also allows customers visibility on wait times. We also recently announced and introduced facemask detection as part of the object classification algorithm, which adds an additional level of safety and comfort for customers of each of these venues. On Slide 18. More recently, we have launched a suite of artificial intelligence-driven video analytics solutions, which utilize algorithms to detect, classify and track people, vehicles and objects in both indoor and outdoor environments. Unlike the vast majority of camera and analytics solutions in the market today. Ours utilizes AI to perform accurate object classification, including being able to determine things like trucks from motorcycles, pedestrians from bicyclists and even electric scooters from wheelchairs. So moving back inside the physical environment and in a deliberate move from us to move into more IoT-based applications. We recently completed an integration, which allows us to deliver more predictive analytics to optimize things like HVAC energy consumption based on customer traffic and behavior. We're particularly excited about the prospect of these kinds of integrations, which will allow us to deliver more value to our existing customer base. On Slide 19, network services. As part of our revenue growth strategy within existing customers and also as part of the acquisition of Beonic, which we completed in July 2019. We officially have launched a full managed services capability, which essentially means that we are equipped to deliver an end-to-end customer infrastructure and software deployment. This broader service offering has introduced a larger portion of nonrecurring revenue lines into the business, but additionally, has provided us the remit to be able to earn a greater share of the opportunity to control the sales process more wholly and ultimately provide a more holistic and stickier product and services offering to our customers. On Slide 20, the most recent product that we have launched is something that we have called the Sky Drone. This is a product offering that combines the latest drone technology and artificial intelligence computer vision technology, to provide crowd management analytics in real time. We have launched this particular product recently to assist many of the councils with monitoring crowds at beaches and to ensure that social distancing practices are being maintained. As I'm sure you can appreciate, we have seen a strong amount of demand being generated for this offering, both locally in Australia as we enter the summer months, and also in our international markets to coincide with the Christmas season. So with that, I will now hand over to John Rankin, Skyfii's Chief Operating Officer, to present the financial highlights.

Thanks, Wayne. Moving on to the financial highlights on Slide 22. The summary of results for FY 2020. As Wayne introduced earlier in the presentation, the full year results for FY '20 were another outstanding performance for Skyfii. Despite the negative impact experienced in Q4 as a result of the COVID-19 crisis. The company once again delivered a strong full year result at the top line with total revenues up 44% at $13.5 million. Our year-on-year recurring revenue grew an impressive 72%, delivering a result of $8.8 million. The strong performance delivered in recurring revenue has resulted in the company delivering a compound average growth rate of 97% in recurring revenue across the last 4 years. At the start of FY '20, the company provided a forecast to the market that it would maintain a positive operating EBITDA for FY '20. We are pleased to announce to our investors that the company significantly outperformed the operating EBITDA line delivering 129% improvement in performance year-on-year, with the company delivering an operating EBITDA of $2 million. Year-on-year, the company's operating EBITDA margin grew from 9% in FY '19 to 16% in FY '20. Contrary to the challenges faced in the second half of FY '20 with the onset of COVID-19, the company managed to deliver a strong operating EBITDA result in the second half. Delivering a 55% uplift when compared to the first half of FY '20. Moving to Slide 23. As outlined on the previous slide, the company delivered a strong year-on-year total revenue growth. As outlined on the previous slide, the company delivered a strong year-on-year total revenue result, which included a significant increase in the proportion of recurring revenues which represented 66% of total revenues in FY '20 versus 55% in FY '19. This result is particularly pleasing as the company's recurring revenues are highly profitable, delivering an 84% gross margin. If we move our attention to our domestic and international operations, as presented on the bar graph, revenues generated from our international operations did decrease to 40% of total revenues versus 47% in FY '19. This can largely be put down to the acquisition of Beonic in July 2019, which reweighted total operating revenues back into the domestic market. That said, in absolute terms, the international markets delivered strong year-on-year revenue growth. The expansion of our international operations remains a key milestone for the business, and we are pleased that the more recent acquisitions of the Beonic and Blix business are providing our international sales teams with a more diverse product and service offering in our efforts to penetrate new markets and increase market share through new customer acquisition. Moving to Slide 24. The company's performance in Q1 FY '21. On the last quarterly call, we shared a number of positive indicators in our business operations as the company traded out of the impact of COVID-19. Key themes included. The company saw a return of customer engagement on our advanced stage sales pipeline that was under negotiation pre-COVID. We experienced increasing levels of inbound leads and new business briefing from existing customers, and we have witnessed increased adoption of new products launched by Skyfii, such as OccupancyNow, which has resulted in a buildup in sales pipeline in new verticals, such as grocery, smart cities and commercial office space. The improved market conditions translated into strong results in Q1. Operating revenue saw a significant jump from Q4, up 21%, with revenues of $3.4 million, which is a result that was in line with pre-COVID revenue performance. We saw a return to growth in our recurring revenues up 7% quarter-on-quarter, noting that there remains a number of customers across our regions that are still receiving support with temporary suspensions of services or have delayed their planned venue rollout of the Skyfii solution. The company now carries forward an annual recurring run rate of $11 million, inclusive of revenues generated from the recent acquisition of Blix. Our cash position improved considerably in Q1 with cash at bank of $2.7 million and $1.9 million available from the company's $2 million debt facility, giving the company circa $4.6 million in cash and cash equivalents. And finally, cash receipts were up 27% at $3.8 million, a result made possible from the increase in sales activity generated in the quarter. Looking forward, the company is very optimistic on our ability to deliver another strong result in FY '21. Whilst the impact of COVID on the macro business environment is creating a certain level of unpredictability, the Skyfii leadership team are very pleased with the improvement in the company's key performance indicators. We are confident of maintaining a strong cash balance and balance sheet. We continue to benefit from an expanding product and service offering, resulting from the acquisitions of the Blix and Beonic businesses which is translating into a strong sales pipeline and forward customer book to deliver another strong result in FY '21. Thank you for your time today. I'll now hand you back to Wayne to present the outlook for the company.

