Good morning, ladies and gentlemen, and welcome to the 2026 WOTSO Annual General Meeting. My name is Seph Glew, and I'm the Chairman of the boards of WOTSO. As a quorum is present, I now formally declare the meeting open. With me this morning are my fellow Directors, Richard Hill to my left, Paul Tresidder, extreme right, and Jessie Glew. Also with us today is our Company Secretary, Agata Ryan.
Back.
At the back. As well as our auditor, Devon Lee of ESV Accounting, and business advisor. First, a bit of housekeeping before we get underway. If you've 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'll see instructions on the screen for voting through the platform. Voting on resolutions one to four in the notice of meeting is now open. Security holders should note that it is my intention to vote all the open votes available to me in favor of each of the resolutions. We'll provide an opportunity for discussion and to answer any questions you might have as we run through each of the formal agenda items, and after the meeting is done, for whatever time people want to take.
Once again, for security holders who've joined online via the Computershare meeting platform, you will see instructions on the screen for submitting a question through the platform. I will now hand over to Jessie, CFO of WOTSO.
Okay, CEO, CFO.
CFO. Did I call you the CFO?
Good morning, everyone. in 2020, we stapled the WOTSO operating business to our property trust. At the time, we had around 19 locations, and the plan was largely to grow WOTSO within properties we own. COVID slowed things down for a period, but since 2023, we have more than doubled the size of our network. We finished FY 2026 with 40 operating locations, compared with 31 in the previous year, and we expect to have 46 locations open by the end of the third quarter of FY 2027. What has changed over that period is not just the size of WOTSO, but the way that we grow. As already mentioned, we originally expected most of our locations to be in properties we owned. However, as opportunities presented themselves, we started leasing space from third-party landlords, and as the network grew, so did the value of having more WOTSO locations.
Today, around 60% of our locations are leased from third parties. Our property portfolio continues to underpin our business, but our growth is no longer tied to the properties we own. Over the past year, we have also made a significant change in how we fund new locations. We started seeking capital contributions from landlords toward our fit-outs in 2025 and are now achieving contributions of around AUD 950 per square meter. At the same time, our fit-out costs have increased from circa AUD 800 to AUD 1,000 a square meter to approximately AUD 1,200-AUD 1,400 per square meter today. With the capital we had allocated to new lease locations now committed, we are shifting our approach again, and going forward, our expectation is that landlords will contribute around AUD 1,500 per square meter towards new locations. This is a significant change to our growth model.
It means we can continue expanding the network without having to fund a significant portion of each new fit-out ourselves. It may mean passing on some opportunities, but we think we are in a position to be selective. Landlords are increasingly recognizing the value of having a flexible workspace operator in their buildings, and our growing network gives us a stronger position in those discussions. There is certainly no shortage of opportunity. We are operating in a fairly uncertain economic environment, but we actually think much of that uncertainty plays into our hands. Interestingly, our recent micro and small business survey of our WOTSO members tells us a different story to much of the broader economic commentary. Around 60% of our respondents are cautiously optimistic about the future, while another 20% believe the future has never looked brighter.
That's a pretty encouraging result and suggests there's more confidence among our members than the broader market sentiment might indicate. Whether businesses are optimistic or cautious, flexibility remains important. When the outlook is uncertain, committing to a traditional 5 or 10-year lease becomes a much harder decision. At the same time, technology continues to change where people can work. More people can do their jobs without traveling into a central office every day, and increasingly, they're choosing to work closer to home. People still want to be around other people, to have somewhere professional to work from, and to feel connected to a community. They just want more choice about where and how they do it. We're seeing that demand come through in the way people use our network. Our day pass business is a good example.
We are now selling more than 1,500 day passes a month across the network, and I mean, anecdotally, I saw WeWork the other day put out a result of 16,500 day passes in a month, and it's something for WOTSO to aspire to. I hope we can get there one day as well. These are people who may not need a permanent office or even a regular co-working membership. They might need somewhere to work for a day between meetings, a few days a month closer to home, or simply a change of environment. As our network grows, so does the convenience of that offering. We're also getting smarter about how we price and sell our products. Our move to demand-based meeting room pricing has been particularly encouraging. By adjusting prices to reflect demand, we've been able to improve revenue without adding more space.
