RPMGlobal Holdings Limited (RUL.AX) Earnings Call Transcript & Summary

Thank you for standing by and welcome to the RPMGlobal Holdings' HY 2025 Half Year Results Briefing. [Operator Instructions] I would now like to hand the conference over to Mr. Richard Mathews, Chief Executive Officer and Managing Director. Please go ahead.

Well, good morning, everybody, and welcome to the first half 2025 Investor Call. I've been looking forward to this one as you can probably imagine. I guess, today we're going to get to speak a little bit more about the Advisory business than we normally would. Hopefully, everyone on the call has seen the announcement this morning that we've agreed a deal to sell our Advisory business to SLR Consulting. So I just want to talk about that a little bit today so you can understand some of the rationale behind it and what it really means for the business going forward. So we might just start on Slide 3. I guess, another great half year, record profit and record revenue at $58.2 million, highest EBITDA -- underlying EBITDA $8.2 million. It's sort of more of the same as you can see from those charts below. Revenue just keeps knocking up half-on-half. We are starting to get some of that leverage coming through from the movement from perpetual to subscriptions. Underlying EBITDA is lifting. It's nice to have a couple of halves where there isn't any abnormals or one-offs. You'll see in that table above an H1 '24 for the shareholders who were around at that time there was that one-off royalty sale. But again, another nice, clean half in terms of underlying performance. You will see the restructuring and transaction costs number popped up. And as you'd expect, we've been working with the [ Molas ] team on this Advisory transaction for a while now, so there was really some costs coming through in relation to that. But in terms of the software sales, at the first half we're 37% up on the prior corresponding period. And you'll see a little bit later when we start talking about software, when we closed the January's books that 37% increase has moved to 64% increase. So yes, we're selling a lot of software. We're selling it to good customers, and it's sort of a software which has the large transaction values associated with it. So another really good half, a good finish, and a really good start to the second half as well. So we move to the next slide, James. Just for the people on the call, we're all in different locations, so, there'll be a little bit more of that than normal. The Advisory division, I guess back in 2021, we sort of started our ESG journey. We bought a couple of businesses at that time and we really have embraced the ESG journey. We're putting the ESG team with the technical team. It seems to have gone really, really well, and customers are looking at us much more as a one stop shop. So it wasn't any surprise to me that when we started the process, and I'll talk a little bit about it in a couple of minutes, there was a lot of interest in our Advisory business. We had, obviously, stayed in mining. We didn't go outside of the mining space. I think that was actually a very valuable thing in terms of the -- the offers that we received because it was pretty hard to get into mining given our dominance in that space. So, hence the reason that there was a lot of interest in that business. A couple of things worth sort of pointing out, I guess, and investors will understand this in terms of timing. If you look at that table, bottom right contribution margin percentage, obviously, we haven't allocated any of the corporate cost to either the Software division or the Advisory division. But once you get up into those 27%, 28% profit margins on a people business, an Advisory business or a consulting business by definition, those are really high percentages. You really are running on all cylinders. So we -- that business has been running well for a number of years. But certainly, if you look at calendar year 2024, those numbers are really, really high. So, I guess, that was one of the reasons that the Board decided that the time was right to look at interest in that business. We're really running that business really well and really hard. A couple of things, and we'll talk a little bit about the multiples, because obviously, it's a pretty impressive multiple that we picked up. But probably worth pointing out that direct third-party cost line in that table. These are -- we hire in real specialists, people that are specialists in trees, birds, frogs, all those types of things where you just can't afford to have those skill sets. But SLR, obviously, a huge organization, a massive consulting organization. I'll touch on it a little bit later, but they have those experts all around the world. And I think when you look at -- we picked up 2x revenue for that business, which for a consulting business is, obviously, a very good price. There's a lot in it for the SLR team as well. So they do have those skill sets. So I wasn't surprised with the offer that came in given everybody from a financial perspective, we will do really well out of this transaction. In terms of the transaction itself, if we go to Page 5, it's a full share sale and effectively a divisional carve-out of the Advisory business. Quite a complicated transaction, as you can imagine, because we've got operations all around the world. So in terms of accommodation and all those -- and people and all those types of things is what we have to carved all those sort of things out. The SLR team, obviously, have bought a lot of organizations. So they really are good at the M&A. And obviously, we've done a lot as well. So it was a transaction that we're able to work through the details well. So all of those organizations that are around the world, which will be separated in terms of the Advisory and the Software, obviously, the people will go with the Advisory business and