DomaCom’s Revenue Drops 36% as Losses Surge 179% in H1 FY2024

Financial Performance and Revenue Pressure

DomaCom Limited has revealed a significant deterioration in its financial results for the half-year ended 31 December 2023, posting a net loss of $4.5 million, a 179% increase compared to the $1.6 million loss in the prior corresponding period. This sharp rise in losses coincides with a 36% decline in revenue from fund management services, which dropped to just under $1 million.

The company’s fee revenue, derived from campaign management and ongoing asset management within the DomaCom Fund, has been under pressure, reflecting challenges in attracting new investors and growing assets under management (FUM).

Funds Under Management and Operational Challenges

Despite the revenue decline, DomaCom’s total Funds Under Management increased modestly to $222 million as at 31 December 2023, up from $182 million a year earlier. The portfolio remains diversified across property assets (45%), special opportunity assets (39%), mortgage-backed loans (14%), and cash (2%).

However, the company is grappling with tenancy issues in certain NDIS property sub-funds, where oversupply has led to untenanted properties and diminished investor returns. These issues have not affected the broader portfolio but have contributed to operational strain.

Compliance and Fund Suspension

In a critical development, the trustee of the DomaCom Fund requested a temporary withdrawal of the Product Disclosure Statement (PDS) for new business and suspended the secondary market for the Fund. This move, part of ongoing compliance and risk monitoring, has effectively halted new investor inflows and trading of fractional interests on the platform.

DomaCom is actively collaborating with the trustee to resolve these concerns and reinstate normal operations, but the suspension poses a significant hurdle to growth and revenue generation in the near term.

Capital Raising and Liquidity Measures

To address its financial challenges, DomaCom has undertaken several capital raising initiatives. During the half-year, it raised $2.15 million through convertible notes offering 12% annual interest and a conversion price of $0.08 per share. Subsequent placements and loan agreements with investors such as Bricklet Ltd and Samagi Capital have injected additional funds, including a $2 million placement announced in January 2025.

The company is also considering an underwritten Entitlement Offer, with commitments from key investors to underwrite up to $3 million, subject to shareholder approval and regulatory compliance. These efforts aim to shore up the balance sheet and provide working capital to navigate the current operational challenges.

Governance and Leadership Changes

The period saw notable board and executive turnover, including the resignation of several directors and the CEO stepping down in October 2024. New appointments, including Chairman Giuseppe Porcelli, signal a strategic reorganization intended to support the company’s turnaround and growth ambitions.

Going Concern and Market Outlook

The company’s auditors have issued an unqualified review report but highlighted a material uncertainty related to DomaCom’s ability to continue as a going concern. This uncertainty stems from the current net liability position, negative working capital, and the suspension of new business inflows.

DomaCom’s future viability hinges on successfully lifting the fund suspension, growing FUM, controlling costs, and completing capital raises. The upcoming launch of the Australian Homeowner Equity Fund in early 2025 is positioned as a potential catalyst for renewed growth.