We think there is a lot more opportunity across meeting rooms, day passes, virtual offices, and other services that we already offer. These are important opportunities because they allow us to generate more revenue from existing space and infrastructure. Turning to the financial results, FY 2026 was another year of significant investment in growth. Total revenue increased to AUD 48.8 million, with flexspace sales increasing 11% to AUD 35.3 million. Underlying EBITDA was AUD 10.1 million, broadly in line with the previous year. At first glance, that might seem a modest result given the growth in the number of locations, but it reflects where we are in the expansion cycle of those locations. New locations cost money from the day they open. We have rent, staff, and operating costs before we've built up the membership and revenue.
We saw that in FY 2026, with our startup locations contributing a loss of approximately AUD 641,000 at the contribution margin level. But we also saw the other side of that equation. Our developing locations increased their contribution from AUD 277,000 to AUD 781,000 during the year. That's why we remain confident in the model. As locations mature, their contribution improves, and as the overall network gets larger, each new location represents a smaller proportion of the total business. We believe that will become increasingly important as we grow. If we continue opening six to 10 locations a year, the proportion of our network made of startup locations should reduce over time, assuming our existing locations continue to mature and perform as we expect. That should mean less drag on the operating cash position from new openings, even while we continue expanding.
It's also worth noting that despite increasing our network by 29% during FY 2026, our corporate overheads remain broadly flat at around AUD 8 million. Of course, not everything goes to plan. Our ongoing dispute with the landlord at North Strathfield remains unresolved. The matter was heard by the court in July, and we're still awaiting judgment. This has been a lengthy and frustrating process, and one that has required considerable time and expense. We remain prepared for the possibility that we will need to leave the Bakehouse Quarter, and we've been working through alternative arrangements for our members. We are also consolidating our Macarthur Square location to Gregory Hills, following our landlord's decision not to renew our short-term agreement that we have at Macarthur Square. These things are part of operating a large property-based business.
Not every location will remain part of the network forever, and we need to be prepared to make decisions about where we direct time and resources. At the same time, we have some very exciting opportunities ahead. One in particular is a flagship location that we hope to be able to announce towards the end of this year or early next year. It's the sort of opportunity that we believe demonstrates how far WOTSO has come and the type of locations we are now being considered for. As we're through from here, our ambition remains to grow WOTSO to 100 locations and AUD 100 million in annual revenue. We don't think that requires us to do anything particularly extraordinary. We have demonstrated that we can grow, or we can open six to 10 locations a year.
We've established an operating team, a growing brand, and a network that becomes more valuable as we add locations. The challenge is to now keep doing that in a disciplined way while improving the performance of existing locations. We don't need to rush, and we won't make deals that don't make commercial sense to us, but we do believe there is substantial opportunity ahead. One question we are often asked is, what is the ultimate plan for the WOTSO operating business? Are we building it to sell it? Will we merge it with another operator? Will we eventually separate the property business from the operating business? The answer is that for now, we want to keep building and operating the business. We love and enjoy what we're doing, and we think there is considerably more value to create.
If one day someone comes along and wants to buy or merge with WOTSO and the price and the terms make sense for our security holders, then of course we would consider it. But we aren't building the business on the assumption that a buyer will come along. Another possible outcome further down the track is to separate WOTSO's operating business from the property portfolio and seek a separate listing for the operating business. That would allow investors to value the two businesses independently, recognizing that they have different characteristics, growth profiles, and capital requirements. It's not something we're proposing today, but it is an option that we think makes sense as the operating business becomes larger and more established.
I think part of the challenge for WOTSO is that we're still largely viewed and valued as a property trust when the operating business has become a substantial business in its own right. Others view us as a marginally profitable operating business and forget that we have underlying real estate assets of significant value. The reality is that we have two quite different businesses sitting within the same structure. One is a property portfolio generating rental income, and the other is a growing operating business with a very different earning profile and opportunity ahead of it. We don't think that distinction is necessarily being recognized in our security price today, but rather than trying to focus on short-term change in the way the market values us, our focus is on continuing to build the operating business and its earnings alongside opportunistic property acquisition.
