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Edited Transcript of HSN.AX earnings conference call or presentation 27-Feb-20 11:30pm GMT

Half Year 2020 Hansen Technologies Ltd Earnings Call

Mar 26, 2020 (Thomson StreetEvents) -- Edited Transcript of Hansen Technologies Ltd earnings conference call or presentation Thursday, February 27, 2020 at 11:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Andrew Alaxander Hansen

Hansen Technologies Limited - MD, CEO & Director

* Graeme Taylor

Hansen Technologies Limited - CFO

* Warwick Lee Sharp

Hansen Technologies Limited - Head of IR

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Conference Call Participants

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* Jules Cooper

Ord Minnett Limited, Research Division - Senior Research Analyst

* Nicolas Burgess

E.L. & C. Baillieu Limited, Research Division - Equity Research Analyst

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Presentation

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Operator [1]

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Ladies and gentlemen, thank you for standing by, and welcome to the [JP] Hansen Technologies Half Year Results Briefing.

(Operator Instructions)

Please be advised that today's conference is being recorded. I'd now like to hand the conference over to your first speaker today, CEO, Mr. Andrew Hansen. Thank you. Please go ahead.

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Andrew Alaxander Hansen, Hansen Technologies Limited - MD, CEO & Director [2]

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Thank you, Kevin. Welcome, everyone, to the call. I'm sure probably everyone's probably busy looking at the screens after what's happened to the Dow, and it's probably likely to happen to our markets in Australia. So disappointing we have to present what we think is a fantastic result for the company in the backdrop of the coronavirus and the impacts on the world markets.

Look, I'm joined today with Grant Lister -- Grant Lister, actually, that's [blasphemy]. Graeme Taylor, CFO. See, even my mind is off the job today. And Rick Sharp, in charge of Investor Relations. So as I'm just trying to re-gather myself. Look, Grant Lister used to be our CFO for about 15 years, so he might even be on the call listening. He'll be happy to hear that.

Look, so let's just start off. There was up the slide deck probably in having a bit of a view to the results. Clearly, to understand Hansen is understanding them from the last 30 years. We've tried to diversify our business. We've come from the origins where we had a single customer just here in Australia to where we are now a global company across the energy, water, communications industry, 550 customers globally, 80 countries and a balanced portfolio now between the communications and the utilities sector. We see ourselves now as a legitimate challenger to some of the main players and, certainly, in the utility spaces, SAP and Oracle. And in communications, which is all really now about the innovation and anti-monolithic where they're looking for best-of-breed solutions as they look to roll out some of the new technologies in the mobile carriers around the world.

And our mission is pretty simple. Look, it's to enable our customers to monetize essential services for today and tomorrow. We're seeing that across all markets these days as they come out with ideas, et cetera, and they're looking to how they actually get those to the marketplace as quick as possible.

Our strategy is all about diversification, as I've stated before, continue to strategically diversify our business by the vertical. So we don't want to have all our eggs in one basket to have all these countries and all these customers across all these industries. Just as all that de-risking our business is the way which we continue. And we also look to acquire businesses within or adjacent to our competencies. Specifically, that's around -- even though we might have the best software in Denmark, we know if you want to go into Brazil, you just can't take people around. It's always our idea to actually bring local people. And we've managed now to have circa 1,500 staff, but would have less than half a dozen expats who manage our company around the world. So predominantly, each country you look at, we're actually managed locally.

We work very hard on leveraging our global experience as our experiences in some of the more mature markets help us when we go into the markets which are still developing, et cetera, and taking those learnings across them. And certainly, our investment in Sigma was to actually take the complexity which the telecommunications sector have been dealing with for decades now, to take those learnings into the energy market, and Sigma helps that. So the whole concept of catalog pricing, provisioning, et cetera, to take those fundamentals across as the energy market is looking to have new services, et cetera, for sale.

