Okay, Jim, I think we've given enough time for our online attendees to join. Please feel free to start the meeting.
Thank you, Tracy. Well, welcome, everybody. It's great to see we've got people here in person after some time. It seems we haven't been able to do that, and welcome to all of the, those of you who are online. Those of you who are online, you won't be able to talk directly to the meeting. You'll be asking questions through the webinar to, directly to Tracy, and they'll be forwarded to us. I'm Jim McLean. I'm the chair of Aroa. I'm delighted to have you all here today. We have quorum for the meeting, and it's now past 2:00, so I declare the meeting underway. Firstly, let me just introduce the board here, who are all on the slide here. Present today are Brian Ward, Founder, Chief Executive, and Managing Director. Phil McCaw, Independent Director.
John Diddams, independent director as well, and chair of the audit committee. Online, we have John Pinion, who is the chair of the Risk Committee, Steve Engle, who is chair of the Remuneration Committee, and absent, I'm sorry, today, because of another appointment, is Dr. Catherine Mohr, who will introduce herself later in the meeting by way of video. We also have our joint company secretaries, James Agnew, who's the chief financial officer, and Tracy Weimar, who's in Australia. In addition, we have Leah Stanley from the auditors with us, and I think Ian Lockton online, who's our corporate counsel in Australia, with Mills Oakley. Let me just take you through the agenda for today. I'll give a few brief words of introduction, and that'll be followed by a report from Brian.
We'll then receive the financial statements, which don't require to be adopted by the meeting, but are available for any questions. Questions can be addressed to James Agnew and Leah, if that's the case. Then we'll. From there, we'll go on to the resolutions. There's some questions now about the format of the meeting. James, would you like to just explain to us how those are going to be managed?
Sure. Thanks, Jim. Hi, everyone. James Agnew. In terms of the instructions for questions, we will work through in-person questions before turning to questions submitted online. For in-person attendees, simply need to just raise your hand, identify yourself as a shareholder or guest, and we will then invite you to speak. Just so that the audience online can hear, just be sure to speak up when you're asking your question. If you're acting as a proxy, for a shareholder, just please clearly state who you're appointed to represent. In terms of the people that are online, questions can be submitted by clicking the Q&A, Q&A box on your screen. Just as, as shown, shown on the slide here. There may be some delay before we get to your question, so we'll ask for your patience. Okay?
Your question will be directed to us by our joint company secretary, Tracy Weimar, to read out the questions. I will now hand it back to Jim.
Thank you, Jim. I've just got a few points that I'd like to make about the company, which Brian will expand on in this presentation. Two things, really, I'd like to talk about. One is the performance from last year, for the financial year ending in March. Aroa had a very good year. Revenues were up more than 50%. Margins were up. We've seen increasing validation of the family of Aroa ECM products. In a sense, we've gone from being perhaps a juvenile to a more grown-up company. In this business, we've grown and with a very positive future. With it comes a lot of organizational complexity. We now have 270 people, quite a lot different from just a year ago, as a consequence of the growth we've had.
That, that provides a lot of organizational challenges and performance issues that we have to drive in the company. We've handled those things very well over the current year, but they will remain matters of some attention to us over the, over the next time. Of course, people are gonna be crucial to taking the company forward from here. The other thing I just wanted to draw a little attention to is our strategy that we've adopted. In the 15 years since the inception for RRI, is we've built a strong foundation on the ECM, the RRI ECM platform. That is the extracellular matrix that is derived from the four stomach of sheep. As a result of that, we now have four substantial product families, and each of those product families are in significant markets.
The position we currently hold in those markets is really a very early stage for our commercialization. We could focus our time almost entirely on those four markets and the developing market we have in Anivo, which you'll hear more about from Brian. That is really sufficient. That would be sufficient to cope with the growth that we could reasonably hope for, for this business. We have a very positive outlook for the business. In addition to the focus on those markets in the U.S., we will be looking at, and continue to look at, expanding outside of the U.S., either on our own or with other partners. We're also on the lookout for complementary technologies to add to the product portfolio we currently have. Crucial to our success, of course, is our ability to attract and retain the best possible people.
In the period, most recently, this has been challenging, it'd be fair to say, and we've succeeded without a great deal of difficulty, of being able to attract really first-class people and to keep the good people that we have. Although it's been a very tight market, the company now, I think, offers an optimistic environment for employment for, for all sorts of people. We've been successful to date, we have every reason to believe that we can continue to attract the best possible people. We're increasingly confident about our strategy. The weight of clinical evidence is only helping us assure ourselves that the strategy that we've undertaken, focusing on ROECM, is, is, is the right one. We have, in each of these product families, increasing clinical evidence and so increasing confidence.
Brian will talk a little bit about this, and it makes a fundamental difference to our certainty for the future. Just a couple of words, the last couple of words I'll make in this respect is about cash. We're in the envious position, the envied position, perhaps, of holding substantial cash, sufficient for us to be able to deal with the growth of physical infrastructure that we need for the business, and also to pursue our developments with Anivo, in particular. We can do this, as we think, in the foreseeable future without any calls on any additional shareholder capital. We're doing this at a time where the company is trading, positively on a normalized basis, or trading with positive EBITDA, I should say.
