Good morning. Welcome to the PointsBet Holdings Limited 2024 Annual General Meeting. My name is Brett Paton, and I'm your chair. I'd like to welcome those shareholders who have joined us here today in person, together with those shareholders who are participating through our hybrid online meeting platform. May 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 10:00 A.M. and that this is a properly constituted meeting. As a quorum for a general meeting is present, I fully declare the 2024 Annual General Meeting now open. In the rooms, we have our CEO, Sam Swanell, and others might just raise their hand to introduce themselves. Together with non-executive directors, Peter McCluskey, Tony Symons, Kosha Gada, William Grounds.
Also in attendance here today are Group CFO, Alister Lui, and Group General Counsel and Company Secretary, Andrew Hensher. Participating online are our US-based non-executive directors, Becky Harris and Manjit Gombra Singh. The notice of meeting was distributed to all shareholders, and copies are available online. I take the notice of meeting as read. As set out in the notice of meeting, the formal proceedings comprise five resolutions. All resolutions will be decided by poll. Voting on the resolutions is actually now open. Computershare, the share registry company, is appointed to act as scrutineers, and Peter Render is appointed as the returning officer for the purpose of the poll. For those in attendance in person, the blue voting cards handed out contain the resolution, and you should complete the voting card before the end of the meeting.
Shareholders who wish to abstain from voting and proxy holders who have been directed to abstain from voting do not need to complete the voting card. Voting instructions. For those participating online, you can select the vote icon at the top of your screen. You can then cast your vote, and you will see the vote confirmation. You can vote any time during the proceedings until I declare the voting closed. You can also change your vote at any time during the proceedings. I will give a clear prompt later in the meeting to warn of any such closing. Question and answer instructions. We will also take the opportunity for questions. If you're attending online, you can start submitting written questions now by clicking the Q&A icon. You can also ask a verbal question by following the instructions on the broadcast window.
We also welcome Amy Whittingham and her colleagues at RSM, the company's auditors. Before I move to the resolutions to be considered today, together with Sam Swanell, I would like to provide some commentary on the strategy, operations, and financial results of the companies. The key event during FY24 was the completion of the sale of the U.S. business to Fanatics Betting and Gaming for a headline purchase price of $225 million. Despite the strategic success of building a valuable asset in the U.S., the costs of operating a state-by-state environment, together with the requirements to build significant scale to compete against well-capitalized operators, meant that the sale delivered the most attractive risk-adjusted outcome for our shareholders. The completion of the sale of the U.S. business involved a complex technical and operational migration, separation, and reorganization of the business over a 10-month period.
The ability to continue to deliver outstanding results in Australia and Canada while reconstructing the business for future growth and success is a true testament to our staff. The net sale proceeds of the business, together with the majority of the company's surplus corporate cash reserves, were distributed to shareholders during the financial year. The board is pleased to have returned a total of AUD 442.4 million, representing AUD 1.39 per share to shareholders across the first and second capital returns. As previously announced, the company applied for and received a class ruling from the ATO confirming that for Australian tax residents, no part of the first or second capital returns will be assessed as a dividend. The PointsBet Group had an outstanding year and achieved a number of measures exceeded previous guidance.
This includes a total net win of AUD 267.1 million, being 16% higher than last year, gross profit margins of 52.8%, an increase of 50.3% than that of FY23, total marketing expense of AUD 71 million, being 21% lower than the previous year, normalized operating expenses excluding marketing expense of AUD 60.4 million, coming in at the lower end of the previous guidance of AUD 60-70 million, and a normalized EBITDA loss of AUD 1.8 million, which was a AUD 2.2 million improvement on the upper end of our previous guidance and represents a AUD 47.2 million improvement from the loss of AUD 49 million in the previous year. I'd now like to make some 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 choice regarding their gambling expenditure.
PointsBet's 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 stability commitment, sustainability commitment. In addition to paying AUD 0.48 in the dollar to the government and racing and sports bodies, PointsBet makes a material investment in achieving best-of-class compliance with important consumer protection measures. In Australia, PointsBet committed significant resources to deliver zero-day KYC integration to the National Self-Exclusion Register and a ban on using credit cards to deposit. The package of initiatives and others mean the regulated online wagering sector in Australia is clearly operating to very strong consumer protection standards. When it comes to advertising, PointsBet has restated many times our support for advertising reform.
However, we do believe it is important that reputable, licensed Australian operators that pay significant taxes and fees can distinguish themselves from unregulated offshore service providers by sensible advertising. We have consistently outlined a logical and sensible advertising model to be adopted that can clearly protect children and vulnerable people. The board of PointsBet Holdings consider 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 in 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 customer and anti-money laundering policies and procedures in all our jurisdictions.
