PointsBet Holdings Limited (PBH) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome to the PointsBet Holdings Limited 2022 Annual General Meeting. My name is Brett Paton, and I'm your Chair. I'm delighted to be able to extend a warm welcome in person this year to our shareholders who have joined us here today. It's been a couple of years. My I now request that all mobile phones be turned off. Thank you. Turning to the agenda for today's meeting. I note that it is now past 11 a.m., and this is a properly constituted meeting. As a quorum for a general meeting is present, I formally declare that 2022 Annual General Meeting open. The Notice of Meeting has previously been distributed and will be taken as read. As set out in the Notice of Meeting, the formal proceedings comprise 6 resolutions. All resolutions will be decided by poll. Let me now introduce the people who are with me this morning. To my right is Sam Swanell, the Chief Executive Officer and Managing Director. Next to Sam is Becky Harris, member of the Remuneration and Nominations Committee and a member of the Audit, Risk and Compliance Committee. Next to Becky is Peter McCluskey, Chair of Audit, Risk and Compliance and member of the Remuneration and Nominations Committee. Next to Peter is Manjit Gombra Singh, during the year he managed to transition from Executive Director to a Non-Executive Director. Next to Manjit is Andrew Mellor. Andrew is the Chief -- Group Chief Financial Officer. On my left is Tony Symons, Chair of the Remuneration and Nominations Committee and a member of the Audit, Risk and Compliance Committee. Next to Tony is Kosha Gada, member of the Audit, Risk and Compliance Committee. Next to Kosha is Andrew Hensher, Group General Counsel and Company Secretary. We also welcome Billy Chan and his colleagues from RSM, the company's auditors. Billy, you might just put your hand up. Thanks. Before I move to the resolutions to be considered today, together with Sam Swanell, I would like to provide a brief commentary on the strategy, operations and financial results of the company. A lot has happened since I addressed you last year, and it's pleasing to reflect on some of the key milestones achieved by the company over the last 12 months. During the past 12 months, the company continued to capitalize on its expanding U.S. presence by scaling its operations through key hires across all departments as well as rolling out online sports betting operations in 5 U.S. states, West Virginia, Virginia, New York, Pennsylvania and Louisiana; plus iGaming operations in the states of New Jersey, West Virginia and Pennsylvania; together with sports betting and iGaming operations in Ontario, Canada. We currently have online sports book operations in Australia, 12 U.S. states plus Ontario, Canada and live with iGaming in 4 states plus Ontario. The U.S. sports -- saw sports betting gross win growth of 66% to $158 million with sports betting net win also increasing by 81% to $74.1 million. US iGaming net win grew 1,247% to $19.7 million. In Australia, the company achieved year-on-year net revenue growth of 30% with the Australian trading business achieving its third year of annual EBITDA positivity. This strong performance demonstrates PointsBet's capability to disrupt and grow market share in an advanced market, where we compete successfully against global groups such as Flutter, Entain and Bet365. Following the completion of the successful capital raise in August 2021, where we raised $400 million, the strategic -- and a strategic placement of $94.2 million to SIG Sports Investments Corp in June 2022, the company is adequately funded to execute our strategy in the near term with a corporate cash balance at 30 June of $472.7 million. I would now like to make a few comments on our global commitment to responsible gambling. PointsBet endorses the principle of informed choice, which is aimed at empowering customers to make informed decisions and exercise choices regarding the gambling expenditure. PointsBet commitment to responsible gambling is demonstrated through its wide range of responsible gambling initiatives and tools. Responsible gambling initiatives will continue to remain central to our organization's sustainability commitment, and I encourage shareholders to read our inaugural sustainability report, which was released last month and is available on the company's website. To highlight a couple of key statistics over the last 12 months, we had 126,000 global unique views of our responsible gambling page and 1,700 average global impressions per RSG social media postings. Country-specific strategies are also in place to meet the unique needs of our global customers and engage with relevant responsible gambling bodies. In Australia, PointsBet contributed to the development of a national safer gambling media campaign with Responsible Wagering Australia, the independent peak body for Australian-licensed wagering service providers. In the U.S., PointsBet partnered with the National Council on Problem Gambling on a research initiative which gathers feedback from regulators, industry stakeholders and safer gambling advocates to inform responsible gambling decision making. In Canada, PointsBet developed a socially responsible campaign with brand ambassadors Trailer Park Boys to promote gambling as a form of entertainment in an authentically Canadian way. Ultimately, we believe this is a very important part for our long-term sustainability of the industry, and we take our obligations very seriously. Corporate governance. The Board of PointsBet Holdings considers good corporate governance a priority. It has adopted policies and practices to ensure the Board remains effective and has the composition to adequately discharge its responsibilities and duties and maintain best practice governance. A review of these documents was undertaken during the year to ensure we stay compliant with the ever-changing governance framework. During the year, there was a particular focus on the area of cybersecurity and data protection, as well as know your customers and anti-money laundering policies and procedures in each and every one of our jurisdictions. A full summary of our corporate governance activities and policies are again available on our website. Just want to talk about the team for a minute. We are led by a great CEO, Sam Swanell, supported by his executive leadership team. They've done a tremendous job in leading the business through a period of substantial change in the last 12 months. In addition, our highly talented employees across the global footprint are a key asset, and results we have been able to achieve are testament to their dedication, commitment, passion and hard work. So on behalf of the Board, I would like to thank all of our team for delivering on the opportunities we saw in financial year '22 and positioning the business for continued growth in financial year '23 and beyond. I would also like to thank my fellow directors for their support over a very busy past 12 months as we executed on our strategy and undertook a significant capital raise to ensure the company is well positioned to execute on the opportunities here and overseas. I would like to thank you, our shareholders, for your support and vote of confidence in the business and its team. We look forward to developing -- delivering on the opportunities we see ahead and moving the business forward and growing the shareholder value. It is now my pleasure to introduce Sam Swanell, Group CEO and Managing Director, to provide further commentary on the financial year. Thank you.

