Earlypay Limited (EPY) Earnings Call Transcript & Summary

It's now 10 a.m., Geoff, so I'll hand over to you.

Thank you, Matt. Good morning, and welcome to the Annual General Meeting of Earlypay Limited. My name is Geoff Sam. I'm the Chair of Earlypay and Chair of today's meeting. I would like to start by acknowledging and paying respect to the Traditional Custodians of the land, wherever those participating in this meeting are located. This meeting is being held virtually, and shareholders will be able to participate, ask questions and cast direct votes at the appropriate times whilst the meeting is in progress. As the time is now past 10 a.m., the company has complied with the relevant requirements for convening this meeting and a quorum is present, I formally declare the meeting open. I'm joined today by my fellow Board members, James Beeson, CEO and Managing Director; Sue Healy, Non-Executive Director; Ilkka Tales, Non-Executive Director; and Steve White, Non-Executive Director. Also present are Paul Murray, our CFO and Joint Company Secretary; and Mathew Watkins, our Joint Company Secretary. Mr. Rod Shanley, the company's audit partner from Pitcher Partners, is also in attendance and will make himself available to answer any questions on the accounts at the appropriate time. The notice of the meeting has been given in accordance with the company's constitution, and copies of the notice are available for you on the company's website, the share registry's online voting site or on the ASX market announcements platform. Unless there are any objections, I'll take the notice of meeting and explanatory statement as read. The format of today's meeting will be a Chair address from myself. Mathew Watkins, our Joint Company Secretary, will then explain the meeting participation process. We will then have an operations presentation from our CEO and Managing Director, James Beeson, followed by a Q&A session on business operations. We will then address the formal business on today's agenda, and this will be followed by a Q&A session on the formal items of business, following which shareholders will be provided an extra 30 seconds to vote on resolutions. I would now like to present my address. Welcome, shareholders, and thank you for your continued support of Earlypay. As Chair of Earlypay, I'm pleased to reflect on some of the achievements in 2024 after a transformational 2 years and provide some commentary around our optimism for the future. Underpinning everything we do at Earlypay is the genuine belief that invoice finance is an excellent funding solution that should benefit many more SMEs than it does. There are 2.6 million SMEs in Australia, and 1 million of them sell goods or services to other businesses, which makes them potentially suitable for invoice finance. The awareness and utilization of invoice finance in Australia is rising as technology enhances the delivery of the product and as SMEs increasingly prefer to use business assets as security instead of their family homes. This shift is seeing invoice finance more than ever before edging towards being a mainstream product. This represents an enormous opportunity for the company, and our strategy is focused on main invoice finance simpler for SMEs by combining product and technological innovation with personalized client service. Our goal is to be the first choice provider of invoice finance to Australian SMEs, and Earlypay is exceptionally well placed to benefit from the broader adoption of invoice finance and expanding addressable market. The company has undergone significant change over the past 2 years to now be in a position of strength. These changes include a more focused strategy centered around invoice finance, updated risk governance, underwriting policies, operational procedures and a more diversified and well-managed loan book. It has taken some time to shape a more diversified and balanced portfolio of clients across size, location and industry with a focus on invoice finance and equipment finance. This involved deliberately exiting some clients and reducing exposure to trade finance. This has weighed on funds in use in the short term but has significantly derisked the loan portfolio, and we now have a stronger platform on which to grow with credit impairments expected to be much lower than in recent years. A major milestone in 2024 was the refinancing of our invoice and trade facilities into a single warehouse in February. We now have a financing structure that is cost effective, capital efficient and highly flexible in its ability to meet our growth ambitions. Late in FY '24, we also varied some lending parameters in our equipment finance facility, which has materially improved our ability to originate new loans and grow that portfolio. In November last year, we completed the acquisition of select assets from Timelio, which added almost $40 million of new receivables. This also added a talented and experienced team that have played an important role in improving the operational structure and capability of the business. To return excess capital to investors, the company bought back of 25.4 million shares for $4.48 million at an average price per share of $0.177. This equated to the repurchase of approximately 8.8% of the share capital outstanding at the start of the year. Earlier this month, we announced a new share buyback of up to another 27 million shares that will be weighted to the second half as we are limited by the amount of shares we can buy in a rolling 12-month period. The $10 million corporate facility is being repaid, and the outstanding balance is expected to be $5 million at the end of the first half and be fully repaid by the end of quarter 3. The company also resumed paying dividends. The amount of the FY '24 dividend was constrained by the amount of retained profits. However, this is not expected to be a constraint going forward. With stronger foundations in place and a more diversified loan portfolio, we have returned to a growth focus and are very optimistic about our organic growth outlook. We are beginning to see the benefits from the strategy to augment traditional distribution channels with new channels, including embedded finance partnerships, and see a lot of future upside in these nontraditional channels. New originations have been strong for both invoice finance and equipment finance so far in FY '25, which is rebuilding our overall funds in use, although the reduction of trade finance exposures in line with the Board's risk appetite is offsetting this somewhat. As the portfolio rebuilds, net revenue growth and credit impairments are contained, we will get the benefit of the inherent operating leverage in the business to drive increasing profits and cash flow in coming years. FY '25 earnings per share EPS is expected to be $0.022 per share, up 28% on the FY '24 underlying pro forma EPS of $0.017 per share with a stronger second half due to the slower starting point for funds in use at the beginning of the year. Given the Board's outlook for strong ongoing financial performance, we are targeting a return to a dividend payout ratio of 60%. I'd like to take a moment to thank our CEO, James Beeson; and CFO and COO, Paul Murray, for their leadership during this transformational period, along with the entire Earlypay team for all their hard work, diligence and contributions during the year. We are only at the start of the significant next phase of growth, and we firmly believe we have the right team and platform in place to benefit from this exciting period. Finally, I'd like to thank my fellow Board members and most importantly our shareholders for their support and patience. We look forward to keeping you updated on our progress as we work towards our goal of being the first choice provider of invoice finance to Australian SMEs. Thank you. I'll now hand over to Mathew, our Joint Company Secretary, to outline the meeting participation process.