Evolution of cloud. Look, people talk about cloud, guys. At the end of the day, you must have a broad strategy. And from us, it's actually ground to cloud. That just means that we must allow for customers who want on-premise solutions to those who want cloud premise. You can't have one way or the other. You must be diversified in yourself and the service you're offering to me. We can only sell what people want to buy, and we're going to make sure we have those things to sell to them.

And the utilities sector, we certainly see that as to transform our customers from purely just selling electricity or gas or water because it's all around new essential services going forward and the way that, that whole market's actually moving. And in the communications sector, we're just seeing what's happening with 5G coming, the whole new spectrum. The importance of coming up with new services, et cetera, which now customers are moving to sell to actually monetize that large investment they've made in that latest spectrum.

So, guys, that's who we are. That's what our mission is. Specifically here today is to talk about our results. And look, I'll cover a couple of slides here, then I'll hand over to both Graeme and Rick. And Grant's not here, so he can't answer anything for us today.

Look, revenue's $143 million (sic) [$144.3 million] in the first half, up about 28%. Certainly happy around that. EBITDA up, NPAT (sic) [NPATA] up, EPS, cash flow. This cash flow, which Graeme will work on a bit more detail, but it's a seasonal for us. But this is very cash-generative-based business. The Board have deemed that we will pay up a further $0.03 partially franked dividend, et cetera.

It has been a record half for us in new sales. It has been a fantastic 6 months, and the benefits will start to unflow over the next year or 2 now as those projects start to go through the development phase and the implementation phase as we're now gearing up now for additional staff to deliver some of our -- the sales which we've been making.

The outlook. Certainly, the outlook. We're just trimming the outlook down a little bit at the moment now. This is not -- we're not here to make any excuses about the coronavirus, et cetera, which ruining other people. We are a very fortunate organization. The product which we develop, et cetera, is not manufacturing. It's not using raw commodities, et cetera, to do that at the moment now. And we're probably more fortunate than most organizations. Yes, we have a couple percentage of our workforce in China, and we've had all those staff actually working from home for the last 6 to 8 weeks anyway. And so Hansen is really quite prepared for this. As things block in specific countries, we would just have our staff being able to work from home and still maintain the same level of competency, diligence and output, et cetera, to our customers. So we [have forged those]. But we've just trimmed it down a bit. But we're firming up our view on EBITDA, the guidance, and just tightening that range up to $72 million to $77 million from what was $70 million and $76 million before.

The new wins. Just to talk about some of the wins which we've got there. Certainly, the Nordics, which have been going through a transformational -- we've actually articulated this 12, 18 months ago, when exactly, as we stated, those actually happened. People like Fortum, who's the largest energy retailer in the Nordics, we've had system implementation now in 2 large retailers looking for further growth with the Fortum business. Lumme, an energy retailer in Finland, utilizing our CIS. For those which know the story, we actually had a product, which is very strong in the Norwegian marketplace with about 60% of retailers using our system. And we took that product, and we then converted it for the Finnish and the Swedish marketplace. So we're now seeing those sales being able to be -- going into those new markets, et cetera, with our technology. Entelios, et cetera, in Sweden and Finland; Elenia, Finnish base. So once again, just that Nordic region has been very, very strong for us.

Certainly, Airtel. Airtel, just to put things in perspective, I think the -- in the top 3 or 4 telcos in the world with 400 million subscribers, et cetera. To take our software across the Catalog, CPQ and Order Management has been a significant win for us. Same with SmarTone out of Hong Kong and Macau. And more recently, Vocus signing up to take the Sigma product range, et cetera. All probably on the back of 5G and just that whole product and service innovation as they're looking to continue to grow their own businesses.

