Full Year 2026 SGH Ltd Earnings Call

August 11, 2026

Operator: Thank you for standing by, and welcome to the SGH Ltd FY2026 results announcement. 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 1 on your telephone keypad. I would now like to hand the conference over to Mr. Ryan Stokes, CEO and MD. Please go ahead.

Speaker #1: Thank you for standing by, and welcome to the SGH Limited FY26 results announcement. All participants are in listen-only mode. There will be a presentation followed by a question-and-answer session.

Speaker #1: If you wish to ask a question, you'll need to press the star key, followed by the number 1, on your telephone keypad. I would now like to hand the conference over to Mr. Ryan Stokes, CEO and MD.

Speaker #1: Please go ahead.

Ryan Stokes: Thank you. Good morning, and welcome to the SGH results presentation for the year ended 30 June 2026. I am Ryan Stokes, Managing Director and CEO of SGH. Joining me is our CFO, Richard Richards. SGH is a leading Australian diversified operating business focused on industrials and energy. Our strategy is centered on owning and operating market-leading businesses with privileged assets and scale. We are Australian-focused with exposure to long-duration demand thematics, including the AUD 1.7 trillion 5-year infrastructure and construction pipeline, the National Housing Accord, a strong mining production outlook, and growing demand for domestic gas and LNG. Our approach is guided by the SGH Way operating model, which brings together disciplined capital allocation, execution, and accountability enabled by an owner's mindset. We are frontline-focused and relentless operators in driving incremental gains which compound to support our long-term performance. Slide 3.

Speaker #2: Thank you. Good morning, and welcome to the SGH results presentation for the year ended 30 June 2026. I'm Ryan Stokes, Managing Director and CEO of SGH.

Speaker #2: Joining me is our CFO, Richard Richards. SGH is a leading Australian diversified operating business focused on industrials and energy. Our strategy is centered on owning and operating market-leading businesses with privileged assets and scale.

Speaker #2: We are Australian-focused, with exposure to long-duration demand thematics, including the $1.7 trillion five-year infrastructure and construction pipeline, the National Housing Accord, a strong mining production outlook, and growing demand for domestic gas and LNG.

Speaker #2: Our approach is guided by the SGH way of operating model, which brings together disciplined capital allocation, execution, and accountability, enabled by an owner's mindset.

Speaker #2: We are frontline-focused and relentless operators, driving incremental gains which compound to support our long-term performance. Slide 3: SGH delivered earnings growth in line with guidance in FY26, along with margin expansion, strong cash generation, and further reduction of leverage.

Ryan Stokes: SGH delivered earnings growth in line with guidance in FY2026, along with margin expansion, strong cash generation, and further reduction of leverage. Revenue of AUD 10.6 billion was broadly flat, while EBITDA of AUD 2.1 billion increased 2%, and EBIT of AUD 1.6 billion was up 1%. The result was driven by our Industrial Services businesses, which grew EBIT by 4% to AUD 1.5 billion. Industrial Services growth was led by 14% EBIT growth of Boral and 1% growth of WesTrac. Coates maintained its margins in a variable construction market, while lower contributions from energy and media reflected a lower share of equity accounted earnings. Operating cash flow of AUD 2.1 billion increased 6%, reflecting the quality of earnings across the business. Slide 4. The SGH Way defines how we operate, measure performance, and hold ourselves accountable. Our strategy sets the direction, our operating cadence drives the disciplined execution, and that execution delivers operational excellence.

Speaker #2: Revenue of $10.6 billion was broadly flat, while EBITDA of $2.1 billion increased 2%, and EBIT of $1.6 billion was up 1%. The result was driven by our industrial services businesses, which grew EBIT by 4% to $1.5 billion.

Speaker #2: The industrial services growth was led by 14% EBIT growth at BORAL and 1% growth at Westrac. Coates maintained its margins in a variable construction market, while lower contributions from Energy and Media reflected a lower share of equity-accounted earnings.

Speaker #2: Operating cash flow of $2.1 billion increased 6%, reflecting the quality of earnings across the business. Slide 4. The SGH Way defines how we operate, measure performance, and hold ourselves accountable.

Speaker #2: Our strategy sets the direction. Our operating cadence drives disciplined execution, and that execution delivers operational excellence. Performance is measured through the balanced scorecard: each metric is quantified, tracked, and owned by an accountable leader.

Ryan Stokes: Performance is measured through the balanced scorecard. Each metric is quantified, tracked, and owned by an accountable leader at every level of the business. Delivering on these metrics supports profit, return on capital and TSR, and drives a flywheel to support our long-term ambitions. Slide 6. Safety is a key priority for SGH. In FY2026, LTIFR improved 38% to 0.5 and TRIFR improved 29% to 2.2. Every business improved, reflecting targeted programs across critical risk controls and consequence management. Approximately 85% of SGH's 15,000-strong workforce are frontline roles, directly creating customer value. In FY2026, 275,000 hours of training were delivered, largely directed to those frontline roles, building technical, operational and commercial capability. Female representation increased 100 basis points over the year to 20%. Slide 7. Boral lifted alternate fuel usage at the Berrima Cement plant to 48% in FY2026, reducing emissions while delivering commercial benefits.

Speaker #2: At every level of the business, delivering on these metrics supports profit, return on capital, and TSR, and drives the flywheel to support our long-term ambitions.

Speaker #2: Slide 6. Safety is a key priority for SGH. In FY26, LTIFR improved 38% to 0.5, and TRIFA improved 29% to 2.2. Every business improved, reflecting targeted programs across critical risk controls and consequence management.

Speaker #2: Approximately 85% of SGH’s 15,000-strong workforce are in frontline roles, directly creating customer value. In FY26, 275,000 hours of training were delivered, largely directed to those frontline roles, building technical, operational, and commercial capability.

Speaker #2: FEMA representation increased 100 basis points over the year to 20%—see slide 7. Borrow listed alternate fuel usage at the Berrimer cement plant to 48% in FY26, reducing emissions while delivering commercial benefits.

Ryan Stokes: WesTrac also continues to play a key role in the circular economy, remanufacturing more than 10,000 components and rebuilding over 200 machines during the year. Our approach to sustainability focuses on initiatives that deliver outcomes across the three dimensions of social, environmental, and commercial aspects. Slide 9. Revenue of AUD 10.6 billion was largely flat, while EBIT of AUD 1.6 billion grew 1%, with margin expanding 40 basis points to 14.7%. NPAT of AUD 920 million at earnings per share of AUD 2.26 were both flat, while Statutory NPAT of AUD 655 million increased 35%. Operating cash flow of AUD 2.1 billion at 99% EBITDA cash conversion drove net debt lower, with leverage down 12% to 1.8 times below our target range. That strength supported a 3% increase in total dividends to AUD 0.64 per share, fully franked.

Speaker #2: Westrack also continues to play a key role in the circular economy, remanufacturing more than 10,000 components and rebuilding over 200 machines during the year.

Speaker #2: Our approach to sustainability focuses on initiatives that deliver outcomes across the three dimensions of social, environmental, and commercial aspects. Slide 9: Revenue of $10.6 billion was largely flat, while EBIT of $1.6 billion grew 1%, with margin expanding 40 basis points to 14.7%.

Speaker #2: NPAT of $920 million and earnings per share of $2.26 were both flat, while statutory NPAT of $655 million increased 35%. Operating cash flow of $2.1 billion at 99% EBITDA cash conversion drove net debt lower, with leverage down 12% to 1.8 times—below our target range.

Speaker #2: That strength supported a 3% increase in total dividends to 64 cents per share, fully franked. It also funds the on-market buyback of up to $500 million commencing following these results, while retaining our capacity and focus on value-accretive M&A.

Ryan Stokes: It also funds the on-market buyback of up to AUD 500 million commencing following these results, while retaining our capacity and focus on value-accretive M&A. Slide 10. WesTrac delivered earnings growth driven by strength in product support activity. Revenue of AUD 5.8 billion contracted 6%, reflecting the previously flagged normalization of capital sales. EBIT of AUD 647 million was up 1%, with services growth and disciplined cost control more than offsetting capital sales movement. EBIT margin expanded to 11.2% in higher services mix and improved productivity. Return on capital employed expanded to 24.6%. Services revenue of AUD 4.1 billion grew 6% on parts volume, service rate gains, and increased parts exchange activity. Rebuild activity was at record levels, with multi-year run life extension program for tier 1 miners delivered on schedule. Installed machine base continues to age, underpinning long-term parts, service, and rebuild demands.

Speaker #2: Slide 10. Westrac delivered earnings growth driven by strength in product support activity. Revenue of $5.8 billion contracted 6%, reflecting the previously flagged normalization of capital sales.

Speaker #2: EBIT of $647 million was up 1%, with services growth and disciplined cost control more than offsetting capital sales movement. EBIT margin expanded to 11.2% with a higher services mix and improved productivity.

Speaker #2: Return on capital employed expanded to 24.6%. Services revenue of $4.1 billion grew 6% on parts volume, service rate gains, and increased parts exchange activity.

Speaker #2: Rebuild activity was at record levels, with the multi-year run-life extension program for Tier 1 miners delivered on schedule. The installed machine base continues to age, underpinning long-term parts, service, and rebuild demands.

Ryan Stokes: While capital sales normalized to AUD 1.6 billion, the medium-term opportunity pipeline remains strong. Slide 11. Boral delivered earnings growth and margin expansion in FY2026. Revenue of AUD 3.8 billion was up 5% on volume growth and value-led pricing. EBIT of AUD 535 million increased 14%, with EBIT margin expanding 113 basis points to 14.1%. Operating cash flow of AUD 779 million was up 13% at an EBITDA cash conversion of 100%. Volumes grew across every product, led by 7% growth in concrete. Growing volume and price together reflects a strengthening customer value proposition, highlighted by 3% higher deliveries on time at 88% and 5% higher grade of service at 90%. Work to variabilize costs across labor and transport continues to support margin expansion. Slide 12. The Coates earning result was below our expectations. The actions taken to hold margins demonstrates the discipline and resilience of the business.

Speaker #2: While capital sales normalized to $1.6 billion, the medium-term opportunity pipeline remains strong. Slide 11. Borrow delivered earnings growth and margin expansion in FY26. Revenue of $3.8 billion was up 5% on volume growth and value-led pricing.

Speaker #2: EBIT of $535 million increased 14%, with EBIT margin expanding 113 basis points to 14.1%. Operating cash flow of $779 million was up 13%, with an EBITDA cash conversion of 100%.

Speaker #2: Volumes grew across every product, led by 7% growth in concrete. Growing volume and price together reflects a strengthening customer value proposition, highlighted by 3% higher deliveries on time at 88% and 5% higher grade of service at 90%.

Speaker #2: Worked variabilized costs across labor and transport continue to support margin expansion. Slide 12. The COTES earnings result was below our expectations. The actions taken to hold margins demonstrate the discipline and resilience of the business.

Ryan Stokes: Revenue of AUD 1 billion was 3% lower. EBIT of AUD 370 million at a margin of 26.7% was maintained through disciplined cost and efficiency actions. Time utilization rose 160 basis points to 61%, driven by sales execution, the hub and spoke branch model, and fleet management. The fleet grew 2% to AUD 1.89 billion on an original cost basis, demonstrating our confidence in the business. The infrastructure pipeline is expected to mobilize into FY2027, including works ahead of the Brisbane Olympics. Coates is well-positioned to drive operating leverage as market activity grows. Slide 13. Beach's production of 19.4 million BOEs was 2% lower, with revenue of AUD 1.8 billion, EBIT of AUD 559 million, and NPAT of AUD 355 million, providing SGH with AUD 107 million of equity accounted EBIT. Beach commenced production operations at the Waitsia Gas plant during the year, which reached an inflation capacity of 250 terajoules per day in April.

Speaker #2: Revenue of $1 billion was 3% lower. EBIT of $270 million, at a margin of 26.7%, was maintained through disciplined cost and efficiency actions. Time utilization rose 160 basis points to 61%, driven by sales execution, the hub-and-spoke branch model, and fleet management.

