Thank you for standing by, and welcome to the Hansen Technologies Limited acquisition of powercloud GmbH Conference Call. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Andrew Hansen. Please go ahead. Welcome everyone to the call. Certainly for those which have followed Hansen for a while, it's been a bit of a break between acquisitions, but our patience plays out. Just as a way of backup, I've certainly got Graeme and Richard, just in case. I'm actually doing this call from Germany, so any problems with the line, they're online, but I'll be able to keep the call going. So as probably everyone has read, today was the announcement of the 100% acquisition of the powercloud business. So this is a business which certainly we've known for a long, long time in the German marketplace, being founded back, I think, like in 2012. We started talking to this company last year, and we're dealing directly with the shareholders of the business, so we've enjoyed getting to know them, you know, intimately and putting a transaction together. I certainly want to take some time out to thank the Hansen team. You know, there's a lot of people gets involved with our business when we're doing any sort of acquisition. So I call out to, you know, Sam Hansen and Julia and certainly Richard, GT, Darren, Neil, and all the team which have been involved in the transaction. So the first question is why powercloud? Look, as we've noted there, and basically always along the thesis of Hansen, it's Tier 1 and Tier 2, as in the energy market. Currently has 65 customers, and that's spread across some of the big Tier 1s, et cetera, down. Very modern, cloud-native, SaaS-based architecture. You know, 300+, 350 staff, and servicing the DACH region over here in Germany. So, you know, you continue that same sort of theory, why we like the business, and everything which we buy, they own their own IP. They are subject matter industry experts, and we've probably been enabled to get them at the right time, where they are in their own development. But there's no doubt that powercloud, their software was so well received in the German marketplace, they looked to grow the business in 2019. But we're struck with a combination of global expansion, rapid expansion of their teams, et cetera. But you hit, you know, the complexity, COVID, shortage of staff, et cetera. And they did the right thing over the last year or so of actually just concentrating back into the German marketplace. But I think that probably happens. A great business run by some great people there, but, you know, if you expand from, you know, 50 staff to 500, you have some teething issues along the way. And I suppose that's where, from Hansen's point of view, Hansenization comes to the fold. It's what we do. We're already a global organization, and I think we bring a lot of disciplines to the team inside the business as we go forward. From a profitability point of view, you know, we're talking about EBITDA positive. There's no doubt this business has been very profitable. It's had expansion, it's had investment. And so where we sit at the moment now by bringing back the investment into real-time return on investment back to the customers, the enormous opportunities which are presenting in the German marketplace, which we've already outlined. So we're expecting the EBITDA positive contribution in 2025. So I think part of it, I think, is you would have seen or taken notice, you know, we've been winning enormous awards on our communications products and our modern architecture. You know, adding this into the mix, it's just putting Hansen at the very forefront of architecture and technology for all of our customers. I think then bringing our disciplines on board to the business, and we're pretty excited about what we can actually do to the business going forward. So we've got a very clear and decisive roadmap to profitability in the business and the opportunities. So certainly the German market has been one, and certainly those which have listened to me for some time. You know, the biggest economy in Europe and the fourth biggest economy in the world has been a marketplace which we've concentrated on. So guys, in summary, it's all out there. It's an established business, very modern architecture, existing customers at the moment now. The German marketplace is going to expand with the smart meter rollout, et cetera, and we've just fantastic timing. And just one of those great opportunities and patience for Hansen to have dialogue with companies and people that we are the right owner of the asset going forward. In terms of customers, of what we can give, that consistency and the predictability which Hansen brings to all of its customers, and also for staff and the opportunities. And guys, this is what we do. We've done it many, many times before. This is straight out of the Hansen playbook. And yes, we have been patient, but we've all known some of the prices, et cetera. We did need to come back to where we could get a fantastic return on investment, and then also having a reasonable vendor who has probably their eyes on the prize of actually making sure that the company was gonna be in good hands going forward. So guys, that's in a very quick summary of the business. We know we do have our half year results out next week, and so we will use the opportunity at the results next week to elaborate a little bit more on the business. But we wanted to take this opportunity now because the contract was signed today and, you know, we've just finished a long day with the lawyers as we've gone through to get the node out and present to you this fantastic opportunity for our business, which we're very, very excited about. So look, I'm happy. I know that I've gone through a bit of speed reading here, but if anyone's got a question, I'm more than happy to take a question. If I can't, but others on board. So, the moderator would like to open up to any questions which are there. Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star then two. If you're using a speakerphone, please pick up the handset to ask your question. The first question comes from Josh Kannourakis from Barrenjoey. Please go ahead. Good day, Andrew. How are you? Josh, I'm very well, thanks, mate. Fantastic. Lots of questions, but I'll just kick off with a couple. So firstly, just around, I guess, you know, the composition of the revenue. Can you give us a little bit more detail about just, I guess, how they make money, structure of their contracts? What, you know, the components of the revenue profile look like in terms of annuity versus upfront, et cetera. Yeah, Josh, look, at this stage, you understand due diligence has actually been through the contracts, but look, it's very much similar to ourselves. They have a combination of, you know, licensees, but predominantly SaaS is the way they operate. So they have a services model, a SaaS model, and a licensee. Very, very consistent, probably with our industry, and certainly very consistent with our understandings, Josh. Got it. Sorry, was just on mute. No, that's, that's, that's all. Oh, that's right. Sorry. And then just in terms of, I guess, the Hansenization opportunity. So I think you alluded to, and from looking at some of the press with them, they obviously got the growth check a few years ago, I think from General Atlantic, sort of obviously tried to supercharge some of the international growth. If we sort of look at the opportunity with Hansenization, so just to be clear, that sort of refining the business back to its roots and its sort of strong position in Germany. And maybe just to give us a feel for when you're talking about that even break-even, just how far through the Hansenization opportunity you would be and whether there's potential to get the margins back up to sort of more the group level? Yeah, look, Josh, you know, if you think what's Hansenization? Made it... It's a combination of spending money like it's your own. I think the rapid expansion, because the technology was so well received around the world. But Josh, you can't go from 50 staff to 500 staff as quick as that and expect to get a consistent outcome. So Hansenization, let's just come back to the basic pieces of their own business and looking after... The German market's such a big marketplace, and from our sort of point of view, it's, you know, I've used the analogy before, going fishing. You're still catching fish on the bait. It's not the time to actually move to another location. And I think, luckily for us, they've already started on that process of concentrating back into the German marketplace. Beyond that, Hansenization really just comes around that proper return on investment when we spend capital, and we invest in the product. We spend a lot of money on our products, a lot of money on our technology, but we do have a good check to make sure it's what customers are wanting to buy when we're developing software. So, you know, I think it's just reengaging. The benefit of Hansenization, I mean, we're just a global company. We already, as you know, operate in the German marketplace, so we've already got consolidation with existing customers over here. So, you know, Hansenization is a pretty basic framework we get people. It just makes a lot of common sense. So turning it back to profitability, we will, early days, make the right check of where they are in the investment curve at the moment, now getting that return and how much more we need to invest. And then, then how we make best opportunities of that investment in the application. So it's, it's pretty simple, but I think that's what we're really good at executing on. Got it. And so I'm guessing just at the moment, Andrew, you're sort of not, I guess, keen to talk about outside of sort of 25, how you think about the margin profile and of the business. But just to understand, do you think this is a business that when you fundamentally look at how they make money in the market, that it should be back to, you know, the broader sort of group margin to the point in time? Yeah, well, to be honest with you, without giving too much, but this business used to enjoy margins exactly the same as Hansen before the supercharging event. Okay. They're not too far away- That's really helpful. From us. Going back to what we do best is what we would be thinking. That's... It seems to be margin, Josh, that we think is consistent. You know, we used to say we have 25%-30%, we're saying, which we could predictably do. You know, we've just been lucky the investments we've been making, we've been able to make a little bit more money as we've been going right to the upper end of that range and all the way into the 30% pluses. Yeah, perfect. All right, I'll give someone else a go. Thanks very much, Andrew. Well done. Thanks, Josh. See you, mate. Thank you. The next question comes from Evan Karatzas from UBS. Please go ahead. Hi. Okay, thanks. Can you just maybe speak to some of the retention arrangements you have with the founder, Marco? Is he staying on in the business? Just looking for some additional info there, if you can, please. Yeah, thanks, Evan. Thanks for your call. Look, Marco hasn't been an employee of the company for the last year or two. So, I think he's been just a shareholder in the business and there's actually been another managing director running the business. So, well, I know Marco, and Marco was certainly part of the negotiation. He He made a decent bloke and a good seller. So, you know, we're not burning any bridges with Marco, but he's not part and hasn't been part of the business for a while. Okay. My apologies there. So the managing director, I mean, is he staying on or some of the key personnel, are they staying on? Any sort of comment you can make there? Yeah, well, we would naturally want to keep all the key managers. They're all good people. We've had the opportunity to get to know these people over quite a number of months now. So, I think the Hansen thesis, you know, resonates with all those people there. So, we expect the leadership team to be largely stay intact. But then, and Evan, as you probably understand, in Hansen globally, our business is always run by local people. We've one expat, you know, we've assigned our team, you know, a 100-day plan, so we have a number of key managers which get involved in and bring over the Hansen framework, but they then leave and leave it behind them. We've done that with every single acquisition we've done. Always, we