Certainly, what was exciting for us was the first cross-sell into Simply Energy. We always thought it would take a year or 2 to actually do our first cross-sell. To actually have done that in the first 6 months exceeded our expectations. In the Australian marketplace, look, to tell you the truth, the Australian marketplace, of size, I'm talking reasonable retailers out there. I think we did a significant deal for Western Power a couple of years ago. And the next deal which has come along the road for Hansen to win the 2 big deals, which have come on to the Australian marketplace for the last number of years has been very exciting, very rewarding for our team here. And certainly, also along the pay TV and the telco markets also with TDC Group, which their convergent billing, et cetera, which we're running with a SaaS deployment; and also, 1Sat, which is a pay TV operator in Brazil, recently signing with us as well. So significant wins there, guys. We are always a net gain -- gaining more customers, et cetera, as we go forward, and we find that very, very gratifying. And you can now understand why we're very, very busy now because all of these projects are now underway to be installed over the next 6, 12, 18 months, 2 years as we go forward.

The next -- the graph I talk to is always about revenue split. I was actually doing a staff induction yesterday, and you -- and to see people's faces to understand the Hansen story with our products, our countries and our markets, and they truly understand the diversification of an investment. And I often point out to staff, I said, "Well, if you were to invest in the stock market, we wouldn't today, but maybe it should be, would you actually be -- would you put all your investment, your pension, your superannuation into one stock?" Well, the thing is you wouldn't, and Hansen provides very much that diversification.

Our verticals now are reasonably split between the communication and utilities. Utilities covers the water, gas, electricity. And our communications covers the pay TV and mobile. So it's nearly 50-50 across that. The revenue split, once again, the APAC market is at this 20%. EMEA is a large part of our business and continues to be as it's more advanced over that marketplace. But as I said, we go back to that 550 customers, 80 countries around the world across our products and regions. It gives us enormous amount of comfort of not having too many eggs in any one basket. We're so diversified.

From our revenue bridge profile, I'm sure, Graeme, you might just want to talk about the revenue bridge.

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Graeme Taylor, Hansen Technologies Limited - CFO [3]

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Choice.

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Andrew Alaxander Hansen, Hansen Technologies Limited - MD, CEO & Director [4]

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No trouble.

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Graeme Taylor, Hansen Technologies Limited - CFO [5]

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Look, I think, before I get into the detailed numbers here, I think I'd just like to reiterate the fact that Hansen's gone through this wonderful patch of new sales, and it's great to see, Andrew, that we're getting that across the board. We're really seeing it across a number of our products. And I think it's very much aligned to our historical strategy of keeping our products fresh and innovative in each of their markets. And it's great to see that, that strategy is continuing to reward the company.

I think leading into the revenue bridge, we provide a little bit of information there that, I think, will be helpful as people start to look and understand half-on-half comparison. Obviously, there's been a lot of changes as we've done a major acquisition and so on. And I think there's some trends here. We continue to see our recurring revenue base slowly growing. We had a one-off license that I think most people that have been around Hansen for some time around the Enoro business that came into the first half of '19 at $3.2 million. Services down slightly, and I'll talk to that separately, giving us an underlying Hansen revenue of around $109.4 million, and of course, then adding to that, Sigma at $34.9 million.

Look, a couple of points that I'll bring out in and around that. It's important to note that IFRS 15 has had a little bit of an impact here. If we were under the old accounting standard, we would have recognized a further $2.3 million, particularly aligned to Sigma. And we have to deal with these accounting standards as everyone in the market. And we've seen Sigma perhaps a little under our expectations in revenue in the first half with a deal that we had anticipated would close in the first half still yet to close. But look, broadly speaking, I think the business has performed to our overall expectations, and we're looking forward to delivering some of this new business into the second half.

Moving on to the recurring revenue piece. Rick and I sat down and had a little bit of a look at this story over time. And it's interesting to just reflect on that for a moment because, as we indicated at the full year results, Sigma was a business that was down an evolution path some way. And perhaps, reflecting back on Sigma's history, probably somewhere around where we were in '17, '18, with 5.3% of its revenues sitting there as one-off license. But as we mentioned, that business continues to transition with a focus more on recurring revenues.