There's every reason to suppose that the company is in very strong shape for its future, and we feel extremely confident in that regard. Just going to the board, just very briefly, there are two board members' appointments for you to consider in the meeting. John Didham, who's present here, is an Australian-based director, is putting up for appointment, and you'll vote on that later in the meeting. In addition to that, Catherine Mohr, who joined the company in November last year, I must say, has made a terrific contribution already, is to be formally elected by the shareholders. She's unable to be here, as I think I've mentioned, and has recorded a video for us to, to watch. Just, finally, from me, just a vote of thanks to Brian, yourself, and the team of people here.
A terrific job has been done in 2023, and we have every reason to suppose, that next year will be equally as good, if not better. Brian?
Thank you. Thank you, Jim. Yes, it's good to be here another year and just talk about progress and, and where we've got to. I mean, I talk about these slides a lot, but what I really wanted to touch on today was just some highlights, some, some things that have really happened in the last 12 months that I think we can be really pleased with. As people know, we're a soft-tissue reconstruction company. We've got four families of products that we sell in the U.S. through, through two channels: through our own direct sales team, but also through our partnership with TELA Bio. You know, this year, we've now clocked over over 6 million of our products being applied to patients to treat, which I think is a phenomenal number. It's, you know...
What that means is that, you know, this is a technology that's been widely used on a lot of patients, very strongly clinically validated. You know, we've developed a lot of experience around this product, and it's also backed up by clinical evidence. You know, a year ago, when I was talking to investors about... You know, the number of publications that sat behind our products, it was 40. We are now at 71 publications that support the efficacy and the safety of these products. You know, we can be very confident in this technology and the difference that it makes for patients. The other big change this year is with Enivo, our tissue acquisition platform.
Over the last five years, we've had a considerable investment into Enivo as a second platform, to build value in the business, but to also complement our existing business. In the last few months, we've had two of the key components of that platform approved for use in patients. We have one final component that needs to be approved, and I'll talk a little bit about that further in the presentation. You know, across the board, I think we've made, you know, strong progress in a number of ways. Just briefly, in terms of the product portfolio, you know, as, as you know, you know, we isolate this tissue layer from the full stomach of a sheep. We purify that in a way that can be implanted into people.
We, we now have four families of products that we're selling. Endoform is a product we've sold for a long time. Myriad is the product for soft tissue reconstruction, which is really the main focus for our sales team in the U.S. That product family, which includes our morsels product, our matrix product, and more recently, our, our Myriad morsels fine product, is really what's driving growth for Aroa. They're products that we're selling, in the operating room, and it's designed specifically for, plastic reconstructive surgery. Symphony is a product that we've very recently launched. Again, we're selling that in the hospital, in a hospital outpatient, setting. It includes our Aroa ECM technology, but also, a molecule called hyaluronic acid, which really, augments the function of this.
This product is designed for patients that have very impaired healing and are very difficult to heal. Typically patients that have diabetic ulcers, venous ulcers, or other sort of underlying clinical problems. The fourth family of products is our OviTex products, sold through Taleo Bio. If you look across this range of four products, there's sort of three things that really stand out for these products. They have this ability to restore functional tissue in patients. When we implant this into patients, these products turn into tissue. That's unlike many of the synthetic products that just stay there. This actually turns into the patient's tissue and regenerates new tissue. Each of these products is designed specifically for a particular application.
While the core technology is the same, the needs for a patient in the early stages of healing with diabetic foot ulcer is quite different from the later stages. We've sort of tuned the products so that we meet the specific needs for patients. Another thing with these products is that they make the surgeon's job easier. A lot of the procedures that we're involved in, the surgeon is cutting tissue from one place in the patient and pasting it to another part of the patient, and that's quite a complex procedure. What these products allow the surgeon to do is not do the cut and paste, but take something out of a packet and rehydrate it and use that to fill that deficit in a patient.
It very much simplifies their job, but it also means that a surgeon who is less technically adept or less trained in a particular specialty is able to do more. It actually increases the capacity of a surgeon to do more complex procedures, which is obviously good for the patient, good for the surgeon. The third thing that we're doing is that our pricing for these products is very disruptive. Typically, you know, we're 20%-30% less expensive than the competing products out there. What that's doing is opening up access to these products for more patients, but it's also allowing surgeons to contemplate using these patients. Using these products and procedures for many more patients as well. We think that's a really exciting opportunity in terms of potentially growing the market.
You know, we, you know, our products are, or maybe. No, these products are all designed for different stages of healing, for different types of wounds, and for use in different settings. You know, it's not a market where one product fits all of the needs, and so we've designed these products to fit particular needs in particular settings. I think one, you know, if you sort of look at our product range now, we now have a very comprehensive portfolio, so we can sort of treat all of the different types of wounds that you'd typically see in a hospital. I think one of the big changes in the last 24 months has been having our own direct sales team in the U.S.
