Thanks for standing by. At this time, I would like to welcome everyone to the Hansen Technologies 1823 results release conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star one again. Thank you. Andrew Hansen, Managing Director, you may begin your conference. Chantal, thank you very much. Welcome everyone to the first half of our 2023 results. I'd like to take this opportunity to also introduce fellow colleagues of mine on the call with Graeme Taylor, Richard English, and Peter Beamsley, our new Head of HR. You may have picked up in the announcement this morning some, well, some pretty exciting changes for us, that is with Graeme Taylor, who's been our CFO for quite some number of years now, with eight years in Hansen now. We've now promoted him to Chief Development Officer with specific focus on the group M&A. Graeme will later in the call talk to our M&A opportunities. Also Richard English. Richard English has been with us for four years now as the Global Finance Controller Director, and he's now been promoted to CFO. I'd like to both congratulate both Graeme and Richard on their new roles and what it looks for the organization. Thank you, guys, and we'll hear from you, Richard, when discussing the financials. I think it's important to Hansen, the succession planning is always an important part, and when we're able to promote people from within, it's always a great opportunity, which always have great knowledge of the organization, the culture, and what really are the fundamentally important things to Hansen. Guys, congratulations. We'll just follow through the announcements which we've got today. Certainly the important notice, which is the standard offering, and then we'll go to page three. Basic to the agenda today. We'll go through the themes, the mission, the results, the detail, cash, investment guidance, and Q&A. Of course, if there's any technical issues, we may take a short break, and then we'll come back to. Look, we have got a bit of the agenda, we'll walk through as quickly as possible, allowing some time for questions at the end. Look, I think just to go through the key themes. Look, clearly, you know, we're at a backdrop now on the back of COVID, which has taken place. We've got global challenges, you know, with wars, et cetera, interest rates, inflation, a whole range of matters which are affecting so many organizations. We don't seem to have had a break since the start of 2020 with COVID. I think from Hansen's point of view and for a business to be around as long as us, we've been through many of these challenges before. Clearly, in the first half of having no customers leave us is pretty fundamental to any business and always goes to the view of Hansen of just being a long-term supplier to our industry. Certainly, the continued success of all of our projects have continued to go live. We're reiterating our guidance, which is 3%-5% organic growth for this year with 30% EBITDA margin. Just to touch on the 30%, we all know as those which have been following the stock that we did have an increase in our EBITDA margins during the pandemic when we weren't traveling. We had staff changes. You know, people in offices weren't there, et cetera. We all anticipated we'd go back to pre... Very, very proud of the fact that we're at the high end of where historically we used to be pre-pandemic. we're very excited about that. certainly an issue which is in the press a lot lately is staff churn. we know we probably did far better than a lot of organizations in, on staff churn. we're certainly, that's slowed down and also rate pressure is stabilizing. I think that from Hansen's point of view, what is actually good to be when we're seeing so many news about so many IT companies letting people go, it is the opportunity that pool is quite deep for us to go to. Also having over a period of time where we did lose some people, which you might say were regrettable losses, coming back to the organization, which are always welcomed back. As you know, you can understand people made a lot of lifestyle changes or moved because of the pandemic, and it's great to see people who've had fond memories of working at Hansen knock on our door again, and they are welcomed back into it. I don't want to steal too much of the thunder of Richard English. The cash generation of this business is a mainstay. You know, this business has been around for 50 years, and the amount of cash this generates, we've paid back out to our shareholders or we use that for capital management to grow is something. I don't want to steal your thunder, Richard, but, you know, last three years, $191 million being paid down in debt and dividends is an amazing thing. I'm not quite sure what other companies, IT companies in the world actually perform at the level Hansen does at our level. I think it's amazing. Very much focused also on our M&A approach, and our disciplines around M&A, but I'll once again, I'll allow Graeme to elaborate a little bit further on those. Just going to the company mission statement without going into the Hansen mission statement. I think that Hansen has continued to reinvent itself over such a long period of time of being relevant to our customers and maintain very strong relationships with them. The main pointer in that is not really giving them a reason to leave us, that we're always ahead, we're always dealing with challenges, whether it be dealing now with AI, which is very exciting to us and our customers are taking place. Technology also having a broad skill set across whether it be SaaS or on-prem, et cetera, the whole way which we deliver our applications as marketplace. We certainly have grown through acquisitions, the Hansenization, which should be aware to most people as we've done acquisitions. We have such a track record of every one of our acquisitions being a successful transaction, and we will continue down that path, and Graeme will touch on a little bit further. We do certainly provide industry-specific software products and expertise. It's all around in business, everyone, that you need to understand what the market demand is, and our job is to make sure that we're actually supplying what the market's looking to. That really comes with capitalizing commercial opportunities. Most of our customers are dealing with challenges at the moment now. We know the cost of capital is higher, interest rates are higher, and people are spending their money more wisely what they ever had before. When you can actually show them updates to your application, or they go through upgrades where they can get a return on investment, is fantastic for us. We think we remain in a very unique position in the market to which we deal with, specifically the energy and the telecommunications marketplace, and dealing those customer needs and the business outcomes which they look to Hansen to continue to provide. In essence, that's our mission statement. On the financial