OFX Group Limited (OFX) Earnings Call Transcript & Summary

Good afternoon, everybody. Thank you for joining us here this afternoon. Hopefully, you can all here and see us clearly. I'd like to welcome you to our 2020 Annual General Meeting for OFX Group. This meeting is being recorded so that we can upload it to our website at a later date. My name is Steve Sargent, I am Chairman of the Board, and I will chair today's Annual General Meeting to be held virtually as committed by the treasurer's coronavirus economic response determination. The company secretary has advised me that we do have a quorum of at least 2 shareholders present, so I declare the meeting open. I would like to introduce you to the others at the OFX office with me here in Sydney. Immediately to my right is Skander Malcolm, our CEO and Managing Director. Just off-screen here is Elisabeth Ellis, our Chief Legal Officer and Company Secretary. The other directors, Connie Carnabuci; Doug Snedden, who is Chair of our Remuneration and Nomination Committee; and Grant Murdoch, who is Chair of our Audit, Risk and Compliance Committee, they are attending by Zoom. The company's auditor, Elizabeth O'Brien from PricewaterhouseCoopers, is also attending by Zoom. In the room here, we also have Selena Verth, our Chief Financial Officer. And the other members of the group executive team, both here and around the world, are also attending by Zoom. Now on to the agenda for today. The proceedings of today will be as follows: I will make a brief introductory address. I will then introduce CEO and Managing Director, Skander Malcolm, who will provide his address. We will then move to the formal part of the meeting and the resolution set out in the notice of meeting that has been sent to shareholders. There will be an opportunity to ask questions on each resolution also -- and also during the general discussion session following the formal business. I'll now deliver my address. Last year, I opened my address as follows: We are living at a time of unparallel change. I can't recall a time in my 40-year career where it has been so difficult to interpret the macroeconomic indicators or predict the fundamental performance of industries and companies. Well, I guess I've got to admit, last year looks pretty straightforward compared to this year. However, despite the world being considerably more complicated and uncertain, it's clear to the Board that the approach we laid out for OFX to be disciplined with our growth, including strong risk management, has stood us in good stead and has ensured a strong foundation for the current environment. Our balance sheet remains strong, our cash flows remain strong, our execution remains disciplined and our risk management culture and risk management regimes are strong. We have further enhanced our risk management capabilities with investments in transaction monitoring, voice biometrics and 2-factor facial authentication, fraud management software. In my experience, the keys to navigating difficult times like these are to have great people who are aligned with a clear mission and a strong culture, and secondly, to have great operating mechanisms to drive strong execution. OFX has both of these. That's why I believe we are well positioned to endure these difficult times. During the full year '20, management and the Board spent a week in London in late September, which we regard as the epicenter of the world's payments industry. It is clearly the world's innovator in payments. We met with clients, bankers, central bankers, industry experts, and of course, our team. We came away with a very good understanding of what the U.K. regulators and banks are thinking with regard to payments regulation and thinking about the future for cross-border payments. The Board and the management team worked closely to develop our 3- to 5-year strategy, laying out the vision for where we believe our current choices and our future choices will lead us. This included regional segment and competitive analysis to build a clear view of areas we feel we have competitive advantages in and how we can develop additional advantages. This in-depth understanding translated to a very clear set of choices for our future as well as strong understanding of our current position, which has proved invaluable when the COVID-19 crisis took hold in late February and March. I firmly believe that the investments we have made in the last 3 years prepared us better than our competitors to flourish in February and March. We were able to serve our clients when they needed us most. We proved to be a strong client for our banks and a good participant in the eyes of our regulators. During March 2020, we saw a record high transaction volumes, while management team transitioned our entire global workforce to working from home. This was achieved while maintaining industry-leading service levels. And actually, our NPS scores increased during this period, an excellent achievement by all involved. The leadership team are continuing to stay close to our teams with daily and weekly catch-ups, frequent town halls and leadership conversations continuing to evolve the strong values-based culture that we have. We have an established well-being program, including the use of well-being services provider, offering coaching, counseling and education. Our team is really focused on employee mindset and stress and how to support and build manager capability to lead a distributed workforce. Looking forward, we continue to see considerable economic, political and social uncertainty, probably for an extended period of time. It seems as if every mega trend that was underway has significantly accelerated. As a result, we believe we'll see 4 continuing trends: one, uneven market activity levels by region. At the time of writing, the U.K. and Europe, along with Asia, have the least certain operating conditions. The U.S. presidential election is also very uncertain despite what the polls may suggest. Here in Australia, it is probably the least uncertain, but nevertheless, we expect subdued economic environment. Secondly, consolidation in our industry. I mentioned last year the plethora of private companies we complete people who put growth in customer numbers above generating profit and cash generation. We already see signs of distress amongst several of these and expect more to come. Three, increased regulatory scrutiny particularly in areas of safeguarding client funds and governance. This is in addition to the continued emphasis on enforcing higher standards of KYC and AML. Four, increased caution by banks about who they support in the international payments industry. Those players who are well managed, with strong risk management regimes, who are well capitalized with strong cash flow will benefit in this environment. I believe OFX is better positioned than most of our competitors to compete in the world I just described. Given the investments we have made, our systems are more reliable and scalable as well as increasing the caliber and number of employees in our regions. We are ready and strong to complete -- to compete globally. We will be very disciplined as the industry consolidates. We are exceptionally clear on our own value as well as the distraction M&A can be to management. That said, there are often opportunities in crises, and we will be thoughtful in assessing these. Lastly, our balance sheet, our risk management culture and our single-minded obsession to provide clients with the best combination of human and digital service will be critical for our regulators as well as our partners and our bankers. In closing, on behalf of the Board, I wish to thank the executive team and all of our employees for their hard work and commitment over the past year. They have done an excellent job in what has been a very challenging year. I would also like to thank you and our shareholders for your continued support. I would now like to hand over to Skander Malcolm, our CEO and Managing Director.