You know, when we first designed these products, we were they were being sold by other partners, and we weren't intimately involved with the surgeons who were using the products. I think what's happened in the last 24 months is now that we've improved, and now that we've have our own direct sales team, we have a much closer relationship with surgeons. I think that's allowing us to understand their needs and to be able to design specific products for specific needs as well. I think that's been a huge improvement for the company. This is, these are the types of procedures where essentially it's two sorts, complex wounds, they seem to be chronic wounds and soft tissue reconstruction, which tends to happen in the operating room.
I think, you know, one thing that we've understood on the Aroa side over the last 12 months is that the opportunity for Myriad is much more substantial than we thought 12 months ago. When we listed the company, we thought the market opportunity for Myriad was probably about $2 million-$250 million. What we're, we're seeing two things this year that have expanded that, that our, our perception of that market opportunity. The first thing is much better market data. We can now see that the volume of products that are being sold in these categories, in hospitals in the U.S., is about $750 million for the Myriad product range. That's much larger than we thought.
Also, if we look at the types of procedures where these products are being used, we go, "Okay, these procedures, this percentage of patients would use these procedures." You know, it's a market at the moment that, you know, if you work it out that way, is at least $850 million. It's a really large opportunity as it exists today. I think the other thing is, what we see is that with these types of procedures, only some of the surgeons that could use these products are using them. What that means is that there's quite a large latent opportunity for us to grow the, to grow the market.
You know, if, if you look at a specialty like orthopedics, you'll see that all orthopedic surgeons use plates and screws to fix fractures in patients. In soft tissue reconstruction, it's probably 25%-30% of surgeons that use these types of products to fix soft tissue injuries. It's a very large opportunity to grow that market, and we think we're very well placed to do that. Just talk briefly about the Inevo tissue acquisition product. This is a product that we've developed through sort of two kind of underlying technologies using our existing Aroa ECM platform. Something we know a lot about in terms of implanting it to people. What we've done is we've coupled that with a single-use disposable pump.
So that pump is connected to that implant by a catheter. As the idea with this product is that, in many surgeries, tissue, surgeons, separate tissue, and in separating that tissue, they might remove some tissue from a patient, or they may be separating that tissue to gain access to a surgical site. When the, when they've finished their surgery, that cavity that's created is very hard to close. You can put sutures in there or stitches in there, but you can't really, get rid of what's called dead space. What this technology does is it delivers a vacuum to that area of tissue, and that is like putting a, a plastic bag on a vacuum cleaner and turning the vacuum cleaner on.
It draws all the air out of that bag and holds those surfaces together. That's exactly what we're doing here. We've, you know, we've now have two of the components for this cleared. We still need to get the biological implant cleared by the FDA. We're working on that. There's a couple of pathways for that, that we're exploring. You know, depending on which pathway is successful, that may be cleared within the next 12 months, or could be through the 24 months. It will really depend on whether we need to do a further clinical study. That's, that's something that we'll have much more clarity about by the end of September. Good news on the clinical pilot study.
We've now treated our first patient with Inevo, and that was, I think, about two weeks ago. The patient has had a mastectomy, we implanted this device, the device functioned flawlessly, much better than we've seen in our development activities, which is fantastic. The patient is still undergoing treatment, so we don't have the final outcome for this just yet, but we're very pleased with how that's gone, how it's functioned. You know, it's a testament to the work the team has done on developing this. We see this as a huge opportunity for the company, so an opportunity in its own right, but also an opportunity in combination with our ECM technology and implants.
You know, when you sort of think about Inevo, the way to think about this is, it's a product that can be used on its own, but we think the combination of our existing implants, plus this product when used together, is an opportunity to really improve the rate and quality of healing for many patients. Those two technologies are designed to go together. It's designed so that it will fit very well with the existing procedures that were treated. I think importantly, these two products can be sold by us, by the same sales team, that we have now. It's an opportunity for us to increase the range of products that our sales team will be able to sell. I just want to talk briefly about financial results.
Last year, we did $60.5 million in product sales. That was up from $39 million the previous year. Really strong growth, which we're really pleased with. Gross margin, 84%, up from 77% the year before. We've made really strong progress there. For the first time since we've been listed, we were profitable on a normalized EBITDA basis. You know, we're now at the stage we're able to fund the operating costs of the, of the organization from our sales. We have, obviously have a strong cash balance, but, you know, we are committed now to maintaining that profitability and obviously, you know, and still building the company, you know, based on high growth and revenue. Cash balance at the end of the year was $45 million.
As Jim said, you know, we're, we're well funded, and we're able to. You know, we're certainly able to feel like we can trade through profitably and keep on expanding the company. I think one thing that's really important to consider is that, you know, if you look at the normalized EBITDA here in this chart, it's the gray box. As you can see that we've been negative, and then in FY 2023, we transitioned to being positive. If you were to back out the expenses for developing Enivo, then we would have already been profitable back in FY 2021. What that means is that the underlying business is very profitable, without, you know, but then obviously, we've added into that the investment in Enivo.
