Good morning, everyone, and thank you for joining our call today on the 2026 financial year. It's Andrew Hansen here.

I've got Richard English, our CFO, along with me, and also Peter Beams in the background, head of investor relations. If we have any difficulties today, we will take a short break and we'll recommence them, but the last number of years it's all worked perfectly, I hope it all works well today.

Just a little bit on Hansen before we kick off. We have software in some 80 countries around the world.

More interesting, 80 million end-customers' energy we serve and 360 million in the communications sector. I think as we've spoken many times about it, but for those new to it, we're actually involved in everything from the customer acquisition, the building of a product they sell them, the billing, the rating, and the collection of the money.

This is the Hansen's life of what we've actually done. Very critical to all of our customers, the real lifeblood of their business, and very, very proud of what we've done to date.

Certainly now with AI, and we've spoken a lot about AI, but I'm very excited to talk more about AI today and what it's actually meaning to our organization whilst we go through those changes. We thought we'd touch on the leadership changes since that's going to be new to everyone, including a lot of people inside Hansen.

Succession planning is a big part of the Hansen business and always is a big part of the business, and the last couple of years when we're looking to my own succession and how it actually runs inside the organization, and that aligned with not only finding a chief executive officer, but also dealing with David Trude, who's our retiring chair of the board. Firstly, probably getting this slide the wrong order, I'd like to thank David Trude, who'll be retiring at the AGM and for 15-plus years of service.

I know as public companies we have this view of governance, you got to change your board and chairs over on a regular basis. The fact that people like Hansen, our ongoing success and the money we keep on making over time has come from the leadership, the governance, the advice, the camaraderie we have with the board.

David has been an absolute champion of mine. I really enjoy having a chair in a non-exec position who we've been able to put in front of customers, deal with acquisitions, and help our business go overseas.

We'll talk more about David at the AGM, but we thank all of his leadership leading up to it. The view was that would actually move me to executive chair, an operational role inside the business.

What we've actually spent over the last couple of years is not only trying to see what do we actually want in a CEO, what were the changes we wanted the business, and I've spent considerable time interviewing people. I'm very proud to announce Stuart McDonald.

A number of you on the call be aware of Stuart's role in TechnologyOne, the role he actually led not only from probably under originally Adrian's guidance of what he actually did to the organization, but, as we know, Stuart was across everything from development of the software, delivering sales, marketing, and end-to-end. It was a very high benchmark when we actually interviewed, but part of the process we went through when looking for is what is Hansen looking for?

Our business has grown over the years on a very low spend in sales and marketing. We're talking about probably 1% of revenue, which is a fraction of what any other company spends.

We've always relied strongly on our reputation, our know-how, and our customer loyalty into the business place. One of the things we wanted to do is actually and bring in a new lens to the organization from the outside is actually growing out that sales We can only imagine because, once upon a time, low single digits, we were happy with that.

We're not happy with that anymore, and one of the things in talking to Stuart and, in fact, all the candidates is what could Hansen be with a true focus on global ambition and expanding our business through sales and marketing. I think as I move to executive chair, I'm still involved inside the business, but I will be more on the strategic side and the M&A side, and Stuart will come in and be running the operations of the business.

Stuart's now he doesn't join until November, but a truly welcomed individual coming to the organization. I'm extremely excited by what Stuart will bring to the mix inside the business, and we know between the self-drive, the business is in very, very good hands.

Welcome Stuart, and thank you, David, for your time. Looking at the financial highlights of the business, a relatively flat year, but I suppose most people understand, jeez, there's been some real turmoil going on at the moment now, everything from technology turmoil to wars, conflict, some country's administration, which we won't go into, but we've focused very much on our business on what we've always done and in underlying profitability and generating cash out the business.

Also moving, as we're going to be moving, and I'll talk a little bit more about that when I talk about AI, certainly moving our sale as a support revenue revenues up whilst controlling costs inside the business. Underlying EBITDA up by 7%, cash EBITDA $106, but the operational cash flow $110 million coming out of the business our size is I'm not sure how many companies can actually subscribe that, just not making profit, but the cash which comes out of it in the year.

Certainly EBITDA at 31% demonstrating the discipline on our cost management has probably been always a thing which Hansen has always done, as everyone's been listening this call for many, many years of what we do as an organization. There's no doubt the strength in our business is our business model has been proven once again to be successful, even when there's turmoil in both industry, economics, and also technology, that we stay on board.

I just want to touch a little bit on AI. I know this time last year AI was still relatively new.