A full summary of our corporate governance activities and policies is available on our website. Our Group CEO, Sam Swanell, supported by his executive leadership team, has done a tremendous job in leading the business through a period of substantial change and growth over the last 12 months. In addition, our highly talented employees are a key asset, and the results we have been able to achieve are a testament to their dedication, commitment, and passion. On behalf of the board, I'd like to thank all of the team for delivering on the opportunities we saw in FY24 and positioning the business for continued growth in 2025 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.
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 delivering on the opportunities we see in the business moving forward and growing our shareholder value. It is now my pleasure to invite Sam Swanell, Group CEO and Managing Director, to provide further commentary on the FY24 financial year and the business strategy and priorities over the coming year.
Thanks, Brett. In Australia, FY24 was a record year of revenue, being AUD 211.5 million, up 10% compared to the PCP. Gross profit was also a record, being AUD 111.8 million, up 14% compared to the PCP. Gross profit growth of 14% outstripped net win growth of 10% as our greater promotions efficiency and leaning to lower-cost international sports products improved our gross profit margin. Statutory segment EBITDA for the year for Australia was AUD 26.8 million, a material improvement compared to the AUD 100,000 in the PCP, and constituted record EBITDA performance for the Australian business. We've now delivered positive full-year EBITDA in Australia for the past five financial years. Our 10% growth in revenue outpaced the market, and we gained market share. In Canada, we continued our improvement in EBITDA performance on the back of revenue increasing 87% on the PCP.
Statutory segment EBITDA loss reduced to AUD 19.7 million compared to a loss of AUD 35.8 million in the PCP. Gross profit was up 141% versus the PCP, with improved gross profit margins from efficiency and cost of sales as the Canadian business continues to scale. Sportsbook net win was AUD 15.2 million, up 124% versus the PCP. This growth was driven by both improved trading margin on a higher overall mix of multi-bets and continued gains in customer acquisition efficiency. Our Same Game Multi and live Same Game Multis are powered by our in-house Odds Factory technology, and along with our live in-play betting capability, form the cornerstone of our sportsbook product-led strategy in Canada. Sportsbook in-play handle grew to 66% of total handle, up from 63% in the PCP, highlighting the strength of PointsBet's live betting product offering.
The Ontario market continues to grow strongly, and we continue to outgrow the market and increase our market share. We are also particularly excited about our progress in online casino. In FY24, we grew net win by 63%, while in parallel, we invested to strengthen our product and overall player experience, which has positioned us to accelerate our performance further into FY25. As noted earlier, the completion of the sale of the U.S. business involved a complex technical and operational migration, separation, and reorganization of the business over a 10-month period. This excellent work has meant that PointsBet maintains significant operating leverage through our fit-for-purpose global 24/7 follow-the-sun operating model. We also continue to invest for growth via our investment in marketing, technology, and product. Our investment levels are set at a level for the company we will grow into in the coming years.
When we talk about transitioning to EBITDA profitability, we do so with investment in these key growth drivers already built into our P&L. However, that investment is largely stable now, and as we grow revenue, we will now benefit from significant operating leverage. This is a significant inflection point, and the revenue growth we generate will flow efficiently to the EBITDA line and expand our EBITDA margins. As I've said before, sports betting and iGaming remains a fast-growing global market, and companies like PointsBet, with a globally powerful product, proprietary technology, and international regulated markets experience available within this industry. I will now hand back to the Chairman for the formal business of the meeting.
Thank you, Sam. I will now move to the formal business of the meeting. Results will be released to the ASX after the conclusion of the meeting. Please note that only shareholders, proxy holders, and authorized shareholders' reps may vote. Any undirected proxy votes given to the Chairman will be voted in favor of the resolution. Any directed proxies given to you by the shareholder will automatically be cast as directed when the poll is closed. Ordinary business financial statements. The first item of business listed in the notice of meeting is to receive and consider the financial statements for the 12 months ending 30 June 2024 and the reports of the directors and auditor. Please note that no vote is required on this particular item of business. As mentioned previously, Ms. Whittingham, partner at RSM is with us today.
Questions relevant to the conduct of the audit, the preparation, content 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 her through me as Chairman. Any questions in relation to director and executive remuneration policies will be considered when we come to that item of business covering the adoption of the remuneration report. Firstly, are there any questions from shareholders here in attendance today? Are there any written questions which have been submitted online or any shareholders who wish to ask a question today on the phone?
Chad, there are no questions.
Thank you.
Being no more questions, I will proceed to the resolutions to be considered. Resolution One, re-election of Kosha Gada. This item of business relates to the re-election of Kosha Gada as the director of PointsBet Holdings Limited. The resolution and the summary of the votes received before the meeting now appear on the screen. Details of Ms. Gada's background and experience are set out in the notice of meeting. However, I would now like to ask Kosha to speak to her re-election. Kosha.