The reason we've done that is we just think there's a really strong opportunity there. You know, we're thinking more about the medium and long-term value that we can create, not about the short term, being profitable in the short term. We've been able to do that because we're well-funded. I just want to briefly talk through sales. You know, you can see strong growth between FY 2022 and FY 2023. You know, from a split by product family, for ROLA, our Myriad sales have really been what's driven growth. You know, over 268% growth there. Really strong growth between FY 2022 and FY 2023. You know, Myriad is where we're putting our focus. That's where our direct sales team is focused.
We think there is a really good opportunity for us to grow in that market. If you sort of think about the numbers, you know, we're just over $10 million, $12 million in sales. That's a market that's in excess of $730 million in the U.S. alone. There's a lot of opportunity there to grow. TeleBio has, you know, continued to perform well, that's 60% of our sales focused on hernia and breast. I'll talk a little bit detail about that. This is Tela's growth. Again, strong growth. You know, everything's coming together for them. They've got a great sales force, excellent clinical data, and they're really powering up what they're doing from a marketing promotion perspective.
You know, we, we can see Tela continuing to grow strongly. They started in ventral hernia, they're now expanding into robotic procedures, and getting into some of the less complex procedures as well. They're a long way for TeleBio to grow. I think what's been really interesting is the growth of OvuTex PRS in breast recon. You know, we can see there just the rate at which that's grown. It's the bottom chart there, over the last two years. Much faster takeoff than OvuTex for hernia, and a very strong growth rate, and we're still seeing that come through. I just wanted to summarize where we've got to with clinical research.
You know, we're very committed to building a strong body of clinical evidence that's critical in terms of the, the adoption of these products. You know, 96 presentations or publications now in peer-reviewed journals or at conferences. 46 presentations, so it's for Endoform, 46 for Myriad, 37 for OvuTex. A good body of clinical evidence. What we see with these individual products is that if you look at how they perform, there's a lot of things that you see in common across this product portfolio, which is not surprising because it's the same underlying technology. The rates of tissue formation with OvuTex is very, very fast, and that's quite distinct from what we see with other technologies.
Not only is it fast, but it's, it's very vascular, and that's really important because, you know, blood supply to tissue is really what drives growth and what sustains life. You get this very vascular tissue that forms. It's, it's very tolerant to contaminated fields, and so many of the, many of the surgeries we're involved in are contaminated. They're in sites that are easily contaminated, or things like trauma are just naturally contaminated from the situation. So this product resists infection in contaminated fields, and that's quite unique for these types of products. We're still It's still something that we're kind of exploring at a more fundamental scientific level to understand why that is. It really stands out as being quite different. We don't have any negative inflammatory responses with this material. You know, we're putting sheep tissue into humans.
Sounds counterintuitive, you know, if you process this tissue in the right way, it's very well tolerated by humans, and we just don't see it. There's no kind of issues with rejection. As I said earlier, you know, using this type, these types of products, can allow the surgeon to do more and do more procedures in a simpler way. As I said, we're very based on clinical research. We've got a whole range of studies that we're undertaking. The key ones are probably the Myriad Registry. This is where we're looking at different types of procedures for Myriad and building out evidence that Myriad can be used in a wide range of different procedures.
With that registry, looking at, looking at it in two ways, the first way is across all of these procedures, do we see some common themes that surgeons can see that there's a difference with this technology? Then also look at some specific types of procedures, and develop evidence around those that this product is suitable for those types of procedures. Symphony, we have a randomized controlled trial underway for Symphony. This is looking at Symphony in diabetic foot ulcers. That's a major use case for this type of product. So that's underway. That'll run for a couple of years. Then with Anivo, we started a pilot study, but we then expect to progress on to do a much larger study, to develop the evidence for that.
Just briefly on manufacturing, you know, over the last, you know, 24 months or so, we've been focused on expansion of our manufacturing capabilities. So we initially started with all of our production across the road, where we were doing both our tissue processing and our fabrication. We've now taken on this site and built out a large fabrication facility here. So, on this site, we now have sufficient capacity for $150 million in sales. When we built it, we originally built it, we thought it'd be about $100 million in sales. What's happened is that we've been able to realize some process improvements, so those process improvements have given us both additional capacity, but also contributed to the increase in margins as well.
You know, with our manufacturing processes, although the manufacturing is well established, there's certainly plenty of opportunities for automation and improvement, which will also lead to margin expansion in the future. Talked about. I think the, the other thing to kind of keep in mind, I guess, is, you know, while we're improving margin, we're improving our capacity, it's not, you know, the investment in this, we've done it now several times. We've scaled up several times, and to build extra capacity now is not, you know, particularly expensive, you know, relative to the level of sales we create. It's not a, we don't have huge capital investments in order to be able to realize those increases in capacity. Let's talk about the outlook.
