Good morning. Welcome to the Extraordinary General Meeting for Zip Co Limited. My name is Diane Smith-Gander, and I'm the Chair of the company and of today's meeting. The time is now 10:00 A.M. As there is a quorum present, I declare the meeting open and confirm that the EGM has been properly constituted. I'm joining you today from Sydney and would like to begin by acknowledging the traditional custodians of the land, the Gadigal people of the Eora Nation. I acknowledge and respect their continuing culture and the contribution they make to the life of this city and region. I pay my respects to their elders, past, present, and emerging. Many of you are joining this meeting virtually from other parts of the country or overseas, and I also pay my respects to the traditional owners of the land from which you are participating.
I would like to thank shareholders, proxies, and our guests for joining us via the virtual meeting platform. All attendees can watch a live webcast of the meeting. In addition, shareholders and proxies can ask questions and submit votes. To provide you with plenty of time to vote, I now declare voting open on all items of business. In opening the meeting, I would like to introduce my fellow board members and the management team of Zip, who are attending, including Larry Diamond, our Managing Director and CEO, joining us from New York, and David Tyler, our Global General Counsel, who is joining us virtually.
With me in Sydney are Peter Gray, Executive Director and Chief Operating Officer, Meredith Scott, Independent Non-Executive Director, Tai Phan, our Company Secretary, John Radclyffe, an Independent Non-Executive Director, Cynthia Scott, the Chief Executive Officer of our ANZ business, and Martin Brooke, our Chief Financial Officer. Also in attendance, virtually, is David Squires, a representative from our share registry, Computershare. There are no apologies for this meeting. The agenda for today's meeting is as follows: I will provide the chair's address. We will then go through formal items of business included within the notice of meeting, including conducting a poll on all resolutions. Following the formal part of today's EGM, we will close the meeting, and finally, the results of the poll will only be released to the ASX following the close of the meeting, once determined.
I note that only registered shareholders and proxy holders will be able to ask questions at today's meeting. Our Company Secretary will now run us through the question and voting process.
Thank you, Diane. Security holders and proxy holders can submit questions at any time by submitting written questions using the online platform or a verbal question via telephone. To ask a written question via the online platform, click on the Q&A speech bubble icon. Once you've completed your typing, please select the Send button to submit your question. To ask questions verbally, please follow the instructions shown below the broadcast window. If you're experiencing any technical difficulties, please call the number on the screen. Please note that while you can submit questions from now on, we will not address them until the relevant time in the meeting. Please also note that your questions may be moderated, modified, or if we receive multiple questions on one topic, they may be aggregated together. Finally, due to time constraints, we may not get to all your questions.
If this happens, we will answer them in due course by email or post responses on our website. Security holders and proxy holders can vote on the items of business via the online Computershare platform. For those who are eligible to vote, as the poll is open, a voting icon is available on the screen. Selecting this icon will bring up a list of resolutions and voting options. You're free to submit your votes at any time. To cast your vote, select one of the options. There's no need to hit a submit button, as the vote is automatically recorded. Please cast a vote for all resolutions. You will receive a vote confirmation notification on your screen. To change or cancel your vote, click the link titled, "Click here to change your vote" at any time until the poll is closed.
A warning will be provided before voting is closed at the end of the meeting. Back to you, Diane, to provide the chair's address.
Thanks very much, Ty. I think we might be one slide out on our slide support here. The how to vote slide's just come up, as far as I can see. Maybe just give a moment or two to have, to have a quick look at that. Okay, before we move to the formal part of the meeting, I'd like to comment on the company's progress against its strategic objectives and the purpose of today's EGM. A little over a year ago, we announced to the market that in light of changing market conditions, Zip would recalibrate its strategy to focus on its core markets of ANZ and the US, with the clear aim of accelerating the path to achieving positive group cash flow. We have made significant progress on this refreshed strategy.