So focusing again and looking at that recurring revenue, Sigma's got 71.2% there. So no slouch, but there's quite a few embedded teams within our Sigma's business out in our customer base that continued to support the customers out in the field. And that's driving a lot of that recurring revenue. So look, we expect, over time, we'll continue to see that evolve and change. But of course, we would expect Sigma will take a number of years to transition through from where it is today into a more Hansen-like revenue stream.

Underlying EBITDA. Again, we've given a lot of information there to the market to really have everyone clearly understand what's driving our EBITDA. We took a decision recently to restructure some of the Sigma business. We had a number of key executives there within that business that were really duplicated across the global Hansen business. And we took a decision to move them on and lower our cost base within that business. So we've spent some -- in excess of some $2 million in order to do that. But that's part of the normal Hansen-alization, as we call it, as we look to bring that Sigma business into the Hansen family and generate stronger margins.

So overall, when we look at the Hansen business, we've got a margin that sits relatively flat from first half '19 to now. As we've always indicated, our business is not a huge organic growth business, somewhere sitting around that 4%. But I think I'd like to reflect on the fact that whilst it's been a little bit flat over that period, of course, with now orders in the order book, we're moving forward from that position and quite excited as we look to the future.

The EBITDA position, of course, is directly correlated to the downturn in revenues there that we're experiencing with a little bit of our fixed cost base coming into play. So look, again, as we start to leverage moving forward and take Sigma up from its current margin of around 18.6%, we're expecting to see the group's margins improving still out into the future.

Cash flow. Those of you who have been on the journey for a while will understand that this is the typical position we take into December. We have a lot of annual billing that goes out in that period. We build up a little bit of working capital. And as we demonstrated clearly last year, that working capital unwinds quite aggressively through January and February. That's already proving to be the case. We've had some $6.7 million of that working capital unwind through January, generating a very strong cash position. That's actually allowed us to retire some additional debt in the month of February. I think a further $5.7 million was retired of our debt base in that period. So look, we continue to generate strong cash flows, service our debt without any difficulty, meet all of our banking covenants, continue with a very strong and positive relationship with our bankers. And of course, that $5.7 million is on the back of $8 million repaid throughout the half.

Look, guys, we're looking at the capital. I think we spent a little bit of money there in the half, some $2.8 million, up a little bit on our typical run rate. But we've had a need to replace some service in our business and continue to meet our obligations for our customers around security and so on. And that's necessitated a little bit of an investment that, look, given the growth of the company, we're not seeing that flowing out at any great degree. And we continue, obviously, to invest in our products. So we're continuing that sort of investment run rate in our actual software at around 4.5%, 4.6% of revenue. And that's topped up a little bit with a very small investment that we've made in a particular customer project that will be released off the balance sheet against future revenues.

So look, all in all, cash flow is strong, position's quite good, working capital's unwinding and we find ourselves at the moment on the back of this with a very good cash position in February and quite a good position to be in as we move to deliver our results into the second half.

So, look, that leads us to our last page. It's really about the outlook, and I know we've already touched on this before. So we updated our guidance to $300 million and $305 million, operating revenues 1.56, 61 (sic) [$156 million to $161 million] is expected in the second half. Certainly, a function of those increased revenues from our new business wins. Also, existing client base seems to be tracking well from all our forecasting at the moment now. Some contribution will come from the new customers as well. I think on the back of the fixed cost base, we are expecting the expanding of our margin up to 24% and 25% from 23.6% as we continue to roll out some of our processes, further integrate the Sigma business and look to optimize the business.

So guys, notwithstanding what's happened in the market today, notwithstanding coronavirus, Hansen is in a very, very healthy position and a very, very exciting future ahead of it. I know that people probably want to get off the call now to look at their stocks they're holding. But Kevin, if you like to take it back, if there's any questions, we're happy to answer some questions. Otherwise, we'll let everyone get on with their day.

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Questions and Answers

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Operator [1]

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(Operator Instructions) We have multiple questions in queue. Our first question is from Nick Burgess from Baillieu.

