Thank you for standing by and welcome to the Hansen Technologies Limited FY22 Results Conference Call. Today, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. At this time, I would now like to hand the conference over to Mr. Andrew Hansen, CEO. Please go ahead, sir.
Thank you, Chris, and welcome to everyone. It's certainly my pleasure today to update everyone on our financial year. I have with me today Graeme Taylor, our CFO, and Richard English, our Global Finance Director, and we look forward to discussing our results. I'll just go straight to page five, which is the introduction to Hansen. Look, clearly, for probably everyone, most companies around the world, it's been a challenging year, what with COVID, interest rates, the global conflicts, inflation, labor shortages, and the market which we deal with, the energy market have all been challenging. To have the result we've done across all that, you know, that headwind, we're extremely delighted. Most people would understand.
Just, you know, touching on, you know, we're a very, very proud 50-year-old business, which is amazing to be around for this period of time. We do provide mission-critical solutions to the energy, water, and communications marketplaces. I think the very nature of our customer base, the mean average is probably over 10 years per customer, which is really good. Very experienced and long loyal leadership team, which have worked with me for a long time, and I would like to think we've always been very, very aligned, certainly as a 22-year veteran of being a listed company. Therefore, our staff are very much aligned with our investors in making a good, strong, profitable company going forward and incentive programs to match.
I think the other key thing about Hansen is just the financial principles of our business and the cash flows. I think that, you know, we're not talking about just making positive cash flow for one year, two, three years. You know, this has been a cash generative business for 50 years, which I think is an amazing stat in itself. We are a true global business as probably those listening on the call. You know, we have, I think it's probably close to 1,600 staff today. We have 600+ customers. We're in 80 countries and our business is really split, really right down the middle between the energy and water and the communications business. As we go forward.
I suppose Hansen's defensive position has always been just how diversified our company has been and the predictability of our business, which is probably the mainstay of what we're doing here. We do, as we would know, deal with recession-proof industries. You know, the energy, water, communications markets are always there and not going anywhere, and that's spread across all those customers. The other thing is we've always concentrated on really just tier one, tier two customers. Some of the events which have affected tier three or four certainly with the instability with the energy market has actually served us in good stead with not losing customers during that period of time.
I think also, just the thought leadership from our own customer base and our play back into it is just that we do provide that technical drive into our business and dealing with innovation as they go forward. Consistent growth industry segments providing organic growth to our profiles. We've never promoted to be some double-digit company but, you know, we would always suggest having money in the cash register at the end of the day as always probably the most important thing for Hansen. A lot of work on modular approach. So a lot of our systems now, people are now taking modules.
Rather than having to do the big upgrade end to end, they can take individual modules and that's provided some great opportunities for us with customers maintaining existing applications but adding modules, which I'll go into a bit later on. Also acquisition targets. Now, I know a number of people on the call today would be keen on us doing more acquisitions. You know, the times are the times, and we're always going to be concentrating on buying opportunities which extend our existing customer base or take us into new regions as we go forward. Customer focused. Clearly, the new logo wins we keep on publishing, and these are the ones which are material would actually stand our reputation in good stead.
I think our products delivering efficiency but meeting regulatory requirements, to understand, I think a number of people which have been hearing this call, our software has a lot to do with local regulations and therefore to providing innovation, but also regulatory is also worth. That long customer theme, which we actually have and end up building on relations with all of our customers. Very low customer churn. In the principle of Hansen is never giving any of our customers a reason to think that they need to look elsewhere, hence the low churn of what we're doing. I think the other thing is about R&D investment into known markets and requirements. Our business spent a record year investing in R&D.
The software to which we're doing is keeping our software at the forefront of technology, but also at the forefront of where the industry is actually going. As we see dynamic changes that's happening in the energy supply and the cost, and we're all reading that. We're all seeing our energy bills at the moment. Now, we're working very close with our customers to make sure that the R&D investment is actually software which is gonna see the light of day. The sound principles of Hansen, and I think that people which would know me sitting over here for over 30 years is actually treating companies' funds like it's their own. Like I'm a founder-led business, but those same principles work through the whole management team inside our organization.
We do very much look at all events in our company, making sure we are getting a return on investment. We do a lot of work to make sure in the allocation of our money with a customer, where we're gonna get that money back, and quite often partner over long-term period with customers. We think that cash flow is always king. You know, we have the advantage, and for those which go through and you look at the financials of Hansen, and I know that Richard and Graeme will talk a bit later on, which is actually the way in which we walk our way through. We can actually show you where every dollar comes in the company and where we're actually spending our money.
Also those things which should consider the environment in those decisions, ESG, et cetera, which we'll touch on a bit later as well. The key point to all this is, you know, to have a business going for 50 years and cash generation growth is amazing. We just haven't done this for five years or one year. This is the most amazing business run by a whole bunch of very talented people in a market which we are subject matter experts. Our 50 into our 51st year now, we can't be more proud than what we are to continue that sustainable growth going forward. We do have a team of people. We've put out there some faces to who run the business.
The average tenure of my management is well over 10 years as we go forward. As I touched on, I think you'll find that founder-led focus we actually have. The other interesting point, which I do make quite often, while we're an Australian-based company, we're not an Australian-led company, so we only currently, we've doubled. We now have two expats who are working overseas at the moment now. It's like, these are really important characteristics of having Hansenization, we call it, a very sound principle around the way we run our company. The management team, both here and overseas, if you understand them, they're Finnish people or South American born Jews or whether in Brazil or whether in Toronto, that it's the local people running our business.