Thank you, Steve. And it's a pleasure to have you all connected to us through technology. And staging this virtual Annual General Meeting is somewhat analogous to how we're managing the company in this environment generally. In other words, finding ways to do what is needed, no matter what the circumstance is. Turning to a review of fiscal year '20. We delivered a strong financial result. Revenue up 6.6%, underlying expenses up 5% and underlying EBITDA up 6.4% against the backdrop of very mixed trading conditions over the full year. Sorry, can we just move to the next slide? Whilst the first half and the third quarter were relatively flat, we saw exceptionally high levels of market volatility in February and March related to COVID-19. This helped drive the EBITDA result of $38.2 million, coming in at the top end of the range we provided in March. Net operating income was up 5.4% at $125.2 million driven by record fourth quarter growth of 16.3%. The final dividend was maintained at $2.35 per share. The investment we have made in our infrastructure systems meant we were able to take full advantage of market volatility, remaining open, available and trading well. Overall, revenue was up 6.6% over the year with a strong second half result, up 12.9%. Our consumer segment grew revenue at 5.8% as we saw a substantial number of lapsed clients reactivate at high-value average transaction values. We continue to see good key financial and operating metrics. Transactions up 6.2%, transactions per active client up 8.8% and stable net operating income margins ex IPS at 56 basis points. We continue to improve our marketing and the client onboarding experience, which drove our cost per registration down 11.3% and our cost per new dealing client down by 7.4%. Our return on invested capital is very healthy at 31.8%, and this is against the backdrop of more than doubling our CapEx from $5.1 million in FY '18 to $10.3 million this year. The CapEx was all from the cash flows we generated from operating activities, which in fiscal year '20 was $30.5 million. We finished the year with a strong financial position with over $60 million net cash held for own use. We delivered on our key growth drivers with North America and our corporate segment continuing to perform well. North America revenue grew at over 24%, with the U.S. being even stronger at over 30%. Our corporate business globally grew 10.8%, and our online sellers business grew at over 21%. We have previously highlighted that growing through partnerships is a key strategic priority, and the progress we have made is excellent. We've previously announced our partnership with Link Australia, and the technology implementation went according to plan so that we are already accepting registrations as well as being able to process payments. Aside from Link Australia, there is a strong pipeline of prospects for fiscal year '21 also. The extreme volatility in February and March brought out the best from OFX. By the second week in March, we had the entire workforce working from home. We managed over 1.8x the incoming core volumes and supported 17% growth in transactions, while system uptime was flawless. That is why clients remain loyal to OFX. We deliver when they need it most. In summary, in fiscal year '20, we demonstrated we have an inherently strong business, good cash flows, high return on invested capital, a capital-light model with no debt, a global platform and exceptionally strong service delivery. Even better, we continue to make it more valuable through investing in healthy, sustainable growth programs and geographic expansion. Turning to an update on Q1. At the fiscal year '20 results update in May, we shared with investors that April trading was soft and that the outlook was uncertain. In Q1, that remained the case with revenue of $28.4 million being down 11% versus prior corresponding period and net operating income of $24.9 million being down 14.4% versus the prior corresponding period. This was largely driven by our consumer segment, where the elevated economic activity in February and March was replaced by caution in April and May, with some recovery in June. We saw declines in revenue in every region over the full quarter. So we saw a recovery in June that continued in July in the consumer. Beyond consumer, the biggest factor in the overall decline in revenue was lower average transaction values. Over the first quarter, they were down 11%, reflecting the economic uncertainty. Higher value consumers are telling us that they are preparing for further volatility, and as such, the typical use cases, wealth management, property and transfers to family, are pending. Small and midsize businesses are understandably uncertain about their prospects, and they're acting cautiously. So clearly, through June and July, their confidence is returning. However, against these challenges, there were some positive signals. Our transactions were up 3%. Transactions per active client were also up, growing 6%. These data points suggest our clients remain loyal even in challenging times. We grew new corporate revenue, excluding online sellers, over 51% versus prior corresponding period. That is the highest growth rate in new corporate revenue in the last 3 years. We grew our online sellers revenue more than 15% overall, and the regions, excluding Asia, grew over 50% in the quarter. Regionally, in July, revenue returned to levels seen in June and continue. And in fact, in North America, they had their third highest revenue month ever in July across all segments. Our enterprise pipeline is healthier than ever, and our program with Link is live and we're setting dividends on behalf of Link's clients. Those data points suggest to me that we're executing well and are not being outcompeted. It also says that our strategy to focus on corporate, online sellers, enterprise and select regional growth is the right one. We remain confident in the strategy, but we're realistic that the economic outlook remains uncertain, and therefore, we'll see unusual trading until things become clearer. As such, we continue to manage the company sustainably, prudent on costs but investing where we see competitive advantage such as corporate and online sellers. The broader OFX team remains committed, engaged and focused on executing well in the environment. Thank you. Now let me hand back to Steve.