I know that someone talked about how many times I mentioned AI, but probably not listening to what we were saying, but I think the important thing is exploring the opportunity of AI. AI is new.

It's something which we couldn't even envision 3 years ago and how quickly it's actually gone. We continue to really explore the AI tools.

We've looked at a lot of tools to go out there, the technologies. Then we started to have what was AI enablement teams so we could actually have people teach the teachers, to begin.

Also commercialization, because it does introduce a lot of ideas of how we will price this new technology into our business. Then we had to start by building the capability.

Therefore, an AI culture, a lot of training with people, a lot of proof of concepts, etc., which started to happen, and the deployment across the whole organization. Then was the modernization of our own products.

This is the first time we could actually say, well, what does it make to our own products? Remembering we have a large degree of customization by customer and by countries as we go around the world.

Then we did develop a thing called Nova RAG. In simple terms, what Hansen has is some 50 years of knowledge base built into technology and know-how, and Nova RAG allows you to actually capture that whole journey.

Rather than going to 10 people or 20 people of how things operate or how industries work, Nova RAG goes into each of those products and deeply goes in and understands how it actually works. Then the first time that whole IP of what we've actually got has able to be crystallized, customized, and brought together.

Then you move on that. Now you've done that.

Now we know we can actually go looking for that data, which our customer's data and our data, because our customers don't always own all the data. Some of the data is from other disparate systems, which we bring together.

Then we started to look at what was some of the productivity gains, and certainly some of our increased margins has come from some of the productivity, certainly our staff being more productive in the use of technology has come on board. We then started to test this even further out with some embedded data-driven improvements inside our business, which have been coming.

Then we're able to, the first time, turn this into the next 5 years. What does the next 5 years look like?

How we commercialize AI, how we leverage this knowledge bank, which has never been able to be done before, drive efficiency, and lead it. Turning that 50 years of intellectual property into a scalable asset can actually take subject matter knowledge and look now to commercialize it going forward.

What does it actually mean for us? I know there's been many questions from our shareholders, our customers, etc.

We've always had multiple products. We've had products which deal with certain jurisdictions, we've had customization for products, etc.

Now with Nova RAG, what we can actually do, we, for the first time ever, will be able to now unify those applications. We're able to innovate by embedding AI into all of our products.

You can now start to see we will now be able to have less products, and we'll be able to now start to upgrade our customers with AI functionality and technology whilst still doing what we're doing at the moment. The benefits are endless.

If you think of R&D, we can now run R&D from less products, our bang for buck is so much further. We can now take the same knowledge, when we've actually acquired businesses in the past, the idea of integrating their technology with our technology is something which has been difficult and costly.

Those same is not cost prohibitive in our business anymore. Our ability to scale into new markets is much, much quicker now, and you put that on top of Stuart joining the company with a clear mandate and a presentation to myself and the board of how we're going to be now building out a true sales opportunity in the organization and taking what we've done with the existing teams and accelerating it.

We see the whole strategic side of AI being a demonstrable change to our business going forward. Guys, I'm extremely excited not only with what we're doing with AI, the health of our industry, how we're using the technology and the changes we make.

I'm extremely optimistic about our future. We probably should drill into some of the details.

Richard, if I could get you to look at the financial metrics, please.

Sure, Andrew. Thank you, everybody, for joining.

I can see there's been a bit of a reaction in the market, we can spend a bit of time this morning walking through that. Of course, welcome to Stuart joining the business on the 19th of November.

I think a lot in the industry will know what Stuart's done at TechnologyOne, we are equally as excited that he's now part of Hansen and driving the next stage of growth after Andrew moves to executive chair. Now for those who've listened to a few of these calls, I do like to talk through some of the key themes, and I think what's really important, first up, let's just talk through some of the key strengths of FY 2026, and then I can address some of the questions that will be inevitably coming for FY 2027.

This has been a very strong year. The revenue has been largely flat year-on-year.

There's some headwinds which I'll talk through, but the idea that we've generated $120 million of EBITDA, increasing our margins from 28.5% to 31%, I think is a real achievement considering what's going on out there in the market. More importantly, and this might get lost in some of the numbers, we've taken out $20 million of costs in the year, and that's no small feat.

That's a lot of effort, and that's the proven work from AI efficiencies, AI enablement, and other initiatives that we talked about 12 months ago. Removing 20 20 $20 million, or 7% of our operating cost base, in 1 year is quite significant.

