Azeus Systems sees growing demand for e-AGM solution

MAINBOARD-LISTED IT solutions and products provider Azeus Systems Holdings has seen encouraging take-up of its electronic annual general meeting (e-AGM) solution.

Launched in May, the e-AGM product was deployed for some 60 customers in Singapore - mostly listed companies - in June alone.

Many companies were forced to hold virtual AGMs last month after physical meeting restrictions were introduced to curb the spread of Covid-19. And such meetings might soon catch on permanently. The Accounting and Corporate Regulatory Authority has opened a public consultation on proposed amendments to the Companies Act, including changes to facilitate digital meetings.

Azeus's executive director Michael Yap, however, preferred to restrain his optimism about the prospects for the e-AGM solution.

"We generally are evolving as we understand the product and the market. Obviously as a company we're investing in this because we believe that it has some material impact... but to what extent, how it will happen, I think it will have to be dictated by the market," he said.

"In Singapore, the total number of listed companies is about 800. So having 60 customers in one month, it's almost 10 per cent of the market," Mr Yap added. "Will it continue? We don't know, but we're hoping, hence, cautiously optimistic."

Seizing an opportunity

Mr Yap said it is too early to tell whether the demand for virtual AGMs will remain post-pandemic. At the same time, the economic contraction is hurting corporate bottom lines and squeezing their budgets.

"Our product allows remote working, which is a big plus, but it's also a product where if your company is struggling, you might hold off and invest in something else."

Mr Yap declined to say how much has been invested in developing the e-AGM product, but he did reveal that Azeus marshalled over 100 employees - out of its more than 300 globally - to work on it.

The company wanted to be able to seize on the market opportunity quickly, and was able to develop the product in less than two months.

The end-to-end virtual AGM platform covers pre-registration tasks such as the digital administration of proxies and advanced submissions of shareholders' questions. It can also be used to host the live AGM webcast, and it supports real-time weighted voting during the AGM. Post-AGM, data can be exported for administrators' or scrutineers' filing purposes.

The price of usage varies per head but starts from S$5,000. Mr Yap said this figure could represent a cost saving for some companies as physical AGMs can be costlier affairs after factoring in venue rentals and food.

Several other vendors have also taken the opportunity to offer competing e-AGM solutions. But Mr Yap believes Azeus has a superior product because most other offerings are essentially broadcast products with registration tacked on.

Azeus's advantage is in its software development background, he added. The group is appraised at the highest level of the CMMI-SW model, a benchmark of software engineering quality and capability that is well regarded in the United States.

In addition, Azeus already has many customers that are listed companies. The group has customers in over 100 countries.

The group said on July 1 that it had started to market the e-AGM product internationally. Customers in the Philippines and Hong Kong have signed up, although Mr Yap declined to say how many. He did say that Azeus has conducted its first virtual AGM in Hong Kong.

Azeus reported a HK$12.7 million (S$2.3 million) net profit for FY2020 ended March 31, up from HK$12.6 million in FY2019. Revenue rose 23 per cent year-on-year to HK$181.2 million, largely due to a 68 per cent jump in products revenue to HK$83.9 million.

Solutions driving sales

The products segment consists of Azeus's own solutions such as the e-AGM solution as well as an executive meetings solution called Azeus Convene and a social care case management system called AzeusCare.

Azeus has been growing the products segment over the last few years to boost recurring revenue and mitigate lumpy revenue from IT consultancy services, which are project based.

It had invested heavily in the products segment, which led to losses for FY2017. But that investment has paid off.

Mr Yap said that this segment has been growing at an average of around 90 per cent annually over the last few years, and is now profitable.

Products are expected to remain the growth driver in the group's current financial year. The mainstay IT services segment may see some weakness resulting from "a number of tender delays" due to the political situation in Hong Kong and the Covid-19 pandemic, Azeus said in its FY2020 results.

Hong Kong, where Azeus is based, is the group's biggest market, accounting for over half of total group revenue for FY2020.

Azeus intends to continue hiring despite the Covid-19 situation, particularly in sales and business development. It aims to go deeper into "some of the high growth markets" and explore "promising new ones". With about HK$100 million (S$17.9 million) in cash - against its S$36 million market cap - and no bank borrowings or debt, Azeus has a fair bit of room to manoeuvre in this pandemic.

But Mr Yap stressed: "We're a responsible steward of the company. We do what we think is optimal for it. It should not be that you have resources and you go and recklessly spend."

Management also needs to ensure that decisions hold the right risk-reward for shareholders, he added. Azeus founder Lee Wan Lik is the company's largest shareholder. He and his wife together control 82.4 per cent of the company, which has somewhat limited its trading liquidity.

Azeus said that there is currently no plan to make more shares available to the public. But the company also plans to keep its listing status.

Mr Yap said that the cost of staying listed is "not as big as what people claim". Also, the regulations are not constraining if the company is properly run to begin with, he added.

Since it listed in 2004, Azeus has paid dividends every year except 2017 - when it posted a net loss. The stock, which closed last Friday at S$1.20, trades at 15.9 times its historical earnings and has a dividend yield of 3.1 per cent.