Datalex plc (DLE) Earnings Call Transcript & Summary

This is the Datalex plc 2021 Annual General Meeting. The AGM is being broadcast by conference call. It's the 23rd of September, 2021, and just after 12 noon. Good afternoon, ladies and gentlemen. This is David Hargaden, speaking as the company's Chairman. I would like to welcome you to the Datalex Annual General Meeting. I'm joined here at the company's headquarters in EastPoint Business Park in Dublin by our Chief exacting Officer, Sean Corkery; and our General Counsel and Company Secretary, Neil McLoughlin. As myself, Sean and Neil are all shareholders, we have a quorum present, so I declare the meeting open. Also with us on an open conference line are non-Executive Board members, John Bateson; Peter Lennon; and Mike McGearty, who is the Lead Independent non-Executive Director. Before we commence the formal process of the meeting, I would like to acknowledge, I regret not to have the opportunity to meet with you, our shareholders, in-person on this occasion. And hopefully, this will change for our next AGM. As noted in our notice of AGM, we are conducting this meeting in accordance with the government's COVID-19-related public health measures and public health advice. We see the AGM as an important chance for this Board to engage with all shareholders, and we welcome your questions and comments at any time. For this meeting, we ask that you submit any questions on the resolutions in advance and we note that on this occasion, no questions were received. I would like to acknowledge and thank Christine Ourmières-Widener and Niall O’Sullivan, who stepped down from the Board in July and September, respectively. They both played a significant role in the recovery of the company over the past 2 years, and we wish them well. We have a search underway to appoint a new Chief Financial Officer and at least, one of new Independent non-Executive Director this year, and we will update the market on this in due course. I would also sincerely acknowledge and thank all shareholders for your ongoing support and commitment to the company over the past year. Despite 2020 being a very challenging year for all involved in the travel industry, we were fortunately well positioned to deal with those challenges. While it's just a software company focused on transforming airline retail, the impact of COVID-19 pandemic on airlines affected Datalex's ability to achieve its growth plans. We have used this time wisely, progressing our growth strategy, investing in product development, R&D and new talent. In addition, we also used this opportunity to strengthen our balance sheet by raising EUR 25 million in new equity and which was significantly oversubscribed. This enabled us to pay off the company's existing loans with its lender. The company also secured an additional EUR 10 million facility from Tireragh Limited, which is available until 31 December 2022, should it be required. In 2021, we also completed a migration to the Euronext growth market in Dublin, a market tailored for growth-stage companies like Datalex. Your Board believes that these achievements will enable Datalex to accelerate investment in its product roadmap and implement new revenue opportunities within its software-as-a-service commercial model. There are signs of an emerging recovery in the airline industry, but as we said in our financial results in the first half of 2021, the recovery will not be linear nor equal across all markets. However, Datalex has demonstrated remarkable reserves of resilience and ability in dealing with the challenges of the past 2 years. Your Board and I have every confidence that the company is now well positioned to achieve its ambitious growth plans in the years ahead. Now I would like to invite CEO, Sean, to address the meeting. Over to you, Sean.

Okay. Thank you, Chairman, and good morning, ladies and gentlemen. As the Chairman said, it would definitely be better if we could be all together, and hopefully, that will happen in the near future. I'd like to start this morning by providing some leads on the aviation and airline industry, which we serve through our products and software. COVID-19 continued to significantly impact air travel demand in the first half of 2021. The usual way of looking at this is to consider the total number of kilometers traveled by airline passengers from January 2021 to June of 2021. This metric during that period fell by 67% over the same period in 2019, which obviously was a pre-COVID period. However, within that metric, the detail is important, and we can see that domestic travel fell by just [ 32% ] against international travel, which is about 86% in that same -- against that same period of 2019. There are some promising signs of recovery, including the ease of restrictions on travel into the U.S. announced this week. Our financial performance to date has been in line with our expectations. In the first half of 2021, we reported that revenues decreased by [ 40% ] versus the same period in 2020. This was expected considering the impact of the COVID delta variant and ongoing travel restrictions to airline traffic generally as the first few months of 2020 were not significant impacted by COVID. We also reported that in the first half of 2021, we reduced operating costs by 22% and improved adjusted EBITDA by [ $3.1 million ] versus the same period in 2020. During 2021, the industry has shown signs of recovery, obvious from a very early days. However, ongoing uncertainty leads to continued volatility driven by the government policy and discrete outbreak of the delta variant. [ IATA ] continue to see increased engagement with prospective customers and encouraging signs of commercial momentum. This year, we have contracted with an existing customer for our NDC product and contracted the dynamic pricing production files. One file with a large airline, which we have yet not named. And then last week, you would have seen that we announced the second one, which was [ Air ]. This, of course, is against COVID-centric backdrop where airlines have been delayed in finalizing key IT and digital transformation decisions. So caution remains. [indiscernible] on executing our strategy by staying in the core business and investing in future technology to meet emerging trends. Over the past year, we had targeted investments in our products, platform and technology to capitalize on the anticipated market recovery, but short- and medium-term opportunities and priorities will be as follows: The first one is new sales pipeline conversion. This is our primary focus at this time. As mentioned as well, we've never been busier, and over the past [ 3 ] months, we've held a large number of customer presentations, production trials and a lot of activity there. Secondly, the retention of our customers and ongoing delivery of additional products. Within our product portfolio, we continue to be a priority for the company. We've been a trusted partner to our airline customers during the pandemic, reacting to their needs by seamlessly implementing important updates and delivering new product capabilities that is moved in more careful and competitive during this period. Thus far, our future prior development would be fulfilled. We will continue to build products that solve critical problems to our customers. In particular, products that offer degrees of intelligence will be to the forefront. And finally, we intend to leverage the opportunity of transaction growth fueled by industry recovery. This will not happen overnight, and it will involve renegotiation of some of our older contracts, but it is a strategic imperative as we position the economy for the next phase of growth. Before handing back to the Chairman, I would like to thank and recognize the entire team of Datalex for their commitment and hard work over the past year. And now I hand back to David.