Thanks very much, John. And congrats again for another fantastic year of very, very strong financial and operational results. So in closing, we are very pleased with the way the business has performed in the financial year '20. And in particular, the trajectory of the business is back on for the financial year '21. Our pipeline is growing again. Our products are evolving, and our operations are becoming increasingly efficient, all of which has resulted in a bounce back in Q1 of this year to a positive recurring revenue growth rate and double-digit total revenue growth. Alongside continued strong cash management. So our key objectives for the remainder of FY '21 remain very clear. We intend to continue to invest into our marketing activities and lead generation activities. We will continue to grow our reach in existing and new verticals with a particular focus on grocery, smart buildings, universities and smart cities. We'll continue to launch new products and services to increase our revenue growth both in new and existing accounts. We will maintain a focus, as always, on strong and prudent cash management and continuing to ensure that we deliver a positive operating EBITDA. We intend to increase the effort into driving growth within our accounting and sensor-based AI solutions, both locally and internationally. And that will include launching our managed services offering into the international markets. And following the successful acquisition of Blix and Beonic this year, we will continue to pursue complementary accretive acquisition opportunities as we seek to become the #1 omnidata intelligence company globally. With that, I thank you all for your time, and I will now hand back to our Chairman, Andrew Johnson.

[indiscernible] part of the meeting - today's meeting is being held online via the Lumi platform. This allows shareholders, proxy holders and guests to attend the meeting virtually. All attendees can watch a live webcast of the meeting. In addition, shareholders and proxy holders have the ability to ask questions and submit votes. [Operator Instructions] Please note that while you can submit questions from now on, I will not address them until the relevant time in the meeting. Please also note that your questions maybe amalgamated together if we receive multiple questions on the same topic. Finally, due to time constraints, we may run out of time to answer all your questions. If this happens, we'll answer them in due course by e-mail, let me stress, we would be very keen to get everything resolved during the course of this meeting. Voting today will be conducted by way of a poll on all items of business. In order to provide you with enough time to vote, polling on the resolutions is open now. If you are eligible to vote in this meeting, a new polling icon will appear. Selecting this icon will bring up a list of resolutions and present you with your voting options. To cast your vote, simply select one of the options. There is no need to hit a submit or end button as the vote is automatically recorded. You do, however, have the ability to change your vote up until the time I declare voting closed at the end of the meeting. The notice of the meeting was circulated to shareholders as required by the Australian Corporations Act 2001, and unless there are any objections, I will take the notice as read. I will now move to the voting on resolutions. The 2020 annual financial statements this is for noting with no resolution. Skyfii accounts for the year of 30 June 2020, and the reports of the directors and auditors thereon have been electronically distributed to members. I now table those documents and note that a resolution is not required. Are there any questions in relation to the accounts or the reports? No questions have arisen on that. So I thank you, and let's move on to Resolution 1, the remuneration report. The Corporations Act 2001 requires that a resolution be put to the members to adopt the remuneration report as disclosed in the annual report. The vote on this resolution is advisory only and nonbinding. The resolution gives the members the opportunity to ask questions and make comments concerning the remuneration report during the meeting. Are there any questions in relation to the remuneration report? I'm aware there are no questions. Whilst I am prevented by change into the Corporations Act, including any votes cast on this resolution by any director or member of the company's key management personnel or their related parties, I am allowed and will be casting any undirected proxies by all other parties in favor of the resolution, as is permitted and was notified to shareholders in the notice of meeting and proxy form. Is there any discussions or questions? We have no questions. The proxies received for Resolution 1 are on screen as follows. I understand everybody can see the vote, and we do not plan to announce that. I put the resolution for those who have not already voted, please put your votes through the Lumi app. [Voting]