Off the back of that, we've generated our most successful year of cash generation in history: $110 million of operating cash flow, up 52% year-on-year. That's the backdrop.

We're starting FY 2027 off a very strong balance sheet position. We're going to be net cash positive in the next 90 days.

Then rolling into FY 2027, and I think what needs to be clearly outlined here is the focus on the business from transitioning from license and some services revenue to a consumption-based revenue model. When you look through the financials, the presentation, you will see our underlying recurring revenue growing substantially year-on-year, and it's continuing to grow substantially next year.

The reality is that as we transition away from these license fees that we're not particularly fond of, and I know that the market's not particularly fond of, inevitably there will be a transition, and FY 2027 is that transition year as we roll off some of these license fees. To give you an indication right now, the license fees in FY 2025 were $50 million, in FY 2026 they're $35 million.

We're expecting a similar level of decline in FY 2027 for license revenue to be approximately 5% of group turnover. That's material change in the revenue mix for the FY 2027 year.

The second thing we're doing is investing a substantial amount of money in AI that we are not capitalizing. We talked to margins in our outlook of 26% plus.

What that includes is $8 million to $10 million of AI enablement staff, vendor spend, token spend, etc., that we're not capitalizing. We're being conservative on that approach.

We're also investing another $6 million to $8 million in sales and marketing. Between those three initiatives, the AI enablement functionality investment, the sales and marketing investment, and the transition to recurring revenue, I think that might partially explain why there is some concern around FY 2027.

We are very optimistic about FY 2028, and Andrew, of course, will talk to the outlook shortly as we go through the presentation. Moving on to the slide 11, just let me walk you through some of the highlights, and then we can talk more about FY 2027.

Operating revenue, we had some headwinds in the year, we had approximately $5 million of FX headwinds in FY 2026. There will be more headwind in FY 2027.

Most of the currencies are running against us. The USD, euro, sterling, and CAD are not working in our favor.

However, we do have a natural hedge in place that most of you are aware of with our cost base also in those same jurisdictions. I mentioned before the license revenue lower by $15 million year-on-year as well.

The MO2 was announced in February 2025, all in all, $387 million off the back of $20 million of headwinds from license and FX, we think is explainable. Then moving across to underlying EBITDA.

There's two things here. At the start of FY 2026, we flagged that we thought we would get our margins back to 30%, right?

We were at 28.5% for FY 2025. We've actually exceeded it.

We've come in at 31%, and the second half of the year's come in at 32.7%. We've had particularly strong second half of the year.

The cost-out initiatives that I referred to before, the 20 million have made a significant difference to the business. Head count has now reduced to 1,450 staff.

We're not going to talk a lot about head count on this call, but we see long-term opportunities for productivity gains throughout Hansen, and that's not dissimilar to a lot of what tech companies are talking about out there in the market. Cash EBITDA, naturally that flows down from underlying EBITDA as well, margin increasing from 23.8% to 27.5%.

I think, considering the cautious demand out there in the market, juggling FX headwinds, etc., we've just delivered $106.2 million of EBITDA, of which $110 million has dropped to operating cash flow. I think, off the back of a bit of noise around what's in the future, I think this has been a particularly strong year.

Underlying NPATA, growth of 15.9%, obviously that flows through the P&L. We also paid our fair share of taxes.

The effective tax rate was 24% versus 19.7% last year. I think next year, just to guide, it'll be 25%, 26% for the ETR for FY 2027.

Move to slide 14. We talk a lot about diversity.

Diversity has helped us this year. We've got some mixed pockets out there, some in growth, some in stability mode, but we now have both verticals largely 50-50: Comms is 48%, Energy is 52%.

EMEA continues to be our growth engine: 73% of our revenue in EMEA and substantial amount of opportunities not only with existing customers, but with M&A opportunities as well that Andrew will talk to shortly. I just wanted to draw your attention to the second table there, which is the real story for FY 2026, and it will be the same story for FY 2027.

Right, this is recurring revenues, this is better-quality revenue. We've grown the business 14% CAGR since FY 2022.

We're also guiding to a 6% 6% to 8% growth rate next year, which gets us to $245 to $250 million of recurring revenue next year. This is the revenue that is profitable, sticky, recurring in nature.

It's locked in for the foreseeable future. If you looked at our contracted revenue in the annual report, you'll see it's jumped dramatically from 250 mil to $325 million.

There is, despite some noise in the numbers in FY 2027, this is where the real story lies. That then lead nicely into license revenue.