the customer, contracts. But it is for all of the Advisory business, and they are taking all of the Advisory business, so all of the people and some of the corporate folks who work on Advisory projects only. I guess, one of the reasons we made the decision to divest the Advisory business is, not many advisory type businesses are listed entities. Normally, they are partnerships, private partnerships or they're owned by private equity organizations. SLR is owned by a private equity organization and Ares Management -- capital management. And when I talk to investors, some of the investors on the call who have been on this journey all the way through, they're always asking me is, that Advisory business how critical is it to your Software business given the types of margins that you can generate out of it and given that each of the transactions are sort of stand-alone, they're not really recurring type revenue transactions. And particularly when I talk to U.K. investors and U.S. investors, they really love the Software business and the way it's running, and always not so keen on the Advisory business. It's worked really well for us in terms of the Advisory business, some of our best ideas in terms of software products have come out of that Advisory business. But when we ran the process, we got such a good offer that it was quite clear that it was the right thing for shareholders. Now, 2X revenue of a business that's running flat out is a good result. Now, as I put in there, obviously, it is 8.1x the profit contribution, but you want to be careful about that number because we haven't allocated any of the $12.5 million of corporate costs to either the Software division or the Advisory division. So probably easier to talk about the revenue multiple. We expect the transaction to close pretty quickly. It will be early quarter 4 or in April, we think, sometime. There is the normal closing conditions and preconditions. All of those are within our control. So we're pretty comfortable with that. It really is a binding agreement or it's not a technically a binding agreement, but we expect the transaction to actually occur. As you'll see there, it is a transaction where there will be an adjustment at the end based on balance sheets and so forth, just normal stock standard process associated with that. And as you probably noticed on that Slide 5 down right in the far right-hand corner, we are going to be able to use up all our carryforward capital losses and 2/3 of our carryforward income losses in Australia. It is Australian transaction. So from a tax perspective, it's really, really tidy. The process was a confidential process. We started it sort of mid to late last year. I do make a comment at the end of the presentation in relation to the current market buyback. We stopped that buyback just prior to the announcements associated with the ASX 300 which we popped into and then relatively quickly afterwards we started the process. So for the investors who have been asking me why have you not bought shares since 31st of August last year? You now have your answer. And it's been just as painful for me as anyone else has seen the share price slide over the last week while on no news. As I said earlier, the SLR folks are taking all of the Advisory team will keep the brand, the RPM brand and all the team going forward will be operating under the SLR brand. There's a transition services agreement, so there will be a transition approach where -- and we've done a lot of work on this already. But for a period of time some of the systems will need to be transferred across some of the third-party licenses. We still got a lot of work to do in terms of the accommodation. Some of our -- we expect SLR take all of our stuff into their accommodation, but there will be a period of time where we will be subletting offices and so forth. So a lot of the work's sort of been done on that, but some of the decisions are still outstanding. So we believe, or the Board and myself believes certainly that with the Advisory business transactional divestment, we think Software investors, it should as far as I understand, remove, I guess, the one impediment that they have in terms of investing in the Software business and it should make that business a lot easier for investors to understand and to appreciate. Certainly, when I do my investor calls once every 6 months, we do spend a bit of time on the Advisory business. Obviously, from a market cap perspective, a smaller part of the business. From a profitability contribution, it's a bigger part of the business. But it certainly is -- with having that business divested should make understanding the business and appreciating it for the recurring revenue that has a lot easier going forward. In terms of SLR huge organization, we compete with them in many engagements, we work with them on many engagements. They have a very strong focus on ESG. They got in very early to that. We've been really impressed with them during the DD process. Very straightforward, very honorable folks. They really do have the same sort of culture as us in terms of one team and being able to use their consultants all around the world for the benefit of their customers. A very customer centric organization as well as. You'll see in that Slide 7, they've got offices all around the world. They've got over 4,500 employees and they provide environmental engineering, scientific advisory skills. So we've done a lot of work with them in terms of where people fit and there's a really nice, I guess, fit between the business. And it will certainly give the SLR folks the leading Advisory business in the mining space. So maybe before I -- James, maybe before I start moving on to the Software, if you've got any questions associated with the Advisory business and Advisory transactions. Maybe it's just worthwhile talking about that. Have you got any on the little portal?

