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DATADOT TECHNOLOGY LIMITED — AGM Information 2023
Nov 26, 2023
64764_rns_2023-11-26_e6fd65be-303f-4b7b-8af9-92262bfaa4b2.pdf
AGM Information
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Chairman’s Address to Shareholders at the Annual General Meeting held on 27 November 2023
Disclaimer:
The material in this presentation is general background information about Datadot Technology Limited (DDT) and is current at the date of the presentation, 27 November 2023. The material in the presentation is for informational purposes only, is in summary form and does not purport to be complete. It is intended to be read in conjunction with all other DDT announcements to the ASX, including the FY23 Annual Report. The presentation contains statements that are, or may be deemed, as forward-looking statements. You are cautioned not to place undue reliance on these statements as they involve known and unknown risks and other factors which may cause actual future performance and results to differ materially from those implied in such statements.
Summary of FY 2023 Financials (Slides 4 & 5)
I am providing a short summary here and I refer you to the full financial report for further detail.
Total revenue for the year was $2.693 million which was a decrease of 24.4% from FY22, due in large part to a 74.2% decrease in Royalties and Licence Fees and not withstanding a 3.2% increase in Group product sales. Net profit before tax was $11,647 excluding $127,016 in deferred tax liabilities which was a pleasing turnaround from the $197 K loss at half year.
Cash and cash equivalents at 30 June 2023 were $2.868 million, a decrease of 9.8% and net assets excluding tax deferred assets were $3.780 million, a decrease of 5%. It is worthy of note that in the second half, the company undertook a buyback of unmarketable share parcels at a cost of $197 K which resulted in reducing the overall number of shareholders by 56%.
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2023 – A Year of Transition (Slide 6)
Notwithstanding the importance of the automotive sector to the Company’s traditional business model, the Board is firm in its belief of the necessity for the Group to diversify its revenue base to lessen its dependence on a single industry’s fortunes. The global events that have occurred since February 2022 and their impact on our automotive related royalty markets have amplified the company’s historical vulnerability to a downturn in this single market segment. We therefore place a high priority on accelerating our planned diversification.
Transforming to an integrated digital & physical ID service provider (Slide 7)
A major focus of the Board and management throughout FY 23 has been to develop the necessary product offerings, software enhancements, marketing materials and incentive models to support the FY 24 objectives of the Direct Business and Consumer segment.
This has included the launch of a suite of asset-specific DataDot product offerings, creation of bespoke industry portals that create value add propositions for our target industry targets, and the engagement of a Director of Investigations, Recoveries and Police Liaison to promote police engagement with PropertyVAULT recovery services.
Launch of DatadotDNA TDIS (Slide 8)
Marketed as the DatadotDNA Theft Deterrent Identification System (TDIS), this product system provides customizable products for the automotive, marine, motorcycle, plant and equipment and home and office segments.
Launch of the PropertyVAULT Insurance Services (Slide 9) Marine,
The second half of FY 23 saw the launch of the bespoke insurance services portal on PropertyVAULT. This portal has been designed to facilitate agreements with insurers for the reporting of total loss stolen assets, their location and recovery through the PropertyVAULT search and recovery mechanisms and the optional sale of recovered assets through a managed tender process.
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Value Add Proposition (Slide 10)
This system is designed to provide a range of value-add incentives for insurers’ participation, including: improved prospects for recovery of total loss property (which is currently negligible), assurance of timely and active police involvement in the recovery process, and the provision of a nationally available subrogation register. Subrogation is the process by which insurers make notification that the property that is subject to a total loss claim is now owned by the insurer and should be returned to the insurer if located. The current system of subrogation is managed by police on individual state-based systems and is widely recognised as not-fit-for-purpose leading to significant volumes of insured recovered property not being returned to insurers.
Our insurance services are being offered to insurers on a performance-based compensation model which secures an agreed percentage of the salvage value.
Launch of the PropertyVAULT HIREVAULT. (Slide 11)
Similar to the Insurance Services Portal, HireVAULT has been designed to meet identified needs of the hire industry. The system is designed to receive uploads of all or agreed classes of a hire company’s assets which is maintained as a register of “safe” assets. The client then notifies PropertyVAULT if the asset is stolen, missing or overdue; initiating the PropertyVAULT location and recovery mechanism.