I think that's such an important characteristic that we're not relying on people. Hence, going into COVID and lockdown, we didn't have a whole bunch of people marooned or isolated from the business. We were able to just keep on trading through it, which we think we're very, very happy about it. I think a nice little note here just on shareholder value, and we understand shareholders on the call are always interested to make sure where we're going as an organization. If it is the share growth, you know, 70%, debt levels, the ability to pay down debt. I'm not sure how many companies as a percentage of growth, turnover, profitability, and cash could pay down the levels of debt to what we have actually done.
That's the constant focus and strategic view on our future the whole time. We always have a long-term view, and that relates very much into our customers as well, of supporting our customers as we go through. Slide 10, reputation built on customer satisfaction. Guys, you're not in business unless your customers wanna buy from you. I think that's really, really important to us, that strong customer retention. The investment we have made in our areas and primarily it's, you know, it's the B2B business to business or B2C consumer marketplace. The money which we're spending in our CS solutions, an on-prem, hosted, SaaS, cloud, we now have an application which can be supported by our customers no matter which way they wish it to be delivered.
Whether they want it to be in the cloud or on premises, the application is supported in all those aspects as well. Also fully integrated tech stack. Some of the work we've been doing more recently is, as I said, I talked earlier about some of our modules, and those modules now mean that individual customers are able to take some of those modules in addition to what they're actually doing. That's been very, very pleasing in this last 12 months and some of the future we're seeing the strength of this modular approach to our business. Long-term partnerships. We do a lot of co-development with some of our customers. We actually are sitting sometimes on the inner sanctum of their dealing with challenges to their industry and how we can help support them. Our software is on point.
Software on point means that basically what they need today, we're not speculative, we're not writing loads of code to which people may never actually see. That's a real solution dealt with in real time. Low churn, in fact, it's probably less than 1% of what our churn is. The demand for our upgrades and sometimes I've heard a press person say, "Oh, our software is legacy." I don't. Maybe they understand what legacy is. All of our software has a path which is embracing technology. It is using different delivery methodologies, and it's done in such a way that we're providing enough value in the upgrade that a customer wishes to get that next level of version of software as we go forward.
Certainly the new wins, and we are winning all these these tier one businesses, which we're winning at the moment now is just a strong testament to what we're actually doing. Look, there's been certainly a lot of R&D which has been on these future requirements, and there's no doubt, you know, the 5G in the telecom marketplace has been one where, you know, we're trying to be as up to front of that marketplace as what we possibly can do. Our R&D spend is there's not a lot of it. Strange enough, the science of R&D in Hansen has always been around sitting, where's the industry going to? We have a view of the next five years, but we drop it back into where's the next 12 months going.
That's done in consultation with our customers, and we would have a view on receiving upgrades for that business. I think our R&D spend is about 5.4% of revenue, but remembering we also have a lot of cross-investment with our customers and work which they are doing, which we sometimes subsidize, et cetera. Where we continue to own the subject matter. It's always our code and our software customers have to pay a license to use that code. Independent industry recognition, you know, we're in all those reports. We're on the radar. We do compete with some very large companies out there. You know, we do compete with the Oracles, the SAPs, the Amdocs, et cetera. We have, we certainly win on a size ratio.
We punch well and truly above our weight in winning the deals, which we continue to win out of there. Just on slide 11, some of the the new logo wins. As I said, we only bring to marketplace. It's actually quite testy sometimes. A lot of our customers don't always want notices going out. Certainly, we're winning new business because in some cases, they have not told their incumbents they're actually leaving. So there sometimes is where we can't even make the announcements, but we respect that. You know, in the last 12 months, the Exelon deal was fantastic. Exelon is the largest utility, energy utility in the North American marketplace. We sold them a module, which is to deal with all the data migration, cleaning up all the data to actually use.
We know there's probably another four or five modules over a period of time we'd like to sell to them. You know, we have a long-term view of our business. Let's get that delivered and then be actually someone who's a trusted partner to continue to help them. Energy Queensland and Essential Energy are just a couple of local people talking to customers here, in both cases, you know, upgrading to the latest CIS version. More importantly, we've actually won some additional modules, metadata management in there, et cetera. We're actually now selling additional modules. These were areas which other competing competitors actually own some of that landscape, and we've actually moved forward at the moment now. Just one in Fortum.
I think one of the pleasing things in our business always is, whilst conservative is what the marketplace is, they are always looking for those efficiencies. In Fortum's case, Fortum, we did some work. We rolled our systems for them in Finland, and we're now continuing to roll them out into Norway and Sweden and looking even to take some of our additional modules again. We have no doubt that as a company, we are very well positioned to continue with this momentum, and as I keep on reiterating the point, through profitability. There's no loss leaders across our business at all going forward. Certainly the global market has some challenges, and so we always see those challenges, but how are we addressing those challenges is a question which people probably should understand.
You know, Hansen's been around for such a long time. We've dealt with all manners of events and certainly the last couple of years. We've, with the global financial crisis, we've had energy issues, labor shortages, all those things there. We've always navigated, like we have this year, navigated as best we can and really having a positive outcome at the same time. There's no doubt, as we've challenged these things over the last 50 years, that the last 12 months or so, the IT marketplace has always had some staff limitations because the demand has always been matching supply. We have noticed a return of less churn in our marketplace.
