Good morning, ladies and gentlemen, and welcome to the WOTSO annual general meeting. My name is Seph Glew, and I'm the Chairman of the Board of WOTSO. As the Quorum is present, I now formally declare the meeting open. With me this morning are my fellow directors, Richard Hill to my left, Paul Tresseter, and Jessie Glew to my right. Also with us today is our Company Secretary, Agatha Ryan, as well as our Auditor, Chris Kirkwood, of ESV Accounting and Business Advisers. Firstly, a bit of housekeeping before we get underway. Voting. If you have not already voted via proxy, you'll be given the opportunity to cast your vote during today's meeting. For security holders who've joined online via the Computershare meeting platform, you will see instructions on the screen for voting through the platform.
Voting on Resolution 1 to 3 in the Notice of Meeting is now open. Security holders should note that it's my intention to vote all open votes available to me in favor of each of the resolutions. Questions. We will provide an opportunity for discussion and to answer any questions you might have when we deal with each of the formal agenda items. Once again, for security holders who've joined online via the Computershare meeting platform, you will see instructions on the screen for submitting questions through the platform. I will now hand over to our CEO and the real boss, Jessie Glew.
Good morning, everyone. It's good to see you all here again. Each year when we meet, the conversation about how and where people work has moved another step forward. Each year we've been able to report WOTSO's growing participation in the changes taking place. It's becoming increasingly clear that the commercial property model built on long leases and big corporates has started to add something new. When the industry talks about the flight to quality, this has traditionally meant premium fit-outs and A-grade space. What we're seeing is that quality is starting to be defined by experience: how easy it is to access a space, how it makes you feel, and how well it supports the way you actually work. Do you feel good in your workspace? Increasingly, people and businesses don't want to be locked in. They want flexibility.
They want to work closer to home in spaces that feel a part of their community. That's what we do. That's what WOTSO does. We take spaces that have been sitting idle and bring them back to life. We give buildings a new purpose. People often ask what makes WOTSO different. I think the answer is simple. We're local. We try to understand our communities and build spaces that belong to them. When we dropped the word property from our name, we did it because our business is more than just a property business. Its circa AUD 300 million property portfolio is given life through its operating business, and that operating business is now sought after by other landlords. It's interesting to witness what's happening outside our own portfolio.
Landlords have started to see co-working not as competition, but as a service, a required amenity like a gym, a childcare, a café. That is a major shift for our industry. We are now doing deals where landlords fully fund the fit-out and still structure agreements around turnover. If we can continue to secure deals in this way, it will fundamentally change the pace at which we grow. It means we can grow faster with less capital and with an even better risk profile. Reflecting on the previous year, FY2025 was about repositioning for growth through the flex-based business. Our flex-based revenue is up 6%. Underlying EBITDA is up 14%. 68% of our total revenue now comes from WOTSO flex-based operations, and there is still no debt in the operating business.
Whilst our results show some growth, we expect greater growth through continued expansion and the maturation of our startup locations to provide enhanced results in the future. Looking ahead, you may have read in our annual report about the ongoing dispute with our landlord at the Bakehouse Quarter in North Strathfield. Our landlord has obtained a rezoning that allows for buildings up to 50 stories on the site where WOTSO currently operates, and the only part of the site on which we believe we could be relocated has been dedicated as public open space. Given this, it's fair to assume we'll need to relocate at some point in the not too distant future. How smooth or chaotic that process is and what level of compensation we receive will ultimately depend on the outcome of the dispute. In preparation, we've been working on options.
We have around 1,000 sq m available mid-next year in a neighboring building owned by our WOTSO directors, and we've struck a deal for space nearby at Rhodes that can accommodate the rest of our members. Whilst it's not ideal, we have a clear plan and the flexibility to execute it. As always, the ease of that transition will come down to the behavior of our landlord at the Bakehouse Quarter. Where to from here? Our focus for FY26 is twofold: growing our network and growing the value we extract from each location. We expect to have 40 locations operating or being fit out by the end of the year, and we're headed towards 100 locations across Australia and New Zealand. That's 100 communities where people can work flexibly while staying close to home. This growth isn't for growth's sake.
As our existing sites mature and our network grows, we expect our profitability to grow. We plan to be the largest provider of co-working space across Australia and New Zealand to impact as many local communities as possible, and we're having a lot of fun while we're building this business. At the same time, we're diversifying our offering and exploring additional services that make work and life easier, like Bubba Desk, which brings flexible childcare into our spaces. Next month, we will complete and start operating our first Cook Space: 10 commercial kitchens in one space that can be rented by the month, week, day, or even the hour. In addition, we're targeting the lazy space in our portfolio: areas like meeting rooms that currently run at about 20% utilisation but still generate AUD 3 million in revenue.