You can see the way it's bounced around. We spend a lot of time with analysts, shareholders talking about license fees.

We are, as best we can within our accounting standards and rev rec policy, migrating towards recurring consumption-based revenue streams. I did say before, 9.1% for FY 2026, I think it might be around the 4% to 6%, and I'm not going to bank it, but that's the sort of percentage for license fees in FY 2027, and that explains a large part of the margin impact for the FY 2027 guidance.

Moving to slide 15, Communications and Media. There's a couple of really good stories here.

The first one is around DigiTalk. Andrew will talk about the acquisition.

We've now owned the business for just on 8 months. It's going ahead of plan.

It is a smaller business, but it's growing well, it's extremely profitable, that's obviously contributed 6 months' worth of information here. We've also taken out 8 million of cost from the business, and you can see the margin increasing from 53.8% to 57.6%.

For those on the journey, you will remember Telefónica 5 years ago. We signed a large deal in FY 2021.

Everybody was hoping that there would be a renewal, and we were really pleased to announce recently that we did renew for a further term. We are a strong partner of Telefónica.

We only represent Telefónica in Germany. They are a global outfit, but we are entrenched in that business, and it's a fantastic partnership that we announced again in FY 2026.

There are a strong number of opportunities in the pipeline. We talk a lot to the size of these opportunities, nothing's changed dramatically.

Obviously, there's some cautious demand all around the world in all markets, but we feel particularly strong about Communications and Media. Slide 16, Energy and Utilities.

A slightly different story here, we've got some large implementations that finished in FY 2026, you'll see the application services revenue reducing in the FY 2026 year. The underlying support and maintenance revenue is the key.

Aside from some reduction in Germany, the business is very, very resilient. We've taken out 10 million of costs from the business and protected our margin.

You can see the underlying margin of 35.8% going to 34.9%, largely protected on a reduced revenue. Andrew and I don't ever talk a lot to one product or one specific country, but it's worthwhile touching on Germany just for a moment.

It's fair to say that the smart meter rollout in Germany is well behind schedule. One of the reasons we bought the business was the acceleration of the smart meters rolling out across Germany.

They are well behind. They have pushed out their estimated completion to 2032.

That's obviously had a drag on opportunities for us to pick up customers from legacy software suppliers. There's been some customer rationalization, there's been some customers actually exiting the market, and there's been some modest customer churn as well.

For a business that's turning over circa $400 million, this is a very small component of Hansen, but it is worthwhile pointing out that it's been a drag on the business in FY 2026, in particular this vertical. It's a long game, and this is the 10-year window we have for opportunity in Germany.

It's not about the last 2 years. We feel in time that this will obviously be a very good acquisition, but in the shorts of it, has been a drag on our overall numbers.

Slide 17, cash generation. There's been some feedback on the last couple of years, when is Hansen returning to the strong cash that it's known for?

This is the year. We generated $110 million of cash flow, 52% up on the last year.

We will be net cash positive in the next 60 days, and I'll talk about capital management in a moment, but we are in a very strong position from a cash generation standpoint. We paid back $19 million to our shareholders, we paid back $64 million to the banks, combining $84 million back to shareholders and the banks in the last 12 months, which is particularly strong.

Of course, we bought DigiTalk for $67 million. Overall, a very strong cash generation year.

If I was to talk to next year, I think it'd be around the 70% to 80% conversion rate, slightly down on this year, but off the back of a very strong year, I think that's understandable. Then finally, slide 18.

I just want to spend a bit of time on capital management and the way that the board and management talk about this, and it's fair to say this is now become a monthly topic. When we're in a position where we will be net cash positive in 60 days, there is a view in the market that there are other opportunities and other ways to spend our money as opposed to M&A.

I think the first one for us is always M&A, right? We have a long track record of generating substantial shareholder value from M&A over the journey.

We have a lot of opportunities coming up off the back of the European summer. We feel that we're well placed on some of those opportunities.

Some of them may not progress, but the point is we have a strong balance sheet, and we think M&A is priority number one. However, we have talked about a special dividend.

We don't think that's in the best interests of shareholders to return a partially franked special dividend. We have talked at length around a buyback, and at share price and where it's trading, it can certainly be attractive and accretive to look at a share buyback.

All I can say is that it's now become a focal point each month. We're not committing to anything today, but the board and management are actively looking at the best way to deploy our capital to make sure it's generating a return for our shareholders, and we will keep you posted over the coming months.