Speaker #2: The fleet grew 2% to $1.89 billion on an original cost basis, demonstrating our confidence in the business. The infrastructure pipeline is expected to mobilize into FY27, including works ahead of the Brisbane Olympics.

Speaker #2: COTES is well-positioned to drive operating leverage as market activity grows. Slide 13: Beaches production of 19.4 million buoys was 2% lower, with revenue of $1.8 billion, EBIT of $559 million, and NPAT of $355 million, providing SGH with $107 million of equity-accounted EBIT.

Speaker #2: Beach commenced production operations at the Waitsia gas plant during the year, which reached nameplate capacity of 250 terajoules per day in April. The business also optimized its portfolio with a divestment of Artisan, enabling the redirection of growth capital.

Ryan Stokes: The business also optimized its portfolio with the divestment of Artisan, enabling the redirection of growth capital. Beach was also awarded new onshore acreage during the year, including the Taroom Trough, giving Beach access to a new base. On policy, the proposed domestic gas reservation framework, as drafted, is a fundamental threat to the domestic gas industry. It puts thousands of jobs, billions of AUD of tax and Australia's long-term energy security at risk. We are engaging directly with government to advocate for practical changes to ensure the domestic gas sector can deliver reliable and affordable gas for Australian manufacturers. Slide 15. SGH's privileged assets are actively managed to maximize return on capital. Our focus on returns and long-term performance anchors every asset decision. The capital allocation framework prioritizes disciplined investment to drive returns and preserve balance sheet capacity for the next leg of growth.

Speaker #2: Beach was also awarded new onshore acreage during the year, including the Tarum Trough, giving Beach access to a new base. On policy, the proposed domestic gas reservation framework, as drafted, is a fundamental threat to the domestic gas industry.

Speaker #2: It puts thousands of jobs, billions of dollars of tax, and Australia’s long-term energy security at risk. We are engaging directly with the government to advocate for practical changes to ensure the domestic gas sector can deliver reliable and affordable gas for Australian manufacturers.

Speaker #2: SGH's privileged assets are actively managed to focus on returns, and long-term performance anchors every asset decision. The capital allocation framework prioritizes disciplined investment to drive returns and preserve balance sheet capacity for the next leg of growth.

Ryan Stokes: At Boral, network investment across concrete, quarries, and bitumen extends the integrated asset advantage. The Marulan Quarry upgrade is about to commence, and we continue to actively progress network opportunities. At Coates, capital is being deployed across the fleet, with investment directed to categories that are supported by the strongest demand, customer pipeline, and utilization. Slide 16. Crux is a large LNG resource on a lower risk backfill development pathway, approaching first gas in H2 of calendar 2027. The gross resource is approximately 1.6 TCFE, with an expected production life of 12 years. SGH's 15.5% interest is expected to deliver a net plateau of 400,000 tonnes of LNG per year or circa five to six cargoes. Construction advanced in FY26 with the platform topsides at store, hook-up and commissioning underway. SGH's investment in FY26 was AUD 194 million.

Speaker #2: At Borrow, network investment across concrete, quarries, and bitumen extends the integrated asset advantage. The Marollin Quarry upgrade is about to commence, and we continue to actively progress network opportunities.

Speaker #2: At COTES, capital is being deployed across the fleet, with investment directed to categories that are supported by the strongest demand, customer pipeline, and utilization.

Speaker #2: Slide 16. Crux is a large LNG resource on a low-risk backfill development pathway, approaching first gas in the second half of calendar 2027. The gross resource is approximately 1.6 Tcf-e, with an expected production life of 12 years.

Speaker #2: SGH has a 15.5% interest and is expected to deliver a net plateau of 400,000 tons of LNG per year, or approximately 5 to 6 cargoes. Construction advanced in FY26, with a platform topside installed and hookup and commissioning underway.

Speaker #2: SGH’s investment in FY26 was $194 million. Offtake marketing commenced during the year, with strong interest reflecting the growing demand environment. We expect to contract offtake as production approaches.

Ryan Stokes: Offtake marketing commenced during the year with strong interest reflecting the growing demand environment. We expect to contract offtake as production approaches. Slide 17. SGH holds a substantial surplus property portfolio of approximately 3,700 hectares, where we are pursuing the highest and best use. Ravenhall is the current development focus with close to 630 hectares of land, 20 kilometers from the Melbourne CBD in a key logistic corridor. Once developed, the precinct is planned to provide approximately 2.5 million square meters of net level area. Boral has a 50/50 joint venture with Dexus to develop Ravenhall. Boral contributes the land, and Dexus brings capital and execution capability. Work is progressing on the rezoning and development, will then proceed through stage superlots to unlock value progressively. Beyond Ravenhall, we are progressing property opportunities at Bombo, Waurn Ponds, and Penrith Lakes.

Speaker #2: Slide 17. SGH holds a substantial surplus property portfolio of approximately 3,700 hectares, where we are pursuing the highest and best use. Ravenhall is the current development focus, with close to 630 hectares of land, 20 kilometers from the Melbourne CBD, in a key logistic corridor.

Speaker #2: Once developed, the precinct is planned to provide approximately 2.5 million square meters of net lettable area. Borrow has a 50/50 joint venture with DEXIS to develop Raven Hall.

Speaker #2: Borrow contributes to land, and DEXIS brings capital and execution capability. Work is progressing on the rezoning and development, and will then proceed through staged superlots to unlock value progressively.

Speaker #2: Beyond Raven Hall, we are progressing property opportunities at Bombo, Warn Ponds, and Pender Lakes. Bombo is a former quarry near Kiama in New South Wales, with master planning underway for a future mixed-use precinct.

Ryan Stokes: Bombo is a former quarry near Kiama in New South Wales with master planning underway for a future mixed-use precinct. Waurn Ponds is a former cement site near Geelong, covering 1,000 hectares. Planning is underway to support future industrial and commercial use, including data centers. Penrith Lakes is a rehabilitated quarry precinct in Western Sydney. Boral owns 40%, and 330 hectares have been identified for potential development through a state-led rezoning process. Slide 19. SGH has a strong medium-term growth pipeline expected to deliver additional earnings and cash flow. Crux is on track to deliver first gas in FY28, adding a new long life earnings profile. In property, Ravenhall is being monetized through the Dexus joint venture. At Boral, network reinvestment across concrete, quarries, bitumen, and recycling drives competitive advantage, supporting continued growth. At WesTrac, investment in technology and facilities is lifting capacity to support long-term demand growth.

Speaker #2: Worn Ponds is a former cement site near Geelong, covering 1,000 hectares. Planning is underway to support future industrial and commercial use, including data centers.

Speaker #2: Pender Lakes is a rehabilitated quarry precinct in Western Sydney. Borrow loans are at 40%, and 330 hectares have been identified for potential development through a state-led rezoning process.

Speaker #2: Slide 19. SGH has a strong medium-term growth pipeline, expected to deliver additional earnings and cash flow. Crux is on track to deliver first gas in FY28, adding a new, long-life earnings profile.

Speaker #2: In Property, Raven Hall is being monetized through the DEXIS joint venture. At Borrow, network reinvestment across concrete quarries, bitumen, and recycling drives competitive advantage, supporting continued growth.

Speaker #2: At Westrac, investment in technology and facilities is lifting capacity to support long-term demand growth. At Coates, the opportunity is to invest in network and fleet to meet demand and drive returns.

Ryan Stokes: At Coates, the opportunity is to invest in network and fleet to meet demand and drive returns. The outlook for energy also remains supportive. Inorganic activity is a key pillar of our growth ambition. In FY2026, we pursued BlueScope. We identified the opportunity, brought in a partner to put the acquisition finance in place and to deliver it. That is what SGH is capable of executing at scale. We continue to maintain our discipline on price and value. We will also continue to actively pursue adjacencies and inorganic growth utilizing SGH's strong balance sheet. I now hand you to Richard to run through the financials.

Speaker #2: The outlook for energy also remains supportive. Inorganic activity is a key pillar of our growth ambition. In FY26, we pursued BlueScope. We identified the opportunity, brought in a partner to put the acquisition financing in place, and delivered it.

Speaker #2: That is what SGH is capable of executing at scale. We continue to maintain our discipline on price and value. We will also continue to actively pursue adjacencies and inorganic growth, utilizing SGH's strong balance sheet.

Speaker #2: Now, I'll hand it to Richard to run through the financials.

Richard Richards: Thank you, Ryan, and good morning. SGH's capital allocation model is designed to maximize long-term sustainable value creation, compounding disciplined investment into earnings growth and TSR outperformance. We manage our capital structure to balance agility and resilience while using leverage where appropriate to enhance return on equity. Capital is allocated against clear criteria that cover industry, scope, scale, market position, and risk-adjusted return hurdles. Our businesses should deliver CPI plus growth over the medium term, with operating leverage driving earnings expansion above that level. At SGH, disciplined capital allocation and our inorganic M&A focus provides further upside towards our growth ambitions. We have a strong preference for highly cash generative businesses that produce consistent free cash flow to service debt, enhance return on equity, fund stable and growing dividends, and invest to support future growth.

Speaker #1: Thank you, Brian, and good morning. SGH's capital allocation model is designed to maximize long-term sustainable value creation, compounding disciplined investment into earnings growth and TSR outperformance.

Speaker #1: We manage our capital structure to balance agility and resilience, while using leverage, where appropriate, to enhance return on equity. Capital is allocated against clear criteria that cover industry, scope, scale, market position, and risk-adjusted return hurdles.

Speaker #1: Our businesses should deliver CPI-plus growth over the medium term, with operating leverage driving earnings expansion above that level. At SGH, disciplined capital allocation and our inorganic M&A focus provide further upside toward our growth ambitions.

Speaker #1: We have a strong preference for highly cash-generative businesses that produce consistent free cash flow to service debt, enhance return on equity, fund stable and growing dividends, and invest to support future growth.

Richard Richards: FY2026 reflects the capital allocation model working as intended, delivering strong cash conversion, reducing net debt by AUD 515 million, deleveraging to 1.76 times, increasing the fully franked dividend, and enabling an on-market buyback of up to AUD 500 million commencing with these results. Slide 22. SGH delivered a resilient result for the year, achieving earnings growth in line with guidance, margin expansion, and 99% EBITDA cash conversion. Revenue of AUD 10.6 billion was 2% lower, with 5% growth at Boral and 6% growth in support sales at WesTrac, offset by the normalization of capital sales at WesTrac and 3% lower revenue at Coates. We delivered a 3% reduction in expenses, reflecting SGH's characteristic disciplined cost management. Coupled with an improved sales mix, EBIT and EBITDA margins expanded, delivering 2% higher EBITDA of AUD 2.1 billion and 1% higher EBIT of AUD 1.6 billion.

Speaker #1: FY26 reflects the capital allocation model working as intended, delivering strong cash conversion, reducing net debt by $515 million, deleveraging to 1.76 times, increasing the fully-franked dividend, and enabling an on-market buyback of up to $500 million commencing with these results.

Speaker #1: Slide 22. SGH delivered a resilient result for the year, achieving earnings growth in line with guidance, margin expansion, and 99% EBITDA cash conversion. Revenue of $10.6 billion was 2% lower, with 5% growth at Borrow and 6% growth in support sales at Westrack, offset by the normalization of capital sales at Westrack, and 3% lower revenue at COTES.

Speaker #1: We delivered a 3% reduction in expenses, reflecting SGH's characteristic disciplined cost management. Coupled with an improved sales mix, EBIT and EBITDA margins expanded, delivering 2% higher EBITDA of $2.1 billion and 1% higher EBIT of $1.6 billion.

Richard Richards: SGH share of results from equity accounted investees declined AUD 39 million on lower contributions from Beach and Southern Cross. Depreciation and amortization rose 4%, predominantly due to the network investment program that began in FY2025. Despite an increasing rate environment, net finance expense of AUD 299 million was down 6%, reflecting a reduction in average net debt for the year, supported by a higher percentage of fixed-rate debt. The underlying tax expense of AUD 332 million was up 13%, driven by higher taxable earnings from controlled entities. Underlying NPAT of AUD 920 million was broadly flat on the prior year, while statutory NPAT rose 32% to AUD 689 million, reflecting substantially lower significant items. On a continuing operations basis, statutory NPAT of AUD 655 million was up 35%. Slide 23.