You know, our guidance for this year is $72 million-$75 million. That's up 25%-30%. Gross margin improving to 85%. Again, we'll be EBITDA positive on a normalized basis. This is a quite a complex table, but a couple of sort of takeaways from this is, if you look at the orange column there, that's our guidance for this year. If you look at the sort of slightly lighter shaded column, that's our guidance based on $0.62. In putting our guidance together this year, we've budgeted for a higher exchange rate of $0.65. You know, if we had the same exchange rate of $0.62 last year, obviously, the, the result would be a lot more positive. You know, that may happen.
We've been sort of conservative in the way we've looked at exchange rate. You know, we sort of feel that, you know, we're sort of very, very well placed in terms of being able to reach our guidance. I think, you know, the important column on this chart is the one on the left-hand side, so on the far left there. I think if you look forward, two or three years, you know, we think the business has a very strong ability to keep on growing. From a revenue perspective, you know, we can see ourselves, you know, 25% year-on-year for some time, delivering growth. We can see gross margins tracking to the high eighties. We can see our research and development costs decreasing as a percentage of sales.
At the moment, you know, they're around about the 20% mark. That'll track down to be more typical of a medical device company, which is around 10%. You know, from a normalized EBITDA perspective, you know, our EBITDA margins should be, you know, 20% tracking towards 30%. It's a, you know, potentially a highly profitable business. You know, what, what's coming up that's really gonna drive value for the company? I think there's four things. There's the Aroa sales, the momentum that we're developing there, particularly around Myriad, Telebio sales, so their continued growth, and I think, you know, we're certainly seeing, you know, strong guidance from them for, for the current year. The launch of Symphony.
This year, we expect Symphony's sales to be relatively modest, but it's really setting us up for success over the next two to three years. We expect Symphony sales to track very much like Myriad sales to, you know, grow strongly year two, three, four. Then Anivo, you know, we think Anivo, as I said earlier, is a really strong catalyst for growth as well. Just before I sort of take questions, I mean, the other thing I'd like to say is, you know, I think the team, you know, the team here at Aroa has, you know, as Jim said, had a fantastic year.
You know, we've achieved some really good things for the business, and, you know, I'm very pleased with the, the quality of people we've got and the quality of people that we're able to attract to the business. As Jim said, you know, we've got a, you know, we've had a strong group of people here for quite some time, so it's been good to be able to have that stable team and build on that. I'm happy to take any questions.
Yes, I'm a wool man, myself. Anyway, sheep is lining there. Has the follicle got any benefits? What, what benefits does it give you for your product?
What's the benefits of the sheep part of it?
The follicle, you know, with keratin.
Oh, yeah. In terms of the, the hair follicle?
Yes, yes.
Yeah. I mean, we're using a different parts. We're using the internal lining of the stomach of the sheep. I mean, there are. One thing that's, it's a whole different organ, but one thing that is interesting about the follicle is that's where stem cells are in the skin of sheep. It is a different, different part of the body. Yeah. Yeah. Does that answer the question?
Yeah.
Okay.
Thank you. Look at another one. With Jarden.
Right. Yes.
Jarden, of, well, the share, was AUD 0.90, I think, yesterday. Their recommendation is that the shares are worth until the 31st.
Yeah. What a difference. I ask myself that every day. Yeah, look, I think, if you look at the consensus view for our shares, it's a lot higher than it is now. That means it's a great buying opportunity.
Yeah.
get in it till you boots. Yeah, it's a tough, it's a tough market at the moment.
Yeah.
I think, you know, we- we're pretty optimistic about the future. Good. Marcus.
Brian.
Sorry, one more question, Tracy. Yeah.
Marcus from shareholder. Thanks for the presentation, Brian. You know, you've got some pretty high gross margins there. You're talking about getting towards high 80s. How do you think about the sustainability of that over the long term?
Yeah.
You know, in terms of how you determine your pricing and not make it too attractive for competitors. How do you weigh those things up?
Yeah, I mean, I think, from a pricing perspective, we're really well-placed in the market. You know, we're, we're typically, you know, as I said earlier, 20%-30% less expensive. There's not a lot of pricing pressure on us, we think our ability to hold price is really strong. From a, you know, production perspective, we think there's good opportunities to make gains there. You know, the product range that we make is quite interesting, in that the raw materials inputs are low. You know, labor is relatively low as well. You know, we don't, you know, we don't feel like we're squeezed too much.
It's been interesting, if you just look back over the last couple of years, where there's been lots of increases in raw materials, obviously, labor rates have gone up and, you know, we've still been able to grow margins. You know, I think, we're getting some benefits from scale. We're definitely getting benefits from product mix as well. You know, as we sell, more products in our own right, you know, some of our, the products we were selling those in our own right, the margins are in excess of 95%. Kind of what's pulling us back is the partnership with Tala Bio and revenue sharing arrangement. You know, that's a little bit of drag in terms of getting that higher.
I think in terms of sustainability, they The margins tend to be more like what you'd tend to see in a pharma-type company compared to a device company. I think, I think they are sustainable. I think around that, you know, that low, low mid, certainly not mid to high eighties, you know, probably, probably in a good position to sustain that.