Thank you, Mr. Chairman, fellow board members, and shareholders. Since I was appointed to the board in 2021, it's been an honor and privilege to serve, bringing my experience in media, technology, and digital business models to the board over a period of time that has seen some impressive outcomes achieved by the business. I remain committed to continuing to bring that experience to bear for helping the business execute our growth strategy and our growth agenda over the next period of time, and thank you for your support.
Thank you, Kosha. The board of directors, with Kosha abstaining, of course, recommends that shareholders vote in favor of Resolution One. The resolution is now open for discussion and questions. Are there any questions from shareholders here in attendance today? Are there any written questions which have been submitted online or any shareholders who wish to ask a question over via the phone?
Chad, there are no questions.
If there are no more questions, we'll move to the next item of business, Resolution Two, issue of STI shares to Mr. Sam Swanell. The resolution and summary of the votes received before the meeting now appear on the screen. Mr. Swanell was awarded a short-term cash incentive of AUD 771,750 for the FY24 financial year. Pursuant to the company's key employee equity plan, the board provides the choice for Mr. Swanell and other executives to take their STI in fully paid ordinary shares in the company, and Mr. Swanell has elected to do so. The election was made in July of this year after it was clear an STI had been earned. On the 19th of July 2024, the board agreed, subject to shareholder approval, to issue Mr. Swanell 1,728,444 shares, fully paid ordinary shares in the company, rather than pay Mr. Swanell the cash STI award.
Details of how this was calculated are set out in the notice of meeting. On the 26th of July 2024, an Appendix 2A was released detailing the issuance of the STI shares to other members of the executive, and noting Mr. Swanell's STI shares will be subject to shareholder approval as required by ASX Listing Rule 10.14. Where shareholders do not approve Resolution Two, Mr. Swanell will receive the STI cash award instead. The board of directors, with Mr. Swanell abstaining, recommends that shareholders vote in favor of Resolution Two. The resolution is now open for discussion and questions. Are there any questions from shareholders in attendance? Are there any written questions or phone questions?
Chad, there are no questions.
Given there are no more questions, I'll move to the next item of business, Resolution Three, issue of Performance Share Rights to Mr. Swanell. The resolution and a summary of the votes received before the meeting now appear on the screen. The purpose of Resolution Three is to seek shareholder approval for the purpose of Listing Rule 10.14 to grant 1,647,411 PSRs to Sam Swanell under the key employee equity plan. The notice of meeting sets out how the PSRs have been calculated and the key terms of the grant, including the performance conditions. The directors, with Mr. Swanell abstaining, recommend that shareholders vote in favor of Resolution Three. The resolution is now open for discussion and questions. Anyone in attendance today wishing to ask a question? Are there any questions on phone or in writing?
Chad, there are no questions.
being no more questions, I'll move to the next item of business, Resolution Four, which is the remuneration report. This is a non-binding resolution. The next item of business is to adopt the remuneration report. The resolution and a summary of the votes received before the meeting now appear on the screen. The annual report for the 12-month financial period ending 30 June 2024 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 2023/24 and reports the remuneration arrangements in place for non-executive directors and senior management during that period. The vote on this resolution is advisory only. However, the board will take the outcome as a vote into consideration when reviewing our remuneration practices and policies going forward. The resolution is now open for discussion and questions.
Are there any shareholders present in attendance today wishing to ask a question? Are there any questions submitted on phone or in writing?
Chad, there are no questions.
Being no more questions, I'll move to Resolution Five. Andrew, Resolution Five.
Yes. So we put out an ASX release earlier today. The company's withdrawn this resolution given the company's market capitalization exceeds 300 million, which therefore makes us no longer an eligible entity for the purpose of Listing Rule 7.1A. As mentioned in that ASX release, the withdrawal of that resolution doesn't impact any other proxies received today.
So that concludes all the various resolutions. I'd just like to give some prior warning that the meeting will close shortly. I'll just pause for two minutes.
Chad, there was one general question in relation to.
Sorry.
There was one general question in relation to the Canadian business.
Okay.
Marcus, if you want to read that one out.
It's off my screen.
It's off the screen. Okay. No problem. Yep. Happy to do that. I'll review that. The question was from Mr. Robert King. Can someone please expand on the progress of the Canadian business and your evaluation of the progress in relation to the company's strategy?
Okay. That's one for Sam.
Yeah. So as we sort of spoke to as it relates to the full-year results, we reduced our loss. FY23 was effectively the first full year of operations in the Canadian business, and so we would refer to that as our maximum loss-making year. We then improved and grew revenues by 62%. I'll just check that number. Grew revenues considerably in the FY24 year. Just bringing it up. Effectively cutting the loss for Canada in half as we spoke to. So the loss last year was AUD 19.7 million, down from AUD 35.8 million in the first year. Our strategy in Canada is a sports-led strategy. Because of the investment we made in the North American market, pursuing not just Canada but originally the U.S. as well, we have our Odds Factory capability. That capability is world-class.