Thank you, Geoff. As mentioned earlier, shareholders will be able to participate, ask questions and cast direct votes at the appropriate time while the meeting is in progress. Visitors and media are reminded that whilst you're welcome at this meeting, it is a shareholder meeting, and you may not make comments or ask questions. We may experience some time lag, and this may cause some delay in your text questions or comments coming to our attention. So we encourage you to lodge any questions as early as you can. Shareholders wishing to ask questions via text, please take note of the following instructions. Please select the Q&A icon located at the bottom of your screen. Type your questions in the Ask a Question box and press Send. Your questions will be addressed at the appropriate time. Shareholders wishing to speak and ask a question, an audio questions facility is available during this meeting, and you can follow the following process. Please select the Raise a Hand icon located at the bottom of your screen. You'll be placed in a queue and authorized to speak when we reach the Q&A session. Prior to asking your question, please state your full name and who you are representing. Regarding voting on today's resolutions, all shareholders, proxyholders and authorized corporate representatives and attorneys of shareholders who are entitled to vote will be able to do so via the webinar poll. It's important to note if you have lodged a proxy form and voted prior to the meeting, you do not need to change your vote at this meeting unless you wish to change your proxy instruction. For those proxyholders, shareholders and authorized corporate representatives who have not yet voted prior to the meeting, please cast your votes on each of the resolutions when the poll is opened. For proxyholders, you will have a summary of proxy votes, which detail the voting instructions, if any, for each item of business. By completing the -- by voting via the webinar poll, when instructed to vote in a particular manner, you are deemed to have voted in accordance with those instructions. Where the Chair has been appointed a proxy on behalf of a shareholder, Mr. Geoff Sam, as Chair of the meeting, will be voting in favor of all resolutions. When the poll is declared open, a poll window will appear. To vote, simply select the direction in which you would like to cast your vote. The selected option will be marked. To submit your vote, simply click the Submit button. You'll have the ability to change your vote up until the time the voting is closed. Thanks, Geoff.

Thanks, Matt. As advised earlier, we will now have a presentation from our CEO and Managing Director, Mr. James Beeson, followed by business operations Q&A time.