If we can lift that utilisation to 40%, that's an extra AUD 3 million with no extra cost. It's small adjustments like these across dozens of locations that compound into real growth. While we're excited about expansion, we're equally focused on boosting the performance of what we already have. We've built a strong foundation, and whilst we're in no rush, we are ready to grow. I will now hand over to Seph for the formal business of today's meeting.
Thanks, Jessie. We'll have questions at the end, so while we'll ask the opportunity for questions with each of the resolutions, that probably, if there are questions, it's probably better to wait till the end and we can have a discussion that goes as long as anyone cares for. We released the proxy results for all the resolutions ahead of the meeting, and these are now shown on the screen. As can be seen, all resolutions have solid support. Item one, financial statements and reports. The 2025 annual report was lodged with ASX on 20 August 2025. It is on the WOTSO website and has been mailed to members who requested a printed copy. The financial report and the reports of the directors and auditor are now laid before the meeting. Are there any questions or comments on the financial report or the reports of the directors and auditor?
Are there any questions relevant to the conduct of the audit and the preparation and content of the auditor's report to be put to the auditor? If there are no questions, as this matter does not require a vote, we'll move to the next item of business. Resolution one. Adoption of the remuneration report. In accordance with the requirements under the Corporations Act, WOTSO is required to submit its remuneration report to security holders for consideration and adoption by way of non-binding resolution. This resolution is advisory only and does not bind the directors or the group. I propose the motion that the remuneration report, which forms part of the director's report for the financial year ended 30 June 2025, is adopted. Is there any discussion? Resolution two. Re-election of Jessie Glew as a director.
In accordance with ASX listing rules and the relevant constitution, the meetings now need to consider the re-election of Jessie as a director. This resolution is an ordinary resolution. I propose the motion that Jessie Glew, who retires in accordance with the respective constitutions of WOTSO and Planlock, and being eligible, having offered herself for re-election, be re-elected a director of WOTSO and Planlock. Is there any discussion? Resolution three, approval of additional 10% placement capacity. The ASX allows eligible entities to increase the usual 15% placement capacity by an extra 10%. If approved, WOTSO will be able to issue up to 25% of the staple securities on issue over the next 12 months. They won't be doing it at current share price, I can assure you. WOTSO will be able to raise additional capital within the price limit set by the ASX without obtaining further security holder approval.
This resolution is a special resolution. I propose the motion that for the purpose of ASX listing rule 7.1A and for all other purposes, approval is given for the issue of securities totaling up to 10% of the issued capital of WOTSO. At the time of issue, calculated in accordance with the formula prescribed in the ASX listing rule 7.1A. On the terms and conditions set out in the explanatory memorandum. Is there any discussion? That concludes the formalities. Please take the time to submit any online voting for security holders present at the venue. A member of the Computershare team will come around and collect your completed voting cards. Is there any discussion? Questions?
Just the way you're treating it is good to do the flexible share of.
I'd just like to find out what the rationale is for that. Why you see it as advantageous.
There's a number of reasons. Firstly, if you look at it from the point of view of Blackwell shareholders, appreciating this is the WOTSO meeting, for Blackwell shareholders, they are receiving the WOTSO shares as a fully franked dividend at an extremely low price. It has the effect of multiplying the effective dividend they're getting because they'll get those shares issued. The most recent ones were issued at, effective, well, at AUD 0.60 a share. We think the shares are worth two, perhaps three times that. That's beneficial for the Blackwell shareholders. From the WOTSO perspective, having Blackwell sitting there, which at one stage, going back two years ago, was sitting with 30% of WOTSO, we think that was a problem for people to see WOTSO going forward as an independent company. The quicker and the more we can reduce Blackwell's holding on.
WOTSO, the greater we get the separation between Blackwell and WOTSO, and WOTSO then moves forward by itself, which it already is doing. If I can get the Blackwell shareholding in WOTSO down to zero, we'll do it.
It's just the uptake is that you've got a lot of very small shareholders on your register.
We did a buyback last year of the small shareholders. I think, Jess, we'll probably do it again. Each time WOTSO distributes them out, we can then make an offer to acquire those shares. That effectively turns the script dividend that Blackwell shareholders are receiving into cash if they want it.
Okay, thank you. Seph, you mentioned obviously that the, I think it was at the NTA and also your expectations are that the 60 cents a share is very low and that it should be considerably higher. Yes. We're not getting any younger. I don't know. And I've had WOTSO and Bakehouse and those for a long, long time now. Do you expect in our lifetime that we will see the value go to what you believe it should be?
Yes, I do, but I can't tell you when. The accelerated growth of WOTSO, I think, will make the difference. We were, what, 20 sites only two years ago, Jess? We will be 40 sites very soon. We can feel the momentum. If you understand or you appreciate what happens is the teams, or Jess has put together the team based on a larger number of sites. For a little while, we have had what some people might call bloated head office management. Our head office costs are set up as a business that is going to grow. As we open more sites, our head office cost per site is going to drop rapidly. We have then got the sites that we have got maturing, and we are seeing the growth in the revenue of those sites once they get up and get established.