Speaker #1: SGH's share of results from equity-accounted investees declined by $39 million, on lower contributions from Beach and Southern Cross. Depreciation and amortization rose 4%, predominantly due to the network investment program that began in FY25.

Speaker #1: Despite an increasing rate environment, net finance expense of $299 million was down 6%, reflecting a reduction in average net debt for the year, supported by a higher percentage of fixed-rate debt.

Speaker #1: The underlying tax expense of $332 million was up 13%, driven by higher taxable earnings from controlled entities. Underlying NPAT of $920 million was broadly flat on the prior year, while statutory NPAT rose 32% to $689 million, reflecting substantially lower significant items.

Speaker #1: On a continuing operations basis, statutory NPAT of $655 million was up 35%. Slide 23. SGH's statutory result includes $315 million of pre-tax significant items.

Richard Richards: SGH's statutory result includes AUD 315 million of pre-tax significant items, primarily driven by AUD 273 million mark-to-mark impairment of our investment in Beach and Southern Cross Media based on their closing share price at 30 June. Other notable pre-tax significant items include SGH's AUD 29 million share of significant items recognized by Beach and Southern Cross, AUD 16 million of transformation and restructuring costs, partially offset by AUD 5 million of fair value adjustments, largely arising from the acquisition of Boral. The tax benefit attributable to significant items was AUD 84 million. This includes AUD 34 million benefit on discontinued operations, reflecting the release of a tax provision following the resolution of historical tax positions in Boral's divested North American businesses. Combined, these significant items reduced after-tax statutory earnings by AUD 231 million, compared to AUD 401 million reduction in the prior year. Slide 24.

Speaker #1: Primarily driven by a $273 million mark-to-market impairment of our investment in Beach and Southern Cross Media, based on their closing share price at 30 June.

Speaker #1: Other notable pre-tax significant items include SGH’s $29 million share of significant items recognized by Beach and Southern Cross, $16 million of transformation and restructuring costs, partially offset by $5 million of fair value adjustments, largely arising from the acquisition of Borrow.

Speaker #1: The tax benefit attributable to significant items was $84 million. This includes a $34 million benefit on discontinued operations, reflecting the release of a tax provision following the resolution of historical tax positions in Borrow's divested North American businesses.

Speaker #1: Combined, these significant items reduced after-tax statutory earnings by $231 million, compared to a $401 million reduction in the prior year. Slide 24. Underlying operating cash flow for the year increased by $121 million to $2.1 billion, with 99% EBITDA cash conversion, up from 95% in the prior year, and in line with our historical leverage.

Richard Richards: Underlying operating cash flow for the year increased by AUD 121 million to AUD 2.1 billion, with 99% EBITDA cash conversion, up from 95% in the prior year, and in line with our historical average. WesTrac's underlying operating cash flow of AUD 831 million converted 116% of EBITDA, driven by the realization of the working capital investments. New machine inventory was lower as major customer deliveries were fulfilled, with parts inventory reduced through optimization and improved turn times. Boral delivered operating cash flow of AUD 779 million, largely driven by earnings growth, which converted fully to cash on broadly stable working capital. Coates generated AUD 427 million of operating cash, maintaining a strong 91% conversion on the lower earnings base. Net interest and other finance costs paid decreased by AUD 36 million to AUD 281 million, reflecting the reduction in net debt achieved during the year.

Speaker #1: Westrack's underlying operating cash flow of $831 million converted 116% of EBITDA, driven by the realization of the working capital investments. New machine inventory was lower, as major customer deliveries were fulfilled, with parts inventory reduced through optimization and improved turn times.

Speaker #1: Borrow delivered operating cash flow of $779 million, largely driven by earnings growth, which converted fully to cash on broadly stable working capital. COTES generated $427 million of operating cash, maintaining a strong 91% conversion on the lower earnings base.

Speaker #1: Net interest and other finance costs paid decreased by $36 million, to $281 million, reflecting the reduction in net debt achieved during the year. Net income tax paid rose by $89 million, to $292 million, primarily reflecting the higher taxable earnings from controlled entities, with the prior year also benefiting from the foreign tax refunds received by Borrow.

Richard Richards: Net income tax paid rose by AUD 89 million to AUD 292 million, primarily reflecting the higher taxable earnings from controlled entities, with the prior year also benefiting from the foreign tax refunds received by Boral. Net investing cash outflows of AUD 706 million were up AUD 28 million, reflecting ongoing development CapEx for Crux, quarry acquisitions by Boral, and an increasing fleet investment at Coates. Net financing cash outflows of AUD 725 million included AUD 436 million in net repayment of borrowings and lease principal, AUD 261 million in ordinary dividends paid, reflecting the higher total dividends of AUD 0.64 per share. Closing net debt reduced by AUD 515 million to AUD 3.7 billion. Slide 25. SGH's net assets increased by AUD 426 million to AUD 5.2 billion at 30 June, largely referable to the increase in oil and gas assets and property, plant, and equipment, partially offset by decreases in inventories and equity accounted investments.

Speaker #1: Net investing cash outflows of $706 million were up $28 million, reflecting ongoing development capex for Crux, quarry acquisitions by BORAL, and an increasing fleet investment at COTES.

Speaker #1: Net financing cash outflows of $725 million included $436 million in net repayment of borrowings and lease principal, and $261 million in ordinary dividends paid, reflecting the higher total dividends of 64 cents per share.

Speaker #1: Closing net debt reduced by $515 million to $3.7 billion. Slide 25. SGH's net assets increased by $426 million to $5.2 billion at 30 June, largely referable to the increase in oil and gas assets and property, plant and equipment, partially offset by decreases in inventories and equity-accounted investments.

Richard Richards: Oil and gas assets increased by AUD 228 million, reflecting the ongoing development of Crux, with the platform substructure and topside installed during the year. Property, plant, and equipment increased by AUD 156 million, driven by quarry, batch plant, and land acquisitions at Boral, and continued investment in heavy mobile equipment to support improved operating efficiency. The AUD 326 million decrease in inventory was predominantly driven by WesTrac, where new machine inventory reduced as large customer deliveries were fulfilled and parts inventory was optimized with inventory turns improving in both dealerships. The AUD 272 million decrease in investment largely reflects the mark-to-mark impairment of Beach and Southern Cross Media, recognized as significant items, together with distributions and returns of capital received from China Media Fund. Deferred income reduced by AUD 125 million, reflecting the level of new machine deliveries completed by WesTrac during the year.

Speaker #1: Oil and gas assets increased by $228 million, reflecting the ongoing development of Crux, with the platform substructure and topside installed during the year. Property, plant, and equipment increased by $156 million, driven by quarry, batch plant, and land acquisitions at Borrow, and continued investment in heavy mobile equipment to support improved operating efficiency.

Speaker #1: The $326 million decrease in inventory was predominantly driven by Westrack, where new machine inventory reduced as large customer deliveries were fulfilled, and parts inventory was optimized, with inventory turns improving in both dealerships.

Speaker #1: The $272 million decrease in investment largely reflects the mark-to-market impairment of Beach and Southern Cross Media, recognized as significant items, together with distributions and returns of capital received from China Media Fund.

Speaker #1: Deferred income reduced by $125 million, reflecting the level of new machine deliveries completed by Westrack during the year. The combined impact of these items, along with other lesser balance sheet movements, resulted in net debt of $3.7 billion, excluding leases, representing a 12% decrease on June 25 levels.

Richard Richards: The combined impact of these items, along with other lesser balance of sheet movements, resulted in net debt of AUD 3.7 billion excluding leases, representing a 12% decrease on 25 June levels. Slide 26. Adjusting for the mark to market on debt-related derivatives, SGH's adjusted net debt to EBITDA or leverage was 1.76x at 30 June. Adjusted net debt of AUD 3.7 billion was down 10%. During the year, SGH repaid the maturing USPP tranches in Boral and WesTrac, and extended SFA Facility tranches, leaving no material corporate facility maturities until FY30. These initiatives diversified our funding base and extended duration, with the level of support from new and existing lenders reflecting our strong balance sheet, earnings profile, and investment-grade credit metrics. At 30 June, 68% of SGH's drawn debt was fixed at an average rate of 5%.

Speaker #1: Slide 26. Adjusting for the mark-to-market on debt-related derivatives, SGH's adjusted net debt to EBITDA, or leverage, was 1.76 times at 30 June. Adjusted net debt of $3.7 billion was down 10%.

Speaker #1: During the year, SGH repaid the maturing USPP tranches in Borrow and Westrack and extended SFA facility tranches, leaving no material corporate facility maturities until FY30.

Speaker #1: These initiatives diversified our funding base and extended duration, with the level of support from new and existing lenders reflecting our strong balance sheet, earnings profile, and investment-grade credit metrics.

Speaker #1: As of 30 June, 68% of SGH's drawn debt was fixed at an average rate of 5%. SGH's effective borrowing cost was 5.6%, with a weighted average facility maturity of 4.1 years.

Richard Richards: SGH's effective borrowing cost was 5.6%, with a weighted average facility maturity of 4.1 years. Available liquidity of approximately AUD 2 billion included AUD 575 million of uncommitted. In addition, we hold approximately AUD 7.8 billion in letters of support across five lenders, providing financial capacity for growth. This balance sheet strength and discipline capital allocation supports the on-market buyback of up to AUD 500 million announced in June, commencing with this result. I will now hand you back to Ryan.

Speaker #1: Available liquidity of approximately $2 billion included $575 million of uncommitted. In addition, we hold approximately $7.8 billion in letters of support across five lenders, providing financial capacity for growth.

Speaker #1: This balance sheet strength and disciplined capital allocation supports the on-market buyback of up to $500 million and expires in June, commencing with this result.

Speaker #1: I will now hand you back to Ryan.

Ryan Stokes: Thank you, Richard. Slide 28. FY26 was a year of consistent delivery, with earnings growth in line with guidance. Our strong operating cash flow reduced leverage to 1.8x, enabling investments for growth. In FY27, our priorities are centered on relentless operating, building on the disciplines that have delivered this result. In sales execution, we are focused on higher participation and conversion across every business while maintaining pricing discipline. We are driving operational execution with a focus on operating leverage and scaling AI for value. We will continue to allocate capital with discipline to support our businesses and drive the next leg of growth. For FY27, we expect to deliver flat to low single-digit EBIT growth. Thanks for joining us this morning. We will now take questions.

Speaker #2: Thank you, Richard. Slide 28: FY26 will be the year of consistent delivery, with earnings growth in line with guidance. Our strong operating cash flow reduced leverage to 1.8 times, enabling investment for growth.

Speaker #2: In FY27, our priorities are centered on relentless operating, building on the disciplines that have delivered this result. In sales execution, we are focused on higher participation and conversion across every business, while maintaining pricing discipline.

Speaker #2: We are driving operational execution with a focus on operating leverage and scaling AI for value. We will continue to allocate capital with discipline to support our businesses and drive the next leg of growth.

Speaker #2: For FY27, we expect to deliver flat to low single-digit EBIT growth. Thank you for joining us this morning. We will now take questions.

Operator: Thank you. If you wish to ask a question, you will need to press the star key followed by the number 1 on your telephone keypad. Your first question comes from Ramoun Lazar with Jefferies. Please go ahead.

Speaker #3: Thank you. If you wish to ask a question, you'll need to press the star key, followed by the number 1, on your telephone keypad.

Speaker #3: Your first question comes from Ramon Lazar with Jefferies. Please go ahead.

Ramoun Lazar: Good morning, Ryan. Good morning, Richard. Just a couple from me. Maybe if we start with WesTrac. You pointed to a further moderation in capital sales in 2027. Maybe can you provide us with a range like you did this time last year? Then maybe also, how do you see the phasing of those capital sales beyond 2027?

Speaker #4: Good morning, Ryan. Good morning, Richard. Just a couple for me—maybe if we start with Westrac. You pointed to a further moderation in capital sales in 2027.