summary, certainly, revenue excluding license revenues, we all understand that IFRS 15 was a change with our licensee having to bring them together, whereas Hansen traditionally has just had those license fees over the term of the contract. We do have a timing issue from time to time, and this probably this first half is a bit of a timing issue where some of these license renewals fall either side of financial years. We are never going to push a customer to bring forward a new agreement or a new contract or a renewal because it actually suits market timing. It happens when it happens, and we very closely the international rules which are afforded to us. Hence, you know, as a company which has undertaken some, you know, 44 audits since we've been public, never had a qualified audit, which show that we stick very much to the way businesses should be run. EBITDA margin now is at 30%, which is back to prehistoric levels, which we're very, very happy about. There's no doubt the lag between our pricing increase of cost without NPAT. I think we've managed exceptionally well on the employee costs as they've actually gone up. I think that's because we are a destination where people wanna work for Hansen. Once I've always said to people, we try to provide the three elements which everyone works for, which is the job we give these people, the salary we're able to pay them, but the culture of the company of feeling where they can continue to develop professionally and personally in a kind environment. NPAT increased by 10.3%. EPSa increased by 9.0% in relatives to the 20. The rapid debt repayment, which down now to a net down by 30%, down to 28.7%. I think, Richard, I'll allow you, I won't steal all of your thunder by allowing you to have some good comment on when we're likely to go net debt at that point in time. Just on slide seven, just to talk about market performance of the organization. I think that we as, you know, it's, you're the marketplace, you're the people who buy shares. To see that support of our investor shareholder base is very good to us. Continually to outperform the index is fantastic. I think our cash position is very, very strong. When we talk about cash position, it is the three elements of our capital management which are fundamental to Hansen. Those three fundamentals is the way which we use our cash, the way we could use our scrip, and the way we use bank to support us going forward. Having our debt paid down those levels is great to us. We certainly remain very, very focused on M&A. I know a lot of our shareholders who have been long-time shareholders have been well rewarded for the diligence and the discipline we approach to acquisitions, which is clearly always done probably with a mindset in this company. We all spend money like it's our own. It's a bit of a founder-led type mentality, and we're not wishing to deviate the wrong way from that. I think I've stolen a little bit our cash position, but the fact that we've been able to return AUD 191 million to our banks is just an amazing number of a company that size. On that basis, look, I might hand over to you, Richard, if you'd like to pick up on some of the financial themes here. No worries. Thanks, Andrew. Look, welcome everybody to the call. I've been here circa four years. This is a great opportunity for me to step into the CFO role, and thanks to Andrew and the board for all of your support. In particular to Graeme. A lot of you will know Graeme over the journey. He's been our CFO for many years, and Graeme put forward a long-term transition plan a while back, and he's been outstanding in handing that over. Congrats to Graeme on the promotion and business as usual for us in finance going forward. If you'd like to move to slide 12, please, just to walk you through some of our key metrics. Look, everybody's always focused on revenue. As Andrew touched on, modest growth, AUD 149.1 million for the half versus AUD 148.9 million last year. Relatively flat year on year, but that doesn't tell the entire story. You know, I think if you strip out the license fees that are unfortunately accounting related by IFRS 15, the underlying business is growing particularly strong. We're up 6.2% across our services and support and maintenance streams. That's a bit of validation for us that if some of you recall, a while back, we built up our capacity in the business, we called the Hansen bench, and I'm glad we did because without doing that, we would not have been able to satisfy that demand. 6.62% underlying growth, lots of upgrades, implementations, market changes. A great first half from our perspective and still on track to 3%-5% growth for the full year. Underlying EBITDA, which is our key profit metric, margin of 30.2%. It's important to point out that, you know, the last two years, the margins have been higher than historical averages during the pandemic. You know, we took some costs out. There was no travel or expenses et cetera like that. The reality is the historic Hansen business is running at 25%-28%. Running at 30% plus for us is where we think long-term Hansen sits. You know, we've absorbed some wage increases, but we've also increased the headcount of the business. We've repriced contracts. We have the pricing power to do that. All in all, we're happy with the first half result. It's in line with our expectations internally. I think for the full year guidance, we're still on track to our 30%+ margins. In terms of underlying NPATA, look, that aligns pretty closely with revenue and underlying EBITDA, of course. Some costs back into the business. The tax rate 22.8%. The same time last year was 22.7%. We think for the full year, you know, we'll be around the 23.5%-24% range for tax. We've also increased in R&D. Graeme will touch on that a little later, this is a high year of R&D investment for us, and it's needed. There's a few things happening in the communication space. We're staying ahead of the curve with our cloud-native implementations and development. Our R&D has crept up from circa 5%- 6.5% of revenue for the first half. Moving on to slide 13, EPSa. Again, these are well and truly in line with our internal expectations. You can see the impact of the EPSa falling away a touch from the prior corresponding period due to some investment in teams and wages. Again, far higher than our historical averages, we're very pleased with that. Net debt, Andrew did steal a bit of my thunder, but we're particularly proud of the fact that we can generate a lot of cash and pay down debt. As interest rates are rising, it's important to get ahead of the game, which we are. We paid down a record AUD 20.9 million of debt in the first half. We're down to a leverage ratio of 0.32, which is extremely low and gives us a significant firepower to really leverage our balance sheet if and when we decide to do the next acquisition. I think it's just a matter of time, but we certainly have plenty of firepower for that next