We have an AGM fast approaching, and between now and then, we'll continue to consider both the M&A and the buyback as well. Finally, we paid out a 5 cent dividend, partially franked to 80% as I said, and we head into FY 2027 in a very strong position from a balance sheet standpoint.

I think the underlying revenue base, we talk a lot about revenue mix, the underlying revenue base is very, very strong, and with the cost efficiencies that we've already identified and further efficiencies to identify, I think we're certainly treating FY 2027 as a transition year, and with Stuart also on board, we're excited about FY 2028. Andrew, I've just done a bit of a whip around the financials, back to you on M&A.

Richard, thanks for that, mate. Done on presenting the financials and managing your team during the year to certainly generate the cash which we have been.

Look, guys, it's always probably worthwhile touching on M&A. We've got a couple of slides on M&A, but Hansen's history has been increasing their profitability.

We've done that for a long time. A long track record of doing it.

We've always had very clear focus on what we're actually looking for around IP, where the margins are, etc., and we've loved it. I think we've been extremely disciplined.

I think the last 12 months, I know a lot of my time has been probably more focused on what we think is the excitement opening up the market with AI and what we're doing, how quick we'll be able to make sales, how quick we can enter markets. It's very, very exciting.

Part of my new role in discussions with the board and also with Stuart on roles is Stuart now operating the business, but myself will get more time on the M&A going back to the M&A time and partnering with Stuart to bring those. For us, also using an AI lens to some of the businesses we'd be looking to buy is how we can actually bring that to market, with something we've never done before and how we leverage some of the intellectual property they had in their history with the Nova RAG coming in over the top.

I think our pipeline has never been bigger in M&A. It does come to question at the moment, valuations of businesses.

Everyone's a bit confused with valuation of all businesses at the moment now. The heady days from a number of years ago when silly valuations were doing it.

Hansen's probably one of the strongest companies out here. We make strong cash.

We have ability to fund. Our balance sheet is unbelievable.

We won't leave what we actually do, but I know the boys have worked very, very hard to build out. I know once Stuart comes on board, I will be able to provide a lot of my time into what we think is a very interesting opportunity.

Changing to the recap on the asset. Richard, you stole some of my thunder on DigiTalk.

Great acquisition, great bunch of people come on board, strong revenue, ahead of our expectations, and so it's straight from the Hansen playbook, which has been fantastic. We can talk about DIAL AI, which is one of the first AI enablement for call center, etc., which we have a shareholding in and have put into our product.

The sales we're now making on the back of that now, that's gone very, very well for the company as well, and certainly expanding the pipeline and also the growth of that business. Powercloud certainly is below expectations, a number of reasons why.

Whilst Hansen's have operated in Germany for such a long period of time, buying a big, established business there with dealing with some bureaucracy in Germany, their transition is slower than what they've originally published, and the migration, the market contraction, customer churn has not played out probably the way which we would have liked. The third-largest economy in the world, 1,000 retailers, meters everywhere, and it all needs to be upgraded to new meter technology.

Our outlook is the smart meter rollout is still going to drive a lot of demand. There's lots of regulatory changes.

It's the medium term. As said, it's a bit of a mixed bag there.

We wouldn't change our way on Powercloud. It's great to see DigiTalk deliver on everything they've said, which has been fantastic for us.

DIAL AI and Powercloud just a little bit below our expectations. We probably moves it all to outlook.

Guys, I've probably never been more excited in my 30-odd years of running Hansen. We've always been subject matter and doing a great job.

We've always made sales because people know who we are. To unlock what we're doing with it is technology now into the future.

We will spend this next 12 months, the next 3 years when we look to converge our products and upgrading our customers. We have a very, very clear path of the journey we're going.

I think we talked about Stuart coming on board to drive those sales, and Stuart has bought into not only what we're doing, but his own experience from TechnologyOne of what's taking place. We do know there's a change of pricing.

Not many companies are talking about it now. The days of charging by seat or by meter or by event has changed.

It's going to be consumption-based, and we're in the forefront of that. Some of the work we're doing, which we don't talk on these calls and won't, with some of our lighthouse customers, which we're now working with some of these new technologies with them and partnering with them, is exciting times.

I think our outlook is fantastic. Our outlook is great.

The fundamentals of Hansen about generating cash and the profitable growth is not going to change. We're just excited by the future with technology, by Stuart, and by our industry as it moves forward.

Next year, yes, we'll be investing a lot. As we've said, we've decided not to capitalize a lot of the investment we're doing in bringing the products together, but still making a very healthy return and cash inside the organization.

