PolyNovo Limited (PNV) Earnings Call Transcript & Summary

Well, good morning, everybody. happy Monday morning. Let me just give you an introductory comment about this. I mean when these equity raisings are typically done, most of the money is bundled into placements to existing and new fund managers. And the ramp is bundled into an SPP and set and forget just we'll take what we can get. But I think philosophically as a Board, we're very keen to make sure that all shareholders get to hear what's being presented to fund managers in particular. And you'll see that this presentation this morning really relies on the Fund Manager Investor Presentation that we gave last week. And -- but in addition to that, you're going to get something extra because we tried a little experiment at the AGM where we interviewed a couple of our senior managers, and we're going to follow that on today just to update you with information in terms of what the funds are going to do in their particular regions but also just in terms of how business is going in those regions as well. So sometime in this presentation, I'm going to talk to Ed from the U.S. about U.S. and Canada and to Valerie about well, if she wanted to talk about Australia, but more particularly about Hong Kong, where she just come back from and Swami about India. Before we get to there, I'll make some introductory comments about how -- why we're even going about this. But then I'll get Swami and Jan to talk about why we're -- and how we use those funds and when we're going to use those funds just briefly, but that will rely on the investor presentation that you can get off the ASX as well. So we haven't really lodged that, go back have a look at it. But if you don't get to look at the thing, we're going to talk about it today. So just by way of introduction, we've been holding on for some time, not needing to do a capital raising. And frankly, we didn't really need to do at this time. But a couple of things changed our view over the last few months. And one of them was that the growth that we're seeing, especially out of the U.S. but across the planet with 70% sort of plus growth year-on-year, it became obvious to us that we really do now have something of a cookie-cutter approach to this. And by putting on additional resources, even though many of those are working capital there's a support services that need to go with that and some clinical trials that need to go with that. And ultimately, if we're successful at that, which we think we obviously will be, then we're going to need some more infrastructure in terms of factories and so forth. So we thought, well, #1, we've got a cookie-cutter approach, and this is the time to really step on the gas, I suppose, double down as the Americans say. But more particularly, to really step up, I think, in terms of what the number of people we've got with leather on the street, and the infrastructure that goes to support that. The second thing that's happened, I think, over the last 4 or 5 months, as you know, we've got a new CEO. And so he's -- his encouragement, we've also thought that we should not only step-up the number of people on the ground but also we should step-up our view about where we should go geographically, so expanding the geographical footprint. Swami will say more about this in a moment. But those two things really led us to say, look, now it's probably the right time to raise the money and put our foot on the pedal as it were. Then what you'll see is that how do we go from not really needing any money to needing $50 million. And Jan will explain to you that the $50 million -- a big chunk of that $50 million won't be in this financial year, but it will be to do with building additional factories and so on. And so a big chunk of it is not really for this financial year, probably half of it in any case. And Jan will talk to that in due course. But those two things together really made us say, well, let's go. But at the same time, I was looking at a share price at one stage of $0.85. So that didn't suit us. We knew the company was worth a lot more. We knew we've been [ shortened ], and it was time to just wait and get the market climatized with how we're going. And we sort of set in our own minds that perhaps if the share price got above $2, somewhere closer to what we thought the real value was that, that might be the appropriate time to do it. And you'll know now historically that, that's roughly what did happen. And we've done a placement looking for $50 million. There's a bit of science between, about how the $50 million is allocated. We put aside about $30 million for financial institutions, we put aside $17 million for the SPP, and that was really based on our own sort of guess, I suppose, about what percentage of shareholders would take this thing up and what average price they would bid for. We can look at every other SPP that's been done in recent times, and we have our own sort of rough measures about what that would be. So for example, maybe 10% of shareholders will take it up 10% to 12% and the avergae bid price might be, say, 8,000 shares -- $8,000 when in fact, you could take up to $30,000 so, some people will take 1 share, some will take -- they will take $30,000 a share. So we [ know ], roughly that the $17 million was going to be good. Now I emphasize that because we wanted shareholders to be able to participate to the maximum that we thought that they could. Now we might be swamped or we might get nothing. We don't know yet. But the $17 million was, there was a bit of science behind that. So we actually drove it the other way