Thank you for that. Good morning, everyone. Firstly, I'd just like to say thank you for those attending the call this morning. I'll give a brief and update as to the FY 2025 results, and then I'll hand to Anthony Stokes to go through some of the financial numbers. If you want to follow along with us, we have a presentation that we logged this morning on the ASX, and we'll kind of use that as a basis for the discussion today. At the end, I'll probably summarize with some of our forward-looking statements from an FY 2026 point of view, where we're seeing the growth and the potential in the business and our opportunity into FY 2026 to achieve our single-digit organic growth and double-digit earnings growth. First of all, just a little bit of a highlight on COSOL and where we landed FY 2025.
I think importantly, AUD 116 million in revenue, but most importantly on the back of that was a 10% organic revenue growth, underlying organic growth, which was part of our stated objectives. We completed the acquisition of Toustone, which accelerates our data and AI capabilities underpinning our asset management as a service offerings. I think that, again, we'll see significant opportunity flow through in FY 2026. We continue to be a market leader in the four verticals in which we offer our services and solutions and software, which is effectively natural resources, utilities, both power and water from a generation, distribution, transmission perspective, as well as public infrastructure, road, rail, airports, ports, and government defense, all of which are critical infrastructure providers. As you can tell from our history and our customer base, long-term blue chip customers.
I think important to note for this investors' call is the increase in our customers that generate over AUD 1 million a year per customer. Importantly, expanding our customer base and not only expanding that base, but driving accelerated growth within those customers to over AUD 1 million was a really important milestone for us over FY 2025. The other key point here is transitioning a number of our major projects to multi-year managed services engagements for sticky annuity revenue over the next three to five years. Those two major ones are Department of Transport and Planning and QBuild in Queensland, both large state government-based organizations. Pleasingly, we also invested heavily in AI. It is impacting the technology sector. It's also impacting our asset management customers. We were ahead of the curve in terms of our investment in the AI space, I guess the AI sector.
We've done a number of key initiatives this year, which saw us actually deliver our first AI-powered data governance solution for a major mining company, which they're utilizing in anger at the moment. Really, really good opportunity for us to expand our portfolio and drive efficiencies into FY 2026 and beyond. I think importantly, our customer journey from volume to value, we're now starting to see that manifest itself in a number of different ways. From a strategic point of view, we're seeing our customers that we engage and acquire through our asset management specialists and our advisory business. We're then moving them into our high-margin technology digital business and ultimately into our as-a-service operations, which is our long-term sticky annuity revenue. We're starting to see a number of customers go through that journey.
We're seeing that last year, if you look at FY 2024 in particular, you can see that we acquired a number of new customers that are now starting that journey from volume, low margin, high volume through to higher margin, long-term contract and revenue. Probably just one last thing to point out. If you think about that journey that we're on, one of our key cornerstone customers is the Metro Trains out of New South Wales. They're the only autonomous rail provider in Australia. We are proud to say that we are heavily involved with Metro Trains over the last five, six, over the last nine years, in fact, where we're providing everything from asset management advisory through the EAM as a service or the platform that the business runs asset management on.
Through the acquisition of Toustone, I think importantly, we provide the digital intelligence suite, which actually sits within their control room and provides a real COSOL in a really unique position where we're predicting and providing intelligent information back to the boardroom for their decision-making processes. Really, really great opportunity for us. It's kind of a poster child for us from a showcase perspective. When you're in Sydney and you ride on the rail there, you can see that it is the next generation of transit in Australia. With that in mind, what I'd like to do now is hand to Anthony Stokes, our CFO. Anthony, if you could just give the investors a bit of our financial highlights for FY 2025.
Thanks, Scott. Thanks, everyone, for joining us today. Obviously, you're sort of building on the conversation from Scott. Our revenue, we delivered a revenue result of AUD 116.8 million, reflecting a 15% year-on-year growth. This is a little bit short of our initial expectations and plans around the FY 2025 year, which is disappointing. The majority of that softness came from the macro headwinds, particularly in the Bowen Basin demand profile in our lower margin asset specialist area, which put some headwinds in terms of our Q4 performance and drove that lower. In addition to that, whilst Toustone was a strong acquisition from a capability perspective, the quality and AI decision-making process around the sales cycle is a bit longer than general, which has seen that sales cycle push out a bit. The underlying contribution revenue from Toustone was a bit lower than our initial expectations.