The future looks great for Hansen. I thank you all for listening in, I thank you all for the journey, and we look forward to taking any questions if there's any questions.

Hi, Andrew and Richard, can you hear me okay?

Yep,

perfectly.

How are you, mate?

Good, mate. First question, just on the transition away from the license fees.

Obviously, you mentioned that that's happening. Just want to clear up, is that partially customer-driven as well, or is it also Hansen-driven in terms of when you are signing new contracts, you're insisting on the recurring basis?

Maybe you mentioned the sort of trajectory that it drops down again. Is that expected to sort of come down to a much more nominal amount in say, '28, '29, etc.?

Josh, good question. I think that Richard has answered a little bit.

Number one, we've got contracts going another 10 years on the old format. The traditional days of licensing has been changing.

We've been seeing that in the marketplace. The problem is it's a new market, mate.

You've got the cost of tokens, you've got the cost of housing. We've already started to move to consumption-based.

Where's the drive coming from? We're probably leading those conversations at the moment now on consumption-based.

We see the value in being able to use what we've called our Cortex, which sits over the top of all of our products, which interrogates the data and brings information back up into the hands of our customers, and the way which we're actually pricing. We know it is from our point of view going to move to consumption-based.

I think we're on the forefront of actually doing it, trying to work out the pricing exactly. What Richard was trying to highlight before, the traditional days of licensing is not the way people wish to see it.

I think our customers also like the idea of consumption because they can monetize consumption. They can look at their own cost of running their own business and see this is a cost, how they pass it on to their customers as well.

It's a bit of a journey, Josh, at the moment now, and I'd probably, at this stage, because competitors are listening, is probably hold back a little bit of what I can say is some of our competitive edge we have over people at the moment now going forward.

That's great. Just on the leadership changes, obviously well done on your tenure and I know Stu well, he's a great operator, so that's a excellent hire for the business.

I imagine him coming in as well, I'm just trying to link, you sort of mentioned on the call that he's obviously talked a little bit about his strategy coming on board, the investment in AI, the investment in sales, and this transition, how much of that was sort of in train before the leadership changes versus maybe partially influenced by that as well?

Remember Stuart hasn't started yet, he doesn't start till November, therefore, to be honest, this is already happening now. In all fairness, there was a bit of DD on both sides.

I've had many, many conversations with Stuart over the journey with many, many candidates, and I think the board had a very clear focus along with myself of what we wanted from inside the organization. Hansen is a predictable sort of business.

I think when we started to feel that what we could unlock in the industry with AI and how we best take advantage, Josh, it was why I think that Stuart, some of his experience, which you would know from Stuart, what he's done at TechnologyOne, you can understand the great alignment of the conversations between Stuart and myself of what we were doing and where we were going. The fact having a new lens over the top, I think we're well on the journey at the moment, and thank God we are on the journey, and we've been on it now for a couple of years.

Mate, I think that Stuart and I will work very, very closely together. I think we talk about being a partnership inside our business.

Him looking after day-to-day, me on the strategy side, the M&A, is just going to harmonize the business going forward. Mate, to your words, a great acquisition.

He's had a brief introduction to the executives, but we can't wait until November when we'll give him the keys to the car.

I'll let someone else ask some questions. Thanks, Andrew.

Thanks, Richard.

Thanks, Josh.

Good day. Hope you can hear me okay, and thanks for taking my question.

Can you hear me?

Yes.

Cool, thanks. I was just interested maybe in drilling a bit more into the license impact specifically to Telefónica.

I think you renewed that in late May or June, can I just confirm that would have been an impact for license fee revenue for FY 2026, or was it something that would have fallen into FY 2027?

Oh no, Sinclair, it's definitely not an FY 2027. It's an FY 2026 impact.

It's nowhere near as material as the license fee in FY 2021, which, if you remember, was about $21 million, it's significantly lower than that. It's part of the reason they were also looking to shift towards this recurring model that I'm talking about that we are now actively pursuing.

No, that makes sense. The reduction for FY 2027, that comes to negotiations that you might have had during the year that you're going to be preferencing, or you feel as though your customers are just combined going to be preferencing a different engagement model?

Look, Sinclair, it's been happening for the last 2 years that there's more and more conversations around putting less on the balance sheet from a customer standpoint and more towards sort of an operating expense. The word SaaS has been used a lot, and now it's considered a bit of a dirty word, it might be back in fashion, but we actually have always preferred recurring revenue, and in some cases, we just have not had the opportunity to take it.