Those listening to me talk six months ago and 12 months ago, we never did it as bad as many companies, but we noticed even our own stats have been reduced. A 9% improvement in our staff retention. That's that concentrated effort by Hansen to recognize leaders inside our businesses is very important to our teams of people. We know that a lot of our tech companies are showing some signs of strain. Clearly, if you are not a cash generative business these days, it does make it very difficult. There's some interesting reports coming out of the U.S. at the moment now of redundancy in the tech sector, primarily around because profitless prosperity is no longer in vogue.
Companies are now looking to support businesses which do actually make cash, and we know that will actually help us with our staff. On that whole labor churn actually highlights to the point where we are looking to rebuild our bench, as most people would know. We did have a staff shortage in this last 12 months. Opportunities we weren't able to take, we just couldn't get the people on board. We've stabilized that now, and we're now on the process of now starting to rebuild that bench, which is what we've had historically. At the same time, we've expanded, further expanding our marketplaces in Argentina, Vietnam, and India, and looking to do something in Europe in the near term as well.
That's dealing with labor, which is also at the end of the day, guys, we've got customers who need products, so staff are important to us. Inflationary pressure. There's no doubt we're all reading what's happening around the world, and there's always that inflation. Hansen has, once again, a very unique position inside our business. We can't stop what's happened with Ukraine and Russia. We can't stop a lot of things about inflation happening around the world. We do have increased costs in our business and of course everyone has those increased costs. One of the benefits Hansen has though, is that we do have opportunities in all of our contracts with our customers where we can actually increase our charge rates, et cetera, by inflation.
That's an opportunity which we can choose to take, but we don't always take. That's the strong sense of why we've had success over such a long period of time. That is how we actually work with our customers who may have margin constraints, doesn't matter what size they are. The fact that whether we wish to apply some or all is something which we take to heart because we are playing a long game and just not a short game. Certainly Hansenization across our business is where we get our efficiencies and maintain those benefits throughout our business. I've touched on a little bit with interest rates, you know, are going up, but our leverage is very low. I know that Richard and Graeme will touch on that leverage in the financial section as well.
We certainly can afford gearing. One of the benefits Hansen has is gearing, and that means that we have amazing support from our banks and from our shareholders which are wishing us to charge forward. Guys, we're not gonna start spending money like confetti. We're gonna be spending money like it's our own and invest it well, 'cause we've proven that my time, 30 years of every acquisition nearly doubling the level of profitability, and we take that to heart. That's not a reason why, even though banks are lending, giving us enormous amounts of credit, it's not a reason why we'd spend the money if it's not gonna be the right sort of deal. The M&A strategy is, it has been a global pandemic, which has restricted us a little bit from traveling.
High valuations, we do know the investment marketplace, there's a number of you on the phone have been invested in companies which have had enormous growth but don't make money. Unfortunately, even in our industry, people have seen some of those valuations which don't make sense to us. It makes no sense for Hansen to buy a business which is double our valuation and it's not accretive. We will continue to run a course which is actually investing money wisely as we go forward. We do know that valuations are starting to slowly return to more realistic numbers, I should say.
That should provide more opportunity for this because at the end of the day, the price should always be set by the purchaser, and we're a purchaser, and we will wait for the market to be appropriately priced. We continue to expand in our M&A and putting more focus actually to Europe and America in our future because M&A running out of Australia, we are just limited a little bit. It was probably an issue, Graeme, wasn't it, during COVID, when we just couldn't travel overseas, et cetera. Our balance sheet cash flow generation allows us to weather any potential storm better than probably most companies sitting out there. On the financials, look, it's important to note here, we've mentioned and most of the people listening on the call have heard, we did have a bluebird.
We had Telefónica, who did say quite unique by rather than paying over the next 10 years, gave us all the money up front. It did have a aberration in the last year. I think, Richard, just on the highlights.
Yes, it's a pleasure to join the call. I've been with the company for about four years, and I've just seen it go from strength to strength. These are very, very pleasing results. You can see with the revenue, what we've done here is excluded the Telefónica licensee from FY21. It was a genuine one-off license and to compare apples with apples, we've taken it out of this chart here. As a result, you can see revenues are up 3.4%, which is particularly pleasing, given the 12 months that everybody is well aware of around the world. It's been a challenging time. In terms of underlying EBITDA, again, excluding Telefónica, this is the strongest year in Hansen's history. AUD 100.3 million, up 1.1%.
Underlying NPATA, again up 6.2% off the back of just some fantastic results and some tax adjustments that I'll talk through shortly. Looking at adjusted EPSA at AUD 0.49, again, this really highlights the fact that typically, you know, obviously we're very profitable, but typically our acquisitions are funded with debt and cash and not equity. The dividend of AUD 0.12, again, this is a record dividend for Hansen. The last two years have been 10. We've declared AUD 0.12 this year, and in effect, returning over AUD 60 million of capital to shareholders in the last three years. Andrew touched on cash generation which we all live and breathe at Hansen.