Yes. There are a couple, Richard. So we'll -- like you said, we'll raise them now. The first was, when you say the sale of the Advisory business will remove the impediment for Software investors, looking at RUL, are you referring to fund managers, potential acquirers of the business, or both?

Yes. Well, certainly, for potential investors -- it's for current investors, actually. A lot of people on this call have sighed a breath of -- they'll be very happy. I'm sure. I'll get a few calls this afternoon saying, oh well done, great price but also strategically it's the right thing to do. Certainly, from potential investors, the same thing. Yes. Look, it's a great business, the Advisory business. I don't want to talk it down and all that type of thing. But from a pure investment vehicle type return, it's not the sort of product that would normally be listed on the boards. So I know there'll be investors who I've spoken to in the last 6 months, obviously, not aware of any transactions, but they will see it as a really good thing. The second part of that question, you know, I guess there will be software companies and large manufacturers in the mining space who will also see the business as a lot simpler and easier to understand. Very, very seldom do you have an Advisory business sitting inside a Software business. Very uncommon. And anything that's uncommon to the market is generally disliked. So you'd have to say that any people or organizations that are interested in our business, you expect to be more interested. I guess -- I can't see this transaction being a negative for anybody interested in the business going forward.

Thanks, Richard. And there are a couple more. I'll answer this next one which was from someone that goes. You indicate there are conditions precedent for the divestment. Is it a binding agreement and are those largely in your control? So I can confirm it is a binding share sale agreement that has been entered into. The transaction will conclude on completion of customary conditions precedent. Those conditions are inside the control of RPM and SLR to complete. Very standard conditions, as Richard indicated earlier, expecting those to be resolved effectively to enable completion to occur hopefully in early April 2025.

Yes. I might just jump in there. Maybe the word resolved is probably not the right word. Just process followed rather than resolved. There's nothing to resolve.

Has the company decided whether the sale proceeds from the Advisory division sale will be distributed via dividend or share buyback or some other method?

Oh, yes, sure. Sorry. I should have said that right from the start. I forget I was talking to the investors. Just got off the phone with all the employees. Yes. So we're going to be giving it back as a capital return. You'll see that on that slide. As I said, in terms of the tax position, it's very, very favorable tax position. We're not even using all of our tax credits and so forth. So it'll be a very healthy number. Obviously, there'll be some transaction costs which jump in there, as you'd expect. But we're looking at returning all the net proceeds to shareholders once the transaction closes. So once the transaction closes, the Board will meet, we'll decide the number, but it'll be a pretty chunky capital churn.

And the last one at this stage, Richard, on this part. Hello. Thanks for selling the Advisory business. Just a quick question. Do you think the Advisory business was important for the Software sales funnel, and will there be any disadvantages of selling it?

Yes. Good question. I've always said, I guess, to investors, there's a loose handshake between the 2 organizations. Both divisions sell completely different services. They sell to the same customers, so we've all got relationships with BHP as an example, but they'll be selling to a different person in BHP for a different type of engagement. With the Software team, we'll be selling to a different person in that business, and for a different set of services. One is sort of transactional in relation to one off transactions. The Software is, obviously, much more recurring in nature and there's much more, I guess, operational dependence on the Software business. So the 2 businesses have been operating separately for quite a period of time. We'd always -- we had for quite a while thought about a carve out. So therefore, we had from a corporate structure perspective that separated 2 businesses quite a long time ago. And it was really just about time, when would be the right time to sell the Advisory business. And for anyone who's involved in M&A, you always want to sell a business because it's going up rather than going down, and clearly our business is going up. So from a timing perspective, it was quite straightforward. We don't think -- it will have little impact on the Software business. Certainly, won't have any impact on the software, software sales, software implementation, software performance, any of those types of things. Yes. So we don't see it as having a big negative impact at all.