We're seeing quite positive signs in the Toustone business as we move forward with our market-leading AI platform that supports that through. Pleasingly, our cash conversion was 8.8 points higher, so 85% cash conversion of our EBITDA. This is a reflection of our key focus on working capital management across all the businesses. That's particularly focused on two key areas. As we've got our bigger projects, how we design those payment milestones and the risk profile around those bigger projects is pretty critical there that we don't have a big tie-up and delay in investment in those projects where we are billing on a regular basis and we are keeping our cash to earnings ratio quite close there. Obviously, our debtor management and our debtor days have been reduced significantly this year and seeing that management come through. A very positive result in terms of that.
We saw some margin compression, which is the reason for our underlying EBITDA only increasing by 7% on a 15% revenue growth performance. This is disappointing for us. Strategically, we've delivered on both our revenue targets and our organic growth targets. We haven't been able to retain that through our gross profit, which has seen our gross margin compression take place. There have been a number of changes taking place around the business to see us hold on to that margin going forward. This was driven by some pricing pressure in our lower-end advisory engagements. Further to that stimulation, that slowdown has also seen some bench holding costs in the second half of the year.
As we move forward, focused on that higher margin revenue piece around the data-driven and AI projects where we see that our target presentation around our AI and our proprietary-led consulting programs where we achieve that higher margin of work. That has been our, you know, it's quite disappointing for us as a management team in terms of delivering that for the investors. We've done some changes that have taken place to see that drive forward in terms of that place. As we step to the balance sheet, we've restructured our debt facility in the first half. This provides us just on AUD 30 million of headroom. That covers our contingent consideration in regards to both the core and Toustone earnout requirements under their SPAs and also provides us some liquidity buffer there as we continue to grow the business and maintain that performance.
Probably to leave on the final one of the best highlights in terms of our performance and proof points around our strategy is we saw a 17.8% growth in our managed services client-based revenue. We've spoken to investors previously around this that we're really focused on that share of wallet and the driving out of our share of wallet of our client base, but also improving our predictable revenue base there. To see that 17% growth in managed services revenue is quite pleasing. I think the other thing to point out here for investors is that the majority of those managed services customers are outside natural resources. Again, we talk about the diversification and predictability of our revenue base, and we've really seen that drive happening.
As Scott pointed out before, those two major projects being QBuild and D T P Victoria, both government-owned entities or government-owned departments where we're seeing significant revenue growth in those businesses, in those opportunities, which is giving us that predictability around our revenue goals. Turning to slide eight, where our highlights around that. Obviously, we talked about our revenue achieving AUD 116.8 million, driving just on an underlying EBITDA performance of AUD 16.8 million and an underlying NPAT-A performance of 9.93% up year- on -year. The reason we talk about NPAT-A is that we're excluding our amortization from that outcome. Obviously, amortization is becoming quite a material cluster, and the majority of that amortization is in relation to our acquisitions, where the purchase price is allocated across intangibles in customer contracts and software acquisition as part of that that we amortize over five and eight years respectively.
We see that our underlying in the prior year in FY 2024, that was a much smaller amount than it was in 2025. As a comparable performance, our NPAT-A being a 3% uplift, while still lower than expected, is in the right direction. In terms of our underlying EPS, disappointingly, that was a reduction year- on -year from AUD 0.0524 to AUD 0.0478. If we adjust that for amortization, it's much closer to flat over the two years. We've still got work to do in that space in terms of the underlying business performance and holding on to that margin. You can see the underlying business there is beginning to perform. Just turning to slide nine, this is just a good snapshot of our history in terms of where we've been.
If we think about where we were in 2021 to where we are today, revenue growth has been 36.6% CAGR, underlying EBITDA of 28.5% CAGR, driving an underlying EPS of 11.8% over that period as well. Definitely growing the business, growing the benefits and the value to the investor base, more work to be done. We are focused on growing that double-digit earnings growth in FY 2026. We've spoken about our cash flow and balance sheet highlights there. Quite pleasingly, not only have we improved our cash conversion, but our net working capital has reduced as a percentage of revenue. Clearly, this is reducing the amount of invested capital in the business and allows us to free up that cash flow to take the opportunities around different opportunities in the business and invest in that future AI and data opportunities we have in front of us.