You can see here that net debt's down 57% of the year, which is quite something. If you look at a three-year period, we've actually paid over AUD 120 million of debt off our balance sheet. The way I look at it is a combination of dividends returned or capital returned to shareholders and net debt. We could turn over AUD 180 million delivered to banks or the shareholders in the last three years, which really highlights the cash generative nature of Hansen. If you move on to the next set of charts on slide 16, we've highlighted here the strong performance despite some headwinds. Look, we've talked for two years around COVID and there's the Ukraine war and there's inflationary issues.
This is a great result. You know, we're up 3.4% on an apples-to-apples comparison quarter-over-quarter. You can see the track record, the CAGR growth of 12.2%, just building via organic growth or acquisition. And of course, there's been some significant new logo wins this year. We announced to the market the Exelon deal in America, which is the biggest energy retailer in America and also the biggest win for Hansen in its history. Andrew also touched on Energy Queensland, which is a significant upgrade, and there's been plenty of other new logo wins in the year that we haven't necessarily disclosed to the market. Just a quick point on the FY20 result.
You can see there AUD 301.4 million. There's actually an AUD 8 million headwind versus that year. If you were to look at the comparison between FY20 and FY22 on a constant currency basis, there was also growth, which I think we all agree is a good result considering what's been happening for the past 24 months. Looking at underlying EBITDA, again, growth there, AUD 100.3 million. Margins around 34%. I think we all who've been on the Hansen journey would know that typically we're between 25 and 30. The last two years have been in the mid-30s, which is exceptional. I think Andrew will get to the outlook shortly, and you'll see that there are some costs coming back into the business.
We are looking to build out our Hansen bench, as we call it, for capacity. There will be some further travel as we go out and see our customers and staff around the world. Underlying NPATA, obviously profit after tax excluding acquired amortization. The important thing here is obviously it's flowing through to P&L, the profitability, but the tax rate for the year is 17.8%. We've utilized nearly all the tax losses in the UK, and there were some other strategic tax decisions made in the year that drove that tax number down. We don't anticipate it being that low next year. I think it'll be more in line with the sort of 25% mark, but we'll update the market accordingly. Moving on to the next slide. Continued positive cash generation.
Like I said, we live and breathe cash generation. We're very, very proud of taking money to the bank. You can see there the earnings per share, again, increasing 5.4%. We've returned 57% of our net profit after tax to dividends to the shareholders. On a TSR measure, we've outperformed many parts of the Small Ordinaries Index. We do look to do our acquisitions via a combination of cash and debt. We don't look to shareholders for equity unless there's a real strategic reason for doing it. On net debt, again, these are numbers that a lot of businesses would be very proud of. We certainly are.
We've gone from AUD 151.4 million down to AUD 28.8 million in the course of three years. So you can see there over AUD 120 million has been paid down. Our leverage ratio is now sitting at 0.31, which is fantastic. Graeme will touch on the capacity we have and the firepower we have to do future growth deals in the future. Then, of course, the dividend per share. I mentioned before, that's a record for us. We've done special dividends in the past, but this year it's a total full year dividend of AUD 0.05 after an interim dividend of AUD 0.07.
Ultimately returning over AUD 60 million of capital back to shareholders in the past three years, and we're very proud of that. Moving on to the next slide, taking profits to the bank. Look, it sounds a bit cheesy, but it's really what we live and breathe here. We talk about Hansenization and the motto for Hansen is "Spend it like it's your own." It's exactly what we do. You can see reported EBITDA of AUD 100, a very small non-recurring item of AUD 300,000, ultimately delivering an underlying EBITDA of AUD 100.3 million. Now the working capital of AUD 18.2 million, for those that have followed the last two years would be aware that we did have the large Telefónica license taken in FY21.
10% of that license was paid in FY21, and the balance of AUD 18 million was paid in FY22. The way I look at this is working capital is effectively net zero excluding Telefónica, which I think is particularly impressive considering we've grown the top line without needing any more working capital. CapEx at AUD 6 million, slightly higher than what those following Hansen would be used to. We have invested in some cloud infrastructure in EMEA to drive some better outcomes for our customers. You can see our product development of AUD 15.6 million. Again, we are investing heavily across all of our products. We take R&D very, very seriously, and we assess the ROI and the views on attracting new logos very, very seriously.
That's measured and monitored on a quarterly basis and driving some great outcomes. You can see here for FY16 there with AUD 6.9 million in lease payments. Then, of course, interest on debt and tax of AUD 26.3 million. Now that's higher than what we've experienced in the past, mainly because of the profitable period in FY21 and the subsequent installment for tax that we had to make in FY22. We've talked a lot about debt, AUD 34 million paid down. Dividends of AUD 22.4 million. After all was said and done, we've still got AUD 60 million of cash in the bank. We're in a great position moving forward. I'll hand over to Graeme now to talk through the dividend and the outlook.
Thank you very much, Richard. Welcome to the call. I think that I'll just take a little moment to talk a little bit about people and development. Richard joined the finance team, as he said, some four years ago, as I'm looking to constantly bring new talent into the team. It's great that Richard's able to join us today and clearly demonstrate his great depth of knowledge around our business. It is part of the overall philosophy that we have here at Hansen. Andrew and the rest of the management team, you've seen some faces there. We look to bring new talent in as well as have those long-term experienced heads in the business.
It's great that we're able to bring these new people in that bring new ideas and a new approach to our business. Back on the numbers. Of course, this year, you know, we've talked a lot about Telefónica and the impact to revenue. This year it's been great to see our delivery team get into a very detailed process of delivering that business to Telefónica. Of course, we have seen some great work done there and a very happy customer. We have met all of our obligations in and around Telefónica and, you know, it's really exciting as our customer prepares to go live with that solution sometime we believe in December of this year. Quite an exciting development for us to be involved with and see.