We are consistently ranked as one of the top products in the North American market. Via our live sports betting capability, our multi and parlay capability, that's how we're able to attract and retain clients in the Canadian market. Ontario is a competitive market, but some of the operators that had inherent advantages in the U.S. don't have those same advantages as they do in the Ontario market. It's set up with a reasonable tax rate. We don't have to pay partner fees. You have iGaming sitting side by side with sports betting, which means the path to profitability is accelerated, so we've spoken about the fact that we will not be EBITDA positive in Canada for the full year. This year won't be EBITDA positive. We think we'll be run-rate positive through the later months of this financial year.
The expectation would be that Canada is delivering EBITDA positivity in FY26. Probably the final point on Canada is that when we talk about the regulated market, we talk about Ontario currently. And so the opportunity that we're capitalizing on is restricted to the borders of Ontario. We do expect Alberta to legalize sometime in calendar year 2025, probably before NFL season, so come around August. And we would expect that a province like British Columbia could follow about 12 months later. So when we talk about the Canadian opportunity, we're focused on Ontario at the moment, getting Ontario profitable. But that capability and that market share and that brand recognition that we have in Ontario should be directly transferable to Alberta and British Columbia and grow the total addressable market in Canada.
In our full-year results slide, we included a couple of slides around where we sit from a market share perspective and how we expect the market to grow in Canada. Australia is an AUD 5 billion market, reasonably mature. In a few years' time, we think it'll be AUD 5.7 billion. Canada's sort of 2-2.5 billion market, but we think in four or five years' time, with the expansion of those new provinces, it will also be above AUD 5 billion in market. So while small at the moment and small from PointsBet's overall contribution to the PointsBet group, it's a fast-growing market. It's going to have new provinces add to the total addressable market. And we believe it's a great complementary market given our capability to complement Australia.
Thank you, Sam. Any further questions appearing on the screens?
Yes, Chad. There's one further question. The question is, there's a lot of speculation in relation to the industry continuing to experience consolidation and that the company may be involved in that consolidation. Can you make any comments in this regard?
We're in a fairly unique position in the marketplace. I'll get Sam to comment perhaps in a bit more detail, but we have gained a very strong brand recognition. We've gained 5% plus, I think, of online turnover in the marketplace. So we're a small fish in a big sea or a bigger fish in a smaller sea. So in time, we expect that opportunities will come to us from the smaller participants in the market. We present presumably a fairly exciting, youthful, sports-oriented organization that possibly will be attractive to other parties in the market, onshore or offshore. So I think the environment is such that we're a fair chance to be part of any process in the next year or so. We're not initiating anything to achieve that outcome, but we are well positioned either way. So it's an each way bet. Any further?
Yeah. I think that's spot on, Brett. I think we're in a really important strategic position, in particular in the Australian market. In terms of smaller operators that we could potentially roll up and accelerate our EBITDA journey in Australia, we have a top-tier platform and product. And so we believe that there are opportunities there for us to do that. And then, as Brett said, in terms of the operators that are above us in size, if they are looking to pick up 5 or 6% market share or have a complementary brand or attracted to our technology and our people, I think we're the only sort of material opportunity for them to add to their current market share. I think there are other opportunities in Canada too. We see opportunities in organic growth in Canada.
The important part that Canada plays for the group is that everywhere else in the world, live betting on sport, in-play betting on sport, and online casino, they are the international product set. Here in Australia, we're a racing market. We're a pre-match sports market. You have to ring a call center in Darwin to get a bet on once an event has already started. Everywhere else in the world, it's all about live in-play betting, and it's all about online casino. We have that international product set, unlike perhaps some of our Australian competitors. I don't believe that our M&A world and consolidation world is at all restricted to be Australian-centric. It's one of the reasons we kept Canada is because we have this fantastic international capability, and it's a key part of the value of the company.
There's just one final question, Chad. The board and management are focused on EBITDA. Why isn't pre-tax profit a more logical metric to report and focus on?
Yeah. I'll probably take that one. The company is focused on EBITDA as well as cash flow generation. The reason why we wouldn't be using pre-tax profits as a measure at this point is because we've had historically a large investment in our software capitalization as part of the bigger business with the US business. As we normalize out of that, our amortization profile will normalize, and that's when we'll start to be in position to kind of monitor our pre-tax profit measure.
There are no further questions, Chad.
Okay. Being no further questions, then I might just have that two minutes of pause for those people to complete their proxy votes and/or lodge their proxy cards. Voting is now closed. Please note that the final results will be advised to the ASX. Thank you all very much for your attendance. Nice to have you here. As the business of the meeting is now completed, I declare.