Full Year 2026 Service Stream Ltd Earnings Call

August 19, 2026

Speaker #1: Good day, and thank you for standing by. Welcome to Service Stream Full Year 2026 results. At this time, all participants are in listen-only mode.

Operator: Good day, and thank you for standing by. Welcome to Service Stream Full Year 2026 Results. At this time, all participants are in listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you need to press star one on your telephone keypad. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speakers today, Leigh MacKender and Linda Kow. Please go ahead.

Speaker #1: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you need to press *11 on your telephone keypad.

Speaker #1: You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded.

Speaker #1: I would now like to hand the conference over to your speakers today, Leigh MacKender and Linda Kow. Please go ahead.

Speaker #2: Hi, good morning, ladies and gentlemen, and welcome to Service Stream results presentations for financial year '26. As per the introduction, my name is Leigh MacKender, Managing Director of Service Stream, and I'm joined today by our Chief Financial Officer, Linda Kow.

Leigh MacKender: Good morning, ladies and gentlemen, and welcome to Service Stream Results Presentation for Financial Year 2026. As for the introduction, my name is Leigh MacKender, Managing Director of Service Stream, and I am joined today by our Chief Financial Officer, Linda Kow. In terms of the agenda, I will start by covering some of the group's highlights and providing an update on Service Stream's operational and financial performance. I will then pass to Linda, who will talk through the group's financial performance and capital management strategy in greater detail. We will then provide an update with regards to trading conditions, group outlook for FY27, and finally, we will open up the call for questions. I personally wish to begin by acknowledging the traditional custodians of the land in which we meet today, and I pay our respects to their elders, past, present, and emerging. Okay, turning to slide three.

Speaker #2: In terms of the agenda, I'll start by covering some of the group's highlights and providing an update on Service Stream's operational and financial performance.

Speaker #2: I'll then pass to Linda, who will talk through the group's financial performance and capital management strategy in greater detail. We'll then provide an update regarding trading conditions, the group outlook for FY27, and finally, we'll open up the call for questions.

Speaker #2: I personally wish to begin by acknowledging the traditional custodians of the land on which we meet today, and I pay my respects to the elders past, present, and emerging.

Speaker #2: Okay, turning to slide three. Service Stream's journey over the last 10 years has been one centered around growth and diversification, ideally looking to leverage the business's telecommunication heritage and create a multi-network business.

Leigh MacKender: Service Stream's journey over the last 10 years has been one centered around growth and diversification. Ideally, looking to leverage the business's telecommunication heritage and create a multi-network business. At its core, Service Stream is an essential network service provider. Our growing team of 6,500 employees and more than 12,500 specialist contractors design, construct, operate, and maintain the critical infrastructure that millions of Australians depend on each and every day. Our business undertakes more than 55 million property visits annually across what is now 16 market segments that we operate across under our three reporting segments. Creating sustainable and long-term shareholder value has and remains at the center of our focus and the outcomes we strive to deliver under the group's strategic plan.

Speaker #2: At its core, Service Stream is an essential network service provider. Our growing team of 6,500 employees, along with more than 12,500 specialist contractors, design, construct, operate, and maintain the critical infrastructure that millions of Australians depend on every day.

Speaker #2: Our business undertakes more than 55 million property visits annually across what is now 16 market segments that we operate across under our three reporting segments.

Speaker #2: Creating sustainable and long-term shareholder value has been, and remains, at the centre of our focus, and the outcome we strive to deliver under the group's strategic plan.

Speaker #2: We're incredibly proud of the business's progression and the strong attributes which we believe differentiate Service Stream from our broader market peers. The business has major exposure, through more than 180 contracts, to growing infrastructure markets, which continue to benefit from significant investment given their critical nature.

Leigh MacKender: We are incredibly proud of the business's progression and the strong attributes which we believe differentiate Service Stream from our broader market peers. The business has major exposure through more than 180 contracts to growing infrastructure markets, which continue to benefit from significant investment given their critical nature. That contract base strongly supports long-term annuity-style revenues across multi-year operation and maintenance agreements. The terms in which these commercial agreements are negotiated are favorable, with circa 90% of the group's revenue secured under lower risk schedule of rates or alliance style cost-plus agreements. Our business has a strong, proud retention rate, holding many agreements well into their 30th plus consecutive year, despite these generally tested in the market on average every four to five years. We have an enviable client base representing state and federal government and major industrial asset owners and operators.