Thanks very much, Skander. Appreciate that. So let's move on to the formal business. I'll now turn to the formal business of the meeting, taking each resolution in the order set out in the notice of meeting. There will be an opportunity to ask questions on each resolution. Questions not related to the resolution should be held until the end of the formal business, when I will open the line for general questions. Voting. In accordance with the treasurer's determination, a poll will be conducted electronically on all resolutions. Votes will be excluded in accordance with the Corporations Act and with the ASX listing rules. The combined proxy votes and direct votes will be shown after discussion on each individual resolution. I advise the meeting that I will be voting all undirected proxies in favor of the resolutions as indicated in the notice of meeting. We have now opened the voting card for the poll. It should have popped up on your screen. Shareholders and proxyholders who have registered with their shareholder number or their proxy code can vote online by selecting the for, against or abstain box in respect of each resolution on the voting card. After completing all items in the vote, you will need to click the submit button at the bottom of the voting card. If you want to vote later, then you can move the voting card on your screen, or you can close the voting card by clicking the X at the top right-hand corner of the voting card. You'll be able to vote at any time until the close of the meeting, when I declare the voting closed. You just click on the poll button on the banner to reveal the voting card again. If you are not a shareholder or proxyholder or if you have already voted, please close the voting card by clicking the X at the top right-hand corner of the voting card. If you have already voted, and you vote again during the meeting, your previous vote will be invalid. The votes will be counted by our share registrar, Link, who will also act as scrutineer. We will announce the results of the poll and advise the ASX as soon as the results are determined, which is expected to be before the markets open tomorrow. If you have any issues with voting during the meeting, please look at the detailed instructions in the OFX online AGM guide or call 0492 828 366. How to ask questions? Shareholders or proxyholders who have provided their shareholder number or proxy code when registering can ask questions by typing it into the Q&A box at any time or by indicating that you would like to ask the question verbally. [Operator Instructions] Now turning to the first item. Item 1, the financial statements and reports of the directors and the auditors. The first item of formal business is the tabling of the financial statements and reports of the directors and auditors for the year ended the 31st of March 2020. The company is required to lay before the meeting the last audited financial statements and reports, which were released to the ASX on the 19th of May 2020 as a part of the company's annual report. No resolution on this matter is required, but I now invite shareholders and their proxies to comment or ask questions on the reports. Questions may also be asked of the auditors in relation to the conduct of the audit, content of the audit report, accounting policies adopted by the company and the independence of the auditor in carrying out the audit. Our auditor, Liz O'Brien from PwC, is present as a part of our panel on the Zoom for that purpose. Are there any questions or comments on the financial statements and reports of the directors and the auditors for the year ended 31st of March 2020? [Operator Instructions] Bear with us as we'll need some time to confirm that those who are asking questions are shareholders and proxyholders. So are there any questions? It doesn't look like there are any questions. As there are no further questions, we'll now move to Item 2. Given that this item relates to my reelection as a Director, Mr. Grant Murdoch, the Chair of the Audit, Risk and Compliance Committee, will chair this item of business. Grant, can I hand it over to you?