We're sitting here with our, we're comfortable with our debt leverage ratios and where our debt facilities are, and I look forward to continuing to work with our bankers and take those opportunities when they present us as we move forward. If we just double-click through to our components of our revenue base, we sort of talk about our three main revenue streams being product and product-led services, managed services, and advisory. Pleasingly, we've seen an uplift in our product and product-led services percentage of revenues. That's 24%, driving a GM of 43%. This is obviously a key focus area for us in terms of where we're driving performance and where we're driving profitability. We continue to invest in that space. That's where our Toustone revenue flows into. This is our unique proposition in terms of as we work with our client base and drive that stickiness.
The other 25% are coming from managed services with GM at 45%. GM for our managed services has been off a little bit this half. There have been some costs in delivery processes that have taken place as we've onboarded those new clients to drive that higher customer integration and satisfaction. We're now working through that performance as we optimize that over 2026 to lift that GM back up to historic levels. As I called out before, our advisory services sit around 50% of our revenue base. This is our generic services across both our IT advisory as well as our asset management specialists. This is a much more price-sensitive part of the market. We're seeing some, this is where the majority of our downward pressure on our GP was, and we saw that GM margin come in at 20%.
We continue to work through to optimize those, but our focus is obviously to drive our product and product-led services. That mix of just under 49% across product-led and managed services as a total revenue base, we're obviously focused on driving that to be a higher percentage as we go into FY 2026. The other call out there is we've obviously got a good mix of top 10 customers with no one customer being more than 7%, more than 8% of our revenue base. As Scott pointed out earlier, with now 27 customers with more than AUD 1 million of revenue, this is a pleasing outcome as we continue to drive the spread of our top customer base. That was the end of the financial overview there. I'll hand back to Scott to take you through COSOL's corporate journey and our outlook for 2026 and beyond.
Thanks, Anthony.
I think as you've probably worked out, our big focus this year is to drive and expand the operating margin. Part of the strategy last year was around the acquisition of net new customers, then expanding the wallet share of those customers to drive that to the AUD 1 million+ . How are we going to execute on our commitment to the investors? I think that's our focus area for FY 2026. Operating restructure, aligning our capabilities to maximize the growth, expand operating margins, and deliver the double-digit EBITDA growth. As you can tell, Anthony has taken a more hands-on operational role across the business, providing and ensuring that we turn our revenue growth into high profit growth. What we're seeing in the business, what we're seeing in the first half here is the growth of multi-year recurring revenue contracts.
That long-term sustainable business contracts in place off the back of our asset management as a service, which is our unique offering in that space. Again, that's in the technology space, which is the higher margin business that we have. We see significant organic growth trajectory. Our blue chip customers continue to invest in asset management. Infrastructure is aging. We're starting to get critical failures, etc., from an equipment point of view, which is well placed for COSOL to provide its services and solutions. We're seeing more and more demand come through that. We're looking to expand our business through that customer base over the next 12 months. It's not necessarily a net new customer acquisition year for us. It's about expanding wallet share and driving margin expansion through our operations this year.
You will note in our announcement, we've also looked at reducing our dividend policy from 50% to 40%. This is around driving our continued investment in AI. That high margin, multi-year, non-linear, so when I say non-linear, non-people-based revenue is critically important for us to deliver the outcome and deliver on the strategy. What we're seeing is if you look at everything that Anthony and both I have said today, the strategy is executing to plan. It's about delivering the margin through the next FY 2026 and beyond. We're well placed to do that. We're seeing that come through right now from Q1, right through this year. I think what's important for us is that referenceability of asset management as a service.
We've seen a number of customers where we've been able to go into, particularly in WA and gold, and also on the East Coast in our utilities businesses, where we've been able to penetrate the customer, quickly turn that into advisory improvement opportunities, which have then led to our digital solution portfolio and expanding that margin. In terms of us being able to expand quickly, we're set up well to execute on that for FY 2026. We will deliver the double-digit EBITDA growth over the FY 2026 journey. With that in mind, I'll probably pause here and open up for Q&A.
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 and two. If you are on a speakerphone, please pick up your handset to ask a question. Your first question comes from Chris Savage with Bell Potter. Please go ahead. Chris Savage, your line has been unmuted. Please go ahead with your question.
Can you hear me now?
Yes.
Thanks, Chris.
Great, we got there. Morning. Two questions if I can. Firstly, a couple of weeks ago with the trading update, you said or flagged a couple of contracts had slipped into FY 2026. I think one in particular was an IP sale in the U.S. Can you give us an update on those and if they've happened or not yet?
Yeah, Chris, I'll take that. There was a couple of deals there. Some of those deals have already closed and we're executing on them, particularly in Australia. The outstanding one, the U.S.-based one, we expect to close in Q1. We'll probably update off the back of that.