Over time, we believe that will give us more options to realize value for security holders. That brings me to the capital management and our security price. We recognize that there is a substantial difference between the value of our underlying assets and the price at which our securities trade. There is an argument that we should sell properties and use the proceeds to buy back securities, given they're trading at a significant discount to net asset value, and we've done exactly that. During FY 2026, we sold our Yandina property and bought back more than 2.5 million securities. The buyback was undertaken at a substantial discount to net asset value and was accretive to NAV per security, but it didn't translate into any meaningful improvement in our market price. That experience has influenced how we're thinking about capital allocation.
We've now pulled back from the buyback because we believe, at this stage, preserving available cash for growth is the better use of our capital. Our view is that continuing to grow WOTSO, improving earnings from our existing locations, and moving towards a less capital-intensive expansion model gives us the best opportunity to build long-term value. Ultimately, the market will decide how it values that progress. When I look at where we were in 2020, with 19 locations and a plan to operate predominantly in our own buildings, and compare that with the business we have today, I feel that we've come a long way. We've more than doubled the network since 2023, expanded across Australia and New Zealand, and developed a business model that now allows us to grow well beyond the limitations of our own property portfolio. I think we're still relatively early in our journey.
We have clear ambition, a strong team, and plenty of opportunity ahead of us. Our job is to now keep building the business, make sensible decisions with our capital, and let the results speak for themselves. I just want to say a big thank you to the WOTSO team, who I often get emotional about because I think they're unreal, our members, and our security holders for their continued support. I'll now hand over to Seph for the formal business of today's meeting.
Thank you, Jessie. As I said before, we can answer any questions at the end of the meeting, but we will proceed now through the formal bits. We released the proxy results for 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 FY 2026 annual report was lodged with the ASX on 25 August 2026. 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 the auditor are now laid before the meeting. Are there any questions or comments on the financial report or the reports of the directors or auditor?
Are there any questions relevant to the conduct of the audit and the preparation of the content of the auditor's report to be put to the auditor? If there are no further questions, as this matter does not require a vote, we will move to the next item of business. Resolution one, adoption of the remuneration report. In accordance with the requirements of the Corporations Act, WOTSO is required to submit its remuneration report to security holders for consideration and adoption by way of non-binding resolution. The resolution is advisory only and does not bind the directors of 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 2026, is adopted. Is there any discussion? Resolution two, re-election of Director Richard Hill.
In accordance with the ASX Listing Rules and the relevant constitutions, the meeting now needs to consider the re-election of Richard Hill as a director. This resolution is an ordinary resolution, and we do not have age restrictions, so we are allowing Richard back in. I propose the motion that Richard Hill, who retires in accordance with the respective constitutions of Ostow and Planloc, and being eligible, having offered himself for re-election, is re-elected as a director of Ostow and Planloc. Is there any discussion? Resolution three, approval of additional 10% placement capacity. You could congratulate me. Oh, congratulate you. 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 may issue up to 25% of the stapled securities on issue over the next 12 months to raise additional capital without price limits set by the ASX, without obtaining further security holder approval. I will add that there is very little likelihood, zero likelihood, that we would be issuing any capital at the current share price. So this is really just giving us flexibility going forward. I propose the motion, this is a special resolution, 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 ASX Listing Rule 7.1A, and on the terms and conditions set out in the explanatory memorandum. Is there any discussion? Resolution four, issue of options to Jessie Glew.
Under ASX Listing Rules, WOTSO may permit a related party to acquire equity securities under an employee incentive scheme with security holder approval. If approved, WOTSO will issue 4 million options to Jessie Glew or her nominees under the group's employee incentive plan. This resolution is an ordinary resolution. I propose the motion that for the purpose of Listing Rule 10.14 and for all other purposes, approval is given for the group to issue 4 million options to Jessie Glew or her nominees under the group's employee incentive plan on the terms and conditions in the explanatory statement. Is there any discussion? That concludes the formalities. Please take the time now to submit your online voting form. For security holders present in person, a member of the Computershare team will come around and collect your completed voting cards.
Are there any questions that members wish to raise or any other items of business for discussion? Yes.