Thank you, Geoff. Thank you. Our vision is to become the first choice invoice finance provider to Australian SMEs and their advisers. Though we're not currently the biggest invoice provider in Australia, we feel that we're uniquely positioned to provide a better version of the invoice finance driven by a depth of knowledge and experience, our scalable platform, processes and funding and our product and tech innovation capability. As I'll talk about soon, there are some ongoing tech advancements that we are at the forefront of, and combining this product and tech innovation capability with value-added client service is helping us make invoice finance much simpler and more accessible for SMEs than in the past. Our focus on invoice finance is also a great strength as all of our energy goes into improving the product and its delivery to better service the needs of clients in a risk managed and operationally efficient way. We also offer a specialized equipment finance offering, which is a very important part of our business in its own right, and it also supports distribution of invoice finance, particularly through the broker network. So why are we so confident to focus on invoice finance? We have a firm belief that invoice finance is an excellent funding solution that should be used by many more Australian SMEs. The big part of this is because we see it help our clients every single day. By improving the product and providing value to clients, we think adoption can increase significantly, and the market opportunity is large. There are 2.6 million SMEs in Australia, and 1 million of those sell to other businesses. Of that 1 million B2B SMEs, we estimate that around 100,000 of them are potentially eligible for invoice finance because they sell to other businesses on credit terms. And it's generally clear that the goods or services have been delivered, and there's little room to dispute by their customers with respect to paying the invoice. At the moment, there are around 5,000 SMEs in Australia who use invoice finance with the total funds in use estimated to be out $2.5 billion. At Earlypay, we have around 450 clients with $160 million of funds in use, which is just 6.5% of the existing invoice finance market. The opportunities for Earlypay here are twofold. We will benefit from the growing market with the higher adoption of invoice finance by those 100,000 SMEs, and secondly, by Earlypay growing its fairly small share of the existing invoice finance market. There are some historical reasons why the adoption of invoice finance is low, but there are also some very good reasons to think that, that is about to change. The nature of invoice finance is that there's an ongoing interaction between clients and lenders. And this is unique to invoice finance as most forms of lending involve underwriting initially, advancing the funds and essentially hoping that will be repaid back over a fixed period. This uniqueness about invoice finance creates some friction historically for clients that have to send invoices and supporting information. And we've had to contact the debtors directly to verify those invoices and monitor the payments. So this is one reason why invoice finance has struggled to grow in the past. In Australia, the awareness of the product is quite limited, especially compared to other markets like the U.K., where for example, it's estimated to be 4 to 5x more popular in terms of usage than it is in Australia. In Australia, the banks, which are the main driver of lending in Australia, they heavily rely on property security, particularly the family homes of directors and owners with SMEs. And around half of SME lending is still backed by residential security, and that's how the banks have always liked to operate. SMEs in Australia that don't have substantial real estate assets therefore find it hard to borrow, which has been a headwind against invoice finance growing. Because the banks have historically relied on real estate security, they haven't really pushed into invoice finance historically, and it's been more up to the nonbank lenders like us to promote that product. The broker channel, it's very important in Australia. For mortgages, it's equally important for small business owners to access finance. A lot of the commercial brokers specialize on asset finance or equipment finance, and the understanding of invoice finance and the willingness for brokers to push invoice finance as a product has been limited. So what's going to change to turn this around and grow the market? In recent times, technological advancement has come a long way. I'm starting with the integrations of people like Earlypay with accounting software like Xero and MYOB, where we can pull the invoices directly without clients having to upload their invoices manually. This has reduced the operational intensity of invoice finance and made it much simpler and quicker to use. And this continues where we are starting to integrate with third-party platforms like workforce management platforms to directly obtain the supporting documentation for those invoices as well, which means we don't have to contact the clients or their debtors so much to provide quick funding on those invoices. Embedded finance. This is where financial services are offered in nonfinancial platforms. And particularly in Europe, there's a big trend towards early payments being offered through embedded finance. And we're at the beginning of that in Australia, and I would say that we're in the forefront of that move. And again, that's just about making the early