We now move forward to resolution 2 the reelection of a Director, Ms. Susan O'Malley. Resolution 2 deals with the proposed reelection of Ms. Susan O'Malley as Director of Skyfii. I do highly recommend to shareholders that they support this resolution. Sue has been a director now for 2 years and brings a great level of experience from a successful career in retail, a role that she continues to have close involvement. She has done an excellent job as the Chairman of the Remuneration Nomination Subcommittee, a highly active director, very knowledgeable, very, very enthusiastic, asks all of the right questions and is very demanding in getting the right answers. Sue has been a great -- has brought great benefit to the Board. And that I'm fully supportive of Sue's continuation as director of the company. Are there any discussions or questions? Having received none, the proxies received for Resolution 2 are on screen. Finally, I put the resolution for those who have not already voted. So please put your votes through the Lumi application. [Voting]

All right. I move on to Resolution 3, the reelection of a Director, Mr. Jon Adgemis. Resolution 3 deals with the proposed reelection of Mr. Jon Adgemis as a Director of Skyfii. Once again, I highly recommend to shareholders that they support this resolution. We have a small board, which I believe -- we generally believe is appropriate for the size of the company, but a Board with a good mix of experience, expertise, geographically spread with 3 of us in Australia. And 1 nonexecutive director in the U.S. Plus an Executive Director in our CEO, also based in the U.S. So for a company that is very much a global company today that's a good balance. The individual skill levels of the Board members do bring a good mix. But the big specific about, Jon. Jon has been close to Skyfii for many years. In fact, even before the IPO, but certainly very actively from the IPO. He's now been a Board director for whole term. The probably -- Jon has got a great -- broad business skills, good visibility in what's happening in the business community. But specifically, his background in M&A is critically important for us at a time where growth, both organically and by acquisitions, is a major focus of the company. I very strongly recommend that Jon Adgemis reelection is fully supported by shareholders. Are there any questions that anybody would like to raise? Apparently there is one. Do we have a question? [indiscernible] but we have a question. I want to make sure that we address as far as possible [indiscernible] as and when they arise.

We've got a question here, guys, would you like me to proceed with stating the question?

Yes, please. Could the directors please speak to their elections, so we can hear from them? Is that -- I'm not sure if that's actually -- that's actually not possible. I'm sorry that because of the -- and look, look, I apologize, this is normally -- in a face-to-face board meeting, as we're all traditionally used to, that would be quite possible. The structure of the Lumi application makes it not possible to do that. I do apologize for the fact that we're not able to do that. And I realize that it's -- AGMs are about shareholders being able to site their board and hear from each of their directors. But in this case, I'm afraid that we just technically can't do that. Once again, I do say, I think, Jon is well-known in the business community. He's certainly been well-known to me for a very -- a good number of years. In fact, well, prior to my involvement with the company that goes back since the IPO as a director at the time of the IPO, known Jon from before that. His reelection does come with my strongest recommendation, but I do absolutely respect the fact that it would have been better. We'll look at it [indiscernible] future holds. We will find a way to make all directors available to shareholders during the meeting. But with that, we've got -- the proxies received for Resolution 3 are on screen as follows. We'll take that as read. I put the resolution for those who have not already voted, please put your votes through the Lumi app. I will now hand the chair to Mr. Wayne Arthur now for resolution 4 to the extent that, that resolution relates to myself.