Speaker #4: Maybe can you provide us with a range, like you did this time last year? And then, also, how do you see the phasing of those capital sales beyond ’27?

Ryan Stokes: Yeah. So I think, we've spoken for a period of time around that notion of what the kind of through-the-cycle capital sales kind of volume, and it's probably where that, I think we've said 1.6-ish, 1.6, 1.8, and where we are now is pretty consistent with that. We think that's broadly consistent for 2027. The longer-term outlook, I think from our perspective, if we're looking at where we do get a bit of visibility to customer investment over that medium-term process, it's a reasonably robust pipeline and certainly stronger than we've seen the last few years. So we are more confident in that opportunity set going into 2028, 2029, and beyond. So I think that's where we're seeing expansion projects, reinvestment, and fleet renewal starting to play through in that context.

Speaker #2: Yeah. So I think we've spoken for a period of time around that notion of what's the kind of through-the-cycle capital sales kind of volume, and it's probably where—I think we said $1.6-ish, $1.6, $1.8—and where we are now is pretty consistent with that.

Speaker #2: We think that's broadly consistent for '27. The longer-term outlook, I think from our perspective, if we're looking out, we do get a bit of visibility to customer investment over that medium-term process.

Speaker #2: It's a reasonably robust pipeline, certainly stronger than we've seen the last few years. So we are more confident in that opportunity set going into '28, '29, and beyond.

Speaker #2: So I think that's where we're seeing expansion projects, reinvestment, and fleet renewal starting to play through in that context. So I think that's where we'd expect a bit of a stronger dynamic from a capital sales standpoint, certainly in the opportunity set.

Ryan Stokes: So I think that's where we'd expect a bit of a stronger dynamic from a capital sale, certainly in the opportunity set.

Ramoun Lazar: Okay, great. Just one other one on WesTrac, just around the pricing and how, I guess, we should be thinking about what that pricing change looks like into the H1 for parts.

Speaker #4: Okay, great. And just one other one on Westrac, just around the pricing and how you're, how, I guess, we should be thinking about what that pricing change looks like into the first half for parts?

Ryan Stokes: Yeah, that's probably a relevant factor playing in and clearly, that currency movement in the prior half and certainly through the period that was calculated has played into that result. I'd say that's kind of a mid-single digit negative movement into the half, and we are competing against that. That's probably a bit of a factor when you look at the FY27 guidance. In our view, the underlying demand from customers is there, the demand from a parts volume and PEX is there. It's that pricing factor which plays through, and that's essentially a currency translation in H1.

Speaker #2: Yeah, that's probably a relevant factor playing in, and clearly, that currency movement in the prior half, and certainly through the period that was calculated, has played into that result.

Speaker #2: And I'd say that's kind of a mid-single-digit negative movement into the half, and we are comping against that. That's probably a bit of a factor when you look at the FY27 guidance.

Speaker #2: In our view, the underlying demand from customers is there—the demand from a parts volume and PEX is there. It's that pricing factor which plays through, and that's essentially a currency translation in the first half.

Ramoun Lazar: Okay, great. Just one other one, final one, sorry, Ryan, from me. Just on capital allocation, just your comments, I guess, this morning around the discipline. Any updates on thinking sectors? Investor Day, you pointed to potentially looking at offshore opportunities. I mean, how has that evolved? Are you finding any potential targets? It'd be great to get a bit of an update on that.

Speaker #4: Okay, great. And just one other, final one. So, Ryan, for me, just on capital allocation—just your comments, I guess, this morning around the discipline. Any updates on thinking sectors? In your investor data, you pointed to potentially looking at offshore opportunities.

Speaker #4: I mean, how has that evolved? Are you finding any potential targets? It'd be great to get a bit of an update on that.

Ryan Stokes: Yeah. We are a little more transparent than many others as far as outlining what we look at and why. I think it's fair to say our criteria is consistent with what we said at the Investor Day. Yes, we may look overseas, but we are still of the view that that risk equation hasn't changed from when we had an Australia sole focus, if you like. It's just we think that that capital allocation risk here is slightly elevated with policy stance, et cetera. So I think that's a bit of a framing as to why we're broadening a little bit. But our predisposition is investing in Australia. We're very conscious of our operating model playing well here and the ability to take industrial business, if you like, and put that alongside what we have and fit within that SGH operating model.

Speaker #2: Yeah, we are a little more transparent than many others as far as outlining what we look at. And I think it's fair to say our criteria is consistent with what we set out in the investor data.

Speaker #2: Yes, we may look overseas, but we are still of the view that that risk equation hasn't changed from when we had an Australia-sole focus, if you like.

Speaker #2: It's just that we think the capital allocation risk here is slightly elevated with the policy stance, etc. So I think that's a bit of framing as to why we're broadening a little bit.

Speaker #2: But our predisposition, as investors in Australia, we're very conscious of our operating model playing well here, and the ability to take an industrial business, if you like, and put that alongside what we have, and fit within that SGH operating model.

Ryan Stokes: When we outlined that at the Investor Day, we said it was industrials and degree energy, but predominantly industrials, where we see strong sectoral demand, and that value and performance opportunity set. So we need to believe that we can add value. We also need to believe there is value to create. I think that's a real key for us delivering our medium-term ambition is that combination of the organic performance with M&A. We think that's a unique attribute of the SGH model, and we have demonstrated that performance with Boral. We certainly see if we're maintaining that same level of discipline around the opportunity set, and we are focused on driving a return on capital and the 10% to 15% objective, that would drive returns for shareholders.

Speaker #2: So I'd say, when we outlined that at the investor day, we said it was industrials and, to a degree, energy, but predominantly industrials, where we see strong sectoral demand and that value and performance opportunity set.

Speaker #2: So, we need to believe that we can add value. We also need to believe that there is value to create. I think that's a real key for us delivering our medium-term ambition: that combination of the organic performance with M&A.

Speaker #2: And we think that's a unique attribute of the SGH model, and we have demonstrated that performance with borrow. We certainly see, if we're maintaining that same level of discipline around the opportunity set and we are focused on driving a return to capital and the 10–15% objective.

Speaker #2: There would be a return for shareholders, but that's something we are constantly evaluating. We don't expect to pivot from that discipline; we're just continuing to explore the opportunities that are out there.

Ryan Stokes: But that's something we are constantly evaluating, and we don't expect us to pivot from that discipline until we just continue to explore the opportunities that are out there. It's just going to be a function of where we see that opportunity to create value and drive performance growth in a situation.

Speaker #2: It's just going to be a function of where we see that opportunity to create value and drive performance growth in a situation.

Ramoun Lazar: Okay, got it. Thank you. We'll leave you there.

Speaker #4: Okay, got it. Thank you. We'll leave it there.

Ryan Stokes: Thank you. Thanks.

Speaker #2: Thank you. Thanks.

Operator: Thank you. Your next question comes from Nick Dage with RBC. Please go ahead.

Speaker #3: Thank you. Your next question comes from Nick Dace with RBC. Please, go ahead.

Nick Dage: Thank you very much. Thanks, Ryan, Richard, for your time. My first question is just around Coates. I did notice the utilization did tick up to 61% in 2026, 59% in the year prior, yet earnings were down about 6.6% growth, which just suggests to me a mix disbenefit during the period. Could you just flesh that out a little bit

Speaker #4: Oh, thank you very much. Thanks, Ryan. Richard, for your time. I think just my first question is just around coats. I did notice that utilization did tick up to 61% in '26 from 59% in the year prior.

Speaker #4: Yet earnings were down about 6.6%. Growth, which just suggests to me a mixed benefit during the period. Could you just flesh that out a little bit further for us, please?

Ryan Stokes: Yeah

Ryan Stokes: Yeah.

Nick Dage: further for us, please?

Nick Dage: —further for us, please?

Ryan Stokes: Well, it is a good pickup. Utilization, there are two measures or two key measures for us that drive ultimate returns. I mean, the time one is an important one because it shows just how active the fleet are. That is a good look through. The key one, though, in driving our returns is the financial utilization. So if you look at, for us, the financial utilization stepped down, which to be frank, you could argue mixed, but in reality, it is probably more a function of a more competitive market and price. That has been one of the elements we spoke about in, I think, the H1 results, and we are very conscious of trying to sustain and drive price. It is a function of balancing a number of factors in a more competitive market. That is the short answer to that result.

Speaker #2: Yes. And I mean, it's a good pickup. Utilization—there are two measures that drive, or two key measures for us that drive ultimate returns.

Speaker #2: I mean, the time one is an important one because it shows just how active the fleet are. That's a good look through it. The key one, though, in driving our returns is the financial utilization.

Speaker #2: So if you look at, for us, the financial utilization step-down—which, to be frank, you could argue is mixed—but in reality, it's probably more a function of a more competitive market and price.

Speaker #2: That has been one of the elements we spoke about, I think, in the half-year results, and we are very conscious of trying to sustain and drive price.

Speaker #2: But it's a function of balancing a number of factors in a more competitive market. That's the short answer to that result. But the pleasing factor is that the utilization is there.

Ryan Stokes: The pleasing factor is that the utilization is there, our fleet is growing. We see opportunities going forward, and we believe there is more we need to do to drive that sales execution to capture price and ultimately continue to drive margin and performance for the business. So I would say part of that is market, but I would not frankly say that is all market. I think we have got a lot to do in how we execute that performance within Coates. It is a quality business, and we are market leader. There are factors we need to execute more effectively, and that is a big focus for us in 2027.

Speaker #2: Our fleet is growing. We see opportunities going forward, and we believe there’s more we need to do to drive that sales execution to capture price and, ultimately, continue to drive margin and performance for the business.

Speaker #2: So I'd say part of that's market, but I wouldn't, frankly, say that's all market. I think we've got a lot to do in how we execute that performance within Coats.

Speaker #2: And it is a quality business, and we are the market leader. But there are factors where we need to execute more effectively, and that's a big focus for us in '27.

Nick Dage: Got it. Thank you. Just separately, just on the guidance, obviously my sense is that there is a little bit of noise in there with foreign exchange's influence. Is there a view towards possibly in the future providing guidance on a constant currency basis just so that we can get a better sense for the underlying business? Or is the business' preference to continue to provide guidance on the basis that you have done so historically?

Speaker #4: Got it, thank you. And just separately, on the guidance—obviously, my sense is that there's a little bit of noise in there with foreign exchange's influence. Is there a view towards possibly, in the future, providing guidance on a constant currency basis, just so that we can get a better sense for the underlying business?

Speaker #4: Or is the business's preference to continue to provide guidance on the basis that you've done so historically?

Ryan Stokes: Well, I mean, to be honest, we do it on a constant currency basis because it is translated back into AUD, but it is just difficult to unpick that element. I understand the core of the question. We try and provide some visibility to the overall WesTrac parts volume, and it is a frustration for us, in particular the team, because what is a unit of parts if you sell a bolt or a large item? You get a lot of variance play through in this whole unitization of parts volume. So it is not as easy to get that pure currency translation. We can provide some context to the currency dollar impact, which I think is probably more relevant to you in that context. Richard add more of that.

Speaker #2: Well, I mean, to be honest, we do, on a constant currency basis, because it is translated back into Aussie dollars. But it's just difficult to unpick that element.

Speaker #2: I understand the core of your question. We try and provide some visibility to the overall West track parts volume, and it’s a frustration for us, in particular for the team, because what’s a unit of parts? If you’re talking about a bolt or a large item, you get a lot of variance playing through in this whole unitization of parts volume.

Speaker #2: So it isn't as easy to get that pure currency translation. And we can provide some context to the currency dollar impact, which I think is probably more relevant to you in that context.

Speaker #2: And I mean, Richard, could you add more on that?

Richard Richards: If you think about roughly AUD 800 million of parts in WesTrac, and you are talking about effectively a 5% to 6% parts price decrease, the retranslation of those parts and components delivers roughly an AUD 40 million hit, effectively day one, so on 1 July. Then on top of that, if you think about the part sales during the year, other than the revaluation, effectively the 5% to 6% decrease in revenue translates through to another approximately AUD 40 million drop, assuming effectively parts demand ceteris paribus.