payment of invoices much simpler than it has been in the past. And with API integrations and the ability to integrate with the accounting software and these third-party platforms now possible, then that makes it a much easier product, much more viable as an alternative for SMEs. There's also been a push in recent times by the banks to promote invoice financing more. And I think a part of it is because of the technological advancements making it easier to sell and also some pushback from SME owners because they don't want to put up their own family homes as collateral for business loans. And we see this push from the banks has actually been very positive. There's such a big market that is untapped that the more awareness there can be about the product, the better. And the banks, being banks, they still target high-quality credits. And we feel like there's going to be a lot of smaller SMEs that are slightly below bank quality that will be eligible for us, and that's really where we're playing. So we think with these tailwinds, we feel that the market is set to grow and that Earlypay is best placed to make the most of this opportunity by playing to our strengths and delivering the market-leading version of invoice finance in Australia. Looking back at the financials for the financial year '24. Here, we're showing just the key stats, noting that at the end of the financial year, we went into the financials in a lot of detail. Starting with funds in use. Funds in use was lower by 15% compared to financial year '23 on average, and this was due to a combination of lower funds in use across invoice finance and equipment finance. As Geoff mentioned before, part of it was the active derisking of the portfolio to remove exposures that we were uncomfortable with, in invoice finance but particularly in trade finance. And the equipment finance portfolio was constrained by some parameter restrictions that really froze our ability to originate new loans. The originations so far in financial year '25 have been very strong, both in invoice finance and also now in equipment finance that we've had those parameters varied. So the trends are certainly looking strong in terms of funds in use. Net revenue in '24 fell broadly in line with funds in use. Net revenue margin remained strong. Credit impairments fell significantly from '23, and this was down 49%. And that doesn't include the RevRoof credit impairments, back down to 1.2%, and that's credit impairments as a percentage of average funds in use throughout the year. Now the provision -- the general provision that we put aside for new lending is 1.25%. So the actual impairments were in line with that in '24, and we expect that to probably continue a bit lower in coming periods. Cost to income, it's quite high. It's not where we want it to be. A big part of that has been because as revenue fell, it was hard to take out costs at the same pace. So there were some compression due to the negative effects of operating leverage. But as we resume growth, we hope to take -- hope to keep the cost base fairly stable. And that -- the discount we had when revenue was falling, we'll get the benefit of operating leverage from growing funds in use, net revenue and ultimately profits as we grow. Underlying NPAT of $4.9 million was up on the previous year, as was earnings per share. And NTA, net tangible assets, sits at $0.148 per share, which is around $40 million. So in summary, going forward, it's now really about growing funds in use and net revenue while maintaining those good margins, containing credit impairments through prudent lending and maintaining strict cost control to fully benefit from the operating leverage as we resume growth. If we do those things, then NPAT and EPS will look after themselves. So that's the financial side of the business. There are a number of important milestones completed in financial year '24 that have laid the foundation for future success that I'll talk about now. So it's been 2 years since RevRoof, the major credit loss that we had. And that was -- it really was the catalyst for a comprehensive review to everything that we do. We're on the path of improving the business and bringing it to a more institutional standard anyway, but the RevRoof was -- brought that forward aggressively. And it's led to significant changes at all levels of the group to build a more robust platform and mitigate against the risk of outsized credit losses in the future. The portfolio performance is now very strong. That's reflected in -- as I mentioned on the previous page, the actual impairments have come off a lot. And on the current book, the collector and credit risk clients are very low compared to where they have been historically, which is a good gauge on what impairments will look like in coming periods. So that gives us a lot of comfort that the levers we pulled after the RevRoof default were the right ones, and we feel like our approach to lending is now much more effective. There are a bunch of changes with risk governance, risk appetite and risk oversight, including the single borrower exposure and managing down large, concentrated exposures, particularly in trade finance. The credit policy was pre-written, and we now have a much more disciplined underwriting framework. An important part of the changes were to centralize key functions like risk management and documents and settlements. And now most of the client-facing roles are the only functions that are decentralized in the states. So now we continue to work on having a more diversified, less concentrated