Yeah. Brian, can I have one more question?
Sure. Yeah.
Yeah. Because the company is headquartered in San Diego, in USA. Yeah, sorry, this time we were late because we have attend another meeting today, near Mission Bay.
Okay.
I've been to San Diego, in U.S. There, there is Mission Bay as well...
Yes.
not as pretty as the Mission Bay in. May I ask that whether you have business in Texas at the present moment?
Texas is really strong for us. Texas, so where we're strong is in Texas, down in Florida, a little bit of that Mid-Atlantic area and California. Texas, you know, With this business, we tend to be strong in those areas where there's older populations or there's people with diabetes or obesity. You know, Texas, Florida, California, there's quite a bit of that in the concentrated populations as well. We are. Texas has been good for us.
What about the percentage of revenue earned from Texas, from the whole $58 million? What about the percentage?
Yeah, I couldn't give you that, to be honest. There's a split. Yeah, I might be able to find out. That's not a number I, I don't have off the top of my head. You know, maybe it's, it's like take a wild guess, 10?
Yeah.
Yeah, 10 is probably 10%.
Okay.
Yeah. Yeah. Yeah.
Why I mentioned, Texas is just because recently I have read The Economist magazine. That is dated the 18th of March to the 24th of March issue. You have only three pages, you have a very good description of Texas. It's different from Texas, 30 years ago.
Yeah.
Yeah, when Uncle Ity offered me a job to Texas, but I refused. Yeah. Now, Texas, it had, the money revenue it earned last year is $486 billion in exports. Is the number one, what should I say? Revenue earning state out of all 50 USA states?
Yeah.
Yeah. because the Republicans there are very business-friendly-
Yeah.
The employees there do not need to pay any income tax.
Yeah.
That's a good point as well.
Yeah.
I suggest to, what should I say? Go into the three biggest states, like Houston, Dallas, and Austin.
Yeah.
Yeah, as quickly as possible, because this year is all wet. The temperature nearly 50-...
Yeah
degree centigrade. The people, when they put their bare feet on the ground, they will be burned. my, our products are very suitable for using. Also, they are so rich. Not to miss the chance.
Thank you. Yeah. We have, our, our head of sales stays in, Dallas, Fort Worth.
Yeah.
Yes, we have we've got a footprint there. We've got several reps, in, in the state of Texas as well.
Yeah.
Yeah.
Just.
Yeah
suggest to, to, what should I say? Use all our stock here, the 100 or million stock, to go to Texas.
Thank you.
Yeah. Thank you.
Yeah. Tracy, have you got some questions?
I do have a question from an online participant. I'll just read that out. Noting Coloplast's $1.3 billion acquisition of Kerecis, what does that signal about the biologics industry and potential inbound interest by global wound care in Aroa?
Yeah. I'm not sure who knows about that in the room, but in the last month, there's been a large transaction. A small sort of innovative company called Kereplast, based. Sorry, Kerecis, based out of Iceland, got acquired by a company called Coloplast, which is a multinational, based out of Denmark. That was a $1.3 billion transaction. The company was doing, it was on a run rate for about $100 million sales, U.S. Not too similar from Aroa. I think there's a couple of things to note. Firstly, it's, I think it's a very strong validation of what we're doing here at Aroa. You know, similar types of technology, and we have a view that we're better.
you know, you know, we certainly think that we're very, very, you know, in a very strong position to compete and outperform Kerecis products. I think it shows the interest from strategic investors in the, this sort of technology. you know, in the soft tissue reconstruction, you often hear kind of questions about: Is this, is this a market where, you know, synthetic technologies are going to overtake biologic technologies? You know, is, is there a place, is there a place for biologic technologies? The way I sort of think about that is yes. The answer is yes, both technologies are important. They both have different use cases. Seeing an acquisition like that for a company with this type of technology, I think is a really strong validator for what we're doing.
I think the other, the other point is, you know, Coloplast is a relatively small player, in the U.S. wound care market. This is not one of the large strategic investors coming in and acquiring a small company. They're, you know, they're quite small in the U.S., so again, I think, you know, a good validator, for a company like us. Any further questions there, Tracy?
No. Thank you, Brian. At the moment, I don't have anything further online.
Great. Any further questions?
Is there any merit in the dual listing while you're at ASX?
Yeah. I mean, it's something that we have thought about. I think there is pros and cons. I think the pro, the pro is that it would give us more visibility in the New Zealand market. You know, because we're a, a New Zealand-based company and we're listed on the ASX, we don't really get a lot of local coverage, so I think it would help in that sense. I think the con, and it's one that is quite important to us, is what we'd really like to be able to do is to get into some of the indexes on the ASX, and it may mean that that becomes harder for us. So, you know, we've sort of come to the view, you know, that we're probably best to just focus on being on the ASX.
It is something that we do continually go back and sort of, you know, reconsider. Okay. Any final questions? No. Okay. Right. Jim. Thank you.