Thanks, Steve. Item 2 is the reelection of Steven Sargent. Having been reappointed as a Director of the company at the AGM in 2017... [Technical Difficulty]

We've lost him.

Details of Steve's experience are set out in the annual report and the notice of meeting, so I'll not repeat those details. The Board, with Steve abstaining, supports Mr. Steve's reelection as a Nonexecutive Director. I'll now hand back to Steve to briefly address you.

Thanks, Grant. This afternoon, I am seeking your support for reelection as an Independent Nonexecutive Director of our company. I joined the OFX Board in August 2016 and I've been Chairman since November 2016. I also serve on the Board of Origin Energy Limited and on the Board of Nanosonics Limited. The experience I bring to OFX has been gained from 41 years of extensive global business operating experience, having led businesses on 4 continents primarily in the financial services industry but also across energy, health care, mining, defense and aviation industries. The skills I bring to OFX are strong business operational leadership with a deep understanding of how to drive a customer-centered organization effectively and officially. I bring strong people leadership skills on how to ensure our people are engaged, aligned and inspired at working at OFX. I bring a deep understanding of international markets and their interplay on OFX's complex operations. Finally, my work as a public company director has provided me with good insight into excellent governance practices, which I put into effect at OFX. The industry within which OFX operates is experiencing turbulent and rapid change. This is both exciting and challenging. I'm encouraged by how OFX is navigating these turbulent times. And I'm energized and committed to representing you in helping guide OFX forward. Finally, while I am an active Director, I do have ample time to dedicate to my OFX commitments. Thank you for the opportunity to address you for my reelection. With your support, I would be honored to work with my Board colleagues and with our management team to create ongoing value for our shareholders, our customers, our employees and our communities. Thank you very much.

Thanks, Steve. Are there any comments or questions concerning Steve's reelection? Let us pause to see if any come through the Q&A. I haven't received it. I can't see any questions. So before I put the resolution to the meeting, I'll advise you of the proxy votes. The proxy votes received are as follows: for, 99.25%; against, 0.56%; and abstaining, 709,394. Open proxies of 0.19% in favor of the chair of meeting at the time of the meeting will be voted in favor of the resolution. Thank you. We now move to Item 3, and I'll hand to Steve to continue to chair the meeting.

Thanks, Grant. I appreciate that. Item 3 is the reelection of Grant Murdoch. Having been reappointed as a Director of the company at the AGM in 2017, Mr. Murdoch is retiring in accordance with Article 47(a) of the company's constitution and is standing for reelection. Details of Grant's experience are set out in the annual report and the notice of meeting, so I will not repeat those details here. The Board, with Grant Murdoch abstaining, supports Mr. Murdoch's reelection as a Nonexecutive Director. I'll hand back over to Grant to address you briefly. Grant?