In the last 12 months, we've reduced our global cost base, exited non-core markets, simplified the business, improved unit economics, despite the rising interest rate environment. Remain on track with our previous guidance on our path to profitability. As part of our strategy to simplify and streamline the business, we've undertaken a significant Liability Management Exercise to strengthen the balance sheet and position the company for future profitable growth in FY24 and beyond. In December 2022, we executed a successful Incentivized Conversion Exercise that reduced the value of Zero Coupon Convertible Notes outstanding by AUD 70 million. In June 2023, Zip launched a further Liability Management Exercise that allowed us to reduce the outstanding balance by another AUD 192 million. The exercise comprised an additional Incentivized Conversion Exercise and a Consent Solicitation Process to amend the terms and conditions of the remaining notes.
The Incentivized Conversion included a cash payment that was fully funded by an equity raising, allowing Zip to complete the transaction with no cash impact to the company. Through the exercise in June, we retired a significant portion of our convertible note liabilities at an effective rate of AUD 0.475 on the dollar, reducing the notional value of the convertible note by AUD 192 million to AUD 137.8 million, fundamentally reextending Zip's balance sheet. The amendments to certain terms and conditions of the notes have been approved by note holders. The success of the exercise demonstrates strong support for the company and its strategic direction from note holders, and we thank them for this support. Our intention is that the amendments to the convertible notes will become effective following today's EGM.
At this meeting, we are seeking your approval for the conversion of these notes to be physically settled. This will allow the convertible notes to be convertible into fully paid ordinary shares in the company at any time prior to the final maturity date in April 2028. We are also seeking shareholder ratification of the prior issue of shares by the company in relation to Zip's June 2023 and December 2022 equity placements, and the shares issued in relation to the acquisitions of Twisto and Urge in December 2022. This will allow Zip to retain as much flexibility as possible to issue additional equity securities into the future. We invite you to take the opportunity to ask the board about the resolutions. I will now go through formal business of the meeting as set out in the notice of meeting.
The notice of this extraordinary general meeting was provided to all registered members on the 29th of June, 2023, and unless I hear any objections, will be taken as read. Voting today will be conducted by way of a poll on all items of business. Proxies have been inspected, and all those validly lodged have been accepted. Votes have been received, representing approximately 15.78% of the issued capital of the company. Undirected proxies or open votes that have nominated the chair as their proxy have been cast in favor of each resolution in the notice of meeting. You can change your vote up until the time I declare that voting has closed. I now appoint David Squires from Computershare as Returning Officer of the poll. Ty, we've had no objections, so no, and no requests.
We'll now proceed to the resolution set out in the notice of the Extraordinary General Meeting. The first item of business is the approval of the convertible note amendments. Item one is as follows: To consider, and, if thought fit, pass the following as an ordinary resolution - That for the purposes of ASX Listing Rule 7.1, and for all other purposes, approval is given for the amendments to the convertible notes. Ty, are there any questions on this resolution?
There are no questions on this resolution.
The proxies received in relation to this resolution are on the screen. I now put the motion. Shareholders can vote via the online portal. We will now proceed to item 2. Item 2 is the ratification of the shares issued in relation to the June 2023 placement. Item 2 is as follows: To consider, and, if thought fit, pass the following as an ordinary resolution - That for the purposes of ASX Listing Rule 7.4, and for all other purposes, shareholders ratify the issue of 52,479,860 shares to institutional and sophisticated investors on the 15th of June, 2023. Tai, any questions on this resolution?
There appears to be no questions on this resolution, ma'am.
Thank you. The proxies received in relation to this resolution are on the screen. I now put the motion. Shareholders can vote via the online portal. We will now proceed to item three, ratification of the shares issued in relation to the December 2022 placement. Item three is as follows: To consider, and if thought fit, to pass the following as an ordinary resolution-... That for the purposes of ASX Listing Rule 7.4, and for all other purposes, shareholders ratify the issue of 21,956,476 shares to institutional and sophisticated investors on 19 December, 2022. Tai, any questions? There are no questions on this resolution. Thank you. The proxies received in relation to this resolution are on the screen. I now put the motion. Shareholders can vote via the online portal.
