DomaCom Limited (ASX:DCL) Reports Half Year Results
Financial Performance Overview
DomaCom Limited (ASX:DCL) reported a substantial loss of $4.5 million for the half-year period ending 31 December 2023. This marks an increase of 179% compared to the loss of $1.6 million recorded during the same period the previous year. Revenue from ordinary activities dropped 36%, amounting to $1 million, down from $1.6 million in the prior corresponding period.
The continuing viability of DomaCom is dependent on growing Funds under Management (FUM) and controlling costs.
Funds Under Management and Revenue Streams
Total funds under management rose to $222 million as of 31 December 2023, a slight increase from $216 million as of 30 June 2023. The composition of FUM includes 45% in property assets and 39% in special opportunity assets. However, fee revenue from management services fell to $981,467, down from $1,457,938 the previous year, reflecting challenges in attracting customers and maintaining investments.
DomaCom’s operational focus has been on enhancing risk and compliance aspects related to the DomaCom Fund. Recently, the trustee required the temporary withdrawal of the Product Disclosure Statement (PDS) for new business, impacting the capacity to attract new investments.
Cost Management and Operational Adjustments
DomaCom has implemented stringent cost-control measures, resulting in a 28% reduction in employee benefit expenses compared to the same period last year. The company aims to reduce ongoing expenses whilst managing the platform and distributing its products effectively, despite ongoing challenges in the NDIS property rental market leading to some properties remaining untenanted.
The loss per share has increased to $0.010 from $0.004, reflecting the heightened loss during this half-year period.
Capital Raising Activities
In December 2024, DomaCom successfully raised $2.151 million through the issuance of convertible notes to wholesale and sophisticated investors. These notes, with a conversion price set at $0.08, are central to DomaCom’s strategy for stabilising its financial position. Various additional funding avenues are also being pursued, including potential underwriting commitments for an Entitlement Offer.
Concluding Remarks
DomaCom Ltd is positioning itself to address significant operational and financial challenges in the upcoming periods. Continuous emphasis on growth in its funds under management, alongside careful management of costs, will be critical for maintaining its operational sustainability going forward.
Motley Fool contributor Abbie Stokes has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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