have great people inside this business and great staff, and we'd expect these people will be running the business. Okay. All right. I'll follow up later. But then just sort of secondly, switching gears, any similarities you can talk between this acquisition and, I guess, the Enoro one you did a few years back? Just given it seems back then, the Scandinavia market was in a somewhat similar position to the German market, coming into a government-mandated smart meter rollout. Is there any similarities, I guess, from that market point of view? Just trying to understand what this, yeah, that mandated smart meter rollout could mean, for the German market and for this business over the next years. Yeah, look, very, very similar to what happened in the Scandinavian market with... Look, there's no doubt that the energy market continues to evolve, and certainly, what's happening with smart meters and the way markets are actually working, and they're getting smarter and smarter. So, the German market is on that same trajectory. We would think the timing is fantastic for us for that German market at the moment. Now, there are established players, but this company's been very successful in actually winning market share and continuing to win market share. So I think Enoro, very, very similar to us, the investment had been made in the product. It was then our time to reap the rewards of the investment made by the last shareholders in the business. Okay. All right, great. And then just final one from me. Appreciate you providing some of those FY 2025 revenue numbers, but any sort of color info you can provide just on the growth cadence of the business from FY20 24 to FY 2025? I'm just looking through the website. I mean, it says they've got 10 million customers with 20 million in sort of the migration process. Like, that's pretty materially big growth numbers there. Just looking for any info in terms of the growth from FY 2024 to FY 2025, if you can. Yeah, look, probably not enough detail for us to actually publicly release at this stage now. Understand, you know, we've only just got the keys to the door at five o'clock this afternoon, so we, you know, a lot of this at the moment now, as you know, with DD, it's all best behavior as you go through it. But look, we'll look to share what we can share when we get our feet under the table a little bit more at the moment now. But, as you've worked out, this is a very, very strong market, the German marketplace, for us. Okay, great. I'll hand it over. Thanks, you, Andrew. Thanks, Evan. Thanks, Evan. Thanks, mate. Thank you. The next question comes from Chris Gawler, from Goldman Sachs. Please go ahead. Hey, Andrew, can you hear me okay? Yes, I can. How are you, mate? Yeah, good. Good. Good, thank you. Just, maybe the first one, just following up on Evan's question, maybe I'll just sort of phrase it a bit more directly. Do you expect this acquisition to be accretive to your organic growth profile once it's integrated, that 5%-7%? Yes. Okay, good. In terms of the organic growth opportunity for this business, is it much of an opportunity to cross-sell the products that this business has into your existing customer base, or do you think it's more of an opportunity specific to the German market only, so to the DACH market? Yeah, look, I think our view is the German marketplace is so big, so we've certainly in the DACH region looked to swap into those countries which are part of it and take advantage. I think the opportunities in Germany are just so big at the moment now. We would just want to make sure that we're actually capturing that market and the local DACH market. So from a cross-selling point of view, you know, we see as we know, we have a view that the communications model uses a catalog and CPQ, which we think is where the energy... So we do see some cross-selling into the marketplace, but a lot of our theory at the moment now in working with their sales team, is literally taking advantage of the current application and the current demand for the software. Outside, let's look after the rest of the regions, number two, and then number three would be cross-selling opportunity, bring some of the other products into the mix into German. So now we're very focused on the price, which is taking care of the German marketplace is our absolute focus initially. Yep, sure. And then just on the profitability point, it sounds like it's perhaps, you know, maybe marginally positive at the EBITDA level at the moment, but it sounds like it's loss-making at the NPAT level, perhaps. I was just curious if there was much of a different intensity of the business regarding R&D spending? Yeah, to be brutally honest, I can't give you that information at the moment now. A lot of what Hansenization brings to it is a much better breakdown between where resources are working on, between, say, R&D and customer delivery and things like that. We spent a lot more time on the analysis of where people are spending their time, and we think that's probably some of the tools we will bring into the business to enable them to have a lot more insight to where time's being spent at the moment now, would be the best way of putting it. So we're still at that point of establishing and give us a few months of that proper return on investment. And that only happens when you start capturing data at a much more, you know, granular level. Yep, that makes sense. Just one last question. In terms of your M&A outlook from here, are you seeing other similar opportunities in the space? Is this the type of deal that you'd like to do more of, that's perhaps a little bit smaller? Just interested in what you're seeing out there at the moment from an M&A perspective? Oh, look, I think, I think we've been very consistent. We've continued to look at business. It's not as though the M&A team has gone to sleep. There's lots and lots of deals out there. You've just got to be patient. You've got to buy it. You've gotta buy businesses where you know we're a natural home for the business, where you are dealing with Tier 1, Tier 2. So you start to follow a whole theme of what we want from an application architecture of where we're actually going. There's lots of deals out there, but, you