Speaker #2: Our contract base not only supports long-term, annuity-style revenues across multi-year operation and maintenance agreements; the terms under which these commercial agreements are negotiated are favourable.

Speaker #2: Approximately 90% of the group's revenue is secured under lower-risk scheduled rate or Alliance-style cost-plus agreements. Our business also has a strong and proud retention rate.

Speaker #2: Holding many agreements well into their 30th plus consecutive year, despite these generally being tested in the market on average every four to five years. We have an enviable client base, representing state and federal government and major industrial asset owners and operators.

Speaker #2: And the business generates exceptional cash flows from its operations, consistently exceeding 100% conversion rates year on year. We have a capitalised business model. We're also proud of the owners' mentality which exists right across the business and ultimately guides our long-term decision-making.

Leigh MacKender: The business generates exceptional cash flows from its operations, consistently exceeding 100% conversion rates year-on-year. We have a capitalized business model. We are also proud of the owners' mentality, which exists right across the business and ultimately guides our long-term decision-making. So whilst we have demonstrated an ability to improve the group's financial performance, grow and diversify revenues, it is exciting that there is still further work and opportunity ahead to drive improved results that we will strive to deliver in the days ahead. With regards to the group's FY26 results, I will start by directing everyone to Slide 6, where I will just touch on some of the key messages for the year. As I just mentioned, we are really pleased with the performance and the results achieved over FY26, which reflect a culmination of years of hard work as the business seeks to drive a range of sustainable improvements.

Speaker #2: So, whilst we're demonstrating an ability to improve the group's financial performance, grow, and diversify the revenues, it's exciting that there's still further work and opportunities ahead to drive improved results that we'll strive to deliver in the days ahead.

Speaker #2: Okay, with regards to the group's FY26 results, I'll start by directing you to slide six, where I'll just touch on some of the key messages for the year.

Speaker #2: As I just mentioned, we're really pleased with the performance and the results achieved over FY26, which reflect a culmination of years of hard work as the business seeks to drive a range of sustainable improvements.

Speaker #2: The results today are again headlined with improvements made across the group’s financial performance and an enhanced quality of earnings. This is evidenced through a significant step change in profitability across the Utility Operations, with EBITDA margins up 130 basis points on PCP, to 5.8%.

Leigh MacKender: The results today are again headlined with improvements made across the group's financial performance and enhanced quality of earnings. This is evidenced through a significant step change in profitability across our utility operations, with EBITDA margins up 130 basis points on PCP to reflect 5.8%. The group's EBITDA margin also improved by 60 basis points to reflect 6.6% EBITDA. The business enjoyed another exceptional cash flow performance result, contributing to a further strengthening of the group's net cash balance sheet, which reflected AUD 80.7 million at the close of the year. One of the major highlights in FY26 was the award of the group's first Defence contracts, marking Service Stream's entry into what is a new, attractive, growing sector for our business.

Speaker #2: The group's EBITDA margin also improved by 60 basis points to 6.6% EBITDA. And the business enjoyed another exceptional cash-backed performance result, contributing to a further strengthening of the group's net cash balance sheet, which stood at $80.7 million at the close of the year.

Speaker #2: One of the major highlights in FY26 was the award of the group's first defence contracts, marking Service Stream's entry into what is a new, attractive, and growing sector for our business.

Speaker #2: We're pleased to confirm that not only has the mobilisation of the operations gone exceptionally well, but the full-year results include a revenue contribution which is in line with our expected full-year run rate that we've signalled to the market, and there's been a positive earnings contribution after only the first initial five months.

Leigh MacKender: We are pleased to confirm that not only has the mobilization of the operations gone exceptionally well, but the full year results include a revenue contribution which is in line with our expected full year run rate that we have signaled to the market. There has been a positive earnings contribution after only the first initial five months. This has assisted in the group exceeding the market consensus that we will talk through today. More broadly, the group has continued to strengthen its order book. We now have 75% of our revenues secured under long-term operations and maintenance contracts. As I said before, 90% of those operating under a lower risk schedule of rates or alliance style model. Finally, on the back of this positive progress made throughout the year, we have seen a double-digit increase in EPS to 13.1 cents per share, and that reflects a 17% increase on PCP.

Speaker #2: And this has assisted in the group exceeding the market consensus that we'll talk through today. More broadly, the group has continued to strengthen its audit book, with now 75% of our revenues secured under long-term operations and maintenance contracts. As I said before, 90% of those are operating under a lower-risk schedule of rates or Alliance-style model.