acquisition. In terms of dividends, look, we've declared a AUD 0.05 dividend. You might recall the same time last year, we declared a AUD 0.05 plus a AUD 0.02 special. That was related to the payment from Telefónica of AUD 18 million that we returned some of to our shareholders. AUD 0.05 is our absolute standard range, and we're happy with that. Looking forward to the full year, you know, we're looking at a partially franked dividend on our current forecast, but that's to be determined as the year unfolds. All in all, AUD 0.05 is our standard rate, and we're happy to return some capital to our shareholders. Moving on to slide 14. What I like about this slide is our, is it really highlights our diversity. We don't have all of our eggs in one basket. The beauty of Hansen is that we don't have a soft underbelly. We're diversified by products, jurisdiction, we've got over 600 clients, we deal in 25 currencies, and we've got two different verticals. There's no one key crisis that can bring Hansen down or put any real stress or strain on the business at all. You can see here the split by vertical, largely 50/50 across the board, and then by revenue type. We've got a good blend there as well. On the right-hand side is what I think is a really important point to draw out. It's the revenue by type and that underlying growth of 6.2%. Look, the second half will be a different makeup of revenue. There'll be some more license fee coming into the second half. You know, the 6.2% growth off the back of building our bench, managing, you know, talent and wage creep is outstanding. We're thrilled with that result. Moving on to the next slide, cash and capital management. Slide 16 is cash flow. This is the standard waterfall chart that we talk to in our business. Everybody knows that Hansen generates cash, and that's sometimes a little unusual in the tech space. You know, we're growing the top line, we're highly profitable and generating a lot of cash. If I just quickly walk you through the waterfall, so underlying EBITDA of AUD 45 million. What you'll see here is a working capital buildup of AUD 16.1 million. Typically for the first half it's usually flat. This buildup's not unusual. We were expecting it. We had five or six clients that we invoiced in November and December. All of that money is now coming through the door. The working capital will be largely fully unwound by the end of March. As of today, or earlier this week, we had a net debt of AUD 20 million. You can already see that working capital is unwinding. CapEx, some modest investment in some refreshes of hardware around the world. I did touch on earlier the R&D investment, the product development there of AUD 10 million. You know, we have a very robust quarterly review of our R&D. We're not just building stuff that we think clients might want in the future. We have a clear ROI process. We have a clear approach to making sure that that investment is sound. We're very, very comfortable with the AUD 10 million that we've invested in the first half. If there are 16 lease rental payments of AUD 3.6 million, then of course interest on debt and tax. Everybody's aware interest rates are creeping. Another reason why we're paying down debt so rapidly. I think the good news will be that on this trajectory, we should be net debt zero by probably the first quarter of FY24, which will be a great result. At the end of the day, we've got AUD 7.4 million of free cash generated, we've then distributed AUD 21 million to the bank and AUD 9 million to our shareholders. Andrew touched on the return of capital to the banks or to our shareholders of AUD 191 million over three and a half years. I just think that's just, it's just an outstanding result. You know, we're well and truly on track to leverage up again and do our next deal when the right one comes along. Slide 17, borrowings. The chart on the right sort of highlights, again, the cash generative nature of our business. You can see the rapid decline in borrowings from when we first acquired an acquisition in Canada, which was Sigma back in 2019. We've rapidly paid it down. What I did wanna highlight is those that have had a look at the accounts may have seen that the AUD 65 million of debt has gone current. It was previously non-current. That was a conscious decision we made. We didn't wanna pay unnecessary fees. We do spend money like it's our own. What we've done is we've let it go current. We are in the process of renegotiating that loan right now. The banks are very supportive. The terms seem consistent with what we've been on previously. There's no concern there about renegotiating the facility, we think that'll be wrapped up by about May, at which stage the debt will go back to non-current. Dividends I touched on earlier. We're really proud of the fact that we can support our shareholders. We've returned AUD 70 odd million, the last three and a half years to our shareholders. That will continue into the future. Look, it's late over in London. Graeme will be up and about. Graeme, handing over to you to talk about investing for growth. Rest assured, I haven't fallen asleep as yet, Richard, thank you. Look, I'd love to just start out by saying, it's been my great pleasure to serve as CFO for a little over eight years. You know, I'm sure everyone can appreciate that to have some form of leadership position. I've had a wonderful team of people working with me in order to have that wonderful career. I'd like to just spend a moment thanking them for their support. Of course, one of the things that's become very rewarding to me personally is investing time in those people and seeing them develop within the company. Every one of them have done that in spades. Certainly, Richard, it's been great that the plan that we put together some time ago now, you've certainly fulfilled your part of the bargain. I wish you every success as you take on your new role. Look, more importantly, you know, investing for growth, I think in my new role, there's a number of elements to that. It may seem a little bit strange to be talking to research and development as part of that. Of course, I'm sure everyone can understand in a technology company, in this world that we live in at the moment, and certainly particularly in the verticals that Hansen deals with, there's a constant technology churn out there. It's very, very important that we make the right investment to ensure that our customers remain on track and on trajectory to achieve their business goals. Andrew often talks about the fact that we're a technology company, but we're really here to make sure that our customers get and use technology to solve their business problems and look to grow and develop. You know, we have to make the right investments in our products to ensure that's the reality. Of course, what we're seeing is an increase in this most recent period in order to achieve that. I think with things like cloud native and other