rather than saying how much for fund managers and then the rump to SPP. We said how much for SPP, and we might or might not be right or wrong, depending on what happens to the share price between now and the end. And then there were $3 million, which we wanted to really show that the directors were behind this. So all of the directors are taking stock except for one who's taking the SPP. So they're all -- they are behind this raising as well. Just in terms of how that's gone so that you know, we had 10 or 12 new financial fund managers on the register as part of that raising for $30 million. We opened it in the morning. We closed it at day. We were looking for $30 million. We got offered over $85 million. So a lot of people who applied for stock got nothing because they weren't already on the register. We didn't like them -- or didn't like the color of their shirt or whatever it was, they got nothing. So the $30 million was taken up quite easily, and we had to scale that back quite a lot. We tried to look after as we will with our shareholders. Those who are already on the register and make sure that they got their share or what they'll bid for certainly some sort of pro rata. So that was -- that part of it was very successful. So at the end of the day when we close the book that afternoon, we had $30 million worth of financial institutions. So that money is now in the bank. We've got $3 million committed from the directors. That is conditional on shareholder approval. So that will go to a meeting in January that Jan and Bart who's on the phone as well, will coordinate. And then the $17 million will come in from the SPP. We'll talk about the SPP later. Normally, we expect to see these things coming in, in the very last day. So you're looking for $17 million, in my mind, being in the market for a long time, I expect to see 89% of that in the last day. And that's the reason we -- the reason for that is that people agree they're going to take it, they want to take it, but they set up their [indiscernible] so it happens right at the last minute. So they might get maximum funds in their own account but also they get the ability to pull it if, for example, a market with a tank or something like that. Interestingly, in this case, and I won't give you the number because I haven't seen the morning number yet, but we've probably got, as of Friday, we had $2.5 million in the [indiscernible] pay for in advance and probably by today, I imagine we'll have $4 million of the $17 million. So it's coming in a lot quicker than I normally expect to see, which is a very good sign. But when you think that these are shares of $1.90 and we're -- and they're trading at $2 or thereabouts, we expect that people will take them up. But that's up to you. The only other thing I just want to say was that the ASX 200 is obviously important to us in the sense that there are a lot of index funds around the world who can only invest in you if you're in one of the indices. And we were in the ASX 200, but because our share price was down, which I largely put down to [ shorter ], we got bundled out of it, which means that a lot of index funds sold out, which doubles down to sort of price on what's happening to the reduction in the price. But there's 2 -- just so people understand it, there's really 2 aspects to being in the index. One is liquidity and one is market cap. And so they really check to see how many shares are you trading in there to how many shares you got on issue. I won't bore you with the formula on this. And sometimes, these formulas are a matter of half as far as I can see, as exact science, but we easily qualify on the liquidity thing and everybody will know that on an average day, we'll get $2 million, $3 million, $4 million, $5 million traded in our stock. So the liquidity side of it -- are fine. On the market cap side, if I look at our market cap today, which is probably about of 1.35, then on my calculation compared with the ASX 200 at the moment, we should be easily in. But when the index is calculated, it's done on an average of 6 months, 6 months market cap. And you all know that a few months ago, we had quite a lot of -- quite a low market cap because our share price was still recovering. We are easily there to know today but when I did the calc on my own rough way, I think we're just on that border of getting into the end of the ASX 200, which was last Friday. Now the reset is done every 3 months. So it's done at the third Friday, December, third Friday, March, et cetera, et cetera. So if our share price was to stay roughly where it is and our liquidity is the same, then I imagine we're easily going to be in the 200 coming March. But of course, you can look at your own, but it's not just us. It's who's going out, who's going in, there could be people better performing than us. But I just want to give people a bit of a sense of this because I see a lot of social [indiscernible] -- and it's not well argued. All right. So that's me just for the moment. What I would like to do is to pass over the presentation to Swami and to Jan to talk about what we're raising money for, how it's going to be used, when it's going to be used and so forth. Now excuse me, just to apologize before we even start. We're trying something new here. So my screen doesn't look like you always, but I'm hoping our operators are going to pull up agenda, just for a few seconds so you can see who's talking next and then reduce it to where it is now and pull in Swami and Jan and get me off the screen as well. So welcome to Swami and Jan, and I'll go off the screen and let you talk.