Speaker #2: And finally, on the back of this positive progress made throughout the year, we've seen a double-digit increase in EPS to 13.1 cents per share, which reflects a 17% increase on PCP.

Speaker #2: And on the back of these results, the board was pleased to declare an increase in the group's full-year dividends for our valued shareholders. Moving to slide seven, from the group's financial highlights—which Linda will expand on further later in the presentation—the first is, starting with revenue over the year, which was $2.475 billion.

Leigh MacKender: On the back of these results, the board was pleased to declare an increase in the group's full-year dividends for our valued shareholders. Moving to Slide 7 and the group's financial highlights, which Linda Kow will expand on further later in the presentation. Firstly, starting with revenue, over the year was AUD 2.475 billion. This reflected a slight increase on PCP, most notably with growth across utilities and the recently formed Asset and Facilities division. This division incorporates our new Defence operations with our legacy transport operations. The business continues to be selective as contracts regularly come up for renewal, actively choosing not to secure those where doing so could erode our focus on quality of earnings.

Speaker #2: This reflected a slight increase on PCP, most notably with growth across Utilities and the recently formed Asset and Facilities division. This division incorporates our new Defence operations with our legacy Transport operations.

Speaker #2: And the business continues to be selective, as contracts regularly come up for renewal, actively choosing not to secure those where doing so could erode our focus on quality of earnings.

Speaker #2: We are absolutely comfortable with further revenue growth in FY27, given the business has successfully secured and now mobilised a number of major contracts across defence, water, and industrial operations that I'll talk to later in the presentation.

Leigh MacKender: We are absolutely confident of further revenue growth in FY27, given the business has successfully secured and now mobilized a number of major contracts across Defence, water, and industrial operations that I will talk to later in the presentation. More importantly, EBITDA was AUD 163.4 million, and that reflected an increase of AUD 17.3 million or 11.8% on the prior year. The group generated OCFP of AUD 186 million and achieved an exceptional EBITDA to OCFP conversion rate of 113%. This is again reflective of Service Stream's blue chip industrial client base, positive terms in which our agreements are negotiated, and the strong focus placed on work to cash right across the business.

Speaker #2: But more importantly, EBITDA was $163.4 million, reflecting an increase of $17.3 million, or 11.8%, on the prior year. The group generated an OCF BID of $186 million and achieved an exceptional EBITDA to OCF BID conversion rate of 113%.

Speaker #2: This is again reflective of Service Stream's blue-chip industrial client base, the positive terms on which our agreements are negotiated, and the strong focus placed on work-to-cash right across the business.

Speaker #2: As I just mentioned, those high cash flows supported a further strengthening of the group's balance sheet, with the net cash position closing at $18.7 million, and that reflected an improvement of $7.1 million on the position reached as of June 2025.

Leigh MacKender: As I just mentioned, those high cash flows support a further strengthening of the group's balance sheet with a net cash position closing at 80.7, and that reflected an improvement of AUD 7.1 million on the position reached as of June 2025. We are very pleased to see another strong result with this regard, particularly as the business has had to cater to both increased dividends, a large tax payment, and the mobilization of Defence and other contract operations throughout the year. As I mentioned before, finally, on the back of those results, given the positive position of the business, the board were pleased to increase the fully frank interim dividend, sorry, fully frank final dividend to AUD 0.035 per share. That took full year dividends to AUD 0.065, an increase of 18% on the prior year Slide 8.

Speaker #2: We're very pleased to see another strong result in this regard, particularly as the business has had to cater to both increased dividends, a large tax plan, and the mobilisation of defence and other contract operations throughout the year.

Speaker #2: And as I mentioned before, finally, on the back of those results, given the positive position of the business, the board were pleased to increase the fully-franked final dividend to 3.5 cents per share.

Speaker #2: That took full-year dividends to 6.5 cents, an increase of 18% on the prior year. Slide eight. Moving there, there are a number of significant operational and strategic highlights that have been achieved over the year.

Leigh MacKender: Moving there are a number of significant operational and strategic highlights that have been achieved over the year. One of the business' priorities over the last three years has been to optimize our operations, creating that scalable platform from which the business will continue to not only grow, but deliver improved and sustainable quality of earnings. Major focus, we have often discussed, has been to drive improvements across our utility operations to both its level of earnings and its EBITDA margins. We are incredibly pleased to deliver significant increases across both of these during the year. EBITDA increased by 34% or AUD 15.4 million on PCP, and EBITDA margins over the full year moved 130 basis points on PCP to reflect 5.8%. The business has now consistently delivered incremental improvement over eight half-year periods.