Thank you, Sean. I would now like to start the formal proceedings of this Annual General Meeting. The notice of the meeting, together with explanatory notes, was posted to shareholders on the 27th of August last. Accordingly, the requisite notice of the meeting has been given. I propose, therefore, that with your consent, the notice of meeting should be taken as read. I now ask our company Secretary, Neil McLoughlin, to explain the procedures we will follow today and read out proposed resolutions. Neil?

Thank you, David. Let me first outline the procedure we will follow today. This year, given the restrictions on shareholder attendance at the meeting and in accordance with the Articles of Association of the company, voting will be done by way of a poll or a written vote on each of the resolutions put to the meeting. This allows you, our shareholders, the opportunity to participate in the decision-making of the company and have your votes recorded in proportion to the number of shares that you hold. We've appointed Computershare, the company's registrars, to act as scrutineers. For convenience and with the Chairman's permission, I will direct that the poll on all resolutions will be held at the end of this Annual General Meeting, and votes will be verified under the scrutiny of registrars, Computershare, who will then report the total of the vote cast for and against the resolutions and any abstentions. As the poll will take some time to be conducted, we propose to close the meeting after taking a vote and the results of the poll will be announced as soon as possible by RNS and on our website, datalex.com. We will now proceed to vote on the resolutions, which I will formally propose to the meeting. The full text of each of the resolutions is set out in the notice of the meeting, a copy of which you will have received. The first item on today's agenda is to receive the Directors' report and financial statements for the year ended 31 December 2020. And with the permission, I will take the Directors' report and the report of the auditors as read. I now propose Resolution 1 that the report of the Directors and financial statements for the year ended 31 December 2020, be and are hereby received by the meeting. As I said, the poll on this resolution will be held at the end of this Annual General Meeting. Resolution 2 is to receive and consider the Remuneration Committee's report as set out on Pages 74 to 91 of the 2020 Annual Report. I now propose Resolution 2 that the remuneration of -- the report of the Remuneration Committee for the year ended 31 December 2020, be and is hereby received by the meeting. Again, the poll on this resolution will be held at the end of the meeting. The next item on today's agenda deals with the election and reelection of the Directors who are retiring. This year, in accordance with the Board's policy, the Directors have again resolved that they will all retire and submit themselves for reelection by the shareholders. Following the company's announcement on the 2nd of September of Niall O’Sullivan's retirement, the resolution to reelect Mr. O’Sullivan as a Director of the company as referred to in the notice of the AGM in Resolution 3F, is now withdrawn. The withdrawal of Resolution 3F does not otherwise affect the ability at the notice of EGM, AGM, the proxy form or any proxy votes already submitted, and they view the resolutions. The numbering of all other proposed resolutions at the AGM will remain unchanged. I now propose resolution 3A that David Hargaden, who retires in accordance with the Articles of Association of the company, be reelected as a Director of the company. And I propose Resolution 3B that Sean Corkery, who retires in accordance with the Articles of Association of the company, be reelected as a Director of the company. And I propose Resolution 3C that John Bateson, who retires in accordance with the Articles of Association of the company, be reelected as a Director of the company. I now propose Resolution 3D that Peter Lennon, who retires in accordance with the Articles of Association of the company, be reelected as a Director of the company. And I now propose Resolution 3E that Mike McGearty, who retires in accordance with the Articles of Association of the company, be reelected as a Director of the company. The poll on each of the resolutions will be held at the end of the meeting. The next resolution, Resolution 4, is that the remuneration of our auditors be fixed by the Directors in respect of the year ending 31 December 2020. Again, the poll on this resolution will be held at the end of the Annual General Meeting. Turning then to the only item of special business, Resolution 5, which concerns the notice period for general meetings of the company. I propose that the special resolution, Resolution 5, to empower the Directors to call a general meeting other than an Annual General Meeting or a meeting to consider any special resolution on 14 days' notice. The full text of the resolution is set out as Item 5 in the notice of the meeting. The poll on this resolution will be held at the end of the meeting. That concludes the formal business. I hand back to you, Mr. Chairman.

Thank you, Neil. And subject to publication of the poll results, that concludes the business of the meeting. With your approval, I declare the meeting closed, and thank you for your attendance. We will publish the results of the poll by RNS and on the company's website as soon as possible. Before we leave the meeting, just to support Sean, thanks to the team for their hard work over the past very tough period in all of our lives and a lot to thank the Board, the Executive and my fellow Directors for incredible commitment in what has been very challenging times over the last 18 months. We look forward to the future. Thank you all for your support and for joining us today, and I very much hope to have the opportunity to meet you in the near future. Thank you.