initiatives that are going on across the business, that investment will continue a little into the future as we keep in touch with the immediate needs. This is an important investment, and it's an investment that delivers returns to shareholders. You know, it's not unusual to sit in a meeting where we question each and every step that we're making, sometimes to stop an investment because it's not heading down a path that we deem appropriate any longer. We're not afraid to change direction and make sure that the investment continues to yield as is appropriate. That's very, very important, particularly in these times of great change. I think it does very much dovetail into what we're doing at Hansen around future acquisitions. You know, I think as the company has matured, it's become more and more important that these acquisitions, whilst leveraging the wonderful experience we have in the company and our history of doing successful transactions, we continue to look for more innovative ways to bring new technology into the organization. Certainly what we're seeing at the moment in the market is, you know, a lot of companies that have been out there developing new technology, new software, new approaches to doing business. Of course, you know, they're coming up against hard times at the moment as equity becomes more difficult to raise and real challenges face their business. I think this is an opportunity perhaps for Hansen to look at some of these new technologies and perhaps bring them to bear across our two verticals. We're much keeping a watchful eye out for opportunities where we can perhaps leverage an opportunity in that regard. Of course, there's businesses out there that we'd be interested to consolidate with and just expand our global reach as a company. We continue to monitor the markets we trade in very, very carefully. I think it's very, very clear to me, the brief that's there before me. I've got a couple of colleagues that are working with me in this regard. Certainly Hansen is very, very focused to look for that next acquisition and stick true to our fundamentals. We understand that ownership of IP, looking for things in places where we exist today or may be complementary to some aspect of our business, gives us a great opportunity to leverage the core skills we have within our business. I think that the old equation goes, I'm always looking for, you know, one and one to make three or hopefully five, if we can be that bold. Look, having taken on this role now for all of about 10 minutes, I can't promise anything immediate for everyone, but quite clearly, we've got a very strong focus on acquisition. As Richard pointed out, we're in a position where we've got a balance sheet that enables us to go and spend some capital to keep growing the business. I think to that end, you know, what Richard alluded to was certainly our banking facilities. It is important that that facility be appropriately negotiated. I applaud Richard's approach to take the time to do that because we wanna have great flexibility in that facility so that we can move quickly when the right opportunity comes along. Look, I'm looking very hopefully into the future about an acquisition opportunity and when it will come. I certainly look forward to continuing to serve the shareholders and my colleagues in my new capacity. Thanks very much, Richard. I think it's probably back to you, Andrew. Thank you, Graeme. Thanks for starting up late, although I do note the number of callers have probably come overseas, so you're not the only person sitting in their pajamas on this call. Thank you very much. And I'll certainly reiterate your comments about Richard, but to yourself, Graeme, I'm really looking forward to working with you. Now just talking now about guidance for the year. I've already touched on it. You know, we still reiterate the backdrop of what's happening around the world at the moment now, but we still feel extremely comfortable with our forecast going forward and happy to restate what is our organic growth going forward at 3%-5%. We are still expecting our EBITDA margins to be around that 30%. Whilst we talk about M&A and aspirations for growth, you gotta not withstand it, this is such a great business without that. It's just showing even though we've not done a deal for three years, and there's good reasons why we haven't, because the right valuation's not there, the right deal's not there, we will stay disciplined. To find the business is still growing and still making the money it is now, that's just the cherry on top. This is an extremely successful business which has navigated change over 50 years. To have that successful, you know, year-on-year growth and making cash, as I said, I don't know what other businesses out there. That's nothing to do with me. That's just do with a bunch of very hardworking people which continue to fine-tune this organization to continue to sell what people are wanting to buy. You know, I'm very, very proud of being able to lead such a team of talented, hardworking individuals. I don't know how many other CEOs really get to have that sort of that feeling coming to work every day. I thank them all for their focus. I thank them all for their commitment to the organization. We are extremely excited for the future of this company. The way we look at it, we're always looking a decade ahead, from a public company and everyone's looking six months. Just understand the decisions we're making are for the long-term prosperity of this organization. On that basis, I thank everyone for listening to us have a chat, and I'm sure there may be one or two questions coming through. Chantal, I'll pass it back to you, and if there's any questions, we'll do our best to try and answer them. At this time, I would like to remind everyone, in order to ask a question, please press star, then number one on your telephone keypad. Our first question comes from Garry Sherriff with RBC. Your line is open. Good day, Andrew. Congratulations Graeme and Richard on your promotions. Well deserved. Apologies if I've missed a couple of things. I'm just on a couple of other conference calls. Just two questions. Firstly, the operating cash you and Richard, maybe just talk through exactly what happened there and whether that's gonna revert in the second half? The second question, again around our license revenue, being about 40% lower on PCP. Is this just temporary? Can you just give us more detail around what happened there? Thank you. No worries, Garry. Thanks for your question. In terms of the working capital, we have four or five large implementations underway. In terms of the billing milestones, we invoice in accordance with the billing milestones in November and December. As a result, the cash is coming through in the first or the third quarter of FY25. Typically, we have sort of a flat first half of working capital. There's no negative or gain. In this case, because of these