Yes, Simon Samuel for Delta Asset Management. BlackWall is going to not issue, but trade their stock for 5 million odd WOTSO shares. Would you not be better off buying those back? Because those shares are going to end up with more or less unwilling holders, which will keep the price depressed for a lot longer than if you just bought them back.
There is that risk. But within BlackWall, going back three years ago, I think we had 30 million shares. The concern was that BlackWall was sitting there as a blocker, if you like, sitting on the register, and there was no room for other people to get in. The reality is a lot of BlackWall shareholders, and I am one of them, saw the opportunity, and we saw the opportunity for the BlackWall shareholders to be the owners of their stock directly and disperse it amongst the BlackWall shareholders.
If we did a buyback or we purchased those shares off BlackWall, that would take that opportunity away from BlackWall shareholders and would leave BlackWall in a position, and I'm really speaking for a different meeting here at the moment, in a position where it's going to become a passive property investment company, and I'd have locked in shareholders that wouldn't have a way out. Frankly, I'm encouraging the shareholders that have been with us a long time to swap their holdings. They're not unwilling holders in this sense. I'm saying, the way forward is to be in the WOTSO arm of what used to be a consolidated business. We're now saying it's dispersed. WOTSO's going its own path. You should go with them because BlackWall over here is going to become a passive, hopefully unlisted investment vehicle, and it's not the interesting space for you to be.
I don't think it'll have the effect you're saying. But if it does, then the opportunity will still be there for us to buy back the stock on the market if we chose to do it.
Second point, I did have a quick chat with Geoffrey a moment ago, but I've just looked at your top 20 shareholders.
There isn't, from what I can see, a single fund manager on there of note.
That is true.
How are you going to find a home and
Well, we are hoping. Look, the answer is I do not know. I do not know what we do to get people's interest. I do not know why people do not why the fund managers can't look and say, ultimately, there are two elements to this business. There is a real estate portfolio and there is an operating business. Even if you think the operating business is worth nothing, the real estate portfolio is worth 2.5 times what the current share price is, call it two times in a depressed market. They should be there. They should be joining with us. They should be coming with us. But we have had a lot of conversations, and usually they have got advice for us, sage advice on maybe we should liquidate the portfolio, liquidate the whole company, give the money back to shareholders. It does not seem to be a path.
They did not like the BlackWall sitting on the register. Get rid of that, it will work now. I think over time, it will just happen when people realize that we do have a valid business in WOTSO. Then just looking at the two of them separately and saying, well, maybe they are each valid. Maybe it is the day that we separate the two. I think it is more than likely that there will come a time when we will just stay separate, and then you have got a property portfolio and a property trust, and you have got an operating business. We have already got the shareholder base to do it. But right now, in terms of the interest from investors, it is pretty frustrating. We will wait. We will just keep growing.
The net asset value, is that based just on the properties? What makes up the net asset value?
The NAV has an element of WOTSO value, doesn't it?
The NAV includes a value for the WOTSO business. The NTA includes the goodwill, and maybe Chris, you're better placed to talk directly to this, but includes a goodwill for the operating business when we acquired it originally. And that comes up with the NTA, and the NAV has a value for the WOTSO business that was independently valued at AUD 90 million. And that's what generates the NAV of AUD 1.80-ish.
Yes, actually, the lower number is-
AUD 1.37 value.
AUD 1.37.
It is just the property portfolio plus a goodwill of the WOTSO business.
If the properties were liquidated, then in theory, the AUD 1.37 would be distributed back to the-
If the properties were liquidated, it would be less than AUD 1.37, about AUD 1.20.
Yeah, if you remove the-
If we took away the goodwill, it would be about AUD 1.20, Chris.
I would hope we would sell our properties for more than what they are worth on paper, quite frankly, because there is a good AUD 17 million odd discount that valuers apply into our real estate portfolio because of the WOTSO business being in there, and the way that our leasing is structured and the related party nature of the OpCo-PropCo piece. So they effectively call the WOTSO space vacant when they are valuing it, and then they apply a market rent, and then from there they then take up all the revisions, the letting, leasing fees, so on and so forth. So, those values are depressed by that AUD 17 million odd, because of our operating business. Yeah.