We'll now proceed to item 4, ratification of the issues of shares to the Urge acquisition sellers. Item 4 is as follows: To consider, and if the board fit, pass the following as an ordinary resolution, that for the purposes of ASX Listing Rule 7.4, and for all other purposes, shareholders ratify the issue of 4,296,862 shares issued to the Urge acquisition sellers on 19 December, 2022. Tai? No questions on this resolution. Thank you. The proxies received in relation to the resolution are as usual on the screen, I now put the motion. Shareholders can vote via the online portal. I think we're all getting used to this routine. We'll now proceed to item 5, ratification of the issues of shares to the Twisto sellers.
Item five is as follows: To consider, and if the board fit, to pass the following resolution as an ordinary resolution, that for the purposes of ASX Listing Rule 7.4, and for all other purposes, shareholders ratify the issue of 27,627,408 shares to the Twisto sellers on 22nd December, 2022. Please submit any questions you have on this resolution. Ty, are we seeing any questions?
I can't see any questions on this.
Okay, no questions. The proxies received in relation to this resolution are on the screen. I now put the motion. Shareholders can vote via the online portal. That concludes the resolutions to be voted on today. Could all shareholders voting online please now ensure they have submitted their votes?
In a couple of minutes, I will close the voting system, please ensure that you have cast your vote on all resolutions. I'm now going to pause to allow you time to finalize those votes. I will ask if there are any questions in relation to the submission of online votes before I close the poll. Okay, I'm not seeing any questions on the submission, we will have the brief pause to ensure that everyone has an opportunity to vote on all of the resolutions.
I think that's enough time.
Okay. All right. Thank you, Ty. All right. Having allowed a pause for everyone to submit their votes, seeing no question on the actual submission process, I declare the poll closed. The staff of Computershare will now process the poll.
The results of the poll will be announced to the ASX once they are available. Is there any other business that can lawfully be brought forward?
There's no other business.
Thank you, Tai. As that concludes the formal items of business of the meeting, we will now address any questions from shareholders, and I'll then close the meeting.
There appears to be no questions from our shareholders.
Just confirming there are no questions from our shareholders. No- There's one general question that I think may be coming through. We're not seeing the question. I'm looking for my technical advisors in the right-hand side corner of the room. That should be coming through. Here we go. To... Yeah. All right. We have a question here, and I'm going to ask Larry Diamond in the US to perhaps address this question.
The question is: The rate of bad debts in the US market is great. I think that means that it's starting to increase. How is it going to address. Apologies, I'm completely misinterpreting this. The bad debt performance in the US is great. Yes, it is great, we agree. There's a lot of work has been done to increase that. The bad debts in the ANZ market, Pete, I think I'm going to give this question to you. Apologies for my misinterpretation.
Yeah, thank you for the question. We have seen some early signs of softening in the broader Australian consumer market, and that has impacted our performance. This would be in line with some of the performance with regards to competing consumer products, credit cards, personal loans and mortgages. We have actually adjusted our settings and focus on these areas for the business to deliver slightly improved outcomes. Our net bad debt loss rate of about 4% of annualized receivables is marginally outside the targeted range, we look forward to reducing that. As we have controlled our losses previously, with adjustments to risk settings, obviously the benefit of our products, these adjustments to settings deliver outcomes very quickly. I think shareholders should look for improved performance in the first half of FY24.
Thanks very much, Pete. Okay, I'm not seeing any other questions. With that, thank you very much for your time today, for your questions, and your continued support of Zip, and for attending today. I'm declaring the meeting closed at 10:19 A.M., and will ask Computershare to close the virtual meeting system. Thank you and goodbye.