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Nicolas Burgess, E.L. & C. Baillieu Limited, Research Division - Equity Research Analyst [2]

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Just a couple of questions if I can. So just specifically on the Sigma business, so that margin of 18.6%, aside from the accounting changes, the restructuring work that you're doing in there and your guidance for the group, how much do you assume or anticipate that, that margin improves into the second half? And then, I guess, the broader question on Sigma is where should it get to over the next couple of years.

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Warwick Lee Sharp, Hansen Technologies Limited - Head of IR [3]

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Yes. Nick, it's Rick here. As we sort of highlight there in the sort of dock point that if you -- if the $2.3 million of revenue that, if you like, we received as cash was recorded as revenue, the margin would have been in the order of 23.7% anyway for the half. So that's a business that we see tracking at sort of 25% plus thereabouts at the moment anyway. As Graeme mentioned earlier, we missed out on a piece of revenue that we thought we would have gotten. If we got that, It would have been comfortably in excess of 25%. So that's where we said it would be. Certainly, in terms of the second half, those $2.3 million of, if you like, restructuring costs, majority of that is for senior personnel within the business that won't be there in the second half. So there's a good chunk of cost that will come out in that second half. So -- they're now going straight from the margin.

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Nicolas Burgess, E.L. & C. Baillieu Limited, Research Division - Equity Research Analyst [4]

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Okay. So that will improve in the second half. So just thinking about Hansen, ex Sigma, the EBITDA has gone backwards by about 3%. In the second half, what's the assumption there? Does that continue to track backwards? It's flat? There's some growth there? How should we think about Hansen, ex Sigma, in the second half?

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Warwick Lee Sharp, Hansen Technologies Limited - Head of IR [5]

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So Hansen, ex Sigma, as you can see there, that's why they're next to each other there. So underlying EBITDA went backwards by about $800,000 or $900,000 against a revenue drop of $3 million. And that's why the underlying EBITDA margin is essentially flat. A lot of that growth in the second half that we're expecting $12-plus million is certainly coming from the Hansen -- largely from the Hansen business. We'd expect the expense base to tick up a little bit for the Hansen business, but a lot of that revenue will drop to the bottom line.

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Nicolas Burgess, E.L. & C. Baillieu Limited, Research Division - Equity Research Analyst [6]

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Okay. So an improved performance, Hansen ex Sigma. And then just finally, my question, so you alluded to the fact that the benefits from the Vietnam initiative haven't flowed through. So what's the timing on anticipated benefits from that project? And I guess any sort of assumption that we should have in terms of what needs to be reinvested in the business versus what might see improvements in the operating margin of the overall group?

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Warwick Lee Sharp, Hansen Technologies Limited - Head of IR [7]

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Yes. So the headcount there in Vietnam has largely stabilized now. It's at the end of the '19 financial year, it's about 100. It's ticked up a little to about 105. And particularly now with India as part of the group, it's now looking forward in terms of where do we increase our resources there between India and Vietnam. But certainly, Vietnam, we did say that we expected the margin improvement to really start in FY '20 and FY '21. It's probably fair to say that we see some of that benefit starting to come through this current half.

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Andrew Alaxander Hansen, Hansen Technologies Limited - MD, CEO & Director [8]

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It's just speed to competency, Nick. You've got to hire someone, train them on your schools, train them on your tool, and it just takes -- so if you look at the average employee in Vietnam now, he's only been an average tenure of 7 months with Hansen. In all fairness, most of that time taken was actually training people. If you look at the rest of the Hansen team with an average tenure of 10 years, it was always going to take time. We've got some issue building on the back of a lower cost base, Nick. So therefore, if I had 100 people based in the U.S.A. with their level of competency, that would actually make an enormous hit. It's a much easier hit to do. It's a much longer-term investment. And we have every faith in doing it.

I think the other point is, we certainly have aspirations about -- as a percentage of what percentage of our company will come from our -- we'd not like to call them lower-cost centers, but our centers of excellence between India and Vietnam. At the moment now, between the 2, we're tracking to approximately 350-plus staff. But we would think, over the next year or 2, that will probably increase by another 100 in that region at the moment now. So there is an investment in training people up, that whole speed to competency, so that they start to perform at a level of confidence of anyone else in the world, and that's when the savings really start to flow through.