Speaker #5: So if you think about roughly $800 million of parts in West track, and you're talking about effectively a 5 to 6 percent parts price decrease, the retranslation of those parts and components delivers roughly a $40-odd million hit effectively day one.

Speaker #5: So, on 1 July. And then, on top of that, if you think about the parts sales during the year, other than the revaluation, effectively the 5 to 6 percent decrease in revenue translates through to another approximately $40 million drop, assuming effectively parts demand serves as paribus.

Ryan Stokes: Where we get to is that just the pure currency impact flowing through WesTrac's result, effectively in 2027, will be approximately AUD 80 million.

Speaker #5: So where we get to is that just the pure currency impact flowing through West Track's result, effectively in '27, will be approximately $80 million.

Nick Dage: That's very helpful. Thank you very much for taking my questions. Cheers. Thank you.

Speaker #4: That's very helpful. Thank you very much for taking my questions, Judith. Thank you.

Operator: Thank you. Your next question comes from Nathan Riley with UBS. Please go ahead.

Speaker #3: Thank you. Your next question comes from Nathan Riley with UBS. Please go ahead.

Nathan Riley: Thank you. While we're on the topic of that FX headwinds, those prices are set every 6 months. Have you assumed flat or consistent FX into H2?

Nathan Reilly: Thank you. While we're on the topic of that FX headwinds, those prices are set every 6 months. Have you assumed flat or consistent FX into H2?

Speaker #6: Thank you. So, while we're on the topic of FX headwinds, those prices are set every six months. Have you assumed flat or consistent FX into the second half?

Ryan Stokes: Well, we've learned a long time ago, try not to budget that or forecast that too well because a lot plays through. I mean, the difficult part is if you look at where we started 1 July and you had to calculate then, you wouldn't have had that currency change through. So it's a difficult element to forecast, but our assumption is that effectively, a zero outcome in H2. So for context, that's where we think about that. It's just a difficult dynamic to have to assume that we get or try to forecast what that might be. Short answer, we try and avoid that and just assume it's consistent. So there will be a movement in H2. Where that is, that'll be a function of currency through the period.

Speaker #2: We've learned a long time ago, try not to budget that or forecast that too well because a lot plays through. And, I mean, the difficult part is if you look at where we started July 1 and you had to calculate then, you wouldn't have had that currency change through.

Speaker #2: So it's a difficult element to forecast. But our assumption is, yeah, that it's effectively a zero outcome in half two, type. So for context, that's where we think about that.

Speaker #2: It's just a difficult dynamic to have to assume that we get, or try to forecast, what that might be. So, yeah, short answer—we try and avoid that.

Speaker #2: And just to assume it's consistent. So, there will be a movement in half two. Where that is will be a function of currency through the period.

Ryan Stokes: The other factor which we, again, don't forecast is more likely than not. I shouldn't say more likely, but the usual movements in a price reval or the underlying movement in price usually occurs on a calendar year. That's the other factor that may play through in that H2, which we just don't have visibility of as we sit today.

Speaker #2: The other factor, which we again don't forecast, is more likely than not—oh, I shouldn't say more likely, but the usual movements in a price reval, or the underlying movement in price, usually occurs on a calendar year.

Speaker #2: So, that's the other factor that might play through in that second half, which we just don't have visibility of as we sit today.

Nathan Riley: Okay. Thank you. Can I also just ask about Coates? Can we get a bit of an update just in terms of regional performance, just around the states, just in terms of utilization trends, but also if you could just comment on how you're seeing competition in those states and potentially also just around asset classes as well?

Nathan Reilly: Okay. Thank you. Can I also just ask about Coates? Can we get a bit of an update just in terms of regional performance, just around the states, just in terms of utilization trends, but also if you could just comment on how you're seeing competition in those states and potentially also just around asset classes as well?

Speaker #4: Okay, thank you. Can I also just ask about Coates? Can we get a bit of an update just in terms of regional performance—just around the states, in terms of utilization trends? And also, if you could just comment on how you're seeing competition in those states, and potentially also just around asset classes as well.

Ryan Stokes: Yeah. New South Wales has been a pretty consistent and robust market. I think we've seen some projects roll off, delays of others, but that's been broadly consistent through the year. WA is probably slightly up, but not materially. I think there's a bit of activity across that resource side we play into, but from our perspective, we're needing to grow into that Southwest WA market, and that's something we're focused on. But WA's been a decent market for us or the West region. North has been more challenging. I think there's a lot of gear that's left other environments, particularly South, and ended up in that Queensland region, and that's, I think, yet to see a big step up in activity. We do know and expect that to come through pipeline, suddenly look a bit better there.

Speaker #2: Yeah, New South Wales has been a pretty consistent and robust market. I think we've seen some projects roll off and delays of others, but that's been broadly consistent through the year.

Speaker #2: WA is probably slightly up, but not materially. I think there's a bit of activity across that resources side we play into, but from our perspective, we're needing to grow into that southwest WA market.

Speaker #2: And that's something we're focused on, but WA has been a decent market for us, or the West region. The North has been more challenging. I think there's a lot of gear that's left other environments, particularly the South, and ended up in that Queensland region.

Speaker #2: And that’s, I think, yet to see a big step up in activity. We do know and expect that to come through pipeline and, certainly, look a bit better there.

Ryan Stokes: The interesting thing in South for us is the Victorian market actually has been pretty consistent, but that's come down quite a bit. So that still hasn't stepped up, but it's consistent, but we're seeing a bit more activity in SA and Tasmania. So utilization, I think for us, is strongest in West and East, and there's opportunity for us to grow in Queensland and South. It's pretty consistent across the mix of fleet.

Speaker #2: And the interesting thing in the South for us is the Victorian market actually has been pretty consistent, but that's come down quite a bit. So that still hasn't stepped up, but it's consistent. We're seeing a bit more activity in SA and Tasmania.

Speaker #2: So utilization, I think, for us is strongest in the West and East. And there's opportunity for us to grow in Queensland and the South. That's— and it's pretty consistent across the mix of fleet.

Nathan Riley: Got it. Just in terms of that more competitive environment that you flagged earlier, is that specific to regions, or are you seeing that more in particular asset classes?

Nathan Reilly: Got it. Just in terms of that more competitive environment that you flagged earlier, is that specific to regions, or are you seeing that more in particular asset classes?

Speaker #4: Got it. And just in terms of that more competitive environment that you sort of flagged earlier, is that specific to regions, or are you seeing that more in particular asset classes?

Ryan Stokes: It's more pronounced in regions. They're definitely more pronounced in areas. We're seeing the harder market for us, the more challenging environment's been in North, in Queensland, where it just feels like there's excess gear waiting for projects that have been delayed. That's playing through, so we're working hard to hold that. Similarly, South is, as I said, it's consistent, but it's still soft. Overall, that price dynamic is playing through in other markets, but it's just the nature of just being more competitive. We've worked hard to drive utilization up and try to sustain that price. I'm very focused on how we actually push price as a key lever of performance in 2027. It's without doubt the biggest opportunity we have is to drive that price and get that play through in margin, and very focused on that.

Speaker #2: It's more pronounced in regions. It's definitely more pronounced in areas, and we're seeing that the harder market for us, the more challenging environment, is in North and Queensland, where it just feels like there's excess gear.

Speaker #2: We're waiting for projects that have been delayed, and that's playing through. So we're working hard to hold that. And similarly, South is consistent, but it's still soft.

Speaker #2: But overall, yeah, that price dynamic is playing through in other markets, but it's just the nature of being more competitive. But we've worked hard to drive utilization up and try to sustain that price.

Speaker #2: I'm very focused on how we actually push price as a key lever of performance in '27. Without doubt, the biggest opportunity we have is to drive that price and get that play through in margin.

Speaker #2: And we're very focused on that. But I think at the same time, the business has demonstrated that resilience and the ability to continue to optimize their cost structure.

Ryan Stokes: I think at the same time, the business has demonstrated that resilience and ability to continue to optimize our cost structure, and sustain what we think is a strong EBIT margin. We're definitely focused on how we can actually improve that operating leverage and returns.

Speaker #2: And to sustain what we think is a strong EBIT margin, but we're definitely focused on how we can actually improve that operating leverage and returns.

Nathan Riley: Perfect. Thank you.

Nathan Reilly: Perfect. Thank you.

Speaker #4: Perfect. Thank you.

Operator: Thank you. Your next question comes from Keith Chau with MST Marquee. Please go ahead. Pardon me, Keith. Your line may be on mute.

Speaker #3: Thank you. Your next question comes from Keith Chow with MST Marquee. Please go ahead. Pardon me, Keith, you were on mute.

Keith Chau: Oh, hi there. Hi, Ryan. Hi, Richard. Good morning. Thanks for taking my questions. The first one, actually, just a few follow-ups on some of the answers. The first one with respect to the level of WesTrac capital sales or revenues for FY2026. I think, Ryan, in response to Ramon's question, you talked about AUD 1.6 billion to AUD 1.8 billion being the range that is sufficient for FY2027. Just noting that in FY2026, revenue was AUD 1.65 billion. So I just want to understand.

Speaker #5: Oh, hi there. Hi, Ryan. Hi, Richard. Good morning. Thanks for taking my questions. The first one is actually just a few follow-ups on some of the answers.

Speaker #5: The first one, with respect to the level of West Track Capital sales or revenues for FY27—I think, Ryan, in response to Ramon's question, you talked about $1.6 to $1.8 billion being the range.

Speaker #5: That's sufficient for FY27. Just noting that in FY26, revenue was $1.65 billion. So I just want to understand.

Ryan Stokes: Sorry, just to be clear, AUD 1.6 billion to AUD 1.8 billion is what we have referred to in prior conversations around what is a through the cycle lens. We comment around that AUD 1.65 billion is right there and kind of tried to think, just to be clear, guide to 2027 being more consistent with 2026. But no, so that is at that AUD 1.6 billion level, to be precise.

Speaker #2: Sorry, just to be clear, the 1.61—that's what we've referred to in prior conversations around what's the through-the-cycle lens? We comment around that 1.65 is right.

Speaker #2: And kind of tried to think, just to be clear, guide to '27 being more consistent with '26. But no, so that's at that $1.6 level.

Speaker #2: Just to be precise.

Keith Chau: Okay. Thank you. Maybe, Richard, just as a follow-on from that, when you look at deferred income on the balance sheet, at least for us, please tell me if I am incorrect here, but if the deferred income for WesTrac is settling at a trough level, should that be a reasonable indicator that WesTrac sales should be finding a bottom in the near term? Sorry, WesTrac capital sales. Beg your pardon.

Speaker #5: Okay, thank you. And maybe, Richard, just as a follow-on from that: when you look at the third income on the balance sheet — at least for us, and please tell me if I'm incorrect here — but if the third income for WestTrac is settling at a trough level, should that be a reasonable indicator that WestTrac's sales should be finding a bottom in the near term?

Speaker #5: Sorry, West Track Capital Sales. Beg your pardon.

Richard Richards: Yeah. The deferred income is predominantly, effectively deposits on new mining machines. It is not solely. We also run, effectively some MARC contracts. Those contracts are effectively a power by the hour where you bill per hour, you defer the revenue, and then you recognize it when it goes through effectively major service events, which we have done in the last 18 months. So in that context, it is predominantly referable to machine sales, but the MARC contracts also play a part.

Speaker #6: Yeah. The deferred, or the deferred income, is predominantly, effectively, deposits on new mining machines—but it's not solely that. We also run, effectively, some mark contracts, and those contracts are effectively a power-by-the-hour, where you bill per hour, you defer the revenue, and then you recognize it when it goes through, effectively, major service events, which we have done in the last 18 months.

Speaker #6: So in that context, it is predominantly referable to machine sales, but the mark contracts also play a part.

Keith Chau: Okay. Are you able to give us a very broad split of that deferred revenue balance, or is that something that varies over time?

Speaker #5: Okay. And are you able to give us a very broad split of that deferred revenue balance, or is that something that varies over time?

Richard Richards: Well, it does vary over time. I think if you have a look at the financial statements, you will see that effectively the movement in deferred income was about AUD 125 million decrease.