Thanks, Steve, and good afternoon, again. Today, I'm seeking your support for reelection as an Independent Nonexecutive Director of our company. I joined the OFX Board on listing in 2013 and have been Chairman of the Audit and Risk Committee since then. I also serve on the Board of Lynas Corporation Limited, where I chair the Audit and Risk committee. I have recently rotated off-listed companies ALS and Redbubble, where I also chaired their Audit and Risk committees. And I've recently been a Director of QIC, where I chair its Audit and Risk Committee again. I'm also a member of the University of Queensland Senate and Chair their Audit and Risk Committee, it seems to be a habit, and a member of the Finance Committee. I'm an adjunct professor at the business economics and law faculty of that university. In addition, I'm a Director of UQ Holdings, which oversees the corporate undertakings of that university, including UniQuest. Currently, I'm also a member of the Queensland State Council of AICD. That's my directorship experience. Prior to becoming a full-time nonexecutive director in 2012 -- or '13, I had over 37 years in chartered accountancy experience. From 2004 to 2011, I led the corporate finance team for Ernst & Young and before that was an audit partner from 1980 to 2000 with Deloitte. Thank you for this opportunity to address you for my reelection. With your support, I'd be honored to work with Steve, the Board and Skander and the management team to create ongoing value for all our shareholders, our customers, our employees and our communities. Thank you.

Thanks, Grant. I can truly attest that Grant has been a tremendous contributor to the company overall, and we really value what he's done for this. I'll open it up to any questions. Are there any comments or questions concerning Grant Murdoch's reelection? It doesn't look like there's anything coming through. Before I put the resolution to the meeting, I will advise you of the proxy votes. The proxy votes received are as follows: for, 99.28%; against, 0.53%; abstained, 709,394. Open proxies in favor of the chair of the meeting at the time of the meeting will be voted in favor of the resolution. I'll now move to Item 4. Under the Corporations Act, listed companies are required to report as part of their directors' report and remuneration report. The remuneration report is included in OFX's annual report. The Corporations Act request companies to put shareholders a nonbinding vote to enable shareholders to voice their opinion on matters including in the remuneration report. Under the Corporations Act, the vote of this resolution is advisory only and does not bind the Board or the company. However, the Board will take the outcome of the vote into account when considering future remuneration policy for directors in KMP. Shareholders should note that if 25% or more of the votes cast on this resolution are against the adoption of the remuneration report, the first element of the Board spill provisions introduced in 2011, known generally as the 2-strikes rule, will be triggered. If the second strike occurs at the 2021 AGM next year, this would require a resolution on whether to hold a further meeting to spill the Board, a spill resolution to be put to shareholders at the 2021 AGM. A snapshot of OFX's remuneration outcomes for 2020 is set out on the current slide and in the remuneration report, so I will not repeat those details here. For the 2021 LTI, we retained the amended executive share plan as approved by shareholders in 2018 AGM and the performance metric is the absolute TSR CAGR and an EBITDA gateway. Although it is actually an FY '21 grant, our remuneration report also includes details of a retention grant of $110,000 to each executive, which I do want to explain in a minute. It's in the form of equity that vests 12 months after the grant date, which was June 2020. The grant of this equity to Skander Malcolm, the CEO and Managing Director, is subject to shareholder approval under Item 7 of this AGM. The 2019 -- sorry, in 2019, we also introduced a global employee share scheme to encourage greater share ownership across the company and to align employees at all levels with the shareholder experience in FY '20, 154,838 shares granted to 243 employees. Remuneration outcomes for KMP, the CEO and the CFO, are set out in the remuneration report and the notice of meeting, so I don't propose to go through this here. Before I open up with questions, I do want to provide some context to the stock grant of $110,000 to each executive. We have explained this to a couple of the proxy advisers who -- the ones we were able to have a meeting with. They voted for this recommendation. The rationale for this grant was based on the unsolicited approach we had from another company on another continent late last year. We received a bit for an acquisition of the company. At that point in time, if we -- the Board viewed it to be quite attractive and represented good value for our shareholders. As due diligence proceeded and we went through the transaction, we were advised and became very aware that the other company -- the combined company -- should the acquisitions have gone through, the combined company would be led by a significant majority of the executives of OFX. So it was a company from a different continent, but it would have been run out of Australia mostly by our executives. When -- part of the approval process had the transaction closed would be that we need to get regulatory approval of the change in ownership across 55 jurisdictions. At the time, we believe that to be -- to take around 6 to 9 months. And so it was critical to maintaining shareholder value in that transaction that our executives were aligned and intended to getting that transaction done. And so we sought the advice of some remuneration consultants. And the advice that the Board agreed with was to provide a simple share grant that the executives got, which vests in 12 months. All executives got exactly the same amount. That was what the team wanted. And so when we had made that commitment in the middle of March, we and the other side agreed that the transaction was not to proceed. And so it made more sense at that point in time given a lot of the difficulties going on, that it did not make sense to try and proceed. We had already made the commitment to our executives. So the Board felt that we should follow through, also giving -- recognizing the attraction our management team has to some of these other companies in the market. So that is why the grant was given. Before I put the resolution to the meeting, I will advise -- or sorry, are there any other questions? Are there any questions?