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Nicolas Burgess, E.L. & C. Baillieu Limited, Research Division - Equity Research Analyst [9]

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And just generally, any comments around the savings that you make. How much you broadly want to reinvest into the business? How much you sort of have to give back to customers in a competitive context versus how much you keep and actually report in profit benefits?

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Andrew Alaxander Hansen, Hansen Technologies Limited - MD, CEO & Director [10]

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Look, I think it's really to articulate down to a number, mate. Our customers, although we end up having a 10-, 20-, 30-year history with them, are all asked us constantly for innovation. And we -- the innovation comes from 2 ways. One's just in the technology. How can we give them technology which they can actually make more money out of it? Another comes down to our cost of providing those services. So you've got to do a little bit of both. We've got an exciting time at the moment now from a technology point of view, saying to the energy companies how they can sell more products. And that -- so how much do you have to give back? Nick, you certainly have to maintain, uptick your R&D, the costs, which actually keep people engaged and want to stay with your products. But we just aren't doing more blended teams. And so we don't have to pass all the savings of India because the India or Vietnam cost of staff still has -- we are still mostly a first-world company. So the management and the infrastructure and being public are all something, but you probably can provide a 20% discount to your customers on staff, which does enable you -- are able to gain some margin. But you've got to do it on the back of that -- you've got to make the investment. So -- and just remember, for us to actually have one person in Vietnam versus one person in the United States of America, it just doesn't happen overnight. You have to step on engaging that person in that first world. It's just some of our longer-term planning, we would look to do the allocation of that work in some of these lower-cost centers.

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Operator [11]

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(Operator Instructions) Our next telephone question is from Jules Cooper from Ords.

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Jules Cooper, Ord Minnett Limited, Research Division - Senior Research Analyst [12]

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Just 3 questions from me. The deal activity in the first half was very strong, as has been communicated. Andrew, can you give us a sense for how the pipeline sits today and whether you'd expect the deal activity in the second half to be similar to the first half? And this is sort of a new expectation we should sort of see from Hansen going forward?

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Andrew Alaxander Hansen, Hansen Technologies Limited - MD, CEO & Director [13]

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Look, Matt -- Jules, I have the opportunity of looking back over 30 years, so you -- there were specific reasons in the Nordic region. In the Nordics, we were one of the first to do the deregulation of the energy market. And they're up to now, you'd say, like version 3 of a modern marketplace where -- that whole deregulation. So we knew about it. And Jules, if you take a step back, that was the reason why we actually bought the Enoro business because we were tracking markets around the world for further deregulation, et cetera. Look, we knew that region was hot. That ripe region is still really good for us at the moment now. I think that when you look at our deals, making deals all around the world now, whether we're making in Brazil or in Hong Kong or in India and Australia, business is good for us. But they do go -- there are certainly some areas which the whole rollout of 5G in the telco marketplace is something which, over the next 5 years, companies will look to try and find product to actually use up that spectrum, et cetera, which is great for us. Other countries just going through deregulation. So that's our IP behind the scenes, Jules. We track these marketplaces a few years out and want to be there on the ground if and when those markets will notably open up. So is it the new norm at 6 months? I think it was a bit of a purple patch. But the sales have actually come across the board from the business.

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Warwick Lee Sharp, Hansen Technologies Limited - Head of IR [14]

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In the Nordics, there, Jules, we previously mentioned the 3 deals below Fortum, being Lumme, Entelios and Elenia, but Fortum is the new one that we haven't sort of mentioned before, but that is a very big one. And so it's fair to say that we actually would have a lot of difficulty taking on more capacity. At the moment, we are constrained. So -- and only if you would just ask, the utilities division has had to knock back some opportunities.