Speaker #6: Look, it does vary over time. I think if you have a look at the financial statements, you'll see that, effectively, the movement in deferred income was about a $125 million decrease.

Keith Chau: Okay. Thank you. Then just going back to Coates' price competition, I think in prior forums, the target at least was to be able to maintain pricing. It certainly seems as though real pricing has fallen for Coates. One of the comments made in the presentation was that the exit run rate out of FY2026 was prices improving. Is that on a real or a nominal basis? So i.e., can the price increases observed at the end of FY2026, is that enough to recover costs?

Speaker #5: Okay, okay, thank you. And then just going back to Coat's price competition, I think in prior forums the target, at least, was to be able to maintain pricing.

Speaker #5: Certainly, it seems as though real pricing has fallen for Coats. One of the comments made in the presentation was that the exit run rate out of FY26 was prices improving.

Speaker #5: Is that on a real or a nominal basis? So, can the price increase as observed at the end of FY26? Is that enough to recover costs?

Ryan Stokes: As far as the outlook for 2027 on price, we are focused on how we can continue to drive that price north. That is a major focus for us. It is the constant balancing act that you have to manage as far as winning activity, balancing duration, and projects and opportunity. But the real focus for us is how we get that price realization up and obviously have that play through in returns. It is a major driver for us, so that operating leverage in the business. If you look at where we are from a time realization perspective, there is room to grow that. But financialization is the key lever for us to drive that return level up, and there is a couple of hundred basis point opportunity there we think we need to execute through 2027 at least.

Speaker #2: Sorry, just so— as far as the outlook for '27 on price, we would focus on how we can continue to drive that price north.

Speaker #2: That is a major focus for us. It's a constant balancing act to have to manage, as far as kind of winning activity, balancing duration, and projects, and opportunity. But the real focus for us is how we get that price realization up and obviously have that play through in returns.

Speaker #2: It is a major driver for us to get that operating leverage in the business. So, if you look at where we are from a year-to-date perspective, there is room to grow that.

Speaker #2: But financialization is the key lever for us to drive that return level up. And there's a couple hundred basis point opportunity there. We think we need to execute through 2027 at least.

Keith Chau: Ryan, would the goal be to get your price increase above cost inflation then? Just putting it simply.

Speaker #5: So Ryan, would the goal be to get your price increase above cost inflation then? Just putting it simply.

Ryan Stokes: Yes, absolutely. That is the focus. I just want to be cautious because I do not think that is necessarily the right way to think about the business, and our ability to manage costs is not purely around price. Price realization will drive the financial return on the fleet. We can still drive cost measures to actually ensure that we have got that same margin through there. So I am just conscious of that is not the only lever around those controls to deal to cost inflation. We have other levers, and we will continue to pursue that. But that price lever will drive that financial return and ultimately should play through in operating leverage.

Speaker #2: Yes. Absolutely. Yeah. Yeah. That is the focus. But and that I think that but I just want to be cautious because I don't think that's necessarily the right way to think about the business in our ability to manage costs.

Speaker #2: It isn't purely about price. While price realization will drive the financial return on the fleet, we can still implement cost measures to ensure that we maintain that sustained margin.

Speaker #2: So, I don't think just being conscious of that is the only kind of lever around those controls to deal with cost inflation. We have other levers, and we'll continue to pursue that.

Speaker #2: But that price lever will drive that financial return, and ultimately should play through in operating leverage.

Keith Chau: Yeah. Thanks, Ryan. I certainly appreciate that one. There are several more moving parts to the business than just pricing a bucket of costs. The last one, and the one that struck me actually outside of the operating businesses is PLDC. It is a development that we have been following for far too long, and longer than we would probably care to admit. But it has been a tricky project in the past. In the presentation, it talked about 20% of the area has been granted some fill approval. So, presumably you are not going to go ahead or the JV partners are not going to go ahead and fill that area without developing it in the future. So is that fill approval a good lead indicator of councils perhaps getting ready to grant some development approvals for that site?

Speaker #5: Yeah, thanks, Ryan. That's certainly appreciated. That one—there's several more moving parts to the business than just pricing a bucket of costs. The last one, and the one that struck me actually outside of the operating businesses, is PLDC.

Speaker #5: It's a development that we've been following for far too long—and longer than we'd probably care to admit. But it's been a tricky project in the past.

Speaker #5: In the presentation, you talked about 20% of the area having been granted fill approvals. So, presumably, you're not going to go ahead, or the JV partners aren't going to go ahead and fill that area without developing it in the future.

Speaker #5: So is that fill approval a good lead indicator of councils perhaps getting ready to grant some development approvals?

Speaker #2: Yeah.

Ryan Stokes: Yeah. You followed, Boral probably been following that journey. It has been a long time. But if you roll back for a lot of that period, that PLDC focus was on a rezoning for residential. Our view is that the employment opportunities, the infrastructure opportunities, and others through industrial are the opportunity set that state government is keen to see and will get behind in that rezoning. Still work to be done around some of that process, and go through all the required steps to get the development approvals in place. But if you think about the concerns you have around lighting, et cetera, our view is the best application there is going to be element on industrial applications, data centers, et cetera, could be well-positioned there. Just for clarity, the area is not prone to flooding. There is no concern there.

Speaker #5: For that side?

Speaker #2: Yeah, those who have probably been following that journey know it has been a long time. But if you roll back, for a lot of that period, that PLDC focus was on a rezoning for residential.

Speaker #2: Our view is that the employment opportunities, the infrastructure opportunities, and others through industrial are the opportunity set that state government is keen to see and will get behind in that rezoning.

Speaker #2: There is still work to be done around some of that process, and we need to go through all the required steps to get the development approvals in place.

Speaker #2: But if you think about the concerns you’ve got around lighting, etc., our view is the best application there is going to be element on industrial applications, data centers, etc.

Speaker #2: Could be well-positioned there. And just for clarity, the area isn't prone to flooding—there's no concern there. It's about how that increase in activity would play into the broader region.

Ryan Stokes: It is how that increase in activity would play into the broader region. But for us, the field is the opportunity, something we want to pursue. We have other companies approaching us proactively and the joint venture around the potential for activity on there. We think it is really well-positioned, just given proximity to core infrastructure and the fact to the large lake and it is pretty good for data centers. We think there is an interesting opportunity there as there are with Waurn Ponds. I guess what we are trying to signal here is as we think about the property, we want to actively drive value through that, and some of these processes may take a period of time. But looking at what is the highest and best use as an owner in that asset, conscious of where we deploy our capital.

Speaker #2: But for us, the PLDC opportunity is something we want to pursue. We've got other companies approaching us proactively, and the joint venture around the potential for applicate activity on there.

Speaker #2: And we think it is really well positioned, just given its proximity to core infrastructure and the fact that it's a large kind of lake, and it's pretty good for data centers.

Speaker #2: So we think there's an interesting opportunity there, as there are with Warm Ponds. I guess what we're trying to signal here is, as we think about the property, we want to actively drive value through that.

Speaker #2: And some of these processes might take a period of time, but looking at what's the highest and best use, as an owner in that asset, we're conscious of where we deploy our capital.

Ryan Stokes: I think they are worthy to think through in that medium-term opportunity set.

Speaker #2: So I think they're worthy to think through in that medium-term opportunity set.

Keith Chau: Okay, that is great. Thanks, Ryan. Thanks, Richard. Appreciate your time.

Speaker #5: Okay, that's great. Thanks, Ryan. Thanks, Richard. Appreciate your time.

Operator: Thank you. Your next question comes from Brooke Campbell-Crawford with Barrenjoey. Please go ahead.

Operator: Thank you. Your next question comes from Brook Campbell-Crawford with Barrenjoey. Please go ahead.

Speaker #1: Thank you. Your next question comes from Brooke Campbell-Crawford with Barron Joey. Please go ahead.

Brook Campbell-Crawford [Director of Research: Yeah, good morning. Thanks for taking my question. First, just on WesTrac in the annual report on the outlook, it notes that market share growth for WesTrac is a focus at the moment. Do you mind providing some numbers on where you think your market share is, and do you have a target on where you hope that to get to over the next couple of years?

Brook Campbell-Crawford: Yeah, good morning. Thanks for taking my question. First, just on WesTrac in the annual report on the outlook, it notes that market share growth for WesTrac is a focus at the moment. Do you mind providing some numbers on where you think your market share is, and do you have a target on where you hope that to get to over the next couple of years?

Speaker #3: Yeah, good morning. Thanks for my question. First, just on WesTrac—in the annual report on the outlook, it notes that market share growth for WesTrac is a focus at the moment.

Speaker #3: Do you mind providing some numbers on where you think your market share is, and do you have a target on where you hope that to get to over the next couple of years?

Ryan Stokes: Yeah. It is a pretty transparent sector if you like, from a market share perspective, the industry, a lot of data as to where you go, what sales you are going to score in territory. We have had some great success in New South Wales in relation to the resource sector, and our share of market is, I think, in the 60% to 70% range, which is a big step up for us over time. That has been a good outcome. WA, we are very focused on driving that share and continue to be above. We want to continue that to be above 50%. Then you get into the construction equipment space, and that depends on size of equipment, et cetera, where in the 30s is where we have traditionally been.

Speaker #2: Yeah, and it's a pretty transparent sector, if you like. From a market share perspective, the industry has a lot of data as to where you go, what sales you're going to score in territory.

Speaker #2: We've had some great success in New South Wales in relation to the resource sector. And our share of the market is, I think, in the 60–70% range, which is a big step up for us over time.

Speaker #2: And that's been a good outcome. WA were very focused on driving that share and continue to want that to be above 50.

Speaker #2: Then you get into the construction equipment space, and that depends on the size of equipment, etc., where in the 30s is kind of where we've traditionally been.

Ryan Stokes: I think the better way to think through the opportunity is really around these big project deliveries and getting that haulage gear in and winning that tender process. That is really a focus for us. So we look more at it from an opportunity set to opportunity set and how do we actually maximize our chance of winning every available major deal that is out there. That is something we spend more time focused on because if you win the deal, it will be a period of time before that will then flow through in your market share. When you are seeing the market share, it is a long time after that activity is secured or lost. So that can be our focal point. According to your question, is how do we increase our share and leverage the product offering and value offering that we have? Yeah, that absolutely is focused.

Speaker #2: I think the better way to think through the opportunity is really around these big project deliveries and getting that haulage gear in, and kind of winning that tender process.

Speaker #2: That's really a focus for us. So we look more at it from an opportunity set to opportunity set, and how do we actually maximize our chance of winning every available major deal that's out there.

Speaker #2: And that's something we, from time to time, focus on, because if you win the deal, it'll be a period of time before that will then flow through in your market share.

Speaker #2: But, so, when you're seeing the market share, it's a long time after that activity is secured or lost. So that's going to be our focal point.

Ryan Stokes: According to your question, is how do we increase our share and leverage the product offering and value offering that we have? Yeah, that absolutely is focused.

Speaker #2: But according to your question, it's how do we increase our share and leverage the product offering and value offering that we have? Yeah, that absolutely is the focus.

Brook Campbell-Crawford [Director of Research: Okay, great. And maybe just a follow-up on M&A. You are being clear on your plans, but I guess just doing larger transformational deals like BlueScope can be tricky, and there is not a huge amount of options out there that I would have thought match your criteria and are large. Not saying there are not some out there, I am sure there are, but just not a lot of options. Just keen to understand, would you consider getting more active on a range of smaller bolt-on deals within your existing segments or adjacencies to drive growth that way? Because there might be much more options out there you can get active and help augment what is lower growth, I guess, organic business.

Brook Campbell-Crawford: Okay, great. And maybe just a follow-up on M&A. You are being clear on your plans, but I guess just doing larger transformational deals like BlueScope can be tricky, and there is not a huge amount of options out there that I would have thought match your criteria and are large. Not saying there are not some out there, I am sure there are, but just not a lot of options. Just keen to understand, would you consider getting more active on a range of smaller bolt-on deals within your existing segments or adjacencies to drive growth that way? Because there might be much more options out there you can get active and help augment what is lower growth, I guess, organic business.