No new questions.

No new questions? Before I put the resolution to the meeting, I will advise you of the proxy votes. The votes received as follows: for, 75.05%; against, 24.75%; abstained, 717,025. Open proxies in favor of the chair of the meeting at the time of the meeting will be voted in favor of this resolution. We now move to Item #5. Item 5 is the issue of shares and loan to the CEO and Managing Director under the executive share plan. This is the long-term incentive plan. Item 5 contains the long-term incentive grant for full year '21 to the CEO and Managing Director, Skander Malcolm. This grant includes the issuance of ordinary shares and a loan to Mr. Malcolm to assist him to acquire these shares under the terms of the amended executive share plan as approved by shareholders at the 2018 AGM. The executive share plan provides for immediate share ownership, linking a significant proportion to Mr. Malcolm's at risk remuneration to ongoing returns to shareholders over the period of the loan. Details regarding Mr. Malcolm's proposed FY '21 grant are set out in the current slide and in the detail in the notice of meeting, so I will not repeat those here. The performance metrics have been changed from FY '20 to include 2 tranches of shares with separate metrics for loan forgiveness, the first being absolute TSR CAGR, and the second thing the underlying EBITDA per share. Are there any comments or questions concerning the issue of shares to Mr. Malcolm and the provision of a loan to assist him to acquire the shares under the amended OFX share price?

We've got a question for our auditor.

So is this for Liz?

Yes. So Liz, we've got a question for you as our auditor, from [ Wayne Arthur ].

The question I have will be for general discussion. It's not about this specific item, okay?

Okay. Fine. So we'll come back to that. Thanks, [ Wayne ]. Thank you. Appreciate it. So if there's -- so I'll put the resolution to the meeting. I will -- before I put the resolution to the meeting, I'll advise you of the proxy votes. The proxy votes received are as follows: for, 99.13%; against, 0.68%; abstained, 754,220. Open proxies in favor of the chair of the meeting at the time of the meeting will be voted in favor of the resolution. I'll now move to Item 6, issuance of performance rights to CEO and Managing Director under the global equity plan, the short-term incentive plan. Item 6 concerns the proposed issuance of performance rights to CEO and Managing Director, Skander Malcolm, to reflect Mr. Malcolm's achievement of STI for FY '20. This issuance of securities under the OFX's STI plan will be completed in accordance with the global equity plan, which was approved by shareholders at the 2018 AGM. The 2020 company performance measures were discussed under Item 4 and are set out in detail in the remuneration report and the notice of meeting. Mr. Malcolm was also assessed against individual performance measures, the details of which are set out in the remuneration report and notice of meeting. Mr. Malcolm's STI payment is settled in 50% in cash and the remaining 50% subject to shareholder approval, deferred equity to be delivered in performance rights to vest 1 year after the issuance with a holding lock applied for a further year after vesting. Mr. Malcolm's FY '21 STI -- FY '20 STI target was $782,611 and his STI achievement, as assessed by the Board, was 58%. This was calculated based on a 53% funding from the company performance measures and an individual performance of Exceeds Expectations. Details regarding the calculation of Mr. Malcolm's performance rights are set out in the current slide and in the notice of meeting, so I won't repeat those details here. Are there any comments or questions concerning the issue of performance rights of Mr. Malcolm under the global equity plan?