large implementations and upgrades, we've had some build-up. I think you were saying that we've already, and half of that's already been unwound, in the first, well, first month it was actually, and I think by March. We're largely unwinding, Garry, we're AUD 20 million net debt today, We're basically focused on a net debt zero position by Q1 FY24. In terms of the revenue, yes, license fees down first half versus last year. That's, there's a bit of IFRS 15 in there, the accounting treatment. In the second half, the license fees we're anticipating will be stronger than the first half. For your modeling, you know, just anticipate there'll be some upside in the second half from license fees. Thanks, Garry. Very good. Very good. Thank you. Our next question comes from Lafitani Sotiriou with MST Financial. Your line is open. Good morning, everyone. Just a couple questions from me. The first one, I wouldn't mind focusing on the pipeline and organic business sales. I think previously you've included some charts around upsell and cross-border sales and from existing clients and winning net new clients, 'cause it's a great outcome not to have any client losses in the last half. Could you just talk to the organic side and whether you can even touch on, are there particular strengths in geography or business lines that you see greater opportunity from an organic perspective? Yeah. Thanks for the question. look, as far as the sales pipeline's concerned, to tell you the truth, we've not really seen much deviation over the last few years, which have been affecting the business. The pipeline looks okay. I think the encouraging part of the pipeline more recently has been probably existing customers, doing upgrades, and taking more services from us. That's people evaluating the applications that they've already got at the moment now. In some cases, which is very encouraging, they've gone to the marketplace, they've evaluated the competitors, and they've stayed with us. We have a very strong win back. I couldn't give you exact numbers, but I reckon probably, you know, 20% of all people over my 30-odd years of being here who've elected to leave and actually end up staying with us. We're pretty proud of that. I think the pipeline organically is as sound as it has ever been. Some of that, more of that focus has probably been we have such low churn of customers, so it's always good that when they, some of them were gonna leave, they end up staying or some who just wanna embrace more services from us as our technology, you know, some of. The point being, some are very happy to be on premise. Some people may say, "Oh, no, we wanna go cloud-native." The fact that we can accommodate customers who have a specific choice of being in private cloud, public cloud, or be on premises. They're just as good as it's always been. Thanks for that. Can I just move on to sort of the capital allocation question? 'Cause you know, there's, as you've indicated, within the foreseeable future, you're moving to sort of no net debt. We've seen an uptick in some of the R&D expense in the last half, and obviously a keen focus on M&A, which there has been. You know, very much a drain there. There's higher expectations. If we fast-forward six months to a year and, you know, net debt's at zero and you think some of the target acquisitions are still a bit expensive, can we expect to see things like buybacks emerge, or would you be allocating more to R&D, or what are you guys thinking? Obviously we don't, you've made it clear in the past you're not gonna just do an acquisition for the sake of it. How should we think about the capital allocation over the next couple of years? Yeah. Look, I think, look, I think that's a topic our board spends a reasonable time in capital management, capital allocation. Which we probably, I would think we'd mark ourselves pretty good 10 out of 10 in actually doing. You're quite right. Look, this is shareholders' money which we're actually spending. We deem over the life of this company the return on capital as we invest it is second to none in doing, in what we've actually done. The first point to us always is to pay down debt. It's a bit like, you know, clearing the credit card so you can go again with absolute clearance. Because we are cash generative, it makes perfect sense. I think we've found the balance of actually putting a combination between paying down debt and continuing to pay out dividends to our shareholders. I think in six months' time, you're probably now raising the question from the board's point of view of what we should be doing with the surplus cash this company generates, which should be the shareholders. I can assure you, if I can't find where the cash we're building up, we can't use appropriately because we adequately provide our working capital so easily in this organization, we will be challenged in six months' time about how we return that. I would like to think, some of the work we're doing and some of the things we've seen, without going into too much detail, that we would be back at a point where capital management would be taking on board acquisitions and using cash, using debt, and/or using scrip as part of it going. You touched on share buybacks. Look, you've gotta do a lot of share buybacks to actually make a big difference. Once again, we always think, and from my history of, you know, 30-odd years in the company, that return on capital that's been outperformed for our shareholders is probably best used by us to actually keep on growing this business and getting a return to our shareholders via share price increases as they take a favor in the shares or as we do dividends. Sorry, just a follow-up to that then. If you consider the M&A environment and focus at growth, you know, in the past you've discussed that pricing from some of the targets was unrealistic. Has some of that pricing come down? And how confident or how disappointed would you be if you didn't make an acquisition in the next year? You know what? It's a funny thing. If we don't do an acquisition, we should be applauding ourselves that we didn't do an acquisition. I think the moment you throw out your fundamentals of your business and you start buying businesses to set the market expectations, that'll be the wrong decision we always make. I won't be disappointed one way. I'm very close to the deals which we're talking at. In broad, in broad terms, there is no doubt leading up to COVID, we were in a period where valuations were really well out of step. Now is it out of step? The only thing we can mark ourselves with is the value of Hansen. That becomes a benchmark for us. We think our shareholders on the call today have said, "This is what we think you're worth." It makes no sense to me to go and buy a business at more than you think I'm worth. I think the opportunity. You know, I had a conversation with someone recently who knows about Hansen, who knows about our Hansenization, and