Okay. Does it change at all the skew this year? Typically, you have a slightly stronger second half. I know you'll have Toustone for the first half of this year. Can we expect more of an even split between H1 and H2 this year?
Chris, yeah, that's right. We'll probably see a more even skew this year on the back of that delayed IP sale out of FY 2025. I think in terms of visibility, we've got a couple of other IP sales or renewals due in this first half. We're sort of comfortable that it'll be a bit flatter. We've still got the probably margin skew still is towards the second half with the higher percentage of revenue being in that higher IP sales in that Q4 period.
Thanks, Anthony. Sorry, I know I said a couple of questions. When you call out high single digit organic growth, how are you treating Toustone there? Toustone contributed for what, six, seven months in FY 2025. The additional five, six months from Toustone will be on top of that high single digit organic growth?
That's correct.
Cool. We could expect low double digit growth at the revenue line?
Low double digit.
Okay. Last question, I promise. Toustone, obviously a little bit disappointing so far. Have you changed yet the deferred consideration, or is that dependent on KPIs in year one and year two?
There has been an adjust, sorry, quick call out there. Even though it's the fourth question, I'll let it go. The deferred consideration had a couple of components. For those of you who want to read the detailed accounts, note 36 points out of that business combination calculation. When we did our half-year results, there was an outperformance target in there that was circa AUD 4 million of deferred consideration. We've taken that out. There was a hurdle in relation to CY 2025 that needed to be achieved. They're highly unlikely to achieve that based on their forecast. We've taken that AUD 4 million off the balance sheet, which obviously reduced our goodwill. We've held the core deferred consideration or contingent consideration at the level. Based on their current forecast and over the two years, they've still got an opportunity to deliver that.
We'll make a full assessment of that as we do our half-year accounts for 31 December 2025, of which we'll obviously have the actuals for CY 2025 and then a reasonable forecast around CY 2026. We've held that goodwill there. We'll do a final business combination analysis and firm that up in the 31 December accounts, which would likely see a reduction in our goodwill and a reduction in our contingent considerations.
Yeah, good one. All right, thanks for the color. Cheers.
Thank you. The next question comes from Milo Ferris with Ord Minnett . Please go ahead.
Okay, just a quick one from me. Just talking to your AI capability that Anthony and the team have been developing. What's the reception been like, and how are you thinking about it from a revenue perspective from here?
Yeah, thanks, Milo. I think as everyone would know, AI is almost synonymous in the business community right now. It's certainly a buzzword. I think we're treating it like a revenue enabler and revenue growth opportunity, and we are getting that feedback from our customers. I think we're more focused on enabling our customers as opposed to driving cost efficiencies out of the business, albeit we're doing both. What I would say is I don't expect it, given the size we are today, to have a material impact on revenue. Where it will add value is in delivering our revenue at a lower cost base. I think it's more of an expanded operating margin performance benefit to COSOL at this point in time. There's significant opportunity in this space, but I think as it rapidly moves, it becomes a little bit more about do you trust the information?
I think we'll still see that trust and experience as a challenge over FY 2026. It's certainly front and center for us in terms of how we expand our portfolio.
Okay, that's clear. You've called it out with the reduction of your payout ratio, but how much incremental investment would you expect moving forward?
Sorry, Miloa, it was a bit muffled towards the end.
Just the amount of investment that you're expecting to put into this.
Yeah, look, I think we'll focus around, like we did last year, around that AUD 1.5 million worth of investment over FY 2026. Again, that gets aligned to our, we are a customer investment business. We co-innovate with our customers and deliver value for those customers. That will then flow based on the customer demand that comes through. We have a couple of initiatives right now that we're working on that we expect to deliver value in 1, and we'll see that reflect in numbers in H2.
Okay, perfect. Thanks. Good one.
Thank you. Once again, if you wish to ask a question, please press star and one on your telephone and wait for your name to be announced. There are no further questions at this time. I will now hand back to Mr. McGowan for closing remarks.
Thank you. I really appreciate the investment support over FY 2025. Looking forward, we have a strong base in which to exploit and expand our margins. There are a number of proof points with Metro Train Sydney, with a number of gold miners in WA, as well as utility businesses here across the eastern seaboard. We're excited about the future. We're excited about the growth into the U.S. market. I think from our investment in our IP, we're expecting to drive that growth out over FY 2026 and beyond. Thank you for your support, and we look forward to a strong and positive FY 2026. Thank you.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect. Thank you.