Value Add Proposition (Slide 12)
HireVAULT provides a number of potential benefits for hire companies. Significantly, at the present time police will not take reports of hired assets that are overdue their return date or are simply regarded as missing, without some direct evidence that criminal intent is involved. It is during this ‘grey” period that hired assets are often illegally disposed of making it very difficult for hire companies to initiate any recovery action. Similar to the insurance space, HireVAULT provides a nationally accessible subrogation system that provides police with a clear record of ownership and assists with the early determination as to whether an incident falls within the “civil debt category” or is a case involving criminal intent. This facilitates a far more timely and active participation of police.
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Similar to the insurance sector, this service is being offered on a performancebased compensation model.
Engagement of a Director of Investigations, Recoveries and Police Liaison (Slide 13)
Active engagement with Australian police services is an integral part of the PropertyVAULT stolen property recovery model. Police are not only responsible for the investigation and eventual recovery of stolen property identified by PropertyVAULT, but police services also come into possession of very significant volumes of suspect property that can’t be readily matched to a crime report on their internal systems. This property is invariably sold at public auction as unclaimed property rather than being returned to its rightful owner. Often an insurance company. Active police interaction with PropertyVAULT to find a match for unclaimed property has resulted in many hundreds of successful matches.
Murray Chapman is a highly regarded former Detective Superintendent of NSW Police. Murray has 33 years of investigative experience including over 100 major crime investigations involving organised crime, gang-related murders, drug supply, kidnappings, extortions, and organised motor vehicle and vessel theft. He was the Commander of the Property Crime Squad and Corporate Spokesperson for Property Crime in NSW.
Murray has joined the team as he believes that as users of the Vault grow, it will revolutionise the way stolen property is identified and recovered in Australia. Murray’s extensive experience in all facets of property crime, together with his network of liaisons with key personnel within Police Forces and the insurance industry make him the ideal person for this important role in PropertyVAULT’s expansion.
OEM and Distribution Segments (Slide 14)
The OEM and Distribution segments are not expected to see any significant change in the current level of royalties over the forward period as the conflict in Ukraine remains unresolved. However, we have recently agreed with Datadot Taiwan to expand their authorised territory to include Vietnam and South Korea in response to potential OEM interest in those markets.
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OEM and Distribution Segments (Slide 15)
Collaboration with Datadot South Africa is continuing to seek expansion of our OEM automotive sales in the U.K. and European markets. Our other direct automotive sales channel, principally Subaru in Australia, increased sales in FY 23 in line with their increase in vehicle imports due to the easing of supply constraints in the automotive industry and can be expected to remain steady.
Sales to our wholesale customers in both the U.K. and the United States delivered pleasing growth in the second half of FY 23 and we expect to see continued albeit modest growth via these channels for the remainder of FY 24.
Trace sales are expected to remain at FY 23 levels for the remainder of FY 24.
Looking Forward (Slide 16)
While Microdot sales to our wholesale customers in both the U.K. and the United States delivered pleasing growth in the second half of FY 23 (and we now expect to see continued growth via these channels in FY 24), the continuation of the war in Ukraine and its impact on our automotive related royalties highlights the need for comprehensive diversification.
This has seen a major focus throughout FY 23 on developing the necessary product offerings, Vault software enhancements, marketing materials and incentive models to support our FY 24 objectives. Our focus has now shifted to securing a range of commercial agreements with insurers, the industrial hire industry and consumer product dealerships to commercialise the growth potential of our full service integrated digital and physical ID provider. Discussions are now underway with a range of large and product specific insurers and hire companies. While work is still required to bring these negotiations to commercial contracts, there are positive signs that some of these will materialise in the third quarter. We are also working to leverage our consistent 100,00 public interactions with the PropertyVAULT portal each month to grow our direct to consumer sales.
We will continue to work with our trusted distributors and partners grow our international direct sales and royalty streams.