Yes. And that was the last question at this stage, Richard, on the portal on the divestment.

Okay. Well, thanks very much, everyone. Maybe we'll go into the Software business. I guess, it shouldn't be lost on anyone that -- it's obviously, a great price we picked up for the Advisory business, but at the end of the day, it's 10% of the market cap of the whole business. So that, again, helps put it into perspective. Into the Software business, let's go to Page 8, Thanks, team. So, yes, as you can see, yes, we're now we're at the end of or middle of February when we closed the books. We're 64% up on last year in terms of software sales. So, really, things are going really well. AMT is performing well. Actually, all the software products are performing well. One of the things, I guess, to call out on that slide is how well the American software sales team went in the first half. I've been talking about those folks for a while now. And I've been saying to people, look, we've got some great people in. We're rebuilding. It's going to go good. Trust me. And, pleasingly, you can see by those numbers, they really -- they had a great half. They've just got a great pipeline going forward. They sold $16.1 million in the half, which is 79% up on everything that they sold last year. So they're going to have a great year. Interestingly enough, there's very little AMT in that number. So that was really scheduling and financials. They're building their pipeline really nicely in the AMT. That's, obviously, been quite a focus for the new management team. So, lots more to come from those guys. But, they wanted to have a team in place by the start of last half. They did, and they executed exceptionally well. The other thing to point out is, while we're 64% up on last year at around the same time, we only sold $1 million in perpetual software sales. So there will be some people who can't read the accounts, don't really understand what we're doing, and they're like, oh, my goodness gracious, it's still $1 million down. But that's actually a really good thing. Right? So what we're really saying is, we obviously -- you never know what that number sort of pops around at the end of the half. But, we have moved the customers on to subscription licensing. It was just a rounding area now. Hopefully, that will sort of continue going forward, and people will continue to buy subscriptions. Obviously, with perpetual licenses, there is some geographies that we do sell perpetual licenses in, because we're worried about collection, risk and those types of things. There will be some where customers just want to use their CapEx rather than the OpEx and so forth. But, again, that's $1 million dollars down on the half last year, and it's actually a good thing. We've got 3 large projects, on the go. I've been sort of talking about those. So project in our mind is we were working with the customer. They're testing the software. You need to run that back -- slide it back. Thanks, mate. And, we're sort of working with them. Generally, we're putting into one of their sites so they can see the value that they can get of it. We've got 3 large pilots going at the moment. We don't recognize any revenue for the pilots. Once the pilot is finished there'll be some materials that will pick up and so forth. But it's really about proving the software. And we've got 3 there. One big XECUTE, one which is going well, and then 2 AMT ones. Again, as you can see, one's in America or in Canada, and one's in Asia. But both are really big organizations. So you got Rio Tinto, Kinross, and Freeport. So, yes, all of those pilots will finish in this half, and we would hope, that they're successful, and good software revenue would flow from that going forward. And we always have a big run to the end of the year, so we're expecting that to be the case this year. We didn't -- haven't had sort of pilots, which is really an addition to that that finish to the year. So, yes, we're pretty excited about the second half. We can see some -- we've got some milestones in our minds. We've got a couple for a while now. Yes. Once they're 2 million, and then you'll lock me in and you'll and say you didn't achieve your milestone. But things like, you know, $200 million in contracted non-cancelable software revenue is the target that we've had for a while. So you can see we're a $183 million at the moment. So, we've got a good chance to get somewhere near or near about. So, Software is going well. The transition is going well. We did have, a pretty good finish to the end of the year in terms of conversions. A lot of the shareholders who have spoken to you will know that we changed their comp plans this year, at the end of the year to try and encourage customers to move from maintenance contracts to subscription contracts. We did that because, once you're on a maintenance contract for a long period of time the risk is that the customer can get quite stale. So, we had a good finish this year in relation to that. You'll see the churn popped up from what's -- in average of 3%. I know it's a small number. It's up to about 5.6% this year. We had a reconfiguration of a license, which is allowed under our GFAs, so we didn't lose any revenue. We just sort of split from ARR to TCV type things, so, there's no issue there. Software development costs have been peaking in Q1, and the reason I mentioned that is because, I think I said on the last investor call, our development costs coming into the half were more than the total value for the half last -- last half. So what that really says is that we have -- we now get our development cost down. So, yes, peaked in Q1. We've finished the software products other than the work that we're doing with our customers. So you'll expect to see this sort of slowly slide down as well. So another, in a lot of ways, boring half. Revenue is up, perpetuals down, subscriptions up, maintenance is converting. Software consulting is there, thereabouts, third-party costs are the same, and then development. So again more of the same. If we jump maybe to the next slide, Slide 9. Thanks, James. We