You know, we keep our fingers crossed as we move forward and look to use that as a reference site into the future. Richard spoke a little bit about R&D investment. You know, I think it's really, really important just to recap on that point a little bit and talk about the fact that we see that as being, you know, where our long-term financial returns come from. You know, it's great to see our existing customers take upgrades. It's great to see them very happy to talk positively about their Hansen relationship to new prospects that we have as we use them as references. It's an incredibly powerful thing when you have a customer standing at your shoulder as you look to secure some new business.
You know, we talk a lot about resilience in this business, and I think it's very much at the forefront this year. You know, we have a great business with a really strong balance sheet. We have a banking consortium that's really keen to see us continue to prosper, and certainly more than happy to support us through 3.5x EBITDA multiple of a combined business when we find the right target. I think what that means to shareholders or prospective shareholders is that you can invest in the company understanding that we're not going to dilute that investment just as we look to continue our momentum. We will only call on equity should we have a very strategic reason to do so.
I think that the final point that I'll make is that our capital management philosophy really remains exactly as it has been in the past. The board looks to return to shareholders cash that's in excess of our immediate needs to deliver some returns in the shorter term, allow us to utilize franking credits where they might be available in our Australian business. But of course, you know, they are reducing as we continue to see profits coming from the business that we have offshore. Of course, you know, it's been great with revenue growth occurring in multiple divisions. We've had, after adjusting for Telefónica, growth here in Asia Pacific as well as in Europe.
I think also, while the Americas has been a little bit quiet this year, you know, it is important to recognize that that's part of the secret sauce, if you like, at Hansen. We don't expect every market in the world to continue to fire at the same time. But it is exciting to recognize that we continue to support the development of solar throughout the United States. We're recognized as being one of the market leaders supporting that industry as it develops within the US. I think there's some exciting times to come out of that market, as we move forward. I guess just to recap where we are today.
I mentioned Hansen offers a very stable, predictable platform for growth, where we service, you know, our existing customers that are in very resilient markets of energy, water and communications. Our product offerings are focused to our customer requirements and deliver predictable revenue growth. You know, we don't invest speculatively. We're very much on point to make sure that our customers receive a benefit immediately and see their businesses prosper. I think that's a very key point, particularly in these times where there's a little bit of economic uncertainty. Everyone's looking for that little bit of improvement in their margin and how they can get their businesses to operate more efficiently. Our reputation of delivering on time and on budget continues to grow and grow, drive new business opportunity.
Again, you know, if you're wanting a partner when the pressure's on and the margins are tight, you really want someone who's able to deliver and not deliver unpleasant surprises where cost overruns are concerned. Certainly we value our reputation in that regard. Finally, just a reminder that we do provide a very strong defensive platform in this environment, and we're looking forward to getting on to growing our business into the next stage. Andrew, hand back to you.
I think you've taken all the key points again, Graeme. You've stolen all my thunder. Good mate, well done. Look, I suppose, just where we're looking to the future. Look, there are, we've already explained how we're addressing what are the global challenges at the moment now. But even in this current environment, we still expect to have modest organic growth in our business at the moment now, which will continue to grow through existing new sales and our customer base. I can assure you, we are probably delighted that we can start getting our staff back in the numbers and building that bench has been problematic, as everyone knows, during COVID and just the restriction of staff. We're very optimistic of building that bench because of missed opportunities which we can now start re-dealing with again now.
We do expect, you know, part of that current environment changes through inflation and industry changes, et cetera. There will be some margin pressure, but we think once again, we're gonna be very consistent in our approach and expect margins to still be underlying above our ongoing target of 30%, which makes me very pleased to actually talk about. Just on the social side, this is very important to all of our staff, just our view on ESG. You know, our carbon footprint has been assessed, and we're looking to get some more information out to everyone, including our staff, which are very keen on doing it at the moment now as we embark on being a carbon neutral organization.
On that basis, look, on behalf of the board, I wish to extend my appreciation to all the staff in Hansen and their loyalty, their commitment, and hard work to have got the results which we're doing at the moment now. We certainly appreciate our investors coming on the journey and hope we continue to give you comfort about having serious people who know how to run businesses, investing the right way to maintain that the investment you're making is a sound investment you're making. On that note, I'm happy to answer myself or Richard or Graeme any questions, if there's any questions on the line. Chris, please.
Thank you. Again, 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 two. If you are on a speaker phone, please pick up your handset to ask your question. We will now pause momentarily to assemble our roster. Today's first question comes from Josh Kannourakis with Barrenjoey. Please go ahead.
Hi, Andrew, Graeme, and Richard. Thank you for taking my call. First question, guys, just around the pipeline. Obviously, you've won a lot of new logos in the period. You mentioned also there's a few you can't mention. Could you give us a little bit of context of the ones you can't mention, just what product segments they're in, geographies, et cetera?
Yeah, Josh, really across the board, mate. It's actually both sectors at the moment. Now we know the energy market specifically is actually dealing with the challenges, which is what's happening here in Australia is exacerbated overseas, and further exacerbated into Europe, with the gas pipeline being disrupted over there at the moment now. There is probably some distractions to what our customers are thinking, but having products speed to market and dealing with some of these challenging times is there. We've seen no real change. In the telco market, it clearly is this strong drive towards the commercialization of 5G and the products which people are saying. It really is across the board.