Thanks, Brett. Good morning. This is Sam Swanell, Group CEO and Managing Director. And I would also like to thank you all for attending the 2022 AGM of PointsBet. Since inception, PointsBet's Board and management have been working towards establishing the key building blocks that have put us in the strong position we're in today to pursue the expansion of the North American sports betting and iGaming opportunity. These key building blocks include establishing a foundational Australian business, a global market-leading execution team, acquiring licenses in what is already 14 live sports betting jurisdictions in North America for PointsBet with more to come, developing our modern technology stack to deliver an outstanding North American customized product focused on the highest turnover part of the market, live betting on U.S. sports, and establishing deep key strategic relationships with the likes of NBC Sports, Susquehanna and the Stronach Group. Our team, licenses, technology, product, strategic relationships and most importantly, experience and learnings means we have built material incumbency and can rightfully have confidence in our ability to grow revenues from our current position as the sixth largest online sports betting operator in the U.S. according to Eilers & Krejcik's October report. From a capability perspective, PointsBet is executing at a level far superior to 12 or 24 months ago. Our global platform powers all jurisdictions efficiently, maximizing the benefits of global synergies in areas such as technology, product, trading and service. This is complemented by local focus in each market to ensure we delight our target customers. Earlier this month, we announced a pivotal moment in the evolution of our U.S. strategy through a partnership with 1/ST Technology, a business division of the Stronach Group, North America's dominant Thoroughbred horse racing organization. Under the partnership, 1/ST Technology will provide market-leading horse racing betting products and content solutions to be fully integrated within the PointsBet Sportsbook app. The partnership will also deliver a PointsBet branded stand-alone ADW offering in states outside of those in which the company currently offers sports betting. Utilizing the licenses held by our wholly owned subsidiary, BetPTC, PointsBet will own and operate the ADW business with the ownership of customer data remaining with PointsBet. It is anticipated that the PointsBet branded ADW solution will launch in early 2023, delivering PointsBet an online betting presence in over 30 U.S. states, including jurisdictions in which we do not currently offer sports betting. 1/ST Technology are world leaders in pari-mutuel tote and ADW technologies and hold some of the most recognized brands in the industry, including the legendary Preakness Stakes and the world-renowned Pegasus World Cup. With our mature market Australian racing expertise and now an outstanding strategic partner in 1/ST Technology providing us with a market-leading portfolio of racing products and services, we can introduce new and existing customers to a dynamic and interactive PointsBet branded horse racing betting experience. The 2022 financial year represented another period of progress for PointsBet. During the period, we saw improvements in relation to many of our core financial metrics compared to 2021, and we also made great strides in terms of expanding our North American total addressable market. All the following figures are in Australian dollars unless otherwise stated. The group handled $5 billion in turnover, an increase of 32% on the prior year. Sports betting gross win was up 41% to $497.8 million, and total net win was up 48% and at $309.4 million. For the reporting period, PointsBet reported net revenue of $296.5 million, a growth of 52% versus the PCP. Gross profit of $121.6 million represented growth of 39% over the PCP. The group sales and marketing expense was $236.8 million for the year, with Australia accounting for $61.5 million, the U.S. accounting for [ AUD 162.6 million ] and Canada accounting for $12.8 million. This increased marketing investment assisted in the delivery of over 513,000 group cash active clients as at 30 June 2022. The group's normalized EBITDA loss was $243.6 million as the company continued to invest in the business to build scale in North America and within the technology department as well as growing our U.S. client base across our operational states. We will continue to take a disciplined and focused approach to cost management and always remain nimble and able to make relevant adjustments to expenditure where we determine it to be appropriate. The Australian Trading business recorded turnover in excess of $2.5 billion and net win of $215.4 million, up 30% from the prior year. We were also pleased that the Australian business achieved its third year of EBITDA profitability, recording a statutory EBITDA of $7.7 million. During FY '22, the U.S. business operated in 10 U.S. states, adding West Virginia, Virginia, New York and Pennsylvania during the year. The U.S. trading business recorded sports betting turnover just below $2.5 million and total net win of $93.9 million, up 122% from the prior year. In Canada, we completed our first full quarter of operations in Ontario. Total net win came in at $200,000. It should be noted that the Ontario market structure is well set up commercially for operators. Not being tethered to a casino, racetrack or retail footprint to operate, that is, no partner revenue share arrangements, a nominal license fee and an effective tax rate of 18% make the overall future economics favorable as our platform attains further scale. There's no doubt that a key driver of our progress to date has been the strength and depth of talent that we have acquired across all areas of the company. Key recent hires include Jerry Bowskill, Chief Technology Officer, previously CTO of both The Stars Group and Scientific Games Interactive; Andrew Catterall, Australian CEO, previously CEO of racing.com and having held senior leadership positions at Racing Victoria and the AFL; Ed Hartman, Chief Strategy Officer, previously Senior Vice President, Corporate Development at Fox Corporation and Senior Vice President, Mergers and Acquisitions at News Corp. It should be noted that we are reaching scale now. We expect full-time employees to grow only moderately with the majority of additional staff added to products and technology. Our mission remains to create the best live betting experience for our North American customers, and we continue to progress in a positive direction with live betting expected to represent 75% of all turnover in the U.S. within 3 years. Odds Factory is our proprietary trading platform which houses our pricing algorithms. Owning the platform and the experience for these sports will allow us to curate an experience around what our customer wants. Odds Factory is a modern cloud-based technology which allows us the ability to move faster than our competitors who are either restricted by third-party providers or legacy technology that prevents the flexibility required to move fast. When we deliver our Odds Factory pricing algorithms to a particular sport, we unlock capabilities to deliver a full feature set to the customer, which includes market-leading set of betting and player props including great breadth of offering and more accurate pricing; single-game parlay or multis, both pre-match and live in play; lightning bets, being the ability to bet on which team will score next or other similar micro betting contingencies; and cash-out availability on all markets. Our strategy is to set the foundations in place by launching Odds Factory for the 6 core U.S. sports. To date, we have launched NFL, NBA, College Basketball and MLB, with NHL during Q3 and College Football in Q4 FY '23. Once Odds Factory is launched for a sport, we then continuously iterate on this experience to drive more player engagement and delighting our target customer. For this NFL season, we have built from a strong foundation and continue to further enhance the overall UX and specifically focus on our lighting bet experience. This is providing our customers with market-leading live betting experience, delighting them with our engaging and easy-to-use product. Excellence in live betting driven by Odds factory is critical to attract and retain the target segment of our U.S. business. The target client bets multiple times per week, the majority of which is placed on live betting markets and across a range of North American and international sports. And they are more focused on the quality of product, features and overall speed and ease of use than the average client. To conclude, it's clear that the North American market will deliver the vast majority of regulated global gaming growth over the next decade. We have established ourselves as a global gaming operator which has built material incumbency in both North America and Australia. We've now enhanced our Sportsbook product, scaled our team and possess the in-house technology and market access to successfully compete in North America. We've developed best-in-class partnerships which help accelerate our trajectory to take advantage of this enormous opportunity. As we have previously said, technology and product is our right to win with the execution demands of the growing in-play opportunity ultimately determining those who will simply partake and those who will thrive. Further, to compete at scale, operators will also require operations in hard-to-access states such as New York, Illinois and Pennsylvania, with PointsBet currently live in each of these jurisdictions. We have a best-in-class global team that understands what is required to deliver success in FY '23 and the years to come as the North American total addressable market continues to rapidly expand. I'll now hand back to the Chairman.