Thank you, David. Good morning, everybody. 4 months ago, when I joined PolyNovo, many of you asked me the question and David asked me the question, why did you join PolyNovo? And I said it's a combination of 2 things. One, it's a genius Australian medical technology; and two, coupled with the bold and ambitious board, which wanted to accelerate global growth and impact, which surely influenced me to join PolyNovo. Now 4 months into the company, let me share with you where I think we are with both those things. First, the genius technology. I keep getting ringing endorsement about NovoSorb and BTM from customers, surgeons and our own people across the world. It does a terrific job of improving outcomes, much better than the standard of care. It does a terrific job of improving patient experience, much better than the standard of care. It does a terrific job of decreasing the complexity for surgeons, nurses and OR staff again, much better than the standard of cost and does a terrific job of reducing cost of all the hospital systems much better than the standard of care. So that's a ringing endorsement which is driving the adoption and penetration of PolyNovo, NovoSorb and BTM dramatically. And you heard David talk about the 70% plus growth. The second is bold Board. The Board has supported almost every request that we put in as a management team for global acceleration and impact. Whether it was moving from distributor to direct in India, accelerating our entry into Canada and Hong Kong. Everything we've got terrific support. The thing which I'm going to share with you is -- and something which surprised me pleasantly was our teams. I'm really proud of our teams. We have a very passionate bunch of people hungry to reach more hospitals, more surgeons, more patients yet in a very responsible and outcome-focused way. And just to share with you where we are today. In Australia and New Zealand, we are a leader in third-degree burns, and we're expanding to trauma. If I look at our Australia team's performance per capita, per surgeon, per rep, the number of cases that we do in Australia are highest in anywhere in the world. When I think about our U.S. performance, we're strong #3 with the best possible growth trajectory in the U.S. market, and we are taking market share away from everyone. In many of the [indiscernible] burn centers, the burn directors are already turning to us as the go-to choice. And most importantly, from a U.S. perspective, I'm very proud of how Ed and his team have executed in a very responsible profitable way. And our business today delivers more than 20% EBITDA already for a very young business. So that's extremely creditable. And that has given me a whole lot of confidence in terms of driving geographical expansion across the world. I spoke to you about Hong Kong, Canada and India, but we're also moving faster and harder in U.K. and Germany, where we hope to be leaders over the next 12 to 18 months. We are looking forward to expanding in Japan and China as well. These are the world's largest medical device markets, and they will be extremely important to our future. We are stepping up in terms of trying to go and cover more indications wherever we can across the world. So we are moving from a burn supremacy into trauma, into [ Nec Fasc ] into many other indications, which our surgeons are taking us to. We are looking at also alliances globally, which can take the NovoSorb technology into different fields, which is not today covered by us. So we believe we can do a terrific job in orthobiologics. We're looking partnerships there. We're looking at partnerships in general surgery and oncology, which hopefully can give NovoSorb better expression in different parts of the hospital systems and channels. And lastly, after we drive all this demand, we also need to make sure that we have the capacity fulfill the demand. And we are already embarking on a very ambitious capacity expansion agenda. And I will ask Jan to talk -- take you through how we are going to spend the funds and the sequence and timing of it. Thank you.