portfolio, which focus on invoice finance and equipment finance, and we'll continue to work down the trade finance exposures through time. The funding restructure in February this year, we implemented a new warehouse for the invoice and trade pool. It's much more capital-efficient and cost-effective and flexible than the previous funding structure, and we now just contribute 5% of equity for every new loan in invoice finance. As I mentioned, it's operationally quite easy to run, and we don't have to carry a big cash balance like we did before. So installing this new warehouse released a lot of capital that I'll talk about shortly. We also varied the equipment finance warehouse parameters that were constraining our growth to be more in line with our target market. And since those parameters have been varied, we've resumed strong growth in that product. The funding released from the new warehouse allowed us to pay off the $20 million corporate bond, although there is a short-term $10 million corporate facility in place at the moment that's currently being repaid. Current balance is now only $6.5 million, and that will be down to $5 billion by the end of the half. And by the end of Q3, we expect to have that fully repaid. Timelio acquisition. So this has fundamentally changed Earlypay, and the impact of this acquisition is much greater than the purchase price would suggest. If you look at the portfolio by itself, which was just shy of $40 million of receivables, mostly invoice finance receivables, the cost of that acquisition will be covered within 18 months. But the strategic benefits of this acquisition far outweigh the financial benefits. The portfolio is very high risk, a lot of it being from Bendigo Bank, when Timelio bought that portfolio a few years ago, but it is at tighter margins. But on average, it has increased the quality of our overall receivables portfolio. The acquisition brought a talented team, people across sales, client service, technology and finance, who are really driving us to be a better business. The tech and innovation capability that they've brought to the business is now allowing us to do things that before the acquisition we could have only chopped off. And it's really helping us diversify our distribution channels and be at the forefront of innovation for invoice finance where previously we probably didn't have the capability to do that. There was an initial step-up in the overall employee costs when those 12 people joined Earlypay, but we've made some changes since then. And that's worked through, and we're back to where we before the acquisition. As I mentioned, there was a significant amount of capital released from the refinancing of the invoice and trade warehouse. And also, there are some balance sheet funded assets that have since reduced quite a lot. So in addition to paying up the previous $20 million corporate loan, we're working aggressively to work to pay out the balance of the corporate facility, which will remove some interest expense headwind in the back half of this financial year and beyond. The Timelio acquisition, that consumed $1.3 million worth of cash. The balance was paid in shares, which we were lucky, I guess, that the price that we issued those shares was a little bit above where we bought back the $4.48 million worth of shares as part of the buyback. We also recently announced a new buyback for up to 27 million shares. Now there's a bit of a quirk with when we can buy that. We're constrained by how many shares we can buy on a rolling 12 months. So because we bought a lot of the shares from the previous buyback in the second half of last financial year, most of the capacity to conduct this buyback will be in the second half of this financial year. We also resumed dividends. As Geoff mentioned, it wasn't a large dividend for the full financial year '24. That was purely because of the constraint we have where we can only pay dividends out of retained profits. By having those 4 pillars largely in place, we now return to growth. And I'll talk a little bit about challenges to growth that we've had over the last couple of years. I'd say that the RevRoof default was a huge distraction for the business. And a lot of the business' focus was on identifying, understanding and addressing the shortcomings that led to that failure. Part of the result of that was the significant reduction in invoice finance receivables through exiting clients that we weren't comfortable with. And we used to finance some other invoice financing clients that didn't fit within new warehouse and were outside of our risk appetite, which affected funds in use, and also very conscious and active reduction in reducing our exposure to trade finance, which we feel we don't have a competitive advantage in that product, and it's inherently a more risky product. And we want to take that focus and bring it back to invoice finance. We made some changes to the business development team, especially in Victoria post RevRoof, which weighed on new originations. And just generally, while we were focused on putting out fires, we were less focused on writing new business, and we're quite conservative to our approach to new underwriting. Equipment finance constraints. As I mentioned, the parameters with a certain sector of vehicles was a constraint. And that unfortunately was a big portion of the assets that we typically write. So that really was a headwind to growth and the equipment finance originations really stalled during that period. But in April '24, those parameters were changed and