Ann: Update on Projected FY2026 Corporate Costs, page-2

This update is generally positive for RPMGlobal Holdings (ASX: RUL), especially when viewed in the context of its strategic focus and cost management. Here's a breakdown of why:

✅ Positive Aspects:

1. Significant Cost Reduction

   • Corporate costs are expected to drop by $4.5 million annually (~28%), which boosts operating efficiency and potentially improves profitability margins.

   • This suggests leaner operations post-divestment, aligning cost structure with the now software-only focus.

2. Focus on Core Software Business

   • The divestment of the Advisory business allows RPM to streamline and concentrate resources on its higher-margin, scalable software segment, which typically offers better long-term growth potential.

3. Improved Transparency and Predictability

   • Even though FY2025 guidance was withdrawn, RPM has clearly outlined its expected cost base and structure for FY2026, offering improved visibility to investors.

4. Reduction in Depreciation and Overhead

   • Office lease-related depreciation and third-party costs are going down, suggesting an overall lighter and more flexible operating model.

⚠️ Caveats / Neutral to Negative Considerations:

1. FY2025 Is a “Transitional Year” Without Full Financial Clarity

   • There’s still no concrete guidance for FY2025, which introduces short-term uncertainty about how the company performed during this restructuring phase.

2. Revenue Impact from Divestment Not Detailed

   • While costs are going down, the revenue from the divested Advisory segment is also gone. The net impact on profit margins and cash flow depends on how well the Software business performs on its own.

3. Incentive Pool Still Present

   • The executive incentive pool remains substantial (~$1.2 million), which might be scrutinized if earnings don’t ramp up meaningfully post-divestment.

Overall View:

This is a strategically positive update — RPM is shedding non-core business and reducing fixed costs, which can enhance earnings quality and scalability in the long run. The market’s reaction would likely depend on:

• How well the software business grows post-divestment,

• What kind of margins and recurring revenue it can generate, and

• The quality of the August 2025 guidance.

Would you like an estimate of how these cost reductions could impact earnings per share (EPS) or margins?