Great. Thanks, Swami. So in terms of timing, with the placement funds of $30 million plus the $3 million from the directors, the initial priority is growing that top line and expanding in our markets and new markets. So supporting and with the acceleration of hiring, planning, sales and marketing and also clinical hires to help support the sales and marketing team. That's already now underway and that's going to be part of the spend leading up to June out of that initial $30 million. We're also working on towards a design freeze on a new facility by June 2023. And again, we've already made a start on that. And so the bulk of funds, probably the $30 million will then start will be allocated to the construction phase, which we plan on commencing in FY '24 after we go through the tendering process. So the key point is driving that acceleration of top line supporting Ed with the growth in the U.S. and accelerating efforts over there but also supporting the expansion in India and entering that market, also with Hong Kong and Singapore more happening right now as we speak. So that's a chunk of the spend leading up to June, but a big part of the $30 million that we'll raise from the placement will be spent on the upto $20 million, $25 million on the fit-out of the new factory, and that will commence in FY '24. But where the SPP is important to us, the $17 million that we hope to raise from everyone. It's just lead to an acceleration of current efforts. We are already doing a lot of work in R&D with our team of 9 on various products. We also do a lot of work on the clinical -- building clinical data to support our product claims and expanding the indications as to where our products are used. The SPP funding will help accelerate those efforts, make us more competitive, and be able to bring forward a lot of plans that the sales and marketing teams do have but also that the R&D teams have as well. So it's an important part of the process. But all in all, geographic expansion, increasing capacity, expanding our indications and investing in R&D is where all the funds will be put towards. But the spend profile will mostly be in FY '24. We're making a big start in the lead up to June. It's already underway, and there will be a balance of spend in '25. I hand back to you, David. Thanks.

Great. Thanks, Swami and Jan. I'd like to now move on to the U.S. and Canada. And we're lucky to have on the line Ed Graubart, who's our Senior VP of Sales and Marketing in the U.S. He wasn't probably aware that we're about to raise $50 million in sales. So you're going to hear from him as I'm hearing from him, what it meant for him, and did he actually getting it [indiscernible] that night when he was told that he had some more money. Anyway, welcome, Ed, and tell us a little bit about what this money means to you in terms of how you're going to look at hiring in the U.S. and growing in the U.S. and then we'll go on to Canada.

Sure. Thanks, everybody, for joining the call. Good morning there. So David, what it really means to us over here is we have an opportunity to accelerate, as Swami said, the plan that we've already had in place. We do try to run a responsible business and maintain the profitability because we do understand that our investment and that profitability allows us to fuel global expansion and reach more patients. But what this will allow us to do is to kind of continue down that plan and accelerate and bring people on, not only in the field so that we can go to develop new markets but also the support structure. These are people who indirectly can impact our top line revenue, but they can also directly impact because they are also working with our customers. So when we talk about things like that, we're talking about internal marketing and clinical people to support the sales efforts. We can upgrade our training programs and offer new programs to our existing and new sales reps so that we continue to expand our clinical indications. We can really start to drive the peer-to-peer education, something that Swami saw firsthand last week with us while we were in -- while we were traveling a couple of places around the U.S. is that the impact and the discussions with the surgeon. Surgeons need to hear from them more than they need to hear from us with their experiences and that allows us to really build that program out. And it also lets us build out the clinical support demonstrating the economics and the clinical outcomes that we are so proud of. And again, development programs within new geographies, allowing us to go deeper in existing territories and really allowing us to become that standard of care across hospitals by really allowing the team to focus within those hospitals. So it's just really pulling a lot of that forward so that we can contribute sooner in a lot of these territories than we originally may have planned. The second part of it is the Canada piece, we officially are launching in Canada on Tuesday. We -- if everyone remembers from the AGM and from the announcements we had approval back in October, it's taken us a little while with regulatory quality and getting our logistical pieces all set up there that needed to wait until we did have the formal approval. But I'm happy to report we did our first revenue case last Friday in Canada outside of the Health Canada special access, and so that's good, and we will start shipping product either tomorrow or Tuesday at the latest for all new cases in Canada. We've had success in a number of the recent trade shows up there. We've just actually completed a plastic surgery meeting this weekend. And I think we shared at the AGM the success we had at Canadian Burn. And so we're finalizing the agreement with the sales agent on the West, but we haven't wasted any time. Their team has been through training and then continues to go through training until we can really get them ramped up to where they need to be. And we are also now engaging with sales agents on the Eastern part of Canada, which will just allow us to go deeper into that market overall. So very positive things going on here. I'm excited about being able to grow out what we're going to do. Happy to have the money to do it and commit to doing it responsibly like we've done in the past.