Thank you, Mr. Chairman. Resolutions 4 to 8 are for the approval to issue shares to directors in lieu of cash payments. As shareholders may already be aware, our directors have elected to take their remuneration in shares rather than cash since the very beginning when the business listed. So thereby reserving cash within the business. So Resolution 4 is to the approval of issue of shares to a Director, Mr. Andrew Johnson. And Resolution 4 deals with the proposed issue of up to AUD 56,000 in shares to Director, Mr. Andrew Johnson. I do propose a resolution and move that resolution to be adopted. In my experience, having worked with Andrew from Day 1. Andrew has been a significant contributor and part of the Board, in the first few years since listing, and then the last couple of years, has done an amazing job as Chairman, is very involved in the business, very passionate about the business. Runs a really good board, as he mentioned, a very tight board. And not only is Andrew been a supporter, by way of taking his remuneration in shares. But has also -- in his own capacity invested significantly as a shareholder. So he is a big believer is what we're doing. So I do put the resolution. Are there any discussions or questions? No discussions or questions. The proxies received Resolution 4 are on the screen. So this is an extraordinary resolution requiring 50%, sorry, of the votes cast in favor to pass. I put the resolution for those who have not already voted, please put your votes through via the Lumi app. [Voting]

So with that, I will now hand back to the Chair to Mr. Andrew Johnson.

Wayne, thank you. And for any shareholders who are wondering how we come to an odd number like $56,000 for director remuneration? the reason for that, and it's a reasonable question, is that back in March when the Board met with the executive team looking at very uncertain times, we had -- we basically had some key principles underlying it. One was that we wanted to keep the key asset of the company, the strong technical and sales team we have around the world intact as far as we possibly could, and we pretty much totally achieve that, not actually entirely very closely, but what we did decide with the full visibility. And in fact, agreement off the Board [indiscernible] we would put in place a 20% reduction in remuneration for the executive team. The Board agreed that it was good enough for the executive team. Certainly, the Board should follow suit and so that -- the movement back to $56,000 reflects that for the same period, the Board took the same proportional paycheck. Relatively small sacrifice, but I think it's important that the Board does act as leaders and demonstrate an absolute sharing of -- if it's going to be pain, the pain gets shared equally, that's a measure of good leadership. So far, we get to $56,000. So moving on Resolution 5 deals with a proposed issue of up to $56,000 in shares to a director, Mr. Lincoln Brown. I propose the resolution and move that the resolution be adopted. As was said by Wayne, that we have as a company, always encouraged our Board to take remuneration in shares and to hold on to those share. So as Wayne said, I've never sold a Skyfii share in years I've been associated with the company, take my remuneration in shares and in fact, bought significantly more. The -- so we believe it's critically important that the shareholders -- the directors, bigger shareholders. So from that point of view, I won't continue to make that point. But that I do strongly recommend that this resolution that Lincoln is able to take his approved remuneration in shares is approved. Is there any discussion or questions? All right. The proxies received for resolution 5 are on the screen, as you can see. This is an ordinary resolution requiring 50% of votes cast in favor to pass. And I'll put the resolution for those who have not already voted, please put your votes through on the Lumi app. [Voting]

So Resolution 6 deals with a proposed issue of up to $56,000 in shares to Director, to Susan O'Malley, I propose a resolution and move the resolution be adopted. I highly recommend to shareholders that they support this resolution for the reasons that I've just given that it is important that directors be -- seem to be fully committed to the company. And the most clear commitment is taking their directors fees in shares and then holding on to them. Is there any question -- is there any discussion or question on that point? Right. The proxies received for Resolution 6 are on screen. As you can see, this is an ordinary resolution requiring 50% of votes cast in favor to pass. I put the resolution for those who have not already voted, please put your votes through on the Lumi app. [Voting]

Resolution 7 deals with a proposed issue of up to $56,000 in shares to director to Mr. Jon Adgemis. Once again, I propose the resolution and move that the resolution be adopted for the reasons that I've given above. Is there any discussion or questions? The proxies received for Resolution 7 are on screen, as you can see. This is an ordinary resolution requiring 50% of votes cast in favor to pass. I put the resolution for those who have not already voted, please put your votes through via the Lumi app. [Voting]