Thank you, Brian. We now get to the formal business of the business. The first item on the business is to receive and consider Aroa's financial statements and audit report for the year ending 31st of March, 2023. You've received those financial statements. We have, we don't intend to go through them. Well, Brian?... The floor is open for any questions of either Clare Stanley, the auditor, or James, as the CFO. Are there any questions from the floor about the financial statements? Tracy, do you have any questions?
No, no questions online.
Thank you. Now, before we move on to the, the resolutions, I'll just hand over to James to explain how this is all going to work.
Thanks, Jim. Okay, procedural matters. In terms of the voting procedure for people, of you in the room in person, so the chairman has determined to call a poll on all resolutions at today's meeting. We'll shortly open the voting. I'm just going to outline the procedures as you call on you in person, but also the people online. Firstly, the people in attendance. You should have received a form. The key is, is that if you have a blue form, with your shareholding noted, then you need to complete that, okay? Then hand it and put it in the box, once you leave the meeting. If you're already voted, then you would have been given a yellow form, and if you're not eligible to vote, you would have received a white form. Okay?
If you require any assistance, just reach out to myself or any of the ladies you would have met on registration. For those people meeting online, you will, if you've already voted, then please don't vote again unless you wish to change your original vote. What you'll see is when we give, bring up the resolutions, a poll will come up on your screen. To essentially vote, you just need to simply select, select one of the options and press Submit. There'll be a vote that comes up for each of the resolutions. For those shareholders that have appointed Jim, the chair, as their proxy, Jim McLean intends to vote in favor of all of the resolutions.
Lastly, the poll results will be tallied after the meeting, and we'll announce the results later today. In terms of proxies, we have engaged the services of our share registry, Boardroom, to compile a report on the proxy voting. Boardroom has provided a report disclosing the valid proxy votes received prior to this meeting. As we go through each resolution, you'll see a table that pops up that will provide you with those proxy results. I guess a reminder that as we're now in the formal business of the meeting, the opportunity for questions and comments is limited to our role as shareholders and the authorized representatives. With that, I will pass you back to Jim to take us through the resolutions.
James. Thank you. Thanks. The first resolution I'm trying to refer to is for the reelection of John Diddams. The board unanimously supports John's reelection and recommends shareholders vote in favor of it. I now invite John to say a few words.
Thanks, Jim. I'm John Diddams. I'm over here from Sydney. Today is a little over three years since Aroa was still on the ASX, and nearly four years since I joined the board. I played an active role in helping the company into the IPO and the ASX listing as chair of Aroa's IPO Due Diligence Committee. I'm currently chair of the Audit Committee and a member of the Remuneration and Nomination Committee. My background, I've got extensive accounting, corporate governance, and compliance experience, including with National Accounting Standards, ASX Listing Rules, and the corporations laws in Australia, and to a lesser extent, I must confess, in New Zealand.
I've held roles as the CFO, CEO, and director of private public listed companies over, over many, many years, and I'm currently the chair of the board of ASX-listed X Reality Limited. I'm privileged to be a member of the Aroa board. I have very high expectations, as has the whole board, for the company's success, and I'm very excited about the impact of the products and improving patient outcomes and the future of the company. I'm deeply invested in Aroa's future, and like you, I'm also a shareholder, and I thank you for the opportunity to continue to serve on the Aroa board, if you so choose. Thank you very much.
I now move that shareholders consider and, if thought fit, pass this ordinary resolution. I will give you a few moments to vote. I think that's probably enough time. We will give you a little bit of time at the end of the resolutions, if need be, to continue with your voting, if you haven't completed that at this stage. I now refer you to resolution two, which is the election of Dr. Catherine Mohr as a director of the company. The board unanimously supports this resolution and recommends shareholders vote in favor. As I noted earlier, Catherine was unable to join us today, but she has, however, provided a video message, which will now play. Hopefully. Your hands.
Hello, my name is Dr. Catherine Mohr, and I am a director and a member of the Risk Committee for Aroa since November. A bit about my background. I am originally an engineer, a mechanical engineer, who went to medical school in my 30s, trained in surgery. I have run research for Intuitive Surgical, the maker of the da Vinci surgical robot, Global Strategy, and now run Intuitive's foundation. I study the development of surgeons and how do you train surgeons in low-resource environments. The experience I bring to Aroa is a deep understanding of surgical procedures, how the Aroa's products could be used in a variety of surgical environments, and then also how hospitals look at these things from an economic point of view.
A deep history with New Zealand's biotech and entrepreneurship environment, and a real desire to see Aroa grow to be the company that it could be. Thank you very much.
I move that shareholders consider and have thought that pass this ordinary motion. Are there any questions from the floor or externally? Tracy, are there any questions?
No questions online at the moment.
Thank you. I now refer to resolution three, which authorizes the board to fix the audit fees for BDO, the company's auditors, for the year ending 30th March 2024. The board unanimously, unanimously supports this resolution and recommends that shareholders vote in favor it. I move that the shareholders consider and have thought that passed the ordinary resolution. Are there any questions for this resolution on the floor? That appear to be. Tracy, do you have any online questions?