We don't have any questions.

We don't have any further questions? Before I put the resolution to the meeting, I will advise you of the proxy votes. The proxy votes received are as follows: 99.17%, for; 0.63%, against; abstained, 751,870. Open proxies in favor of the chair of the meeting at the time of the meeting will be voted in favor of the resolution. We now move to the final item. Item 7, issuance of the shares to CEO and Managing Director under the global equity plan, concerns the issuance of shares to the CEO and Managing Director, Skander Malcolm, under the global equity plan as approved by shareholders at the 2018 AGM. This is a special grant of shares to Mr. Malcolm that is the same as the grant made to all other key executives of the company on the 9th of June 2020. It is consistent with the commitment made by the Board as part of unsolicited M&A proposal, which the company was considering over the closing months of 2029 (sic) [ 2019 ] and early 2020 in recognition of the fact that the acquisition of the company was conditional on the continuity of key executives, including Mr. Malcolm, and could take up to 12 months to complete to get the various regulatory approvals. This grant of shares to Mr. Malcolm will not have a dilutive impact on shareholders as it does not require the issue of new shares. Rather, the shares that will be granted to Mr. Malcolm were issued subject to vesting conditions on 22nd of September 2017, pursuant to the OFX Group Limited executive share plan. Those shares did not vest and were forfeited on the 7th of June 2020 in accordance with the terms of the Executive Share plan. Details of this proposed grant of shares to Mr. Malcolm under the global equity plan are set out in the current slide and in the detail in the notice of meeting. I will not repeat the details here. Are there any comments or questions concerning the issue of the shares to Mr. Malcolm under the global equity plan?

We don't have any questions.

We don't have any questions? Before I put the resolution to the meeting, I will advise you of the proxy votes. The proxy notes received as follows: 84.4%, for; 15.4%, against; 754,220. Open proxies in favor of the chair of the meeting at the time of the meeting will be voted in favor of the resolution. That concludes the formal business of the meeting. I now invite shareholders who may have questions or comments that have not already been addressed. So maybe we can ask [ Wayne ] to...

The first question that we've received is from [ Kevin Daly ]. And his question is that our Asian revenue results were quite poor, what's the problem there. Back in April of last year, after a good review of our Asian business, we decided to pivot our strategy. Up until that point, we had taken onboard a lot of fast-growing clients, particularly in our online sellers business, and the margins that we were getting were not equivalent to the margins we were getting in our online sellers businesses in other parts of the world. On top of that, we found that for doing a detailed analysis of the opportunities in our corporate business as well as our consumer business, there were better opportunities for us to pivot our focus elsewhere. So that's what we did. Since then, of course, apart from exiting the lower-margin business, Asia has really, as Steve laid out, been probably one of the toughest environments. I mean, obviously, prior to COVID-19, in Hong Kong, we -- that team had to manage through the riots and the ongoing uncertainty there. And our Singapore office obviously is open and it's doing very well, but most of our Asian revenue comes from the Hong Kong business. So those are the reasons why our Asian business has contracted. We put in place a new leadership team. We're seeing good growth in our consumer segment. Our online sellers business has still got work to do to turn around to get to where we like it. Our corporate business is stronger than it was. And so we still see the Asian business has been incredibly important to the global nature of OFX. We've got a stronger team, and we expect to see improved performance out of Asia over the next 12 months. So the next question is from [ Wayne ]. And [ Wayne ], that question is how is the application for the Irish money license going. And the answer to that is it's well and truly underway. Our team over in the U.K. have been sourcing candidates, and we have some very strong candidates. I interviewed 2 candidates in the last 7 days to head up that operation. And indeed, on Wednesday night, I've got another call with the CBI to continue that process. Naturally, the CBI is taking a very thorough look at the organization, and we welcome that. It's very important that any regulator who's looking to support any kind of cross-border payments company on Europe -- in Europe is a well-run, soundly managed, strongly governed business. And therefore, the regulator is taking appropriate steps to complete due diligence on us, and we're moving forward on that basis.