It's one of the benefits, I think, which Graeme touched on, Josh. We just don't rely on any one marketplace. Thank God for that because, you know, everyone's in a slightly different cycle where they are. At the headlines, the 5G and certainly our customer interaction and engagement in the energy market is still the two strong drivers. It really is, there's no one specific market or product which could actually would take the headlines on that, but.
Okay, great. Thanks, Andrew. Just second question, you mentioned obviously a bit of the incremental cost in terms of building the bench, but can we talk about what that means in terms of being able to capitalize on some of the organic growth opportunities and how that means we should sort of look at our, you know, next couple of years in terms of that organic growth profile as the bench sort of builds up?
Yeah. Look, we've never probably put into numbers, Josh, but there's no doubt this last 12, 18 months, we did not have enough staff to work on the projects we've been presented, which is an awkward thing. Therefore, because the very nature of what we do is quite special, we just can't take people off the bus and then make them productive. We didn't have enough staff and so we did miss out on opportunities, not only with customers, actually some new deals which we just could not pick up because we just didn't have the staff to do. Our reputation means a bit too much. You know, anyone can actually accept a deal and then deliver it late, but we've never done that. We've always really tried to focus and concentrate on that.
Rebuilding the bench from us, there's two aspects of the bench. The first one is just dealing with current demand. The second thing is actually the forecast sales would like to be in that bench and their availability to do it. Just a further answer to the question you may or may not have. That bench is actually a bit of a global bench, and that's actually building upon people in most parts of the world. In the big subject matter in country, but also in our development centers in Argentina, Vietnam, et cetera. You know, we're moving into new premises, we have more capacity to take more people on board as well.
It's really across the board and we would certainly think that's gonna assist with our organic growth and also new deals as well, Josh.
Okay. Thanks, guys. Well done on the results.
Thanks, Josh. Thank you.
The next question comes from Garry Sherriff with Royal Bank of Canada. Please go ahead.
Good morning, Andrew Green with Rothschild & Co. Three questions, one on your unrecovered revenues that you refer to in your outlook. The second one on cost, and the third one M&A. If I look at the unrecovered revenues in your outlook, can you maybe just tell us exactly what that refers to and what sort of revenue quantum that is unrecovered?
I thank God someone's read that word because I invented that word. I hope you like it, Gary. Look, I touched on it a little bit before. Our contracts have the ability in all of them to recover CPI, RPI increases. We don't always. An unrecovered for us is we just don't go and always apply increases to our customers. We always really work in partnership of bringing efficiencies to the table. It's like a bit of a safety valve for us. In some cases, we do take it on. There are some areas where we may not actually apply that increase. We'll actually wear some of the costs in going forward. That's just that management, Gary, as far as we're concerned, to have that long-term relationship.
Now, I've not put it into dollar terms, but what I think our investors probably understand that our business would understand that this, the inflation risk to Hansen is minimized because all of our contracts, we can actually change the rates. We also own the software, so it's up to us what we wish to charge. You know, we're very mindful of how trying having a customer for 10 years rather than having an extra bit of profit for five months.
When you talk about that CPI recovery or non-recovery, is that because the customers pushed back on it or did you just not attempt to recover it?
Oh, a combination of both. Like, look, it's. You go to anyone with an increase these days, and they push back. Sometimes you don't even. It's better not to even. Look, there's pushback, Gary. We can push back, et cetera. It's a customer-on-customer basis, and we have a process as we work through our account management team and our strategy and product team and finance teams and work out how best we go. Mate, you don't put your cost up to anyone without them going, "Oh, thank you very much." Everyone always is pushing back. They've got the same pressures in their business, and we'd rather not push it because it's that, just that long-term view of the business.
Okay. Just following up on costs, I know Josh touched on it. Can you maybe just remind us your current staff numbers and what your expectations in terms of that build-out will be into FY23?
Yeah. At the moment, our staff numbers are about, I think, 1,600 staff short at the moment. I think our plans over the 12 months would probably be growing that to somewhere between 5%-7% in staff numbers.
16 staff at present and growing at 5%-7% over the next 12 months or so?
Yeah. We would see on target and business coming in, building the bench that we would be looking to. It's all relative because, you know, we're also anticipating deals, new business coming in, having the people to do it to deal with a bench also, Justin. We're still not immune from the fact that some people wish to leave us. You've also got to deal with just that churn of your staff as well. We know that, you know, this information is actually, you know, can be found. You can go onto our boards as to just how many staff we're looking at. You know, over those last 12 months, that number has diminished by about 50% up until now.
Slowly but surely, we are getting the numbers to where we need them to be and then to build the bench is our next goal.
I think the other thing I'd mention, Gary, is that we're actually seeing that it's a permanent employee's market really heavy early on this year. It's starting to change a little bit. We're seeing a greater depth in the selection pool available to us as we go into the market, so we're able to be a little more selective.
Mm-hmm.
Of course, you know, we sometimes in that number that Andrew's talking about, we're looking for very specifically qualified people in different areas as we look to attack, you know, further different markets around the world. Certainly, you know, Argentina is a place we're finding.
Mm-hmm.
You know, a fairly deep talent pool at the moment that we're looking to continue to expand.