Thank you, Ed. When we had our AGM, Marcus Wagstaff, Professor Marcus Wagstaff was on the line, he just come out of that conference in Canada, and he is very optimistic about what he'd heard from the surgeons there. He felt that the culture was a bit more similar to us, but there's a real family there and that we already have a lot of traction. And I think one of the things that perhaps our shareholders don't know is we said that we had some surgeons buying on the special access program, but that revenue was already several hundred thousand dollars year-to-date before we've now launched and had our first case on the 2nd of December. So that sounds quite optimistic, I think, and it sounds like you're also optimistic about it.

Yes. It is. And I can tell you the team up there is very excited. And we've talked to a couple of surgeons just over the weekend, some communication back and forth, letting them know that we're ready to go. And as excited as somebody might be able to sound on a text, it's #1, they're getting back to me, which is always a positive thing. I'll take that as excitement about what we're doing.

Very good. Well, thank you for that, and thank you for attending. I'd now like to just move on quickly to Hong Kong and introduce you to Valerie Young, who you met also at the AGM. I said at the AGM, she been up, and she had 2 cases up there, and there was an enormous interest. She came back and then she went up again I think last Saturday week to reinforce what she has been doing out here on the first trip. Valerie, you're back in Australia now, right?

That's right.

So tell us about the last week up there and how it's progressed on?

Well, just like Ed, I want to share with you all some really exciting news. So David, yes, I did get back from our second trip to Hong Kong a week ago. And Hong Kong's a premium market for us. They can afford world leading technologies and where advancement in treatment options are widely adopted. I was just saying to our CEO, Mr. Swami Raote last week, and if market entry is like a battle and Hong Kong is the battle ground, then we'll be the [indiscernible]. We've established a beachfront. So there are only 5 hospitals in Hong Kong that does plastic reconstructive surgery. And during my last trip, I secured 2 of them to start clinical evaluation of BTM, making it a total of 3 hospitals so far. And that means hospitals 6 patients in Hong Kong have a BTM applied with the first patient's treatment now completed. Also during that trip, I was very fortunate to have a Melbourne trained plastic surgeon who was in Hong Kong for holidays at the same time. And she took the time to meet with the surgeons there to share with some of her BTM experience. She showed them [indiscernible] cases that she's done while she chose to use BTM and how to get the most out of it. So her sharing will shorten the learning curve for the Hong Kong surgeons as they embark on their own BTM journey. So in reality, it is still early days yet. It is still a beachhead, and there's a vast [ hinterland ] to be conquered. And geographically speaking, Hong Kong is only a beachhead for the vast [ hinterland ] of the Greater Bay Area of the GBA of China, which includes really well-known cities, such as Shenzhen and Guangzhou, and that's a total population of 71 million people. And I touched on this at the AGM. So the Hong Kong -- the Chinese government is 2 years into a pilot program. which is to allow a number of facilities in a Greater Bay Area to access nonregistered medicines and medical devices that are used commonly in Hong Kong public hospitals. They're now in the process of scaling this up. So there is strong government support for health care development, and this presents a huge potential for PolyNovo. So in due course, the clinical evidence that we get of GBA will be used to gain regulatory approval in China. So the GBA interns will become a beachhead for the enormous [ hinterland ] of China, which is 1.4 billion people and almost 1/5 of the world's population. So in a way, my mission is to establish our sales in Hong Kong. And next week, our Hong Kong logistics partner will take the first delivery of BTM. And at the same time, our finance team, led by Jan has been working with [indiscernible] to explore setting up an entity in Hong Kong. And these efforts will help us get more cases done both to increase the sales, which is my job and also to build local clinical evidence for BTM. And down the line, when justified our business growth, similar to what I did in New Zealand, we'll also consider hiring local talent to service our Hong Kong customers and also support our expansion into the GBA. So the road is long, and it won't be plain sailing all the way, but there's a Chinese saying, "a journey of a thousand miles begins with a single step, " and we've taken that first step, and the rest of the journey is a really exciting one. And I invite you all to join us on that journey. So thank you, and back to you, David.