now we're originating equipment finance strongly again. So now it's been 2 years since RevRoof. And with all those changes in place, we feel like we have a much stronger foundation on which to grow. And the resumption of growth has happened in this financial year so far strongly. Also helping with the growth focus is a more targeted approach to where we play. We have a real focus on invoice finance. And we're not chasing the bigger clients that are less risky or even the other end of the spectrum that are bank quality. The typical clients are that have turnover of between $2 million and $50 million. So that equates to a $300,000 facility to a $5 million facility, which we feel is where we really are playing in our strengths and also helps us build the diversified loan portfolio. And typically, those clients at that size, we can generate better margins for the services we provide them. It's a big focus on innovation. I mentioned earlier that invoice finance has been hamstrung a little by being somewhat manual. But we're at the forefront of innovating the product through technology and just making a simple product for SMEs to use, which should support a broader adoption of the product, and we'll be at the forefront of that change. The diversification of distribution channels is another critical change. Historically, commercial finance brokers were the main source of originations, but we've been diversifying away from that to include the embedded finance opportunities and also consultancy practitioners. And we're getting a lot of business through client referrals and staff referrals as well. Not to mention our inquiry through marketing efforts has increased a lot as well. So we're -- the source of our new business is much broader than it has been. Part of the innovation is to make our product easy to use not just for SMEs but also easier for brokers and referrers to give us deals. And that's pushing a focus to get deals through the pipeline quicker, get quicker to the funding decision and to funding the clients. And we feel that we're already probably a leader in terms of turning around invoice finance deals. And we're still really focused on that because we're not only competing against other invoice financiers. We're competing against the fintechs that can provide funding to SMEs really quickly. So we have a really ambitious goal to get that down. And we feel that for brokers that refer invoice finance to us and our competitors, the ability to turn it around really quickly is a competitive strength, and it's going to see a lot of business come our way. We've also boosted the sales and marketing team. And recently, we've been forced to add resources in the settlements teams for both invoice finance and equipment due to the higher volumes we're seeing. On the equipment finance side, after adjusting the parameters, we're seeing a strong resumption of growth, mostly through the broker channel. We've been offering selective discounts to certain asset types to help give us a nice pool of -- a nice, diversified pool that is in alignment with core parameters. And that's really giving us capacity to grow in the core assets. And pleasingly, the weighted average of new originations is at historical levels. So that's not weighing on margins at all. So again, new originations for both invoice finance and equipment finance are growing very strongly so far in financial year '25, although it's been offset a little bit by the active derisking of the trade finance portfolio. A key part of the post-RevRoof review was just about building a more diversified and advanced portfolio. So we put a big focus on removing or reducing single borrower exposures. And now we don't have any exposure to more than $10 million. The target funds in use for a client is $200,000 -- or $250,000 up to $5 million now. And we're not stretching for those big deals that typically came with trade finance, which is a riskier product in our experience. And the diversification that you can see there from June '23 to June '24 continues, even beyond June. And that's made up of -- well, that's contributed by shedding some of the bigger clients but lots of smaller clients in invoice finance and equipment finance. So that trend of diversification is set to continue. In terms of the product, trade finance, you can expect to keep falling and equipment finance growing. But invoice finance, the expectations are that's going to continue to grow as a percentage of the overall pool. Client location, most of our clients are on the Eastern Seaboard. And we have slightly over-representation in Queensland, where we bought a relatively big business a few years ago, and we have a strong team up there, which continues to maintain a strong presence. With respect to industries, labor hire and recruitment, transport, wholesale and manufacturing are all well suited to invoice financing due to the clear delivery of goods and services and little room to dispute the invoices. So we have a natural overweighting to those sectors. In transport, you can see that that's partly invoice finance but also trucks and trailers to the equipment finance business. And civil -- and construction is almost entirely civil construction, which is yellow goods like the things you see on the side of the highway when you're driving along, like bulldozers and excavators and things. The location and the industry mixes, we don't expect those to change through time, and we're comfortable with the spread at the moment. So we've been through this many times over the past year and more, but we're