That's the whole point, isn't it? The way the business that we've always done, if you go historically, it's always been recurring revenue, etc.

I think the accounting standards, Richard, did change, and also the way people want to give us money, but it's not the way which we'd like to do, and I think it's going to go back more now to that recurring revenue model.

The thing is, Sinclair, I don't want to sort of open up a can of worms, but if you sort of try and unwind the license fees that we've been doing and sort of smooth them out over time, the business had a particularly strong year in FY 2026, and FY 2027 is not materially different other than the investment we're making in AI and sales and marketing. I know it's going to get lost in the wash.

These licenses have been around for a long time. $50 million in FY 2025 is a big number, last year $35 million, whatever historically where we've been, and I'm just saying that that's not going to be the case going forward, and I think that should be viewed as a positive.

Obviously, it's not viewed as a positive for FY 2027, but long term, that's where we're going.

No, that makes sense. Then, in terms of FX, you highlighted, I think it was about a $5 million FX impact, and most of that, presumably, was in the latter quarter of the year, I think.

If I look into FY 2027, I think you've already said it's going to be higher than $5 million, but if I was to guess and say $10 million, would that be a silly number? I apologize if I'm just pulling numbers out of the air and expecting you to answer them.

Look, it's actually started in sort of January, February. It wasn't just the US dollar that impacted us, it's the GBP, CAD, euro, etc., so that's sort of kicked off.

Look, I'm not going to try and predict it, but I don't think 10 mil $10 million sounds like quite a lot, to be honest, but it's going to be an impact for sure. We can manage the best we can on the cost base, but even in that scenario, you're still carrying a lot of costs in these jurisdictions as well that can offset it, but not to the full extent.

No, that's great. Then finally, sorry, the last question, I promise, just on Germany.

I think, from what I can understand, you and you've highlighted those deferrals. You've always spoken to '27 as a year where the rubber hits the road in terms of smart metering, but what does it sound like there's almost a halfway solution the regulators have come up with, which means that sort of uplift is off the table for a number of years now, or is it 12 months, 6 months?

I think what's happened, Sinclair, they've given their retailers a bit of a free kick and moved it down the road a touch. They've also reduced the bar to get over to achieve the smart meter rollout percentages.

They're running, if you look at it now, they're running at about 20% rollout of the meters that they are now considering as mandatory. That's a long way away from getting to 100%, which they've now kicked down the road to 2032.

I think what you'll see, and it's has happened in other countries, is it's a slow start now, but it'll start to accelerate pretty quickly from sort of '28, '29 onwards. That's, by the way, that's about 2 years behind where we thought we would be.

I think if you read about Germany, it's going through some challenging times economically, pushing this on to all the retailers and ultimately the end consumers is a challenging

Yeah. Having 1,000 retailers over there, and this is such a change to their business model, there's been a lot of pushback, a lot of politics behind the scenes, which we've got no control over.

It's unusual. Normally, the regulator sets the agenda and they get to follow, but in this particular case, pushback.

Look, it's still going to be there. Germany still wants to be able to share power with the rest of Europe and they need smart meters to actually start to do it.

There's a lot behind this. We're just a bit disappointed, but that's outside of our control.

The end goal is exactly the same. I think it's a slower burn, but the acceleration will actually be kicking off.

Brilliant. Thanks for answering my questions.

Really appreciate it.

Thank you very much.

Hi, Andrew and Richard, can you guys hear me?

Yep,

perfectly.

Great. Thanks, guys.

I just wanted to start off with the churn in Germany. Are you guys able to give an exact percentage or what's actually been the trend going on here just because we've been kind of seeing something going on in EMEA and that part of Germany for quite some time, just wanting to understand whether it's been more of a sudden drop recently or whether it's been, I guess, something that is going on from a competitive standpoint with some of the peers that have been entering the space there?

Look, it's not probably those numbers you're thinking about. It's the uptake which has been slower.

From a churn point of view, there's been some consolidation where some people have been coming together in businesses over there, which is probably not good for us. We always knew in Germany there's not going to be 1,000 retailers in 15 years' time.

It has to consolidate because it's not a very efficient way. It's no different to in Australia, in the state here of Victoria, electricity used to be sold by local councils.

Consolidation did have to come on board, but it's not probably to that level. It's probably our ability that our own customers, some of the works they would do with us to move forward, haven't materialized because they don't need it yet because it's slowed down, and some of the new customer wins is probably the issue more for us about Germany.