Thank you, Valerie. Now a couple of quick questions. These 6 patients there, are they paying patients, right? This is -- are we supplying any free product? Or is that...

So at 1 hospital, they are choosing to do a paid evaluation and the other 2 hospitals, it is a free trial evaluation. And one of the reasons for that is there is no funding for use of BTM outside of burns, so they want to make sure it is a good enough product in their hands so that they would use it out of their own departmental funding. So it's a slightly different setup at the other 2 hospitals.

Yes, but the 6 patients that you've already had, are they [ paid ] patients or...

Are they what? Sorry.

Paying patients.

They are paying patients correct. 5 of the 6 are paying patients.

Okay. And so [indiscernible] just to give us a sense of what it's being used for. Are they all burns?

Now in fact, the very first patient who received BTM in Hong Kong had the competitive product put on. And unfortunately for him, that product has failed. So BTM came to save the day. The other patients are mostly burned, but there's also -- the last patient who had an oncological excision, and they have renal options for that old gentlemen. So they're using BTM to try to close that one. So we've got a mixture of business.

Brilliant. And you said you've got 3 out of 5 hospitals in Hong Kong. What are the other 2 waiting for? Are they just waiting to see how it goes in the other 3?

They're probably waiting for me to go back.

I figured you'll find some way of orchestrating a return trip. That's great. Beautiful. Well, listen, thank you for that. And finally, I'd just like to update on India, and I'm going to hand back to Swami, just to talk about what's happening in India as well.

Thank you, David, and I'll be very quick about India. We've been fortunate to hire top talent in India between the two of them, between the managing director and the chief medical officer. They have close to 65 years of experience not just in India, but also in North Asia and in U.K. and some of the European markets. So I'm excited about them having joined PolyNovo. We are going to get the certification from Board as a registered legal entity in the next 10 days. After which we have already identified our, [ 3PL ]. We have participated in an all India plastic surgeons conference early November, that close to 350 surgeons visited the stalls with a request to do samples and demo in their surgery rooms and clinics. And the team that we have in India has already identified 25 centers of excellence, which we'll be using as -- for training, and they are in the process of now hiring the next batch of people, which will be close to 18 people hired over the next couple of months. The minute we get the approval from the Ministry of India. So I expect India to go off like a rocket just because of the expertise and the talent that we have there. And honestly, the sheer number of patients who deserve this product is phenomenal. And we would be truly saving lives in India because they don't have too many options today. So I'm proud of what I'm doing for my country. And I'm proud of what PolyNovo will be doing for us across the world. Last year, in full year 2023, we saved just under 10,000 lives. This year, we hope to save more than 20,000 lives, but honestly, the opportunity is in millions. And that's where we hope to take this glorious Australian technology. So thank you, David, for all your support, and back to you.

So just one question. Swami, I think a lot of people probably don't appreciate that the rate of burns in places like India, but also Indochina and so forth, is significantly higher than what Ed's sees in America or Valerie sees in Australia and so forth. Could you comment on that just to sort of reinforce that?

Yes. Because if you really look at where do burns and trauma occur in the world, China and India are the burns and trauma capitals of the world. Unfortunately, the advanced dermal templates category is kind of a paradox. I mean, I call it a 90/10 paradox. 90% of the market today serves just 10% of the world. Out of USD 1.5 billion, USD 1.35 billion comes just out of 1 market, which is U.S. and the rest of it is spread out across Western Europe and a little bit in Japan and Australia. So PolyNovo truly has an opportunity to go where the patients are and truly save lives, redefine healing in many of the markets because, really, there are no solutions. And that's something which motivates all of us to keep driving hard on global expansion to serve many more patients for burns, trauma and beyond burns and trauma. I think it's truly amazing technology, which the surgeons are telling us, and they will take us to many more places than just burns and trauma. I'm pretty confident of that.