If we were to separate the two, we have already got the shareholders. We just de-staple, if you like, WOTSO away from the property portfolio. We would be in a position where the property portfolio would then have a third-party tenant. The valuers would suddenly say, "Oh, it is more valuable because you have got a third-party tenant, that listed company over there." They like listed companies, so we would have a listed company that is the tenant. We think the real estate portfolios would pop in value. Hopefully, if it was like that, the market would say, "Gee, that is valuable. We might actually buy some." We will see.
The distribution that is distributed out of WOTSO to the shareholders, is there a possibility of the distribution being bigger, therefore, that might incentivize fund managers and stuff like that?
Are you asking the chairman or the CEO?
It is a-
The CEO resists, because she wants the capital to help the company grow. The board is encouraging her to think in terms of growing the distributions over time, would that be right?
Yes. It's an active discussion. It's certainly something we talk about a lot, and we will hopefully continue to see an improvement.
Yes. I think a steady rise is probably what's on the cards, which you'll see in the history we've done over the last couple of years.
Hi. I'll just say to that, I think historically, WOTSO and BlackWall have always had great return. During this market, I think it's kind of a good thing that it's reducing at a time where capital investment is important, and it's going to become a really good opportunity for you guys. My actual question, this is for Jessie, it's a bit innocuous, but you mentioned about the demand-based letting of-
Yeah
resources. Have you seen utilization go up because of that, or has it stayed the same?
I love this stuff because it's been really interesting to play around with the different services that we have to offer. We introduced demand-based pricing in October, November of last year. It was only discounts on meeting room prices, and we saw utilization uptick at that point. But we introduced that discount on Mondays and Fridays when spaces are not utilized as much as they might be on Tuesday, Wednesdays, and Thursdays. Initially, we saw a dip in revenue, but an increase in utilization, because we really discounted the prices on a couple of those days. From, gosh, it was June of this year, we introduced what we're calling premium pricing, which is essentially surge pricing on Tuesday, Wednesdays, and Thursdays. We've seen the revenue bolster sort of north of where it was when we introduced the discount pricing.
Yeah.
Utilization has remained where it was. We increased meeting room prices by almost 20% on what their base was, and we had not one person say a thing. I think as long as you're still offering space that people can get at discounts at times where if they can organize their week, you're still offering that for your members, then they still have the opportunity to get in at the right price for them.
Are the resources available members outside of WOTSO?
Yeah. It is for externals and internals.
Right.
In addition, we are starting to look at the same thing for our day passes.
Yeah.
We did a day pass campaign, which we spoke about previously back in April.
Yeah.
I could not believe the response we got to that day pass campaign.
Yeah.
Our day passes normally sell at AUD 60 a day. We sold them at AUD 20 a day for the month. We had businesses buying circa 1,500 day passes.
Right
Just so that they could stockpile them, I guess. But effectively, we will look at having Mondays and Fridays being cheaper days.
Probably AUD 20 days, and then again, Tuesday, Wednesday, Thursdays likely being the AUD 60. Playing around with pricing.
You mentioned WeWork and getting to that level. I wouldn't worry too much about that. At the end of the day, that probably means you've got a better retention of people in your spaces, not just Johnny-come-latelies.
Yeah
That come on one day a month or what have you. So, it is obviously great for revenue, and it is great to get that foot in the door.
Yeah.
I hope that that continues the growth, because look, 79% utilization.
Yeah.
It is great.
Yeah, we hope to grow that. I think we can get our occupancy to around 85%.
Yeah.
I think, on the piece around the day passing, we have seen a huge transition of the way that people utilize our space. It used to be that businesses really wanted their own private office.
Yeah.
We are now seeing a lot of businesses say, "Well, we are going to pop up Tuesdays and Thursdays, and we want 30 desks in the open plan space," or, "We want it in a private office." They completely rework that property strategy, which-
Yeah
I just think means that we need to think about how we lay our spaces out, the inventory that we have, and how we can make sure, if we are at 85%, that we still have the desks available for those users.
Yeah, because I think that there is going to be good opportunity in 2027, because I think a lot of companies are going to start-
Consolidating
yeah, getting rid of large offices.
Yeah.