in a really good place with our funding structure, the new warehouse. And I've spoken about the benefits of that before. We have plenty of headroom there to grow the portfolio. Equipment finance, now that we've changed the parameters, that's fairly fit for purpose. And again, there's plenty of headroom to grow that portfolio. In the corporate loan, we expect to pay that down in the next few months. And then we'll get back to having the receivables, the invoice and what's left with the trade funded by that warehouse and then the equipment receivables funded only by the EF warehouse and no debt at a corporate level. For invoice finance, commercial finance brokers continue to be the main source of referrals for Earlypay. And given their importance, we want to be the first choice for brokers by offering a simple-to-use product for their clients and the best in market, speed, decision and settlement. We've put a lot of effort into settling new clients faster and continue to invest in automation and better processes to keep improving our referrer experience as we think that this will directly lead to more originations. Consultancy practitioners and business advisers are also a growing source of referrals given the economic backdrop, although we're selective about which clients we approve in that space, although I will say that invoice financing is really well suited to helping businesses that have had challenges and are coming out the other side. They don't necessarily have to have been around for a long time or have a long track record. If they've got a good ledger with strong customers with factorable debt, then more often than not, we can provide funding to those clients or those types of businesses. Marketing, it's really -- it's amazing how much referral we're getting through marketing and direct inbound at the moment. And client and staff referrals are much higher than before, which I think is a testament to the confidence we have in our product and how our clients feel about our offering. On equipment finance, originations have increased sharply since we changed those parameters. And all of this distribution is through brokers pretty much. There's not much outside of the broker channel for EF. And again, we had to -- we added some resources in docs and settlements to support the higher originations on equipment and particularly EF in recent months. With respect to the new channels, which are focused on invoice finance, while it's still a very small contribution to new originations, we're very excited about the potential of the embedded finance and third-party integrations that we're building out. Xemplo, SprintSuite and foundU, those logos weren't here last time. They're new partners and new integrations that we have. Xemplo, SprintSprint and foundU are all great examples of how we're working with the labor hire and recruitment sector to provide simple access to cash flow by early paying invoices by integrating directly with these platforms. Our new API capability allows us to pull and push information to and from third-party platforms, allowing us to source the supporting documentation of the invoices like time sheets in this example. This also helps us fund -- this enables us to fund clients faster in a very risk-controlled way while providing operational benefits to both our clients and us. We feel that Earlypay is very well placed to be the leader in this space given our tech capability, scale and experience in invoice financing. Also, very importantly, what we're learning from innovating through the embedded finance and third-party platforms is helping us make our core invoice finance product better as well. Across all channels, we're very focused on providing funding as soon as we can and making it as seamless as we can for both clients and also for SMEs and also our referrers. And we're making better use of our CRM to streamline the underwriting process for both products, and that includes using that for documentation preparation and execution. Underpinning all of that is building the Earlypay brand. You might have noticed that the deck is using a refreshed brand that has only very recently been put in place. We felt that given the evolution of the business over the past 2 years and renewed focus on invoice finance, we felt that the timing was right to refresh the brand. So it reflects who we are today. And we'll be more active in promoting invoice finance and Earlypay to SME operators and their trusted advisers going forward. With respect to guidance, as I mentioned at the start, looking back at the financial year '24 results and the key drivers of future NPAT growth and EPS growth. We expect earnings per share in '25 to be $0.022 per share, which is up 28% on the previous period, which was $0.017 per share. And that $0.022 per share, that's based on the assumption of $6 million of NPAT and 272 million Earlypay shares, which is what's currently outstanding. And the earnings will be weighted towards the back half of this financial year as we rebuild the portfolio, and also the benefit of paying down the corporate loan at the start of the next half will support net revenue and earnings in the back end. Dividends, the payout ratio, we expect to return back to 60%. And again, as mentioned earlier, we announced the share buyback for another 27 million shares -- for up to 27 million shares. So overall, we feel that the work we've done over the past 2 years puts us in a great position to increase the number of SMEs that we support and now grow earnings and EPS accordingly. Thanks, Geoff.