was wanting me to actually price enhance some Hansenization to the acquisition we're buying from them. I'm just going, "No, no. Hansenization is to be the benefit of Hansen shareholders. It's our hard work and our know-how to go and do it." There is. While saying that, there is no doubt there is some movement. I think the more important thing is the targets which we have identified in this last year, the key targets that have been done have not been sold. It's not as though we're underpricing. It means that you've got to set the market. It doesn't matter what you do in life, though. You can set the price whatever you want on any asset you've got, but the price is always gonna be set by the purchaser, and we'll just be patient. I think that those valuations are coming down. They see us, they see our valuation, they see what the stock market thinks we're worth, and they know we would not be willing to pay a premium for that. We would want this to be earnings accretive, and we would want to deliver like we've always done, the strong discipline Hansen has around running businesses to actually deliver greater margins of the businesses have been able to operate themselves. All right. Thank you. Okay. Bye. Our next question comes from Evan Karatzas with UBS. Your line is open. mi all. Can you please... Another one for Richard to start. Can you please just outline how much of a cost impact was related to, I guess, staff churn or employee hiring for the period, specifically relating to things like recruiting costs, new joiner costs, just to bring that increase in your employee headcount? Look, Evan, of our increase in remuneration year on year, there's about a 5.5% which relates to headcount increases. There's a small portion which is churn, which is abating. We had far more of that during FY20 and FY21, FY22. There's a bit of churn in there, of course, but the numbers have come well down. There's balances around wage increases, which we think we've handled particularly well this. I think, yeah, I mean, just in the part of that answer is in recruitment costs. Yeah. We would probably about 90% of our employees are hired internally. We have a fixed internal cost. We have a talent acquisition team. We've always thought that the data and the market the job is something that we've been wanting to keep in-house for ourselves. It's a fixed cost inside the Hansen, but it's only very specialist roles we would normally go outside. Like I said, it's a fixed cost, so we're not dealing. More importantly, we're not dealing with headhunters who have the job of our employees outside of their own business. Okay. Thanks. Perfect. Just on the CapEx and R&D, capital CapEx there. Can you just to provide a bit more color into what that would include? Obviously, it's gonna be a bit of a step up as you mentioned earlier, Richard. In terms of CapEx, there's some standard refreshes for laptops and other hardware. We're also going through a hardware refresh for some of our data centers, so we're partway through it. I think there'll be a slight uptick in CapEx. You might be looking sort of AUD 1.5 million-AUD 1.8 million in the second half. R&D, look, Andrew did an interview a few days ago around the R&D investment. There's a few key initiatives. One of the main ones is cloud-native, where we're improving user experiences. There's been some significant market changes in the industry as well. There's a lot going on. Like I said, the space is a particularly dynamic space versus the energy space. We're. Yeah, we have to stay relevant, don't we? I think that's the thing, it's staying relevant. We've got to stay in the marketplace. There's investment we're making today, we have to. The data security is, you know, the amount of money I'm spending on data security 10 years and some things, but that's all, it's all about the relativity of your customers and cash flow not having that customer churn. We're very disciplined in that approach, spending it on investment. Yeah. Okay, great. Just a final one for me. Just on slide 12 in the presentation, you mentioned an uplift from contract repricing being more of a benefit in the second half. Can you just provide some color on what that involves and what sort of benefit that will be in the second half, or what benefit we should be expecting or looking for through the second half there, please? I mean, the reference there, Evan, was around our ability to pass on increases, which of course we can in all of our contracts. We're fairly pragmatic about where we pass on, you know, CPI increases, and we look at long-term tenure, we look at upgrades. There's a whole strategy around it. In terms of modeling for your second half, Look, we're not gonna disclose how much of an impact that's had. You know, the full year guidance remains as it is. I think that's the safe bet for now. Okay, no problem. Thanks for that. Our next question comes from Josh Kannourakis with Barrenjoey. Your line is open. Hey, guys. Just a couple of quick ones from me. You mentioned on the upgrades and the success you're having with existing clients. Can you maybe talk a little bit more to any of the particular modules or products where you're seeing that more or any particular dynamics driving those upgrades? Yeah. Go, Josh, Andrew here. Look, it's so broad, I suppose understand we've got applications in 80 countries around the world across the two disciplines. I think with the nature of Hansen, you never have every single jurisdiction or industry on fire at exactly the same time. Some of the upgrades have certainly come because there has been market changes in maybe the Swedish marketplace, which is forcing some customers to have to do upgrades, or other technology. Look, there's no macro. They're all a bunch of micros, to be brutally honest with you, across the board. There's no doubt, as we touched on earlier, look, everyone's trying to provide or get services from their vendors cheaper than what they were paying before. The challenge that Hansen has, like everyone else, is how do you provide more value to try and hold onto your money? You just don't want to discount things down. Invariably, we will, we do invest in some of the modules for people, which is important. The other thing is just where some customers wasn't progressed from, say, a. It's not SaaS so much. It's all around. We provide applications. Whether that application is gonna be on their own hardware, our hardware or third party, there's a lot of talk at the moment now around cloud-native. Just remember, cloud-native, in Australia, they think about it as much. When you go overseas, cloud-native doesn't really work because in the EU, you have the Data Protection Act, which means you can't have customer data or doing outside your country. You can't be in a cloud environment in some countries. It just doesn't work. Hence the whole time, you'll never hear Hansen making some announcement saying, "Oh, we've gone SaaS," or, "We've