know, we wanna buy well, and that's all about being patient. This one is largely a founder-led business, and that means we do spend our money like it's own, and therefore, we don't need to buy someone some short term, you know, hitting some, you know, some incentive program, then go and get the next job. So we'll continue to be as disciplined of what we have, and we'll always look at and spend money like it's our own, because we are spending our own money. Perfect. Thanks, Andrew. That's all for me. Thanks, mate. Bye. Thank you. The next question comes from Lafitani Sotiriou from MST Financial. Please go ahead. Morning. Just a few questions, if I may. I just you get the lack of information you're prepared to provide in relation to this transaction. I guess you've got the keys, you've performed DD, you've made some calculations on it being accretive, but you're not giving us some pretty basic numbers in relation to this transaction. So where... What's the current EBITDA? Is there a level of synergies you're assuming to get to EBITDA accretive into financial year 2025? And if so, is it costs or is it related? Are you capitalizing any of the R&D? Are they capitalizing any at the moment? So I'm just a bit confused why we can't get any of this pretty fundamental stuff for the company's acquisition. Well, we've chose at this stage to disclose what information we think is relevant to our obligations being a listed organization. Beyond that, a lot of the thesis which Hansen puts together around how business is actually run and how we turn the businesses around is really privileged to us. And to be honest, we don't normally also share that with the target company as well. One of the things we've learned over a long period of time that what Hansen does is pretty smart, and we don't wish to go and hand it out to people going forward. So at this stage now, we've had to make broad assumptions without... We don't own the business, so you can't bring them across the line, you can't ask them specific questions, so you have to make assumptions of every business which you actually buy. But clearly, you know, we think this business is a good business for all the reasons which we've actually done. The fact that we've not actually disclosed that level of detail, we think some of that is commercial in confidence to us, which we probably don't want our competitors to know of how we would look to turn around the business. This business, whilst is a private company, people can actually look at the the financials historically. So some of these things we want to keep to ourselves, but we believe we've fully complied with our obligations in informing the marketplace. I appreciate your question. I suppose if you're in my shoes, you might understand my answer to you, though. So, I mean, what's some basic stuff, are they capitalizing any of their R&D? So, you know, for it to be EBITDA accretive in financial 25, you know, there is an important swing factor. Can you add any color on that? I don't have those details to hand, and it's not something that's released at this point in time. Okay, thank you. Thanks, Laf. Thank you once again. To ask a question, please press star one on your phone. The next question comes from Jules Cooper, from Shaw and Partners Limited. Please go ahead. Hi, Andrew. Well done on what looks like a great business. Just one question. I really appreciate the history that you sort of, you know, overview of the business, and when they started to go offshore and look at international growth, leveraging off that success in Germany. Do you think, and it's really just more of a perspective, given you're in the market there now, do you think there is any risk that they've taken their eye off the ball, customers in the German market, and there needs to be, you know, some handholding there, or this is very much in that core market with always service well, even when they went internationally for that little period? Yeah. Hi, Jules. Look, a good question. We, from where we sit at the moment now, luckily, the, the big German Energy and Water Conference is next week, and where we'll be meeting a lot of the customers face to face. From where we sit, you know, and the information we've got, I think the customers are roughly happy. The... I think you can understand that rapid expansion which they did because their, their software was so well sought around the world, it's just hard. You know, the energy marketplace, Jules, requires a lot of regionalization or country by country. I think they do have a very good product in the German marketplace. And I think, you know, I wouldn't have it. Look, they're a great bunch of people. Maybe their eye is a bit too big for their stomach while they're trying to take all on board. We're a bit more different. We think that the German marketplace is so strong and the DACH region is so strong, we'd want to capture all those markets before we'd go. But we'd also look at these, the, the applicability of the application into other markets around the world. So we haven't got our eyes closed, but we've, we have a strong view of how the energy market actually works, and, and we've proven that by having such sticky software with all of our customers and, and making sure we've got the right sort of investment. So, you know, long answer to you, Jules, but I think the local customers are happy. I'll certainly know a lot more in the next week when we start talking to them all. All right. Thank you. Thank you. At this time, we're showing no further questions. I'll hand the conference back to Mr. Hansen for closing remarks. Well, look, I thank everyone for dialing in, and I certainly appreciate the positive tone from everyone. Everyone seems to have probably picked up the excitement, which we have this great opportunity and we think there's more opportunities out in the marketplace at the moment now, but this is right in our wheelhouse. It's a good business, it's good software. We own the IP, a Tier 1, Tier 2, and an emerging marketplace that gets no better than that. So, guys, thank you very much for dialing in, and I look forward to talking to you all again next week about our half year results. Thank you, all. Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.