Thank you, Sam. Before I go through some of the formal procedures, I'd just like to let you know that as we did in-person meeting 3 years ago, I'd like everyone to feel really relaxed and comfortable to ask as many questions at the end of the period to Sam Swanell and the executive team. It's not often that you can ask broad-based questions on the business, how it's going. Treat is as sort of like an analytical session. Pretend you're an analyst if you're not and if you are an analyst, we'd hope to get some really penetrating questions. So that -- we'll do that at the end of the formal proceedings. There are a number of formal matters I wish to draw to your attention. This is a shareholders' meeting only. Only company shareholders can vote. Their attorneys can vote. The proxies and authorized company representatives are entitled to vote and speak at this meeting. Cards have been issued to attendees of this meeting. If you're holding a blue card, you can vote. If you are with the yellow card, you can certainly ask questions but not entitled to vote. To ensure fair and equal treatment of all shareholders and accurate results, I'm going to call a poll on all resolutions being put to the shareholders at this meeting. I now declare the poll open for all resolutions so that shareholders who cannot stay for the full meeting can vote at any time. The poll will be conducted in accordance with the directions set out in the document directors -- directions as to the manner of taking a poll, which I now produce and table and sign for the purpose of identification. Therefore, for those shareholders who would like to leave the meeting earlier today, complete blue voting cards. You can do so at any time during the meeting, place in the ballot box to be held by Computershare staff at the door when you're leaving the meeting. If you're uncertain about any of the voting procedures, please raise your hand, and Computershare staff will be pleased to assist you. I'm holding open proxies in my capacity as Chairman, and it's my intention to vote all available proxies in favor of each of the 6 resolutions. Financial statements. The first item of business in the Notice of Meeting is to receive and consider the financial statements for the 12 months ending June 2022 and reports of the directors and auditor. Please note that no vote is required on this item of business. As mentioned previously, Mr. Chan, a partner of RSM, is with us today. Questions relevant to the conduct of the audit, the preparation and consent of the independent audit report, the accounting policies adopted by the company in relation to the preparation of the accounts and their independence in relation to the conduct of the audit may be directed to him through me as Chairman. Any questions in relation to director and executive remuneration policies will be considered when we come to the item of business covenant in the adoption of the remuneration report. Before I go any further, are there any questions regarding procedures? Yes.