gone cloud." Our applications can be deployed on SaaS, their hardware, our hardware, cloud. It's whatever suits them. That's always. We see technology is a means. Where we can provide that cheaper than they're paying today, that's where a lot of the interest has actually been coming from. Got it. No, that's really helpful. Just on that cloud point, Andrew, like if we think about, you know, the, you know, some of the other peers have talked about they do get an uplift when you do go to, you know, a pure, a public cloud environment because, you know, you're sort of managing that multi-tenanted environment. Do you guys also get that, you know, uplift as well on the customers where you are transitioning to that environment? Look, I'm not sure talking about other companies and what they've done, because most of the companies I've heard about their own journey have not actually transitioned into making money yet. Because the other thing with cloud, it often doesn't mean, Josh, that we're providing the cloud. It's they could be providing that environment themselves because it's just a mechanism to actually host on going forward. The cloud benefits, and I don't wanna get too technical because my technical team will start laughing that I know what I'm talking about. Cloud-native is really a mindset of developing your software, which is component. It's like the big Lego block set. You can just take out one block and fix it and then put it back in. The main savings are not savings for us so much. It's savings for a customer that these applications which are staying up and alive the whole time can just have a single module being updated without having to take the whole system offline. The savings come from not having to do an end-to-end test. They can just retest that module rather than taking the whole application down. Some of the savings, strange enough, will not be replicated in Hansen's operations, but will be our customers' operations where they see those benefits. Cloud-native- Got it. It's a mindset which we're all going down to, but it's actually a development methodology which has been around for 100 years, to tell you the truth. It's just talked about more than what it used to be. Yeah, 100%. Obviously, it gives you guys a few more development efficiencies as well. A final one, just on the debt side as well. In terms of capacity, you've obviously talked about M&A at length before in terms of that. But maybe just to reiterate in the current environment, you know, with interest rates a bit higher, how yourself, the board feels about, you know, the sort of capacity to use debt. Yeah, look, I think, look, broadly speaking, you know, where do we feel comfortable? It's a bit of a subjective sort of conversation, but you know, we would think 3x the combined debt of the acquisition. It would be our own profitability plus the EBITDA. That model of 3x is capital. I can tell you now, there's banks which will go a lot higher than that. Where do we feel comfortable? In regarding to interest rates, and strange enough, it's not a big thought to us because of, as you see, the amount of cash which we generate. I think we've just gotta take some comfort of the long-term history of Hansen of making money. When you think about it, if the cost of money for us is now 5%, it's not high. What's the historical, if we went over the last 30 years, what's the average about, you know, 7.4% or something? It's still low cost of the cost of capital at the moment as far as we're concerned. Our ability to service that and pay down the debt will continue to be a mainstay of the focus the board has for our capital management. Great. Thanks, Andrew. Appreciate you taking my question. Thank you. Our next question comes from Dylan Jones with Ord Minnett. Your line is open. Morning, all. Thanks for taking my question. Just a quick follow-up on the license revenue. Are you able to quantify the first half timing impact at all? Looking ahead to June, July, would you anticipate any similar timing issues in the second half? Look, to tell you the truth, we don't release at that level, and you probably understand why. License revenues have tenure to them. It could be someone's prepaid 10 years, 5 years, 1 year, 2 years, et cetera. That's all commercial and confidence to us. We're highly competitive to know that detail. I think what Richard probably answered it best before, which is I think the fact that we're timing licenses and being paid when they actually hit. I think the last few years, that's been relevant, I suppose, when you look at the Telefónica deal, et cetera, and some of the deals which we actually announced. We don't break it down, but I think you can take comfort from Richard's view that we will likely to have more license uptick in the second half than the first half. I'm not at liberty or would not want to be saying on what are the durations of those licenses or what customers, because we don't want that information in the public domain. No, fair enough. Sorry, just secondly, just looking ahead to June, July, do you anticipate any sort of similar... I know you sort of alluded to what you're expecting in terms of license revenue, but just around timing there, is there any comments that you wanna sort of add around the second half, just looking ahead six months? No, I'll probably just reiterate what Richard said. The licenses are likely to be stronger in the second half of the financial 2023 year than what they were in the first half. Perfect. No, thank you. Just on the cost side, obviously done some hiring in the first half to build back that staffing capacity. Are you able to talk to how you sort of feel about this capacity as it sits today and what we can sort of expect in terms of new hires over the second half? Yeah. I'm not sure if you're asking the question, because we've all read about so many IT companies letting go of staff. We have our forecast and our planning, and we plan things a year out. We see no changes in our current headcount and growing our headcount. You need a natural bench in your company which deals with the upskilling of staff before they're productive. You need to deal with churn, and you need to also finally manage. The thing I'm happy to share with you, we, under our management methodology, we're always viewing the next 13 months out in detail and making sure we have capacity to deal with the next 13 months. We have other opportunities inside the organization, which is the redirecting of staff between products and countries to provide support. We've got a very strong base in China, Vietnam, India, and also now Argentina. We're always, if we've got finished customers, we wanna have finished staff supporting them, but they now go largely to where we have these broader teams and these broader teams in those other countries. There's two aspects. There's certainly a cost element to it, but there's also availability of key staff. From our point of view, I think