Okay. In terms of churn, it's more of an uptake story rather than them say leaving Hansen and going to a competitor?

Correct.

Okay. I guess then moving on to the declines in revenue, E&U revenue in Americas and APAC, just wanting to understand what this consists of just because you don't split it out from a license and support and maintenance and application aspect for each of the geographic regions.

If you can just talk to, I guess, what's driving those declines year-on-year.

Two of them, there's some license revenue in FY 2025 that's not going to be replicated in FY 2026 and beyond. That was a one-off settlement there with some existing customers.

That's the main driver in the Americas.

Oh, that's the Americas, okay. Then

in Asia-Pac, the implementations that we have talked about, and some of them have been particularly sizable, are now finished, those now roll onto a lucrative recurring revenue stream, being support and maintenance.

Yeah. Cool.

That's clarified those things. I guess then next onto this Nova RAG technology that you guys have been building out.

It looks very promising from what I can see, just wanting to understand, have you benchmarked it against, say, some of your competitors to see how it kind of stacks up against theirs? Could you kind of, I guess, describe what this technology is from a RAG capability in terms of is it just standard RAG, which has been around for the past 4, 5 years, or is it moving towards more like the agentic capability that some of your AI-native peers have been moving towards?

Look, we would be doing a disservice in actually answering that question. Technology basically is a religious debate.

Nearly every new technology which comes into Hansen, we have an innovation group of people. We actually benchmark all products out there.

We can go with any product which we wish for. The technology chosen by our people normally has been benchmarked against its peers, etc., to get to where we want.

We had a very clear focus of what we were wanting from those newer technologies, from Nova RAG, and one was to reach into all of our products and all of that history to bring it forward. As said, I couldn't specifically answer the benefits of one technology over another other than it goes through a benchmark process to actually get the best outcome because we know what do we want from it, and it was very clear at the start what we're trying to achieve, and we chose what we thought was a technology stack which proved itself, the value proposition, the end game plan, is what we went with.

Cool. Then, finally, just wanting to understand, I guess, the change in approach to capitalizing the development costs.

I guess, moving AI now and not actually doing to capitalize development on the AI aspect of it, what was the driver behind that shift in strategy or the change

in approach there? There's a combination.

We are capitalizing substantial amounts of the investment, right? Without boring people on the call with accounting standards, the technology is moving so fast.

We need to make sure that we're not capitalizing too much, right? If anything, we're taking a far more conservative approach to expensing it through the P&L as opposed to capitalizing like other companies.

There's an underlying technology as opposed to the end-customer technology. The end-customer that we can actually do that consumption-based pricing over life of contract, but underlying technology is probably also one of our views, isn't it, Richard?

A lot of the work we're doing is on AI enablement as well, not necessarily customer-facing, but also internal-facing, and that drives other benefits, and I wouldn't feel comfortable capitalizing that on the balance sheet.

Is also that a large contributor to, I guess, the softer FY 2027 EBITDA guidance?

Correct. That and up front on the call, I'm not sure if you picked up on that, I said we're investing $8 to $10 million in AI, and nearly all of that will not be capitalized, right?

There's

a far bigger amount that's been allocated to product AI, but in terms of AI enablement and the like, it's a substantial amount of investment that we will get a return on, not particularly in FY 2027, but you will see that into FY 2027 and '28.

Cool. Thanks, guys.

Thank you very much.

Hey, guys, just a quick follow-up from the prior question. Can you give us any context just in FY 2027 around how we should look at the capitalized development costs versus '26?

I think it's going to go up a touch, Josh, not materially, but I think we're running at about 3.5%, 4% capitalized, it'll go to probably 5%, 5.5%, depending on where the work is done. The actual spend, the $27 million that's gone through the books in FY 2026, it won't be significantly different to that, but it's more a matter of where it's actually capitalized, and I think probably 5.5% is fair.

Got it. The investment in the AI and that, so that's sort of incremental

over and above

that.

That's over and above. That's through the P&L.

Over and above the traditional. Yep, no, just wanted to clarify that.

Thanks, guys. Appreciate it.

Thanks, Josh.

I don't think we have any online questions, at this point, I'd like to thank everyone for listening in, and I hope you join me in welcoming the changes to our business not only just from a technology point, but also from a leadership point of view. We remain very enthusiastic about the future of our business.

I know it's a busy day for everyone, thank you for your time and listening in. Goodbye.