[indiscernible]

Sorry, could you just speak up a little louder?

[indiscernible]

We do have -- I mentioned earlier, we do have a lot of tools available to us. The various forms of self-exclusion would be one, where the customer chooses to self-exclude themselves from betting. The other would be the various tools where I might actually ask Andrew Hensher to comment because, as Chief Legal Officer, he's in touch with the tools such as betting styles, betting approach, age of the person, signals that get thrown up by -- red signals, amber signals. So Andrew?

Yes. Thanks, Chair. So yes, we have a variety of different functions that allow us to ensure that people are gambling within their means. As Brett mentioned, we got some individual self-exclusion, things that people can go online and set deposit limits or even exclude themselves. We also have what we call red flag alerts and behaviors in all of our different territories. So we've got a compliance and responsible gambling team that monitor those on a real-time basis. And if people seem to be betting outside of their means in terms of either increasing volume or size of betting, that gets flagged to responsible gambling officer, which will contact that individual correctly -- directly, I should say. They will assess whether or not that individual is betting within their means. And we also have the right to exclude them from betting moving forward. The National Consumer Protection Framework has come into force as well in all states and territories. And very soon, there's going to be a national self-exclusion register, and so there will be obligations on operators such as PointsBet to actually provide names forward to those -- to that register to ensure that people who do have gambling problems can't then go and gamble with other operators as well. So we certainly take responsible gambling extremely seriously. And we also put out our sustainability report earlier last month, and that also sets out some of the procedures that we follow from an RSG perspective.

So I hope that helps. We'll probably leave -- unless it's specific to procedures, we'll probably leave Q&A to each of the resolutions in turn. Resolution 1 is a reelection of Brett Paton, myself. The resolution summary of the votes received before the meeting now appear on the screen. As the next item of business relates to my reappointment, I will hand over the meeting to the Chair of the Remuneration and Nominations Committee, Tony Symons, for this resolution. However, just -- we're going to ask each of the directors to give a short sort of appraisal or refresh of their roles and responsibilities, their credentials and what they seek to do to help shareholders. So from my perspective, actually some of my roles have basically been helping guide the company to a skill-based construction of the Board with diversity of experience, skills, gender and culture; further evolve strong governance and culture policies; providing real-time support to CEO and executive members when required; through the Nomination and Rem, working with the CEO on key hires, which you've heard have been quite substantial in the last 12 months; helping guide the company on capital formation to support the approved growth strategies; providing the environment for broad Board participation in strategy setting and goal setting; helping introduce the Board mentoring program. It's quite unique. Each of our Board members on this podium here are mentoring 1 or 2 executives within the organization to help further their career development but also to help lines of communication back to the Board. We think it's a very healthy way for the Board to independently hear what's going on within the business model. So into the future, next year and the year up until I'm reelected, one of the key things I'll be doing is working with Sam, our CEO, on key strategic initiatives to continually strengthen our North American operations and opportunities, which I have asked working with the Board and CEO to evaluate selective Board or advisory roles in North America to complement our strong footprint there. I'll leave the podium and hand over to Tony.