Yes. All right. That's great. Thank you for that. I'd now like to move on to just share purchase plan itself just in case there's any confusion out there. I know just by way of the money that we've already been paid at, certainly, plenty of shareholders are not confused about it. But I thought just as partly a novelty really. I get Bart Oude-Vrielink, who's a partner at MinterEllison, who our corporate lawyers, Bart's Dutch by the way, if you can't tell by his name, which means by definition, you can't tell him much, you know that Dutch know everything. So that's an even better reason to have him here. But Bart, welcome, Bart and I've [indiscernible] for probably 35 years. And I'd like just to explore quickly, Bart, at the SPP and how they operate. And then perhaps I can top and tail with a little bit about how we're going to allocate if there's overs and unders and so forth.

Yes, sure. Thanks, David. So thanks for the opportunity. So the SPP is an offer of shares by PolyNovo to shareholders. It's made in accordance with ASIC instrument, which provides an exemption from the prospectus provisions. And it's in a fairly standard form. So the offer booklet for the SPP with the application forms have all been dispatched. It opened on the 30th of November 2022, and it closes at 5:00 on the 13th of December 2022, so there's a bit over a week to go in order to make applications. The offer is made to everyone who's on the register as at 7 p.m. on the 21st of November, and they have to also have registered addresses in either Australia or New Zealand. In terms of the structure of the SPP, it, it provides for a maximum per shareholder of $30,000. That maximum also applies to clients of custodian -- professional custodian shareholders. So the underlying clients of professional custodian shareholders also have the opportunity to apply for up to maximum number of $30,000 worth of shares. The share price or the issue price at which the shares are offered is the same as what was extended to institutional shareholders in the placement of $1.90, which represents a [ 10.5% ] discount to the 5-day VWAP to the record date of the 21st of November. This placement tries to bring a little bit of order in terms of applications. So in addition to the $30,000 maximum, it requires that shareholders who want to take up minimum parcels of shares beginning at $1,000 worth of shares going through to $2,500, $5,000, $10,000, $15,000, $20,000, $25,000 and $30,000 being the maximum. In terms of what is being sought, as David said earlier, a maximum of $17 million is being sought, and David can talk about the scale-back algorithm in a moment. There is a sort of discretion to accept overs, but essentially, the plan of the capital raising is cap of $17,000. So to the extent that the experience with the SPP is the same as what the company experienced with the placement, there will be a scale-back algorithm that's described in the placement booklet. So David, if you want to talk about the scale back here.

Thank you, Bart. So I mean just from that, it doesn't make any sense for you to apply for shares because the limit is $30,000. So it doesn't mean we're going to look at any differently. If it turns out that we bid for more than $17 million, which is the cap, we do have the option. But as Bart said, never say never who knows, you'll see what happens. My guess is that if the stock stays above $2, then we'll easily get the $17 million, and we'll have some orders. And therefore, as a Board, we will need to determine what to do about that, whether we take additional money or more particularly how we scale it back. And so I think what we've said in the SPP booklet, [indiscernible] is that we would as a concept like to try and look after people pro rata, and that has also subject to our discretion as well. So for example, a common trick that a lot of people do at the moment, another trick is to have 1 share only in the company and then prime is that to buy $30,000 worth of shares. So if we're over and you might not be surprised that I might not want to give those people $30,000 worth of shares and pro rata differently. So here's just some thoughts on how we might likely handle that. But I think standing here today, and there's still, I think, there's still -- December still got 8 days to go, anything that happened to the share price, but it looks to me like we'll easily raise the $17 million if things if the status quo stay. Have I missed anything, Bart?

No, no, that's right. So just amplifying the point about the scale-back algorithm, the booklet says, essentially scale back will be done pro rata to your shareholdings as at the record date. So those long-standing and larger shareholders, there they can expect to be treated more favorably if there is a scale-back situation than shareholders with nominal holdings of shares.

Yes, that's a good point and well said. Thank you very much. Okay, ladies and gentlemen. I thought this would go for 30 minutes, but it has gone for 39. And apologies for not allowing questions. This is -- we wanted to try and give you everything that the fund manager has got and a bit more, and I'm sure we've done that. So I hope you got something out of it, and I wish you well with your [ aspirations ] on taking up the SPP and reporting to you again at the half year. But thank you all for attending, and adios.

Thank you.

Thank you.