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Andrew Alaxander Hansen, Hansen Technologies Limited - MD, CEO & Director [15]

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Which is an awful thing to say. But at the end of the day, our reputation is everything to us. We've never had a failed implementation. We haven't been kicked out. So you sometimes -- I know probably, as investors, you don't want to hear it. But in fact, investors should hear that, that, in fact, we are a conservative company. We are a diversified company. But we take on business we know we can actually deliver. So you do get to -- you can choose a little bit. And we do have, we would think, some potential prospects, which are happy to wait for us to enable us to deliver to them in a certain time frame. Our boots are pretty full in some of our areas at the moment.

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Jules Cooper, Ord Minnett Limited, Research Division - Senior Research Analyst [16]

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Right. And then just on the deal activity in the first half, which then drives what looks to be some pretty nice top line growth in the second half. If we were to sort of think about the flow-on effects then into next year, should -- could you just talk to how those deals might scale and whether just the -- I think there's increment of $14 million of work out in the second half. Does that then grow off $14 million into first half of the following year and then second half? Or is it really that's the step-up and then from there, it should just be consistently at that sort of a level?

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Andrew Alaxander Hansen, Hansen Technologies Limited - MD, CEO & Director [17]

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Well, there's always a step-up, I guess. But remembering that the revenue flows from our customers is -- we try to build as much as possible annuity stream. It's something which we're trying to do from the Sigma business rather than asking for upfront license fees. But remember, our revenues come from, really, a few main sources, Jules. So one being licensing. And some of those license fees are like a SaaS model. So just -- that is an ongoing fee. Certainly, maintenance fees is an ongoing fee. Implementation are more of the one-off fees. You do an implementation and get the customer going live. But the fair chunk is actually keeps on going forward as we continue to host or put them in a SaaS-type environment at the moment now. So it just keeps on upticking as we go forward.

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Jules Cooper, Ord Minnett Limited, Research Division - Senior Research Analyst [18]

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Right. Right. Okay. And then just lastly, the restructuring costs within Sigma. Can I just ask whether they were actually paid in the period? So have impacted the operating cash flow for the half?

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Andrew Alaxander Hansen, Hansen Technologies Limited - MD, CEO & Director [19]

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Yes. I think, look, Graeme would be probably better to answer that. I think the majority of those from a cash point of view had been paid during the period.

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Graeme Taylor, Hansen Technologies Limited - CFO [20]

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Yes. That's right, Andrew. The majority have. It was also indicated, Jules, we've got a little bit left to go on into the second half. We expect that we'll see some more being taken out, but that'll have a cash flow impact of, we're estimating, about $1 million as we move forward into the second half.

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Operator [21]

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(Operator Instructions) There are no more further questions on the telephone lines. I'd like to hand the call back to the speakers for closing remarks. Please go ahead.

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Andrew Alaxander Hansen, Hansen Technologies Limited - MD, CEO & Director [22]

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Okay. Thank you very much. Look, thank you, everyone, for their time on the call today. I know there's a lot of distractions in the marketplace at the moment now. From those which invest in Hansen, you can be rest assured, our focus is very much on day-to-day activities. We're lucky we're not being impacted. We don't source materials out of China, except there's almost no impact to our business, but we understand there is a distraction. Hansen, what we've done about 4 weeks ago, I did send a note out to all staff to start to limit global travels, et cetera. We've even pulled out of some trade shows, which looks like the attendance was actually dropping down. We are going through some uncharted waters at the moment now. But at the end of the day, Hansen business continues because all of our customers need to build products, distribute products, sell them and charge them. So there's almost no impact at all to Hansen at the moment now, and we're not really seeing it for many of our customers either because our customers are all very similar. So we're likely -- we're in a bit of a sideshow to what's actually happening. But like the rest of the world at the moment, we're watching with great interest and hope that things can get under control sooner rather than later. Thank you very much for joining.

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Operator [23]

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Ladies and gentlemen, that does conclude the call for today. Thank you for all participating. You may all disconnect. Goodbye.