Thank you, Brett. This item of business relates to the reelection of Brett Paton as a director of PointsBet Holdings Limited. The Board considers that Mr. Paton is a non-independent director by virtue of his ownership in the company. However, the Board considers that Mr. Paton is the most appropriate person to lead the Board because of his extensive experience in the finance industry and wagering industry, his experience acting as Director of listed wagering companies and his deep capital markets expertise. The Board of Directors, with Brett abstaining, recommends that shareholders vote in favor of resolution 1. The resolution is now open for discussion and questions. Questions or comments should be directed to me. As noted at the start of formal business, a poll has been declared open on this item of business. Is there anyone who wishes to speak on this resolution?

[indiscernible] opportunity to discuss the financial [indiscernible].

There will be a question time at the end of the formal business, as Brett explained.

[indiscernible]

Correct.

[indiscernible]

Okay. Thank you. Yes?

[indiscernible] chief executive and the operation in the U.S.A. and [indiscernible]. I read in a report probably a couple of months ago, there are people [indiscernible] in the sense that the chief executive of U.S.A. operations [indiscernible] I couldn't understand why is that [indiscernible] certainly means the franchise business stays here. But you might consider the enormous [indiscernible] in USA, and it's not reflected in the growth [indiscernible] 122% growth. I mean [indiscernible]. I'm concerned about this [indiscernible]. Can Brett comment on this particular [indiscernible]?

Sure. Is this mic on?

Yes.

I think I know the article you referred to. It was written in Australian print media regurgitating a service that is provided called streaming, I think, something out of the United States, which is a body which is set up to discuss and comment disgruntled employees across American corporations. I think you were -- you mentioned in respect to institution. I suspect most of the people subscribe to that particular service are very active fund managers, who are happy to see any negatives brought out and might actually support their short positions. So I think respectable is perhaps overstating their position in society. As to the individual, young member of staff probably didn't realize that he was being entrapped into a conversation that led to that article. I think that's all I need to say on that, Sam. Is it?

Yes. I mean I think, again, we're trying to -- happy to answer sort of Q&A at the end of the resolutions. But just to comment quickly, our U.S. CEO is Johnny Aiken. Johnny has my full support in that role. We're obviously up against significant competition in the U.S. We've always not been naive to those challenges. Because the opportunity is so large, we know it's going to be a hard fought battle. But I don't think a sort of third-party or second-party article can be utilized for any opinion on Johnny's performance. You can rightfully quote the financials and the performance from that perspective. Obviously, our position is that he has our full faith. He's still in the role, and we're very happy with his performance. We're delivering on our vision from a product perspective. We've had to put ourselves in a place where we made an investment. If you want to compete in the North American market for the next 5 years, we have to spend some money to put in place those foundations. You need the licenses. You need the team. We needed to build the technology and the product. Yes, it's been expensive, and those expenses are in place. But as we've spoken about at our full year results call, it's now incumbent on us to use that baseline to grow U.S. revenues, and we're confident that we will. And okay, the 122% growth was off a low figure, but it's 122% growth. And if you look at what we've been doing PCP for the last couple of quarters, prior corresponding period, we're growing U.S. revenues. So I think we needed to make that investment. We've made the investment. We've got the capability. Our execution is recognized. We -- to back, I suppose, again, on the leadership of our U.S. CEO. Last year, we won Sportsbook operator of the Year in the U.S. market, and that's a reflection of an experts panel's opinion of our execution in that market. Obviously, it's clear we've come from a starting position that's further back than some of these established brands. FanDuel, MGM, these are brands that have had billions of dollars invested into the U.S. market. We knew that was going to be our hardest challenge to overcome. We need to invest marketing dollars as part of that foundational investment that we're making into that U.S. market. But our product is recognized, third-party validation, [indiscernible]. For the last 3 quarters, we've had a top 3 app in the U.S. market with FanDuel and DraftKings. Our execution is being recognized by third-party validation official sports betting partner of the year in North America. We need to take those foundational elements and turn it into financial success. We know that. That's our job now to grow revenue from this baseline that we've built, and we're confident that we will.

Thank you, Brett and Sam. Are there any further questions on resolution 2? If not, we'll move to the next item of business, and I'll hand back to Brett. Well done, Brett. Thank you.