Okay. Little change to subject. Resolution 8 approval of issue of options to a related party Jagafii Proprietary Limited. So Resolution 8 deals with the proposed issue of Skyfii options to a related party Jagafii, as part of a $2 million loan and option agreement announced in May 2019. A resolution is required to approve the issue of options to Jagafii Proprietary Limited a related party to Director, Mr. Jon Adgemis. To date, this loan facility has provided a greater funding capacity to invest for organic growth across our international markets and has supported the integration of the latest acquisition of Beonic Tech, which I would actually also take this time or opportunity to congratulate the exec team on both the active acquisition, but also the integration of Beonic and maybe we've got a little bit lucky as well as smart, but taking on a very significantly enhanced capability of people counting at the start of this rather difficult year was -- looked like a good decision at the time. Turned out to be an absolutely excellent decision. People counting got to be extremely important over this last year. And Beonic Tech has been a great acquisition for this company. Putting that to the side, part of the reason that we're really associated with that, what enables us to continue with a solid path of acquisition is the funding to support it. Without putting our cash position at risk, which has also been a critical focus of the team. Over this last year. We wanted to keep ourselves with a more prudent level of cash reserves that we would under normal circumstances because if nothing else, 2020 has been marked by very significant uncertainty and a high level or enhanced level of risk. So really -- so that basically, the options are to a related party Jon Adgemis started to support or to reward the position of being -- of Jagafii being part of the $2 million loan and option agreement, which is extremely important to the company for a number of reasons. It is recommended the proxies be granted. Are there any discussions or questions on this point before we move on? I'm informed there are no questions. The proxies received for resolution are on screen as follows. We'll take that as read. You can all see them. I put the resolution. For those who have not already voted, please put your votes through via the Lumi app. [Voting]

The Resolution 9 deals with the proposed issue of executive option plan shares up to a maximum of 5 million shares over 12 months to Managing Director and CEO, Mr. Wayne Arthur. The executive option plan or EOP under which this is managed and governed was formally approved at the 2018 AGM. So there's nothing new. The nonexecutive directors are of the view that it's appropriate that the Chief Executive Officer, an Executive Director be entitled to be granted EOP options as part of the company's remuneration strategy for the CEO. I highly recommend to shareholders that they support this resolution. Wayne has been with the company from before it was launched, very clearly leads from the front and has absolutely committed himself to the growth and profitability of this company. He has devoted [indiscernible] work-life balance has been as good as Wayne, as it might have been actually few over some of these periods. So certainly, that it beholds the company to make sure that Wayne is both adequately rewarded and certainly encouraged to continue it, seeing that we are very dependent on Wayne's continuing to act with that level of dedication and with high-performance of his duties. The Board also believes that keeping the senior executive team fully motivated and focused on shareholder wealth creation by being significant shareholders in their own right is an important principle in a company of this type. Accordingly, and to reiterate what I said, I with the Board behind strongly recommend that this resolution is -- of grant of options to Wayne is approved. So the proxies received for Resolution 9 are on screen, as you can see. I put the resolution for those who have not already voted, please cast your votes through via the Lumi application. [Voting]

So finally, Resolution 10 seeks shareholder approval for the directors to issue new securities up to 10% of the company's existing shares on issue without the need for shareholder approval. Today, the directors can already issue up to 15% of the company's existing shares on issue. So the approval of this Resolution 10 will, in effect, give the Board approval to issue up to an aggregate of 25% of the shares on issue. The argument for supporting this resolution is based in delivering the board the maximum flexibility it can achieve to raise working capital in a timely responsive fashion. Rest assured, the Board exercised its decisions in this regard extremely carefully. There is a lot of detail about this resolution in the notice of meeting. And I note, in particular, that as a special resolution 75 -- greater than 75% of votes cast must be achieved for this resolution to be successful. Is there any real discussion or questions? I understand not. So the proxies received for Resolution 10 are on screen, as you can see. So I'll now put the resolution for those of you who have not already voted, please put your votes through via the Lumi app. [Voting]

Well, that concludes the formal business of the meeting. Prior to closing the meeting, I will [indiscernible] business or questions from the shareholders. Does anyone have any further questions on the Board, we're keen as always to ensure that all questions do get resolved within the course of the AGM. And if there is an overflow, we will get them all answered by e-mail, but it's far more satisfactory if we can answer them during the course of the AGM with everybody in attendance. So I now open the floor for questions.

Excellent. Thanks, Andrew. So Wayne, we've got a few questions to kick off with that we'll start with yourself. First being, given business growth has been accelerated due to COVID in many respects. How confident are you that this R&D is well deployed and what will happen when the world gets back to normal?