Thanks, James. I now invite shareholders to ask general questions in relation to the operations of the business. If you have any questions regarding the formal items of business today, we will address these later in the meeting. Mathew, did we receive any written questions? Or does any shareholder wish to ask a general question about the business?

Geoff, we do have a question here from Andrew. So James, congratulations to you and the team. There's been some real solid progress on all fronts across the business, and shareholders feel like they're starting to really see an exciting time for the company for the first time in a few years. So just in terms of the question, just wondering if you could please elaborate on how much more trade finance as a percentage of funds in use remain that the company intends to gradually wind down. In other words, how much more IF and EF new business do we need to originate in order to offset the remaining historical trade finance book?

At the end of the financial year, trade represented 9.4% of funds in use, and that has fallen since then, and it's on track to be around 5%. And then we'll continue to trickle down below that. There have been a couple of bigger ones that we've exited. And I think going forward, that's probably 2% or 3% over the next 12 months. So it is a bit of a headwind for originations, but it's nothing that is surmountable. And the pace that we're originating new invoice plans, we should be able to cover that and still show decent growth in that portfolio.

There's no other questions, Geoff.

Thank you, Mathew. This concludes the Q&A session on business operations, and we will move to the formal items of business. Before opening the poll, I wish to remind shareholders that the poll will remain open for an additional 30 seconds after we have considered all resolutions. I now declare the poll open. I now move to the first item of formal business as set out in the notice of meeting. If you have a question on this item of business or any other item of business, please follow the questions process, which was previously outlined. We will address your questions after the last resolution. The first item of business relates to the receipt and consideration of the financial report of the company and the related reports of the directors and the auditors for the year ended 30 June 2024. These items are contained in the annual report, so I will ask they be taken as read. The annual report is available on the ASX announcement platform or on the company's website. The Corporations Act requires accounts and reports to be laid before shareholders at the Annual General Meeting. However, except as set out in resolution 1 to be considered later, there is no requirement for a vote of shareholders to be taken on them. No written questions to the auditor under section 250PA of the Corporations Act were received by the cutoff date, 5 business days before this meeting. Questions may be directed through myself to the auditor in relation to the conduct of the audit, the audit report, the company's accounting policies or the independence of the auditor. As this matter does not require a vote, we will now move on to the first resolution. I'll now refer to resolution 1, which is to consider the adoption of the remuneration report forming part of the directors' report for the financial year ended 30 June 2024. The remuneration report is set out in the directors' report in the company's 2024 annual report. The remuneration report sets out the company's remuneration arrangements for the directors and key management personnel of the company. The vote on this resolution is advisory only and does not bind the directors or the company. The full resolution is displayed on your screen, along with the proxy votes we seek for this resolution. I move that the shareholders consider, and if thought fit, pass the ordinary resolution. I'll now refer to resolution 2, which relates to the reelection of Mr. Steve White as a director of the company. Mr. White's profile has been provided on Page 8 of the notice of meeting. The full resolution is displayed on your screen, along with the proxy votes received for this resolution. I move that the shareholders consider, and if thought fit, pass the ordinary revolution. I'll now refer to resolution 3, which relates to the reelection of Mr. Ilkka Tales as a director of the company. Mr. Tales' profile has been provided on Page 8 of the notice of meeting. The full resolution is displayed on the screen along with the proxy votes received for this resolution. I move that the shareholders consider, and if thought fit, pass the ordinary resolution. I now refer to resolution 4, which relates to grant of performance rights for Mr. James Beeson. The proposed terms of performance rights are outlined on Page 8 of the notice of meeting. The full resolution is displayed on your screen, along with the proxy votes received for this resolution. I move that shareholders consider, and if thought fit, pass the ordinary resolution. I now refer to resolution 5, which relates to the ratification of the issue of the Timelio acquisition shares. The full resolution is displayed on your screen, along with the proxy votes received for this resolution. I move that the shareholders consider, and if thought fit, pass the ordinary resolution. I now refer to resolution 6, which relates to the adoption of a new rights plan. The proposed terms for the new rights plan are outlined on Page 13 of the notice of meeting. The full resolution is displayed on your screen, along with the proxy votes received for this resolution. I move that shareholders consider, and if thought fit, pass the ordinary resolution. I now refer to resolution 7, which relates to amending the company's constitution. The proposed amendments to the constitution are outlined on Page 16 of the notice of meeting. The full resolution is displayed on your screen, along with the proxy votes received for the resolution. As this resolution is a special resolution, it requires 75% of votes cast in favor to be deemed as passed. I move that shareholders consider, and if thought fit, pass the special resolution. I now refer to resolution 8, which relates to the approval of the company's 10% placement facility under ASX Listing Rule 7.1A. The full resolution is displayed on your screen, along with the proxy votes received for this resolution. As this resolution is a special resolution, it requires 75% of votes cast in favor to be deemed as passed. I move that shareholders consider, and if thought fit, pass the special resolution. We will now go to shareholders' questions. Mathew, did we receive any questions on any other resolutions? Or does any shareholder wish to speak to any of these resolutions?

There's been no questions, Geoff.

Thank you, Mathew. This concludes the Q&A session on the formal part of this meeting. We will now provide shareholders with an additional 30 seconds for poll voting to be completed. [Voting]

Just a reminder, if any shareholder requires any additional time to vote, please lodge that via the Q&A part on your screen. Geoff, there's been no request for additional time.

Thank you. As the additional 30 seconds is now up and there have been no requests for additional time, I now declare the poll closed. Once the poll results have been processed, we will announce the results later today on the ASX market announcements platform. That concludes the formal part of the meeting. Since the company has not received notice of any other business, I declare the meeting closed. After the votes have been counted, the results of the poll will be released to the ASX later today. Thank you for your attendance and continued support.

Thanks, Geoff. We'll now close the webinar.