Speaker #5: Okay, great. And maybe just a follow-up on M&A plans. I guess just doing larger, transformational deals like BlueScope can be tricky, and there’s not a huge amount of options out there that I would have thought match your criteria and are large.

Speaker #5: I'm not saying there aren't some out there—I'm sure there are—but just not a lot of options. So, just keen to understand: would you consider getting more active on a range of smaller bolt-on deals, either within your existing segments or adjacencies, to drive growth that way?

Speaker #5: Because there might be many more options out there, you can get active and help sort of augment what's lower growth, I guess, organic business things.

Ryan Stokes: Yeah.

Brook Campbell-Crawford [Director of Research: Thanks.

Brook Campbell-Crawford: Thanks.

Ryan Stokes: Brooke, it is a good question because fundamentally, that is exactly what we do. A lot of time and focus for us is spent talking about the inorganic actions, which is the bigger bolt-ons, if you like, the companies that would sit alongside the companies that we own. So what are those material acquisitions? And we definitely have a focus on those opportunities. At the same time and concurrent, we are looking at supporting our businesses to make investments and enhance their network as well as grow into segments. So we put a lot of capital into Boral, continue to support those opportunities from a network investment where it is going to drive incremental returns. And investing in that network is a really logical opportunity set for us, growing into the right quarry asset, the right concrete asset or in different segments in asphalt or recycling.

Ryan Stokes: Brook, it is a good question because fundamentally, that is exactly what we do. A lot of time and focus for us is spent talking about the inorganic actions, which is the bigger bolt-ons, if you like, the companies that would sit alongside the companies that we own. So what are those material acquisitions? And we definitely have a focus on those opportunities. At the same time and concurrent, we are looking at supporting our businesses to make investments and enhance their network as well as grow into segments. So we put a lot of capital into Boral, continue to support those opportunities from a network investment where it is going to drive incremental returns. And investing in that network is a really logical opportunity set for us, growing into the right quarry asset, the right concrete asset or in different segments in asphalt or recycling.

Speaker #2: Yeah, Brooke, it's a good question because fundamentally that's exactly what we do. And a lot of time and focus for us is spent talking about the inorganic actions, which are the bigger bolt-ons, if you like.

Speaker #2: The companies that would sit alongside the companies that we own. So what are those material acquisitions? And we definitely have a focus on those opportunities.

Speaker #2: At the same time, and concurrently, we are looking at the ability to support our businesses to make investments and enhance their network, as well as grow into segments.

Speaker #2: So, we put a lot of capital into borrowing and continue to support those opportunities from a network investment, where it's going to drive incremental returns.

Speaker #2: And investing in that network is a really logical opportunity set for us. Growing into the right quarry asset, the right concrete asset, or in different segments in asphalt or recycling—that is definitely an area of focus.

Ryan Stokes: That is definitely an area of focus. So we are concurrently doing that. And similarly with Coates, we need to be a bit more assertive in looking at opportunities that we can leverage our operating position and build scale through fleet and network. But you are right. We need to do both, and we are actually looking through that. But to deliver that broad ambition of that 10% EBIT growth over medium term, that is going to require a combination of the organic and the inorganic M&A.

Speaker #2: So, we are concurrently doing that. And similarly, with Coates, we need to be a bit more assertive in looking at opportunities where we can leverage our operating position and build scale through fleet and network.

Speaker #2: But you're right. We need to do both, and we're actually looking through that. But to deliver that broad ambition of that 10% EBIT growth over the medium term, that is going to require a combination of the organic, and the inorganic M&As.

Brook Campbell-Crawford [Director of Research: All right. Thank you.

Brook Campbell-Crawford: All right. Thank you.

Speaker #5: All right. Thank you.

Operator: Thank you. Your next question comes from Peter Steyn with Macquarie. Please go ahead.

Speaker #1: Thank you. Your next question comes from Peter Stein with Macquarie. Please go ahead.

Peter Steyn: Morning, Ryan and Richard. Thank you very much for the opportunity. Perhaps, I want to elaborate a little on your medium-term pipeline and capital sales and just get your perspective on a commodity exposure where you're seeing, in broad terms, some of the evolution of opportunity from a commodity perspective, both in WA and in New South Wales.

Speaker #3: Good morning, Ryan. And Richard, thank you very much for the opportunity. Perhaps—sorry, I just want to elaborate a little on your medium-term pipeline and capital sales.

Speaker #3: And just to get your perspective on commodity exposure, where you're seeing, in broad terms, some of the evolution of opportunity from a commodity perspective—both in WA and in New South Wales.

Ryan Stokes: Look, to be honest, it's really the three core commodities we face into today. So iron, ore, coal and gold. I think it's looking at some of those investment opportunities that will play through. There's certain other commodity opportunities that might play through in copper, but I'd say the bulk of the activity is across those three commodity classes. That's where we see the biggest continuation of the opportunity and relatively in that order.

Speaker #2: Look, to be honest, it's really the three core commodities we face into today—so, iron ore, coal, and gold. I think it's looking at some of those investment opportunities that will play through.

Speaker #2: I mean, there are other commodity opportunities that might play through in copper, but the bulk of the activity is across those three commodity classes.

Speaker #2: That's where we see the biggest continuation of the opportunity—and realistically, in that order.

Peter Steyn: Perfect. Thanks, Ryan. Then just thinking about electrification, there's been some testing that's obviously been ongoing. Just keen to get your perspective, both from a WesTrac and perhaps, you can't speak for Cat, but the Cat perspective on some of those tests, how the machines are performing relative to expectations and how you see that opportunity unfolding.

Speaker #3: Perfect. Thanks, Ryan. And then just thinking about electrification, there's been some testing that's obviously been ongoing. Just keen to get your perspective, both from a Westrac and—perhaps, I mean, you can't speak for Cat—but the Cat perspective on some of those tests, how the machines are performing relative to expectations.

Speaker #3: And how do you see that opportunity unfolding?

Ryan Stokes: Yeah. We have the two trucks with Cat, and we worked with Cat and customers, BHP and Rio Tinto, ran the trials that were announced, those two trucks, and we have spoken about them before. Their battery electric offering. Our view is we will have solutions for customers as they require emission reduction pathways in various forms and be that a battery electric option, a diesel electric connectivity to the grid through that Cat proprietary Dynamic Energy Transfer technology. All of this coupled with autonomy. I think a lot of times when you look at the competitive set, yes, there are always going to be competitive OEMs. From the beginning of Caterpillar's existence and all the way through the 100-year journey, there have been competitive OEMs.

Speaker #2: Yeah. We have the, well, two trucks, or CAT, and we work with CAT and customers like BHP and Rio around the trials that were announced.

Speaker #2: So, those two trucks—and we've spoken about them before—are battery electric offerings. Our view is we will have solutions for customers as they require emission reduction pathways, in various forms.

Speaker #2: And whether that’s a battery-electric option, a diesel-electric connection to the grid through that CAT proprietary dynamic energy transfer technology—all of this, coupled with autonomy... I mean, I think a lot of times when you look at the competitive set, yes, there are always going to be competitive OEMs. And from the beginning of Caterpillar’s existence, and all the way through the hundred-year journey, there have been competitive OEMs.

Ryan Stokes: I think Caterpillar's success has come around having the best product driving the best value for customers, but it is the entire offering, not just the purchase price. When you think about autonomy, Cat is the only real autonomous solution working at scale. A lot of the others still sit on spreadsheet and PowerPoint, but the Cat solution has worked and will continue to work and continue to drive value. When looking at a customer lens, it has to be around how does that total offering drive value and drive a cost per ton that is superior to others? That is what we need to compete on. We feel we will have a suite of offering pending what customers really want as far as how advanced they want to go down this emission reduction pathway and what is the right solution.

Speaker #2: I think Catapult's success has come from having the best product, driving the best value for customers. But it's the entire offering, not just the purchase price.

Speaker #2: So, when you think about autonomy, I mean, CAT is the only real autonomous solution working at scale. A lot of the others still sit on spreadsheets.

Speaker #2: And PowerPoint. But the CAT solution has worked and will continue to work, and continue to drive value. So when looking at the customer lens, it has to be around how does that total offering drive value and drive a cost per ton?

Speaker #2: That's superior to others. That's what we need to compete on. So we feel we'll have the suite of offerings, depending on what customers really want, as far as how advanced they want to go down this kind of emission reduction pathway and what's the right solution.

Ryan Stokes: That is something we are very focused on ensuring we are working closely with customers. Cat is very engaged in those discussions. It is really key to how we ensure we have the best offering across the entire spectrum of what customers are going to require.

Speaker #2: And that's something we're very focused on—ensuring we're working closely with customers. CAT's very engaged in those discussions. It's really key to how we ensure we have the best offering across the entire spectrum of what customers are going to require.

Peter Steyn: Yep. Perfect. Thanks, Ryan. Then maybe just a quick one for Richard. Richard, just keen to get your perspective on buyback execution, how you are thinking about that following the results.

Speaker #3: Perfect. Thanks, Ryan. And then maybe just a quick one for Richard. Richard, just keen to get your perspective on buyback execution—how you're thinking about that following the results?

Richard Richards: We've established a buyback committee, effectively a subcommittee of the board. We will look at effectively where the stock trades, and we have the capacity to step into market and execute that buyback when we think it's appropriate. I think we've indicated to the market that the size of the buyback from a leverage context of 1.76 times, and throwing off AUD 2.1 billion of OP cash, clearly, based off average daily sales, will generate effectively FFO sufficient to fund that buyback over the next six months. I think in our context, we will wait to see where the market settles, and then we'll think through how we execute that, but it will ultimately be the decision of the subcommittee of the board.

Speaker #4: We've established a buyback committee, effectively a subcommittee of the board. And then we will look at, effectively, where the stock trades, and we have the capacity to step into the market and execute that buyback when we think it's appropriate.

Speaker #4: But I think we've indicated to the market that the size of the buyback, from a leveraged context at 1.76 times, and throwing off $2.1 billion of operating cash, clearly, based off average daily sales, we'll generate effectively FFO sufficient to fund that buyback over the next six months.

Speaker #4: So, I think in our context, we will wait to see where the market settles, and then we'll think through how we execute that. But it will ultimately be a decision of the subcommittee of the board.

Peter Steyn: Thank you, Richard. Appreciate it.

Speaker #3: Thank you, Richard. Appreciate it.

Operator: Thank you. Your next question comes from Lee Power with J.P. Morgan. Please go ahead.

Operator: Thank you. Your next question comes from Lee Power with JPMorgan. Please go ahead.

Speaker #1: Thank you. Your next question comes from Lee Powell with JP Morgan. Please go ahead.

Lee Power: Good morning, Ryan and Richard. Ryan, just on the Brisbane Olympics for Coates and Boral, can you give us an idea of where tenderings are, what the contract awards are kind of suggesting to you around committed activity? On the Coates side, is there pressure that you talk to? Is that more shorter term, or are you seeing that kind of flow through to some of the tendering around the Olympics as well?

Speaker #3: Good morning, Ryan and Richard. Ryan, just on the Bridgespin Olympics for Codes and Borel, can you give us an idea of where tendering is, what the contract awards are kind of suggesting to you around committed activity? And then on the coach side, is the pressure that you talk to more short term, or are you seeing that kind of flow through to some of the tendering around the Olympics as well?

Ryan Stokes: To be fair, we will always be a secondary participant in that process. If you think through the cascade, the prime contract will be let and that process will go through, then they will pull those requirements up. It might be Coates and some of the site establishment activity, Boral around some of the construction materials will be a bit later. It kind of depends on where they are, but we are not going to be the first visibility to that activity. We will be watching what happens around that contract activity and government announcements. What we do know is they are hosting the games, and they are going to need to build some stuff to make it happen. We think that is going to have to happen sooner rather than later.

Speaker #2: To be fair, we will always be a secondary participant in that process. So if you think through the cascade, the prime contract will be let, and that process will go through. Then they'll pull those requirements.

Speaker #2: So, I mean, it might be codes and some of the site establishment activity, borrow around—some of the construction materials will be a bit later.