Often at the beginning, we might need to bring members in at discounted rates, but once they're fully occupied, get some maturity, we find that we're able to start increasing the revenue quite significantly. All those increases, whether it's a reduction in the overhead cost per site or an increase in revenue per site, those translate, they go straight to the bottom line. We think there should be a significant improvement over time in our bottom line numbers. Hopefully, the market will start to recognize that. You do want to know, I know it takes time, but we waited 26 years with the Bakehouse Quarter. All that time, we were saying the place is worth more than the market and the value as we're saying. Value is valued at AUD 180 million. We sold it for AUD 400 million.
I think we're not planning to sell our portfolio this time, but I think the market's got it wrong, and hopefully, one day it'll be recognized.
I think just adding in there, we're also a much simpler stock than we previously were. I think people now understand what our offering is. I think to date, that has been somewhat confused, and I think that's contributed to, I guess, the lack of appreciation of what we're doing. I think people now are really understanding what we're trying to do. I think our opportunity to grow really is there and is being met by the market. That's exciting to see. I just think there's been a shift in how people understand who we are and what we're doing.
One more question. So it says that of the 31 locations that's in the annual report, 17 are leased and 14 are owned. Are the 14 that are owned by WOTSO or are they?
They're owned by WOTSO.
Owned by WOTSO.
What we're saying there is they're in the assets that we own in the group. They're in the properties that are of the 17 assets that we own. WOTSO now sits in 15 of those assets. We're in one more than was reported in the annual report, which is the Penwith asset.
Those properties appreciate as well. Those gains will be felt through WOTSO.
Yeah. They will benefit by WOTSO being in there. It does, I think, as Jess has alluded to earlier in her notes, that it adds life to those buildings. At the current time, the values are depressed for our real estate, we believe, because the market, the banks, the valuers treat that as an owner-occupied building.
Related party.
Related party transactions. They call it vacant. They then look at our members and their short term, and they say, "Well, it's definitely vacant." When we get our valuations done, they say, "Let's assume WOTSO's not here. Let's allow for the cost associated with finding a real tenant. Let's allow for let-up allowances and agents' commission, all those sorts of things." They take that off the value. We think that they're depressed at the moment because of WOTSO, but in time, we'll get that fixed. It's a question of people understanding and the valuers acknowledging that motels don't become vacant. Self-storage doesn't suddenly become vacant. It carries on forever. Why wouldn't our business carry on forever?
I mean, it's interesting to see. I'm member tenure now. Across our office space, it's about two and a half years. So despite the fact that people are only signing up for a month, they're with us for an average of two and a half years. Yeah, it's definitely more permanent than a month-to-month tenant.
Great. Thank you.
Hello, everyone.
Hi.
Just a question on marketing. A little while ago, it was probably over a year ago now, I saw WOTSO advertising on television, which was a really different thing for the WOTSO family to be doing, I felt. How do you find that the public are perceiving WOTSO now with more sites? Because obviously, we all here know what you're doing, but how is that translating to the public's knowledge of WOTSO?
It's really funny. We had a culture session the other day where we talked about this very thing, how we're perceived by the public. I think our biggest marketing piece is our signage. I think the more signage we get up, the more we're recognized and the more the brand grows bigger than what we may be at the time. To the TV ad. That was an opportunity presented to us. We often attend the Kids' Counts Project charity functions. As part of that, we purchased a TV ad, and we had a bit of fun pulling that together. You saw the fabulous actors in that, I'm sure, most of our team. Yeah, it's not something that we will be doing continually moving forward unless we buy it at another auction, I presume. It's more about our signage. It's more about us locally getting out.
We have got a Friends of WOTSO program at each of our locations, which go out and meet with all the different businesses in the local area. We think that has a far greater reach than a TV ad.
No, and fair enough. That's why I thought it was a bit strange. Did you actually do any market research on how that affected maybe traffic to the website or social media? Was there any kind of bump?
We didn't see a spike in websites.
You are monitoring.
We did monitor the website traffic at the time that we did the ads. There was not a huge spike. We actually only had a couple of people come in off the back of that. Our issue, I think we have, is that we are a hyper-local business. Our marketing really needs to be done at the local level. To be on a national ad, it is great for brand awareness, but I do not think it is driving people in.
We want to drive shareholders, right?
Yeah.
Thank you.
Anything else? Anything online?
Stephen Maine's not visiting here this year. All right. That being the case, if there's no further questions, we'll close the meeting. Happy to discuss anything in the room afterwards if anyone's got any other issues they want to raise privately.
Any.