Thanks, Tony. The Board of Directors, with Tony Symons abstaining, recommend that shareholders vote in favor of resolution 2. Resolution is now been for discussion and questions. Questions or comments should be addressed to me. As noted at the start of the formal business, a poll has been declared open on this particular item of business. Is there anyone who wishes to speak to this resolution 2? Being no questions, can we move to the next item of business, which is resolution 3? The resolution and summary of the votes received before the meeting now appear on the screen. The item of business relates to the reelection of Peter McCluskey as a director of PointsBet Holdings Limited. Peter McCluskey was appointed in November 2017 as the Chair of the Audit, Risk and Compliance Committee and a member of the Remuneration and Nominations Committee. I'll now invite Peter to address the shareholders.

Good morning, and welcome. My name is Peter McCluskey, and I'm pleased to be seeking reelection today. As Brett said, I've been a director of PointsBet since 2017 and, subsequent to the IPO, became Chair of the Audit, Risk and Compliance Committee. I've also been a member of the [indiscernible] committee for the IPO and all subsequent capital raises. I'm a Chartered Accountant. Originally, I was an auditor for a short period of time. But for the past 35 years, I've worked in the area of -- as a restructuring professional with a particular focus on large banking syndicate work. That's where I met Brett. We were actively involved in the Pasminco administration, which was ultimately a successful IPO into a company called Zinifex. So we go back a fair way. In 2019, I became a special adviser of KPMG in the restructuring area. I'm still currently there working, albeit on a very part-time basis. It's been a pleasure to represent you, our shareholders, since my appointment. And I'm looking forward to continuing to do so as we move into the next phase of the company's growth. I believe the management team is of the highest quality, and it's been a pleasure to be part of a diverse, cohesive and talented Board. The growth of the business has been extraordinary, and it has been rewarding to be part of it. And finally, I want to thank you for your trust you've placed in me and look forward to representing PointsBet moving forward. Thank you.

Thank you, Peter. The Board of Directors, with Peter abstaining, recommends that shareholders vote in favor of resolution 3. The resolution is now open for business and questions -- for discussion and questions. Questions or comments should be addressed to me. As noted at the start of the formal business, the poll has been declared open for this item of business. Is there anyone who wishes to speak to this resolution?

Quick question, Mr. Chair. [indiscernible] relatively low yesterday to the current environment. And it's more likely [indiscernible].

I'm happy to respond to that. Tony, Chair of Remuneration, can comment. In the lead up to the AGM, our company, like most public companies that are in the ASX 300 and 200, reach out and consult with proxy advisory firms. We have -- ASA has been helpful over the years, giving us some guidance, [indiscernible] is happy to -- [indiscernible] council superannuation, investors body of large super funds happy to give us guidance. So we've become very familiar with different processes. The other firms as you know, ISS and Glass Lewis, they've all got different ways of looking at a relatively young company. The -- without going to too much detail, we're fairly -- we've tried to engage with every one of those groups. We've been successful with most, unsuccessful with others in a sense that some of the proxy advisory firms choose not to contact the company. You'd be familiar with that. Their clients, obviously, the index funds and ETF funds, do not contact the company. They're mathematically driven. And accordingly, they have their boxes to tick. Now I'm a Non-Executive Director. I'm deemed to be nonindependent because of my holding in the company slightly over 5% in myself and my family. So that's why it's attracted a no vote from some of those proxy advisory firms. Tony's firm previously has moved on to a larger firm. The firm has been integrated. And his previous firm did quite a lot of legal work for us, again, young company reaching out to the people we trust and understand and understand us. His firm received remuneration, which has been fully disclosed accordingly by those proxy -- some proxy adviser firms. He was not deemed to be independent. So I think those numbers are quite mathematically explained by our knowledge of the voting intentions and directions by those groups. We're very fortunate that we do have some proxy advisory firms that look through the evolution of the company's development. We would expect going forward, we wouldn't have -- I mean, I'm not going to go and sell some shares just so I become under 5%. And I'll become -- I'm not going to compromise. But within reason, we'll take steps to continue to behave like a big company on the journey. Does that...

Yes, it does.

Yes. Thank you very much. One of the things I neglected was to ask Tony to actually -- refresh of his credentials [indiscernible] the Board past and future.