Yeah. I think for everyone on the call, just to probably play on that a little bit more. I think one of the things is that profitable, sustainable companies now. You've gone through where people are changing for money. The fact that you are profitable, sustainable, and have a future is you become a destination. That's to Graeme's point. We're now having people wanting to join us. We're now having resumes being sent through because there are some organizations that just do not have our credentials or do not have our future. People, it's old school now. People see in uncertain times, they want some certainty, and Hansen provides that certainty.
There's certainly a little bit of that security.
Yeah. Yeah. Mm-hmm.
Got you. Last question's on M&A. I mean, your cash flows look very strong. Balance sheet looks like it's in really good shape. What geographies are most attractive at present, either due to regulatory change or competitive environment changing? I guess the follow on from that is what general sectors? Maybe you've already answered that with Josh, but maybe geographies as best broad call and being most attractive at present.
Are you talking from an M&A point of view, mate? Or just generally?
Concern.
You know, growth product.
No, an M&A perspective.
We probably look at the valuation and value probably is the headline at the moment now, and it's just a waiting game. Gary, I think most people on the call would know us well enough. We don't need to jump in. We need to buy well. The marketplace has priced us, and that's what we're worth. It would be great reluctance that we'd want to start paying businesses and, you know, 50% more than our own valuation. We're the marketplace, we have to make sure we buy well. Valuation then we don't really mind. I think that's the beauty of our business.
We are so geographically diversified that assets in Europe, in Asia, in America, Australia are all good hunting grounds for us because we have infrastructure, whether that be legal, finance, delivery, we're all sitting in those regions. As long as we've built out one more than another, our capacity to absorb a deal is very real. We're as keen as everyone else. That's not a reason for me to probably start acting like a career CEO. I wanna make sure that what we buy is a good deal and good for all of our investors and good for this business.
I think, Gary, I'd add, look, the deals by geography are a little different, you know, because of the state of the market, and their maturities. Look, we've had a serious look at a number of opportunities over the course of the last 12 months. We're not sitting on our hands, but, you know, it's like anything. We're dedicating some serious resource to it now. You know, we're looking forward to that next opportunity. I think it's really important. You know, we don't want to be sitting in one of these calls talking about something that's gone pear-shaped. Certainly, yeah, looking for that right one and continuing to pursue, you know, verticals that we think we can bring the existing Hansen talent to.
You know, I think that's another area where, you know, we've looked at a couple of different sectors, and we think that we can potentially continue to grow the business through a third vertical. You know, we keep investing some energy into that as well. You know, we've got our fingers crossed that there'll be one come along that really gets us excited.
Thank you.
Thank you. Thanks very much.
Thanks, Garry.
The next question comes from Tim Monckton with Henslow. Please go ahead.
Thank you. Well done, Andrew. Just one question I've got to ask. About 18 months ago, the company came out and said they had an aspirational revenue target of AUD 500 million by 2025. How does that stand now in the light of last year and the issues you're facing?
Yeah, thanks, Tim. It's a good question. There's no doubt the aspirations of the company was actually a combination of organic and inorganic growth, Tim, as you would be aware. I suppose, you know, we've also had COVID and other issues coming our way. Mate, it was always reliant on acquisitions, as you would actually know. You know, we can only answer it so many ways. I know the market is keen for us to buy. I know our investors are keen to come on that journey. I'm sure with the right sort of valuation, we'd have the mechanism of issuing more scrip to go and do a deal. Aspirationally, mate, we're still there.
You know, that's not a reason why I'm gonna start spending money and wasting company's money on buying a deal which is not gonna be a deal which actually provides true value across the board for all the stakeholders.
It's always important to have a target to throw a dart at, though, isn't it, Andrew? We, you know, we've got that aspirational view. We haven't given up on it, put it that way.
Thank you.
Thanks, Tim.
The next question comes from Stephen Matthews with RAM Partners. Please go ahead.
Gents, the expenditure in product development, AUD 15 million. Just wanted to get some understanding of the needs in the business to continue that development and the capacity to meet the demands from these big customers. Sort of related to this is where is the R&D department? Where is it located? How many places? Just appreciate a bit of clarity on this.
The R&D is a process which sits down between our product owners and the business and the rest of the partners of the company. As I was talking earlier on the call, you may have missed it, was the fact that we have a, you know, five- or 10-year view of where our actual product is going to the marketplace. We look at that from across technology, we look across regulation, we talk about industry change of where the product's going. We have that absolute view. As far as the R&D work, which gets done, we then break that down to what will be delivered in the next 12 months. Now, software is being developed really for two principal reasons. It's consistent with what our customers are wanting in the product and what they are needing.
That can be from a technology, it can be from a functionality, it can be from a regulatory point of view. We also hope that that also aligns with new business at the same time. Our customers are relying on us heavily, hence that's why they pay maintenance, and that's why they do upgrades. To actually take these, our applications extend into the future with them. It's a well-thought-out plan. We run all of our R&D as we'd run an external customer. We have a budget. We have a mandate. We on a monthly basis review the project plan. We quarterly, the executive review it. It's actually a very formalized process, but all based on a return on investment being the revenue streams from the maintenance they pay us, customers taking upgrades and new sales.