Speaker #2: So it kind of depends on where they are, but we aren't going to be the first visibility to that activity. So, we'll be watching what happens around that contract activity and government announcements.

Speaker #2: But what we do know is the host of the games, that are going to build some stuff to make it happen. And we think that's going to have to happen sooner rather than later.

Ryan Stokes: You see some of that playing through, but we will be watching that first contract let and all that play through in government activity, then the opportunity will flow. That is really the timing. There is not really much more to report on that, but we do know that or expect that activity to play through in 2027.

Speaker #2: And you see some of that playing through, but we'll be watching that first contract let and all that play through in government activity. Then the opportunity will flow.

Speaker #2: So that's really the timing. There isn't really much more to report on that, but we do know that we expect that activity to play through in '27.

Lee Power: Okay, thank you. Richard, I have noticed that the terminal gate price for diesel has kind of started ticking up again. Can you give us an idea of where hedging is at for 2027 or just generally what recovery means for FY27 for Boral?

Speaker #3: Okay, thank you. And then Richard, I've noticed that the terminal gate price for diesel has kind of started ticking up again. Can you give us an idea of where hedging is at for FY27, or just generally what recovery means for FY27 for Boral?

Richard Richards: From a Boral perspective, we have always taken a relative progressive hedge position irrespective of price. In terms of near term, we are sort of about 70% hedged, and then that rolls off over the next two years down to sort of 25%. We have been consistently, through the last three or four months, putting in hedges, both in terms of diesel and in terms of bitumen. We just think that that gives us the capacity to manage aberrations in price and run the business rather than trying to run a commodity book.

Speaker #4: So, from a Borel perspective, we've always taken a relatively progressive hedge position, irrespective of price. So, in terms of the near term, we're sort of about 70% hedged, and then that rolls off over the next two years down to about 25%.

Speaker #4: We've been consistently, over the last three or four months, putting in hedges — both in terms of diesel and in terms of bitumen — and we just think that gives us the capacity to manage aberrations in price and run the business, rather than trying to run a commodity bill.

Lee Power: Okay. Are you willing to say what that impact would be in 2027 at all?

Speaker #3: Okay. Are you willing to say what that impact would be in '27 at all?

Richard Richards: Not at this point, no.

Speaker #4: Not at this point, no.

Lee Power: Okay. No, that is fine. Excellent. Thank you for that. Appreciate it.

Speaker #3: Okay, no, that's fine. Excellent. Thank you for that. I appreciate it.

Speaker #2: Thank you.

Richard Richards: Thank you.

Operator: Thank you. Your next question comes from Harry Saunders with E&P. Please go ahead.

Speaker #1: Thank you. Your next question comes from Harry Saunders with E&P. Please go ahead.

Harry Saunders: Good morning, Ryan, Rich. Thanks for taking my questions. A quick follow-on on the WesTrac parts pricing. Just to clarify, what FX rate was that using for the parts price decision, please?

Speaker #5: Good morning, Ryan, Richard. Thanks for taking my questions. Quick follow-up on the West Tracks parts pricing—just to clarify, what FX rate was used for the parts price decision, please?

Ryan Stokes: To be honest, the way it works, we do not get that visibility because we do not set it. We get an AUD parts price movement, so we get to back solve it. I do not think it is fair to point to that. It is not a point in time measure. It is over a period. There is a bit of a process in that calculation where it is difficult to purely factor that back. It is the currency-related movement in the AUD price that we buy and then we sell at. It is fair to say that when that was calculated, it was above where that AUD, Aussie-US price is today. I think that if it was priced today, we would not have the same impact. Richard, you can. I mean, it is not much more we can clarify on that.

Speaker #2: To be honest, the way it works is we don't get that visibility because we don't set it. We get an Aussie dollar parts price movement.

Speaker #2: So we get to back-solve it. So I don't think it's fair to point to that, and it's not a point-in-time measure.

Speaker #2: It's over a period, so there's a bit of a process in that calculation, where it's difficult to purely factor that back, but it's the currency-related movement in the Aussie dollar price that we buy at and then we sell at.

Speaker #2: But it's fair to say that when that was calculated, it was above where the Aussie dollar–Aussie US price is today. So I think that if it was priced today, we wouldn't have the same impact.

Speaker #2: But Richard, you can— I mean, it's not much. I think there's much more we can clarify on that.

Richard Richards: Yeah, I think at this point in time, Ryan's earlier guidance of we are not expecting effectively a significant change in parts price H2 probably reflects that when back in late November, when Cat set the price, I think currency sat broadly where it sits today. Our best indicator today would probably be that we are not expecting a parts price change H2.

Speaker #4: Yeah, I think at this point in time, I think Ryan's earlier guidance of we're not expecting, effectively, a significant change in parts prices in the second half probably reflects when, back in late November, when Cat set the price.

Speaker #4: I think currency sat broadly where it sits today, so our best indicator would probably be that we're not expecting a parts price change in the second half.

Ryan Stokes: Yeah. That May, I think. Just run November.

Speaker #2: Yeah, May. I think just around November.

Richard Richards: Sorry, May. Yeah.

Speaker #4: Sorry, May. Yeah.

Harry Saunders: Great. Thank you. Just one on the tax rate. Any color on the anticipated tax rate in 2027, just given the tick up in the H2, please?

Speaker #3: Great, thank you. And just one on the tax rate. Any color on the anticipated tax rate in '27, just given the tick up in the second half, please?

Richard Richards: Yeah. Look, I would expect it to be about 27% effective tax rate. The tax rate just reflected the significant items. I think that will slightly moderate. As the greater proportion of earnings come from our directly controlled businesses, all of our controlled businesses effectively sit at 30%. The aberrations to that will be the equity account of profits and then recognition of unrealized or capital losses that are currently unbooked. At this stage, that is not something that we can accurately predict. I would say 2027 would be where we would be budgeting.

Speaker #4: Yeah. Look, I'd expect it to be about 27% effective tax rate. And that just reflected the tax rate just reflected the significant items. I think there'll be that will slightly moderate.

Speaker #4: But as the greater proportion of earnings come from our directly controlled businesses, all of our controlled businesses effectively sit at 30%. So, the aberrations to that will be the equity-accounted profits and then recognition of unrealized or capital losses that are currently unbooked. At this stage, that's not something that we can accurately predict.

Speaker #4: But I'd say, sort of, 27 would be where we would be budgeting.

Harry Saunders: Got it. Thank you. Just one on the outlook for residential and non-residential construction in markets in 2027 for Boral, particularly in light of the federal budget. Can you just give us a sense of how you are seeing things on the ground and how you expect that to play out over the course of 2027, please?

Speaker #3: Got it, thank you. And just one on the outlook for residential and non-residential construction and markets in '27 for Borel. Particularly in light of the federal budget, can you just give us a sense of how you're seeing things on the ground and how you expect that to play out over the course of '27, please?

Ryan Stokes: Yes, it is a fair question. Look, it is interesting because there is a lot of noise clearly around this, the National Housing Accord, et cetera. In short, we see that as upside to that activity, definitely the supply requirement suggests that is upside. But where activity is now is actually really robust, you see that play through in the Boral volume. That activity out there from an infrastructure construction outlook is still very good. As that plays through, we see that more adding to that than anything else. I just think it is worth characterizing that because it still feels like it is a really solid market at the moment, when those policies come through, we see more supply come through, that is just going to add to that.

Speaker #2: Yeah, it's a fair question. Look, it's interesting because there's a lot of noise, clearly, around this and the Housing Accord, etc. I mean, in short, we see that as upside to that activity, and definitely the supply requirement suggests that's upside.

Speaker #2: But where activity is now is actually really robust. I mean, you see that play through in the borrow volume, and that activity out there from an infrastructure construction outlook is still very good.

Speaker #2: So as that plays through, we see that more adding to that than anything else. And I just think it's worth characterizing that, because it still feels like a really solid market at the moment. And when those policies come through, we see more supply come through, that's just going to add to that.

Harry Saunders: You are not seeing a residential softening currently?

Speaker #3: So you're not seeing a residential softening currently?

Ryan Stokes: Not in the activity data we have seen, you certainly would not suggest that from the volume data we have got within Boral. I would love to say that is a direct market look through. I think we are probably taking some share in some of that. But overall, the volume activity is still reasonably good. I just think it is worth noting that when you put that across the infrastructure and the total construction sector, it is still a good market. We think that there is just a lot of focus on that resi starts perspective. Yes, it needs to go up, but where it is, there is still a decent amount of activity.

Speaker #2: Not in the activity data we've seen, and you certainly wouldn't suggest that from the volume data we've got within Borel. I mean, I'd love to say that that's a direct market look-through.

Speaker #2: I think we're probably taking some share in some of that, but overall the volume activity is still reasonably good. I just think it's worth noting that when you put that across the infrastructure and the total construction sector, it's still a good market.

Speaker #2: We think that there's just a lot of focus on that residue starts perspective. And yes, it needs to go up, but where it is, it's still a decent amount of activity.

Harry Saunders: Got it. Thank you. One final follow-on, just on that medium-term ambition for 10% EBIT EPS rolling average growth over multi-year periods. I think broadly half of that was perhaps from organic. Just given where you have guided this year for EBIT growth, can we anticipate some recovery in 2028, 2029, and where could those levers come from there?

Speaker #3: Got it, thank you. One final follow-on—just on that sort of medium-term ambition for around 10% EBIT and EPS rolling average growth over a multi-year period. I think broadly half of that was perhaps from organic.

Speaker #3: Given where you've guided this year for EBIT growth, can we anticipate some recovery in '28 and '29, and where could the levers come from there?

Ryan Stokes: Yeah, you are right. That is a key element within our model is the combination of organic and inorganic. That said, if we park the inorganic opportunities, just focus on what we have, the opportunity to invest in our business to drive growth is still a key opportunity. We will pursue that, so that notion of this semi-organic. So acquisitions within Boral or Coates may fuel that growth. We have Crux, which is just a timing-related issue that will come in and that will play into FY28. So if you think within that organic opportunity set, there is still a decent amount of growth. It is just that timing aspect for 2027 mixed with a little bit of currency play through and pass price, et cetera, just is a factor for us in 2027.

Speaker #2: Yeah, you're right. I mean, that is a key element within our model: it's a combination of organic and inorganic. That said, if we park the inorganic opportunities and just focus on what we have, the opportunity to invest in our business to drive growth is still a key opportunity.

Speaker #2: We will pursue that. So, that notion of this semi-organic—so, acquisitions within Borel or Coates may fuel that growth. We have Crux, which is just a timing-related issue that will come in, and that will play into FY28.

Speaker #2: So, if you think within that organic opportunity set, there's still a decent amount for '27, mixed with a little bit of currency play-through and parts price, etc. It is just a factor for us in '27, but we definitely see that growth playing through with Crux coming in, which is literally at the end of calendar year '27. That will further fuel that organic growth pipeline for us.

Ryan Stokes: We definitely see that growth playing through with Crux coming in, which is literally that end calendar year 2027. That will further fuel that organic growth pipeline for us. But we do want to match that with the inorganic opportunities, and that is how we will hit that ambition. It is going to be a combination of both. But there is more opportunity from the organic side than what the 2027 guidance would suggest.

Speaker #2: But we do want to match that with the inorganic opportunities, and that's how we'll hit that ambition. It's going to be a combination of both, but there is more opportunity from the organic side than what the '27 guidance would suggest.

Richard Richards: On a currency-adjusted basis, if you think about it, AUD 80 million on effectively the current year results, 5% straight up.

Speaker #4: On a currency-adjusted basis, if you think about it, $80 million on the current year’s results is effectively 5% straight up.

Harry Saunders: Yeah, that is an important point. Thank you.

Speaker #3: Yeah, that's an important point. Thank you.

Operator: Thank you. There are no further questions at this time. That does conclude our conference for today. Thank you for participating. You may now disconnect.

Speaker #1: Thank you. There are no further questions at this time. That does conclude our conference for today. Thank you for participating. You may now disconnect.

Browse all earnings call transcripts

Full Year 2026 SGH Ltd Earnings Call

Request TrialDemo

SGH

Earnings