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Looking Forward – Capital management (Slide 17)
The Company remains debt free and has a strong financial base with sufficient working capital to pursue its plans for revenue diversification. While the net assets of the group decreased from $3,977,724 at June 2022 to $3,780,085 at June 2023 (excluding the Deferred Tax Asset), this was primarily due to the share buy-back undertaken during the year. The group has cash, cash equivalents and financial investments totalling $2,867,501. While this reserve will be carefully managed to support growth, the Board will continue to ensure the long-term financial stability of the group.
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Leader in Advanced Asset Identification and Digital Protection Solutions!
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Chairman CEO -Managing Director Non-Executive Director CFO - Co. Sec Audit Partner
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Thematerialinthis presentationisgeneralbackgroundinformationaboutDatadot TechnologyLimited(DDT)andiscurrent at the date of the presentation, 27 November2023. Thematerial in thepresentation is forinformational purposes only, is in summary form and does not purport to be complete. It is intended to be read in conjunction with all other DDT announcements to the ASX, including the FY23 Annual Report. The presentation contains statements that are, or may be deemed as forward-looking statements. You are cautioned not to place undue reliance on these statements as they involve known and unknown risks and other factors which may cause actual future performance and results to differ materiallyfromthoseimpliedinsuchstatements.
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Total$2.693mil (Down24.4%)
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RoyaltyrevenuesandLicenceFees(Down74.2%)
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Totalproductsalesincreasedby3.2%
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Positiveturnaroundfrom$197Khalfyearlossto$11,647fullyearprofit
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Cash & equiv. $2.867 mil (3.179 mil 2022)
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Net assets $3.780 mil
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Debt Free -No capital raising or consolidation
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Unmarketable share buy-back $197 K
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2023 - A year of transition
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Launched new suite of asset specific DataDot product offerings
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Developed bespoke industry portals on PropertyVAULT to create value add propositions for target client groups
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Engaged Director of Investigations, Recoveries and Police Liaison
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DotDNA TDIS
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of customisable & enhanced DataDotDNA®
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Launch of PropertyVAULT Insurance Services
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Online report – total loss stolen property identification details uploaded
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Locate – Identify possible match via PropertyVAULT’s search mechanisms
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Recovery –Verify match and manage police liaison to facilitate recovery
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Salvage –Manage logistics and sale of recovered property via tender
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Launch of PropertyVAULT Insurance Services
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Increases recovery of total loss property (presently negligible)
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Facilitates timely recovery action by police
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Provides subrogation certainty for insurers
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Performance based compensation model
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Launch of PropertyVAULT - HireVAULT
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Tailored solution for assets under finance or hire
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Hire companies upload asset details –asset registered as safe
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Client notifies PropertyVAULT if asset is overdue, missing or stolen
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PropertyVAULT initiates its location and recovery services
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Launch of PropertyVAULT - HireVAULT
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Provides alerts for overdue/missing hire equipment (presently not recorded by police)
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Increases recovery of stolen and/or fraudulent disposal of hired assets
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Addresses subrogation and ownership issues
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Facilitates timely police action by assisting determination of civil debt vs criminal intent
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Murray Chapman -former Superintendent of NSW Police andCommander of the Property Crime Squad engaged as the Director of Investigations, Recoveries and Police Liaison.
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• Murray plays a critical role in establishing top level engagement with Australian Police Services and facilitating timely police responses to identified suspect property. (Murray’s CV attached)
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Current level of SA and European OEM Royalties expected for remainder of FY 24
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Expansion of DataDot Taiwan’s territory to include Vietnam and South Korea in response to potential OEM interest in EV vehicle marking
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U.K. distributors expected to continue modest growth trajectory
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U.S. market expected to sustain elevated FY 23 levels into FY 24
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Trace market expected to remain steady
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Negotiations underway with major and class specific insurance companies and hire companies covering general insurance, marine, motorcycle and plant hire to secure formal data exchange and commercial agreements.
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Continue Leveraging PV’s on-line traffic to grow direct-to-consumer sales security products & insurance sales.
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Maintaining joint ventures with Distributors to grow international markets.
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Maintain healthy cash position with no interest bearing debt.
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Board will consider trading environment before making significant capital
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decisions.
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Board’s long term preference is to achieve a steady dividend stream.
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SHARE HOLDER QUESTIONS?
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Leader in Advanced Asset Identification and Digital Protection Solutions!
2023 ANNUAL GENERAL MEETING