did sign another 4 global framework agreements. I've spoken about that before. They're pretty big deals. They're good things to have. It really means that you are or are have become and are a sort of trusted sort of vendor to these organizations. Yes, it's quite a long process that you go through in terms of procurement agreements, in terms of legal agreements, in terms of looking at our software, looking at cybersecurity, all those types of things. So since the 1st of July, we have signed 4 more, Barrick, Kinross, Newmont, all very large global companies and First Quantum Minerals, which has operations all around the world. So that brings our GFAs -- number of GFAs to 10, and we're continuing to work on those. We think they provide a real competitive advantage -- significant competitive advantage to us. In terms of software products, we're still putting out new products or new versions of products. So we've now released our mine design product. We started showing customers that product. So that's a product which parametrically, effectively builds the mine, the practical mine and all the complex ramps, networks, and so forth, which really gives the mining engineers the opportunity to look at different objectives and constraints, all done electronically. Significantly different from what our competitors have. They have nothing that even looks like that. So, it's been very well received. It's been recently released and it's been trailed by Atlas, MinRes, and, and Rio who are all putting it through its paces at the moment. We quite like this trialing by customers, because you do get a different set of -- we've, obviously, got product experts who think it should look like this and think it should run like that, and you got developers who think it should look like this and think it should run like that. But at the end of that, it's what the customers want. You know? So, we get a lot of really handy tweaks and changes to logic and so forth. So once those 3 organizations have put it through its paces, it'll be -- people can buy it now. But it will have a lot more credibility, I guess, in the industry. FleetOptimiser. This is the, what we think, is a very smart application, which we'll set up in the cloud, which really optimize the application of mining trucks. That's being trialed and put through its paces by Freeport folks. We're talking to them about extending some of the functionality to really get the best out of optimization and AI and those types of things. So it's purely early in the journey, but when that product is fully in market it will be de facto standard. I think everyone who has XECUTE will just buy as an extension of. And in the cloud, that's probably gone better than we thought it would in terms of its testing, its development process, and it's being trialed by Barrick at the moment. So obviously, a big organization putting it through its paces with a lot of -- they've got a lot of data, and they got a lot of -- they're already using XECUTE significantly. So they can see the value in it as well. So it's getting through -- put through its paces as well. So from a product perspective, we're still building new product, smart product and product which is being accepted by the industry. In terms of a few other highlights, I don't very often put competitors' names on our slide, but I thought worth sort of pointing out that with our fleet optimization tool or SOT which is the product we bought from the universities and then expanded it, had 7 customers -- very large customers who have moved their software and support agreements from Deswik to ourselves. We used to sell that through Deswik to the market as well as other competitors. So, it's a product which people love, and they really want the vendor who build it to be supporting it sort of going forward. The world's largest miner went live with AMT and all its global operations. So, if you ever going to -- if you want to tick off is AMT scalable, is it -- can be run-in different operations all around the world? It's got a big tip there. So it's a transaction we did quite a while ago. It was a big implementation project, very successful. They did a great job. They did an absolutely sterling job. And they're getting the benefits of that now. We also have one of the largest miners in the world purchase an Enterprise License for the full MinVu suite. So that's really on the operational side. We built some new data [ mining mines ]. We bought a bunch of things for that product and now standardizing on that product now for all their open pits all around the world. Really good transaction, but, again, just legitimizes the robustness and the scalability of that product going forward. So, I think, that product's got a great story. It was one that we bought quite a while ago. We've done a lot of work on it since. And the customers who put that are in love and it's -- you wouldn't get a stickier product. It's just not possible to. I talked about, the software projects, 2 AMTs and one XECUTE. We are concentrating really hard on making sure those projects are successful. Very large projects, so we'll see where they end up. I'm sure every investor will keep asking you about those. That's what I really want to talk about at this point in time. And then during the half, MINExpo was held in Vegas. Now the front page of the -- my presentation, I always do something -- something different. That's actually the booth at MINExpo. So, we went all out this year. And definitely, as a software vendor had the biggest booth by miles. As pure software vendor we were inundated by miners all around the world, wanting to talk about all the different products. We had all the different streams. We had all the product managers there. We invested about $0.5 million in that event, and we think we've got great value for money when we look at the pipeline that came out of it and the opportunity that came out of it, particularly for the Americas folks. And from a cost perspective, we obviously won't have the costs, in the second half, but it was a big endeavor for us, and we think it went