Having the ability to put people in local offices. It is good for them, it is good for the business. Keep on doing a great job.
Thanks, Peter.
Jess, you were telling me the other day also how occupancy coming this year looks like we are going to be instead of falling off a cliff in November.
Yeah
It looks like despite all the anxiety out there in the market, our occupancy is holding solid through November.
Christmas and December, January are always challenging times for co-working, particularly business like ours that's month-to-month memberships, because generally people can put their They can leave for two months and then come back. But we're not seeing that this time. I think because our occupancy is at a point where they don't have the luxury to be able to do that. I also think that businesses are preparing for next year and they're not going into leases, so they are choosing to go into co-working spaces, which is great to see.
Sorry, I think it was last year or the year before you were talking about hospitality and kitchens and stuff like that. Did that eventuate? Anything come of that?
Yes. We've got our first CookSpace at North Strathfield, and it is unreal. We've got 10 commercial kitchens, all sort of back of house, so there's no front of house for these kitchens. They're anything from catering businesses. P, maybe you can All the different types of businesses that are at a CookSpace. Catering.
There's prep for restaurants, so they can have prep space. We've got a lot of people making cakes, people baking for markets.
Yeah
things like that.
Yeah.
Yeah.
They're all full. We opened the space in March. I think we were full by the end of April. We have over 200 inquiries for the space. We're actually looking at where else we might be able to deliver CookSpace in our portfolio. The only thing is, we've got to refine the fit-out of that. It was probably one of the most challenging fit-outs I think we've ever done.
It cost a fortune.
It wasn't enjoyable. Cutting grease traps and having exhausts go into the basement of an already existing mixed-use multi-story asset. Probably wouldn't do that again. But I certainly think there are opportunities out there in the market to find some industrial assets where slabs aren't laid and we can have a look at what we can do there.
Jessie, it might be worth mentioning in this case, it was under a three-story building.
Yes
In a place where there was a substation. So we took the substation out and we put the kitchens in, because what else were we going to do? That proved to be, as Jess said, extremely difficult. But what Jess hasn't said is that we do actually have another property which is just a single-story car park structure, that we think, "Well, gosh, why wouldn't we do it again there?" So we're working on planning that now. We think it's a lot of fun.
In each case, it's converting space that otherwise wouldn't have income coming off it. So, for example, this was the plant room. We had cooling towers and, as you say, a substation in there. We converted sort of that space to 350 sq m of NLA for that property, and then we did the CookSpace in there. The same will go for this car park. It's getting a nominal revenue off it at the moment as a car park. We think we can really improve the revenue coming in off that space. And the other site that we're looking at is the site next to our WOTSO space in Newcastle. We've got a vacant lot of land, which would be ideal for exactly what we're talking about.
We think that those markets, Newcastle, Canberra in particular, where this asset is, we think could really do well with having the service of a CookSpace there.
Any other questions?
Oh, sorry, just anecdotally on the CookSpace. Something that I found very interesting is that, normally office space, you can maybe get up around AUD 1,500 a square meter in a CBD market, high-end space, premium space. We are managing to achieve circa AUD 3,500-AUD 4,000 per square meter on our kitchens in North Strathfield. I mean, all of the equipment is provided in there. That is, I suppose, an outcome of the extent of the works that we did on the space. But we do believe that it could be quite a lucrative business model.
That gives me a chance at a partly return on that.
Yeah. In particular for the landlord.
The landlord put a lot of money into this one.
It was the test.
It was a test, and they had a very cooperative landlord. This is the Alerik property, which WOTSO now has 20% of. So, it will benefit both from the real estate and the operating business in the going forward. The other assets, I think we are quite excited about the opportunity. If we can now that we know something, we have learned what we need, what we do not need, how it is going to work, we think it should be a bit like our WOTSO business initially, where we are stumbling along in the dark, not knowing quite what we were doing. We have now got a pretty clear vision of what is going to come out in each space, and we think we will do the same with the CookSpace. Any other questions? That concludes the business of the meeting.
I declare the meeting closed, with the results to be announced to the ASX later today. On behalf of fellow directors and myself, I would like to thank you for your attendance and interest in WOTSO.
Thanks, everyone. Thank you.