Yes. Thanks, Brett. I've been a Director of the company since 2016, well before the IPO in 2019. And as Brett mentioned, I'm also the Chair of the Remuneration and Nomination Committee and a member of the Audit, Risk and Compliance Committee. It's been quite a journey since 2016 and the evolution of the company to what it is today with over almost 1,000 employees, licenses in 12 U.S. states and Canada and over $5 billion of turnover is quite amazing and one that I've thoroughly enjoyed in being involved in. As Brett mentioned, I'm also a corporate lawyer and a partner at Mills Oakley, which is a national full-service law firm. Prior to that, I, as Brett mentioned, ran a firm called Clarendon Lawyers, which did quite a bit of work with the company in the early stages, well before the IPO and then including the IPO and the subsequent capital raises. I've practiced in the field of corporate law and mergers and acquisitions for the best part of 30 years, including a number of years at global firms, Herbert Smith Freehills early days in Australia and then another global firm, Linklaters in Hong Kong. So I've had a lot of experience in global mergers and acquisitions and capital raises, which I've hopefully brought to bear in my role at the company on the Board. As Peter mentioned, I agree that we've got a first-class Board and management team. I'm excited to work with them and I look forward to working with them in the years ahead. Thank you, Brett.

Thank you for all supporting those 3 director nominations. I'd like to move on to resolution 4, which is the ratification of prior issue of shares. The resolution and the summary of the votes received before the meeting now appear on the screen. As announced on the 20th of June 2020 -- 2022, the company issued 38,750,000 new shares to SIG Sports Investments Corp., which is a member of the Susquehanna International Group of Companies. Privately owned SIG is headquarter in Pennsylvania, U.S.A. and is one of the largest proprietorial financial trading firms in the world with additional business verticals encompassing derivatives markets making, institutional brokerage, private equity, sports analytics and structured capital. The company and their division Nellie Analytics Limited, is a member of SIG. They've entered into an agreement to scope and develop the terms of Nellie Analytics to provide sports analytics and quantitative modeling services to complement PointsBet's existing capabilities and accelerate the technology road map. The shares were issued pursuant to ASX listing rule 7.1. Resolution 4 seeks shareholder ratification pursuant to ASX Listing Rule 7.4 for the issue of shares issued under ASX Rule 7.1. The directors recommend that shareholders vote in favor of resolution 4. Are there any questions on that particular resolution? As there are no more questions, we can move to the next item of business. Resolution 5 and 6. As the next 2 items relate to executive remuneration, I'll ask Tony Symons, as Chair of the Rem and Nums Committee, to address shareholders as it relates to the company remuneration philosophy and resolutions 5 and 6 in particular. Tony?

Thank you, Brett. The company's philosophy is that executive remuneration should be aligned with shareholder interests by providing levels of fixed remuneration and at-risk pay sufficient to attract and retain individuals with the skills and experience required to build on and execute the company's business strategy. We aim to achieve this by ensuring at-risk remuneration is contingent on outcomes that grow and/or protect shareholder value and by aligning the interest of senior executives and shareholders by ensuring a suitable proportion of remuneration is received as a share-based payment. To ensure the company continues to attract, retain and motivate talented staff at a competitive cost, the company aims to align fixed remuneration to the median rate of the relevant market with consideration given to experience, qualifications, performance and other nonfinancial benefits. The Remuneration and Nominations Committee value shareholder feedback when forming the remuneration policy. And following engagement and feedback from shareholders and governance advisers, the company has established a new long-term incentive program structure effective 1 July 2022 for the CEO and his direct reports. The company's senior leadership is becoming more U.S.-based, and the business must increasingly attract and retain leaders in the U.S. and other markets with technology and global management skill sets. U.S. market practice, in particular, places a greater emphasis on time-based at-risk opportunity, and significant equity grants are more commonly used for talent attraction and retention in the U.S. The continued expansion of the company's business in the United States reinforces the need for the company's remuneration structures to evolve and take into account global pay philosophies particularly those in the technology and gaming sectors. The growth of competition in online sports betting and iGaming in North America has rapidly increased over the last 12 months with over 59 legal online sports books in operation in the United States. PointsBet staff at all levels and, in particular, senior staff are increasingly being targeted by competitors who are offering attractive salary and equity incentive packages to entice them to move. The next 12 to 36 months will be critical for the success of the company. Given the current global competitive environment for top technology and gaming executive talent, in particular, in the United States and Europe, the Board has determined to allocate 30% of Mr. Swanell's LTI opportunity in FY '23 by bringing forward FY '24 and FY '25 grants. It is important to note that there will not be any further equity grants to Mr. Swanell in FY '24 or FY '25. And the decision was made following consultation with remuneration advisers and aims to ensure that the Board's desired outcome of motivating and retaining Mr. Swanell over the next critical 36 months is achieved. The Board believes that it is in the best interest of shareholders to ensure that Mr. Swanell is committed to executing the next phase of the company's success. Further, to ensure that executive remuneration is linked to shareholder value while also taking into account U.S. market practice, the Board has determined that the vesting of Mr. Swanell's LTI will be conditional on the following 3 conditions: firstly, relative shareholder return compared to the peer comparator group and constituents of the ASX 300 Index excluding the top 20 companies by market cap, and that has an 80% weighting, and a peer group of online wagering and iGaming operators in North America and Europe with a 20% weighting; secondly, a path to profitability metric, measuring the reduction in global marketing expense as a percentage of revenue compared to FY '22; and thirdly, a time-based service condition weighted to the out-years of the performance period. A summary of the planned rules and the vesting conditions were set out in the Notice of Meeting. The directors, with Sam abstaining, recommend that shareholders vote in favor of resolution 5. Are there any questions on the company's remuneration practices in general or specifically in relation to resolutions 5 or 6? Yes?