really, really well. So we're really pleased with how that went. New product adoption slide, I won't talk about that. Obviously, some product customers buying all the new products. Global Framework Agreements at the bottom. And then guidance. All right. Everyone ready? All right. Guidance. So as you can imagine, this Advisory business has a huge impact on the results of the company. We don't know exactly when it's going to close. We think it's going to be soon. But, when it closes that will finalize where we're going to end up for the year probably. Well, certainly, from a guidance perspective so we'll have a much better idea. But there's going to be a lot of changes within our business after that divestment. So, all of our corporate expenditure, as I said earlier in the presentation, is about $12.5 million. There'll be adjustments to staff costs, people that move across, office costs. It's going to be -- we're working through that office by office. I think there's like 13 or 15 offices that will be impacted in one way or another. Insurance, obviously, a big change. Professional fees, big change. Information technology costs, all the [ kit ] goes across, third-party software costs. Management incentives, obviously, they'll be -- won't be at the same levels. So a lot of above the line changes in expenditure. There's also the transition services agreement where, effectively the SLR team are buying services off us either on a cost, cost plus or on a needs basis. There's quite a lot of streams -- I guess, implementation streams associated with that. So we don't really know what that's going to look like or what the cost is going to be of that until it completes. And then, obviously, because it's a sale of a division/asset/ business, I suppose you'd say, there's going to be major adjustments to depreciation, amortization. There'll be a big change. There'll be some transaction costs that have come through when it's occurred, and obviously, we've got tax consequences all around the world. But as I said earlier, from a pure profit on transaction perspective, we're in great shape in terms of being able to use our tax losses, which we've incurred in past years. So -- because of all that, we don't feel that we're in a position to update guidance. There's just too many moving parts. So we're withdrawing the current financial guidance, and we'll reissue it once the transaction closes. So probably early in Q4, we have a much better understanding there what the final cost structures look like and what time when the actual transaction changes. So there'll be a lot of people that are upset and rush out and sell stock, but, I hope they understand that we're going to put them out if we want to get them right. Obviously, you look at the software numbers, you look at the cost they're going to come out, it's going to be a good year. Outlook. So we will be able to focus solely on the Software business now. There's a lot of things you got to think about in terms of Advisory. Conflict of interest, sanctions. There's lots, lots of stuff in there. [ Visas ]. A lot of things that need to be supported. So it won't just make the numbers easy to understand and also simplify the business in terms of what's happening there. The market acceptance of the software products, obviously, what I say, 63%, 64% ahead this time last year. There'll wouldn't many software companies in the world that can say that. And they have good customers, and they have good products, and they have good transactions. And, again, got $182 million in contracted non-cancelable software revenue, which will flow in. So the business on a very, very steady footing in relation to that. We're still working on some new modules. That's probably the best way to describe it, with some of the biggest mining companies in the world, productivity improvements. I said, I guess, 6 months ago that we pretty much finished the software suites. We're, obviously, going to add some depth and breadth associated with those. But now we've got the opportunity to really work with the big guys on productivity improvements. We want to become really respected go-to software vendor for the global mining industry. For some customers, we're there already, but there's more to be done. But certainly, we're in a very nice spot. As I said earlier, we think the divestment of the Advisory business will remove a major impediment to investors and other people who are interested in the organization going forward. I did talk about the buyback. We will restart that. Clearly, we're very careful about those sort of things. So anything which could potentially be market sensitive, we'll stop buying. And now that there's nothing out there that we don't know about. We think that stock's undervalued, we'll introduce that back. And so have strong balance sheet, healthy cash flows compared to the stock we're offering. Had to take out Advisory. We normally have Advisory there, but I took that out. But, we're really optimistic about the year ahead, now the business is performing really really strong. And I'll just touch on the cash flow at the end. I do this every time. Obviously, we always have cash outflow in H1, big cash flow inflow in H2, maintenance again, 1st of January every year that comes out. So you pick up all the revenue in in H2. Recurring, we've got 73% of our recurring software subscriptions during the second half. So again, revenue flows in one out of the other. We have -- last year was obviously a great year, so there was short term incentives and sales commissions that accrued in second half, paid in the first half. And then, we spent almost $7 million last year on the company share buyback. So, there's nothing really -- nothing to look at here in terms of cash flow. It's all same exactly as in previous years. And we've got a cash balance of about $23 million with no debt. So very, very solid balance sheet. Business is peaking along really well. So what I might do is, I might see if there's any questions. Jimmy, if you could take one question for me or while I just get a glass of water because, I've got parched here.