I think you also mentioned the geography question. We draw on a human resource from around the world to get the job done. It's not a dedicated team that's sitting in the US or the UK or a particular location. You know, we've got a very talented group of people that are carefully managed by the product managers as we look to deliver that. We get a mixture of, you know, blended cost out of some lower cost centers, as well as drawing on, you know, the local expertise in the market that the R&D is focused on. It's a bit of a combination of being able to draw on the global pool of technical resource to get it done.
Very good. Thank you.
Thanks. Thanks, David.
Our next question comes from Nick Burgess with Ord Minnett. Please go ahead.
Yeah. Morning, team. Hope you're well. I think most of my question's been answered. Just a couple of quick follow-ups just on the cost base and the investment. Broadly, if you're planning to grow the headcount by 5% or 7% this year, how quickly can you earn revenue off that investment? Is that something that happens this year or perhaps that's something that you get returns on, you know, next year and the year after?
Yeah, great question, Nick. There's no doubt the speed to competency, which is always so fundamental to Hansen. Like, we've just taken on 50 freshers in India. Freshers is an Indian word for graduates inside the business. Our increasing staff across the board is this combination of dealing with the churn and getting speed up to. I think to do a calculation, what you'd like to do, Nick, is actually translate that into revenue. Some of those people are just absorbing some of the overworked people. Some will go for additional revenues, some will actually go for churn. We also map that against our budget into the future. Actually, if a deal comes in or doesn't come in, it can actually alter that course.
Our staffing is something which is measured on a weekly basis and what we're actually doing the whole time. Combination of all things, Nick, we would expect that bench to contribute to new business upgrades, existing business all at the same time.
Okay. Then perhaps just a broader question to finish on the interaction between, say, organic revenue growth and operating margin. At the moment you've had some constraints which you've explained well, and the operating margin is still, you know, substantially higher than your long-term targets. Do you expect that as organic growth, you know, picks up aspirationally that then means that the EBITDA margin perhaps trends down towards the longer term target, so there is a little bit of a trade-off there, or it doesn't particularly work like that?
Yeah. Look, it's not that. I think it's a justified question of where our margins have gone. Gee, we've learned a lot from the last two or three years of the pandemic. We've learned a lot about ourselves, Nick. We've learned about travel. We've learned our tools are so much more advanced than what they were, say, three or five years ago about what people are working on. You know, we are not doing an Elon Musk telling our staff they've got to come back into the office because we know we're not gonna gain really any more productivity. We think some of these lessons learned would mean that we don't need to travel as much or we can have people not commuting.
I think a range of those things is probably why we think we're our margin will be maintained at a higher level than what historically they've been at the time. I think it's just some learnings. I think that, you know, for the devastation of what COVID was around the world, I think we learned a hell of a lot about ourselves and our business and that role in which we think will actually play into that maintaining higher margin.
Okay. Thanks very much.
I think the other thing, Nick, that I would say, sorry, mate, is that, you know, we debate margin around the boardroom table on a regular basis as we look to sort of think where we might be in 12 months' time. Of course, you've been a long-term follower of Hansen. You know how conservative we are when we start to talk forward in our business. I think there's a lot of moving parts right at the moment. We're coming out of this period, as Andrew said, of quite a significant learning, and then moving into a period where we can see our labor force stabilizing and, you know, new opportunity coming on board. You know, I think it's a really good question, where that margin will hold up.
I do think we're pretty conservative in our outlook.
Yeah. Okay. Thanks, Graeme. Very clear. Cheers.
Once again, if you do have a question, please press star one on your telephone and wait for your name to be announced. The next question comes from Vic Lee with BOQ. Please proceed.
Morning, guys.
Oh, good.
Hi. I just have one question. On your REM report for FY and your incentive plan for FY22, your LTIs, in order to achieve a 150% of your LTI, you will need to beat the 12.5% revenue growth rate and also obviously meeting a TSR hurdle. Just in terms of the revenue growth rate, though, when you get to your AUD 500 million target, it implies a revenue growth rate of 19%. Is that correct?
To address the first part of your question, I think the incentives have been set at a, you know, long-term sort of trajectory that when we set the AUD 500 million hurdle, you know, it was going to be something that we were required to achieve in order to get to that aspirational target. I think of course, as time has gone on, you know, that uptick from a new base year-on-year is increasing. But I think you'll agree that to be seeing a compounded growth rate from revenue of sort of that 12% range is quite strong, translates into quite strong revenue growth year-on-year. It's, you know, I think the management team have been challenged quite significantly to deliver an outcome at that level.
To ask you another way, in order to get the top end of the comp structure of 150%, you need to demonstrate a growth rate in excess of 12.5%, probably closer to 13%.
That's absolutely right, yep.
Okay. To be absolutely clear, that baseline revenue is the AUD 297 that you just achieved?
Correct. Yep.
Okay. That's all I've got.
Don't you think? Thank you.
At this time, there are no further questions in the queue, and I would now like to hand the call back over to Mr. Hansen for any closing remarks.
Thanks, Chris. Look, once again, I just really appreciate everyone taking their time to listen. This is always a busy time with lots of people reporting in. I wish to once again extend my thanks to all the Hansen staff and contributors to our business, especially the support I received from the board of directors and also our investors. I thank you all. Once again, I couldn't be more proud to lead a company for 50 years of sustainable growth and it's a proud moment for me, and I wish you all have a good day. Thank you very much.
That does conclude our conference for today. Thank you for participating, and you may now disconnect.