It's [ Wayne Arthur from Aneros Valuation ]. Can you hear me okay?

We can, [ Wayne ]. Yes.

This is my question to the auditor. When I read the profit and loss statement, the figure that really stood out for me was in the expense items of bad and doubtful debts. I won't ask the auditor to explain why the company has bad and doubtful debts. But really, I want to ask this: When you're carrying out the audit, did you investigate why bad and doubtful debts had risen fourfold over the year? Was there a breakdown in processes and procedures? And were the bad and doubtful debts confined to one location or one office?

Yes. Look -- thank you for the question, [ Wayne ], and I can confirm that, through the conduct of the audit, bad and doubtful debt is a balance that we certainly do focus on. One of the things that we obviously focus on is the receivable balance on the receivables -- client receivable balance on the balance sheet. And we do work to ensure that there's appropriate provisioning against any receivables and to the extent that any debt become bad that they're written off in a timely manner. We also have reviewed the company's accounting policies and treatments around when bad debts are written off. And I can confirm in the conduct of the audit that we're comfortable that, that policy was followed and that we do that work across all locations. So we audit the group. And therefore, we do look at the provisioning across all the regions. So happy to take any sort of further questions, but it is certainly something that we do focus on in audit, subject to the materiality in the context of the overall annual report.

And maybe [ Wayne ], if you're interested, I mean I can add to Liz' full review on it that to your point, the vast majority of that increase is related to our North American region and we relate it actually to a small proportion of transactions. It was essentially identity takeover in our corporate business. Unfortunately, [ Wayne ], in the U.S. banking system, it's what we would call a pull system. So when you want to book a transfer, we go in and pull money from your account in the form of a direct debit, whereas here in Australia or the U.K., you send us money and then we conduct a transfer. That's known as a push system. In these examples, identity fraud was perpetrated on some corporate accounts. We went in to pull the money, and then subsequently, the fraud was discovered. And that money was basically taken back after we've done the transfer, so that becomes our loss. Since then, we've implemented a number of controls, which have resulted in a significantly improved performance in the bad and doubtful debt space, including, as Steve mentioned, voice biometrics. We've implemented identity software, which allows us to physically see applicants. We've also worked with our banks on various rules. And it's one of those things that we are very, very vigilant about. I'd also add that the North American team has been very focused as a team, not just as a risk organization, on improving our performance over time, and that's what we're seeing.

So since the 1st of April, have bad and doubtful debts come down significantly?

Yes.

Then a question from [ Raymond Wheeler ], just in...

Question from [ Raymond Wheeler ]. Did your company take on $20 million of debt? And if so, why? The answer to that is no. This next question here from, I don't know, [ Shwara ]?

Yes. [indiscernible]

Okay. So there's a question from [ Shwara ] about our enterprise pipeline and what portion of that pipeline has moved into a more mature state. As I mentioned in my remarks, the enterprise pipeline is better than it's ever been in terms of the quality of the prospects in the pipeline. And to your question, [ Shwara ], there have also been prospects that have moved into a more mature stage of that pipeline. Naturally, these items are commercially sensitive, so I can't comment on individual prospects, but overall, the pipeline is healthier and more advanced.

Is there any other question?

No more questions.

No more questions? Okay. So if there are no more questions, I'm about to close the meeting. Before doing so, I remind shareholders and proxyholders to complete their voting cards immediately. And if you haven't already done so, once completed, press the submit button at the bottom of the screen. As advised earlier, the results of the polls will be released to the ASX as soon as these are available. Is there anyone who has not completed and submitted their voting card that wishes to do so? The polls are now closed. Thank you for your attendance today and for your forbearance through this different process we've had to endure and also for your support throughout the year. We look forward to your continued support in the year ahead. The meeting is now closed. Thank you very much.