So we've got about -- just looking at the screen now, Richard, we've got about 5 questions. Two of them are a little bit around how we might price our products. So this is just by way of a reminder, a public call. So we know from the attendee list that there are some competitors on the call. So welcome. We hope you're having a great day as well. But we'll respectfully decline to answer those on this particular call. So one we will answer and then hand a couple of more to Richard. So this one, regarding the reduction in maintenance revenue from $6.5 million in 1H '24 to $5.1 million in 1H '25. What was the driver behind this? Were these maintenance customers converted to subscription customers?

Yes. So thanks, James. Yes, so it's really maintenance agreements. So maintenance agreement, perpetual agreement comes with sort of maintenance. It's -- every year, customers purchase it and it buys them 2 things. The first thing it buys them is bug fixes and so forth, if there is any, and also the ability to upgrade to newer versions of the software. So we started this transition from maintenance -- I guess, perpetual to subscriptions 5, 6 years ago. We had just let that run its course, I suppose. But we were starting to get just a little bit concerned that some of the customers were getting a bit stale in terms of their contracts. So software is very sticky in our world. So most customers will keep the same software for more than 10 years. But if they are going to go out to look at the market, it's somewhere probably between 7 and 9 years. So at the end of this year, leading into the end of this year, we spent more time talking to them about some of the benefits of moving to a subscription licensing, in terms of kind of fee setting and all those types of things. So, yes, you'll see in the second half of this year a -- not a huge drop, but probably a larger drop than you've seen in past years in relation to maintenance. But, again, we think that's a really good thing rather than a bad thing. Because what customers are doing is they're committing to 5 years of revenue rather than 1 year in maintenance. They're committing to 1 year, and things change, you know. Not many things change in 1 year, but a lot of things change in 5 years.

Thanks, Richard. Another question. How do you look at the subscription revenue contribution in the second half of '25 from the first half '25 TCV sales of $36.4 million. Your report states that only $0.6 million of revenue was recognized in 1H '25 due to the majority of agreements only being concluded in December '24.