No, I don't have any online questions.
Thank you. Move on to the next resolution. This resolution refers to the granting of share options to Dr. Catherine Mohr in alignment with the share options issued to the company's other non-executive directors, as approved at last year's AGM. The board recommends that shareholders vote in favor of resolution four. I will now move that shareholders consider and as thought fit, pass this ordinary resolution. Please note, this resolution is subject to closing restrictions as set out in the vote of the notice of meeting. Any shareholder have any questions or comments? Tracy, do you have any online questions?
No, I don't have any online questions.
Thank you. This final resolution, resolution five, relates to the directors' remuneration. As I am one of those involved in that, such resolution, I have a prior acceptance. Thank you, Jim. I now refer to resolution five, which seeks approval for the maximum aggregate cash fee payment to the company's non-executive directors, to be increased from AUD 100,000 or by AUD 100,000 to AUD 750,000. Following Catherine's addition, Aroa now has six non-executive directors. As outlined in the notice of meeting, a detailed review undertaken by the Remuneration Nomination Committee, input from Aon, to identify aspects of the current cash fees that necessitate prompt attention. The proposed increase to enable the company to accommodate these changes.
The board recommends that shareholders vote in favor of this resolution. I will now move that the shareholders vote in favor. Sorry, but that the shareholders as, as thought fit to pass this ordinary resolution. Please note that this resolution is subject to voting restrictions as set out in the notice of meeting. Does any shareholder have any questions or comments?
Thanks. Thanks for the shareholder. I didn't see a copy of the AON report released. In terms of the composition of American versus Australian companies that were included in the benchmark, can you provide any more detail on that?
Yeah, I know, you know, I can provide a comment. I might get Steve to, as the chair of the REM committee. I mean, there was a mix. We looked at it from a Australian perspective, a bench, a set of benchmarks there, and also a set of U.S. benchmarks. I believe there was some New Zealand benchmarks in there as well. It was a hybrid approach, you know, looking at those kind of across all of them to make sure it made sense. Steve, are you, did you hear the question?
Yes, I did. Thanks, Brian, and thanks for the question. This was a serious effort conducted, something we plan to do on a regular basis. Looking at the markets, as you're indicating, Brian, with the idea of being competitive, both, in the U.S., where we have two members, as well as, looking at the other Australian and New Zealand markets. There are differences, and that came out in the report. The board, starting with the Remuneration Committee, looked at that to try to find a balance between those items. So this is where we headed as far as what we thought was appropriate, given, you know, the growth of the board, intent over the next years, and some other factors that are all involved.
I assure you, it was quite an effort to go through all this and to come up with a reasonable change, we think. You know, the key here is it needs to be competitive because we're trying to recruit in very talented board members and at the same time, you know, retain and so forth. We think this is a balance on that side. Overall, the policy is shooting for a median-type value. We're not at the high end by any means, more around the 50/50 in terms of the numbers that we saw in that report. Is that help?
Yeah, thank you. That's good. I mean, I, I think just a comment that you want to ensure... With the hybrid approach, you want to ensure that you, you know, the U.S. guys are, are, are competing in a different pool. I recognize we're a New Zealand headquartered business, but just, you know, how you've, how you've benchmarked will be interesting to see. Thanks for those comments, Steven.
Yeah. No, and it, it's, it's complicated, as you might guess, across these different places. Yet, you know, other people do it, and we are looking at what they're doing as well as, as what the absolute numbers are to get an idea of the best way to go at it. We will continue to do that as we move forward. We thought adding this additional level, this amount, this time around, was the appropriate way to go.
Yeah. Tracy, do you have any questions online?
No, I don't have any online questions.
Right. I'll now hand it back to Jim.
Right. We'll now just give you an extra minute for poll voting, for polling voting to be completed. If you're in the room, would you please indicate by raising your hand if you require more time and lodge, lodge voting paper? Online voters, when we indicate the poll is being closed, your voting box will disappear from your screen. It's Tracy, maybe you can let me know where that, where that has occurred.
It's been up during the course of this discussion about the resolution, so, it's just now giving a bit of extra time to, to finish that voting, and then we'll be ready to close the poll.
Thank you.
Okay, Jim, I think we. That might be an enough time for the poll. I have had no indication of further time being requested at this stage.
Tracy, we're just collecting final-
Okay.
In the room here. Thank you. Yes. Now, we're opening the floor to any questions or comments from shareholders. Before we'll work through in-person question first and online questions after that, are there any questions or comments from the floor group? None from the room. Tracy, are there any online questions?
There are no questions online.
Thank you. The, the company has not received any notice of any other business. This brings to an end today's annual general meeting. I'd just like to thank those who attended. The pleasure is to have people here in person . I think, might say at last. Just finally, I'd like to thank the shareholders, both in the room and online, for their continuing support. It's really appreciated, and we approach the future with great optimism. Thank you very much. I declare the meeting closed.
Thanks, Jim. I'll, I'll end the online portion of the meeting at this time.
Thank you, Tracy.