we manage the staffing extremely well, and we're confident. We've always got positions open. We've always got also positions open for people we'd like to bring back into the organization. We're sitting very, very comfortable at our trajectories at the moment now. Our staffing, our ability to recruit, our ability to upskill people, our ability to get people as productive as soon as possible. We're very, very comfortable. Great. No, thank you for that. Thanks for taking the questions. I'll leave it there. Thank you. Again, if you would like to ask a question, please press star one. Our next question comes from Vic Lee with Blue Ocean Equities. Your line is open. Good morning, guys. I've just got 3 buckets of questions. The first one is just picking up on the operating cash flow. If I add back the AUD 16 million that's working capital related in the slide deck back to the statutory operating cash flow and knowing that you've sort of paid, it's still AUD 10 below and also that you've also paid less tax. How do you account, what's the other AUD 20? Are you comparing half on half, Vic? Yes. I'm looking at your statutory cash flow. Yeah. last we had an AUD 18 million receipt from Telefónica come through in December 2021, which will be the bulk of it. Okay. Well, there you go. Okay. My second and third area is related. I can see that your CapEx to sales spending on R&D has gone up as a percentage of sales. Historically it's been 4%-5%, and it's now closer to 7%. I think that's actually a really good thing. Can we talk to, is that a new level or is that... How do you think about that? You talk about cloud natives and things like that. Can you talk to that about the sales? Yeah. Well, the, Look, you've got to understand that Hansen's investment in R&D is sometimes expense, sometimes is capitalized, and sometimes it's co-invested with our customers at the time. All I can say without going out specifics, because, you know, we've got a number of different products which we actually look at it. Each year, we actually formulate an R&D aspirational investment for all of our products. That's actually normally has that aspirational view of 5 years, and it brings down to what do we need to do now. Each of those products are then looked at, and then we come down to the reasons why we're making that investment. It could be because we see an emerging market, you know, a market which is gonna be doing something in 12 months time, and we wanna be there in time. We could see it's just regulatory, we need to comply. It could also be that we think we'll get an upgrade or make a sale out of it. We look at that. We manage our R&D like we do with an external customer. We get a quote. We look at it, then we review it on a quarterly basis, to make sure the original assumptions we had, based on what would be maybe an upgrade, a sale or market maturity. That's our sense. The fact it's gone up to 7% is a combination of all those things, investments for sales, investment for customers, investment for retention, investment for compliance. You're probably right. You can always have a large debate. I think our ROI is very stringent the way we look at inside the company. The fact it's gone up by a couple of%, I think was just relevant to where we are at this point of time now. There are more pressures on most IT companies at the moment now because of the emergence, a good emergence of AI. I think we're gonna talk about doing an investor day in the next few months where we can talk about what Hansen is already doing in AI, which is quite exciting. We've got to continue to invest in that technology as we go forward. Perfect. My last one is just around the staff numbers. So, you're obviously replenishing staff and also maintaining a bench. So how many have you actually added on since the last result, staff-wise? The last time around, I think we had circa 1,450 to 1,600, we're up to 1,600 now. When we talk about the bench, the bench is not as large as it was because of the capacity requirements in the first half of the year and the second half of the year. We're sitting at about 1,600 going forward, which includes. It's up about 10%. 10% growth. That includes also some, a bunch of graduates that we bring in around the world every year to upskill the team. Can we tie back the staff hiring to your, obviously, to your growth and then also to the R&D spend as well? I mean, clearly you don't hire people unless you see that sort of runway. Yeah, yeah. Correct. I think, look, and I think we answered one of the questions before to that thing. We are constantly looking at the next 13 months and making sure we've got enough staff. Look, we did go skinny, guys, and I think that it'd be, we're probably the same a lot of organizations. We've got to think of ourselves. During COVID, certainly here in Victoria, where we went into a lockdown for such a long period of time, where you couldn't travel, you couldn't go to a supermarket, you couldn't go out. We were the beneficiaries of an increased productivity from our staff. Things have gone back to normal now, et cetera. We actually, some of the peak in our business or the growth of our business was able to be achieved through productivity gains, through people not being able to go outside, but we could never rely on that in long term. Part of the increase in bench is to deal with churn, it's to deal with projected growth and sales. It's to deal with the normalization of post-COVID. It's a touch of all them. We think the numbers now, I'm not sure we are, it's just that 1,600, Richard, that growth of 10% feels very comfortably inside. The fact that we can go up our staff by 10% and over the last 8, 9 months, et cetera, and still see our EBITDA, those levels is a pretty positive sign for, I know, the way we operate our business. Thanks, guys. Excellent. Thank you. Thank you. We have completed the allotted time for questions. I'll now turn the call back over to Andrew for closing remarks. Well, once again, everyone, thank you so much for listening in. As I said, we remain extremely confident about this business and the directions it's going. Just to reiterate, the moves of Graeme and Richard is a great sign of the depth in our organization, the way we can keep on moving forward. I think that Graeme moving to the U.K. where half our business exists is very, very good as we also look to shift executives through the company as a global organization and not have it all centric running out of Melbourne is another good sign. Guys, we're very excited about the future and that we thank everyone's time for listening in today. For those shareholders, thank you very much for your loyalty and your support for the business, and we will look to continue to look after you. Thank you very much. Have a good morning or good evening, Graeme. Yes, good evening and good morning. Thank you. This concludes today's conference call. Thank you for your participation. You may now disconnect.