Yes, that's true. Yes, whatever reason. The last week of Q4 is our biggest week by absolutely miles, followed only by the week before Christmas and New Year. And obviously, the Americans work between that period, and that's why you see some of that sort of flowing in. So yes, there was a lot of that software revenue occurred in the second half of the year. So right at the depth. So what happens, of course, is all new revenue, you get all the benefits of that for the second half. So that's why such a small number, that $1.6 million (sic) [ $0.6 million ], just really means that it will flow through into future halves and future years. So, we try. Having said that, if you look at what we sold in -- since January. That'd be a rocket science to do that because you take one number from the other one on the slide. And you can see that we sold a lot of products and a lot of that's new stuff. So it'll be good software subscription half for sure.

There's a question with respect to whether we can provide a bit more color regarding the 3 large software pilot projects. And a question also about what TCV opportunity might come from those, which, of course, is a bit forward-looking. But in terms of providing color for the 3 large software pilot projects, is there anything more that you wanted to add there from what you've already said?

Yes. We got -- obviously, we got to respect the customers as well. So, now I'm probably pretty comfortable with what we've said there. Now we're still going to finish it, finish the projects. Then the customer will decide whether to go or no go for transaction, which is more enterprise in size and length. But not everyone talk about those because, it's between us and customers.

So we've got a question that's come in just now to say, can we give any more detail regarding the likely size of reduction in corporate costs following the Advisory sale?

Yes. No. I can't really. Because we just got to wait through all the details. There'll be some areas which will be impacted, and then there'll be other areas that aren't impacted. And once we know, we'll talk to the shareholders about it. But I don't really want to speculate on.

Any color on development costs? You mentioned it peaked. Is that peak in absolute dollar value? And if so, does it stay around this range going forward or fall drastically?

That's not going to fall drastically, but it's going to fall. So, we're not letting people go in the development space. The average length of employee in that space is very high. But through natural attrition, when someone does resign, we look very hard at whether we can move someone else into a different role, get them different role, sort of juggle the big chairs around, and that's sort of what will continue. So it will certainly come down, there's no doubt about that, because the run rate coming into this half is a lot lower than the run rate coming in at the first half of '25. But you shouldn't expect it to go from $10 million to $7 million.

Thanks, Richard. Somebody has asked, they missed it, but can we confirm we now have 11 GFAs? So I'll answer that. As per the slide, we've got 10. We have taken one out, which was Volkswagen, and that is an advisory services GFA rather than a software one. So we're resetting that at 10 rather than 11. But good question for those keeping count.

Well done someone's is [ counting ].

How much step-up in subscription revenue from flipping perpetual maintenance revenue should we expect to see?

Yes. We actually have a -- there is a step up. I think for -- well, it was $1.1 million to $1.36 million, this time around. But you want to be really careful for all the analyst on the call using that because, some of them are much higher than that. Some of them are less than that. In some situations, when they're converting from maintenance to perpetual, they're taking the opportunity to say, well, we've sold their business, so we're not using that software anymore and so there's adjustment to licenses. It certainly goes up, and it certainly goes longer. But, just be careful when you put that number in your spreadsheet because there's lots of examples where it's 2x and more, and in some situations where it's closer to 1.1x.

Thanks, Richard. And there are 2 more questions on here, but they fall squarely into the guidance. One is around EBITDA forecast and another one around EBITDA margins after divestment. So for now, we'll leave those. And that's it on the portal.

Okay. Well, thank you, everyone, for your time. It's a pretty big day for us. I've spoken to all the -- I spoke to the Advisory employees this morning. They're pretty excited. They know SLR. They're excited about the opportunities that provides for them going forward and to work on projects all around the world and in different areas. They'll get the opportunity to move outside of pure mining. I've been pretty mean. I've made them stay in mining, since I've been here, and it's sort of 12, 13 years. So, it's been really well accepted by them. I know SLR are really excited about the business. You can see that in terms of the price that they've paid. And again, I think it will simplify our business, and make it much easier for our software investors to understand and appreciate and potentially invest in. So thank you everybody for your time, and I'll look forward to speaking to a lot of you in 6 months' time. Thanks, everyone.