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Okay.

So we do appreciate this is actually a third [indiscernible] geography structure. I note that the share price [indiscernible]. And in terms of market value [indiscernible] the fact that you're actually stricter [indiscernible], is there opportunity [indiscernible]. Share price is now $2. If you retain [indiscernible]?

Thank you for the questions. Just to reiterate on the questions, I don't know whether they can be heard online, so the first question, if I'm not wrong, was relative to the share price, in particular, how we're justifying the increases in remuneration in particular for Sam. The point that I'd make there is that we conducted a total review of our remuneration at the start of the year, and that was in recognition that our remuneration was below market. And certainly, that report and that piece of work confirmed our suspicions that we were paying below market. We obviously want to attract the best people to our company so that we can execute on the strategy. We also want to retain the team that we've got. As I mentioned earlier, we think we've got a cracking management team, and we want to make sure that they're here for the next critical 36 months to execute on that strategy. So the response to changes in remuneration were to bring those elements of remuneration in line with market. And so the fixed level of remuneration for Sam is equivalent to the median of the ASX comparables. In terms of your question in relation to the LTI being an equivalent of an STI, we don't see it that way, the reason being that if we don't achieve those -- if Sam doesn't achieve those performance hurdles, then the incentive is not paid out, and it is paid out over 3 years. There is an ability to achieve -- well, there's a weighting for each of those items. And I don't have the data directly in front of me, but I can come back to you on the specific weighting. It was included in the Notice of Meeting, I recall. But we don't see it as an STI. And then your further question was in relation to the directors' remuneration. Again, that came out of the second piece of our remuneration review, which the first piece was the CEO's package. The second piece was the broader global leadership team's remuneration, which also encompassed director remuneration. And that review also identified that the director remuneration was below market. And I think we've obviously increased it, but we would say that it is still below the median of our ASX comparables. There's another question here in front.

[indiscernible].

Okay. If there are no more questions, I will hand back to Brett. Thank you.

Andrew, we'll go through resolution 5 and 6. Thank you. The resolution summary of the votes received in relation to resolution 5 have been received before the meeting now on the screen. The purpose of resolution 5 is to seek shareholder approval for the purpose of Listing Rule 10.14 to grant 1,516,945 PSRs to Sam Swanell under the key employee equity plan. The directors recommend that shareholders vote in favor of resolution 5. I will now proceed to the next resolution to be considered. Resolution 6, remuneration report is a nonbinding resolution but important. The next item of business is the adoption of the remuneration report. The resolution and the summary of the votes received before the meeting now appear on the screens. The annual report for the 12-month financial year ended 30 June 2022 contains a remuneration report, which forms part of the directors' report and sets out the remuneration policy of the company and its controlled entities for 2021 and 2022 and reports the remuneration arrangements in place for nonexecutive directors and senior management during that period. The vote on this resolution is advisory only, however, the Board will take the outcome of the vote into consideration when reviewing our remuneration practices and policies going forward. I'll now provide some additional procedural direction. The poll for all resolutions and conclusion of formal meeting. Andrew, you might help me here. We had a question from the gentleman from the ASA on the financial statements.

We've actually -- that was the very first resolution -- or not the resolution, the very first item of business. So I'm more than happy to continue opening the poll, and then we can hold questions prior to the close, if that makes -- if you're happy with that.

My question was really [indiscernible]. As a shareholder, [indiscernible] just you mentioned [indiscernible] so it's not that respective. We as shareholders really need to know what are the net position you are looking at to actually get [indiscernible] what measures would you do [indiscernible] retail shareholders to look at including what's [indiscernible].

It's a really intriguing question. Let me go into the share price and I thought about talking about the share price because it's affected us all in the room, unless you recently purchased some shares under the current share price. But let's just assume we've all suffered some loss of value. The sector we operate in -- I missed your name, sorry.