Speaker #2: One of the business's priorities over the last three years has been to optimise our operations, creating that scalable platform from which the business will continue to not only grow, but also deliver an improved and sustainable quality of earnings.

Speaker #2: The major focus we've often discussed has been to drive improvements across our utility operations, to both its level of earnings and its EBITDA margins.

Speaker #2: And we're incredibly pleased to deliver significant increases across both of these during the year. EBITDA increased by 34%, or $15.4 million, on PCP, and EBITDA margins over the full year moved 130 basis points on PCP to reflect 5.8%.

Speaker #2: The business has now shown improvement over an eight-and-a-half-year period. And most importantly, the division achieved a 6% EBITDA margin in the second half, so that exit rate is certainly strong and reflects a result 18 months ahead of the target that we discussed only six months ago.

Leigh MacKender: Most importantly, the division achieved a 6% EBITDA margin in the second half. So that exit rate is certainly strong and reflects a target or a result 18 months ahead of the target that we discussed only six months ago. Importantly, we are still identifying further opportunities which will support incremental improvement, but these will take time to deliver. We continue to be excited about the utility division. We have often reflected that it is one of the group's major growth engines facing a number of strong markets, and we do expect further incremental improvement in margins and growth in revenue over FY27. The utility performance, combined with other initiatives, support an improved group EBITDA margin of 6.6%, reflecting another strong result equating to 60 basis points on PCP.

Leigh MacKender: Most importantly, the division achieved a 6% EBITDA margin in the H2. So that exit rate is certainly strong and reflects a target or a result 18 months ahead of the target that we discussed only six months ago. Importantly, we are still identifying further opportunities which will support incremental improvement, but these will take time to deliver. We continue to be excited about the utility division. We have often reflected that it is one of the group's major growth engines facing a number of strong markets, and we do expect further incremental improvement in margins and growth in revenue over FY27. The utility performance, combined with other initiatives, support an improved group EBITDA margin of 6.6%, reflecting another strong result equating to 60 basis points on PCP.

Speaker #2: And importantly, we've still identified further opportunities, which will support incremental improvement, but these will take time to deliver. We continue to be excited about the Utility division.

Speaker #2: We've often reflected that it's one of the group's major growth engines, facing a number of strong markets, and we do expect further incremental improvement in margins and growth in revenue over FY27.

Speaker #2: The utility performance, combined with other initiatives, supported an improved group EBITDA margin of 6.6%, reflecting another strong result and equating to 60 basis points on PCP.

Speaker #2: We've often talked about a major priority for all services businesses being the retention of existing contracts as they reach their full term and proceed to market, as well as securing new growth.

Leigh MacKender: We often talk about a major priority for all services businesses being the retention of existing contracts as they reach their full term and proceed to market, as well as securing new growth. We are really proud that the business had another successful period, securing AUD 3.2 billion of multi-year contracted works throughout FY26. This reflected a strong retention rate of 93% for the agreements reaching a renewal milestone or end of term and proceeding to market. As I said earlier, importantly, the business continues to be selective about our contract renewal options and the associated terms to ensure that as these are secured, they are enhancing our quality of earnings, not undoing some of the positive work delivered in the prior periods. The group's level of work in hand remains robust at AUD 8.2 billion.

Speaker #2: And we're really proud of the business to have another successful period, securing $3.2 billion of multi-year contracted works throughout FY26. This reflected a strong retention rate of 93% for the agreements reaching a renewal milestone or end of term and proceeding to market.

Speaker #2: And as I said earlier, importantly, the business continues to be selective about our contract renewal options and the associated terms, to ensure that as these are secured, they are enhancing our quality of earnings, not undoing some of the positive work delivered in prior periods.

Speaker #2: The group's level of work in hand remains robust at $8.2 billion. Importantly, that $8.2 billion only reflects the initial terms, with many of Service Stream's contracts having multi-year extension options not referenced in that headline number.

Leigh MacKender: Importantly, that AUD 8.2 billion only reflects the initial terms, with many of Service Stream's contracts having multi-year extension options not referenced in that headline number. We account for those options, and our work in hand is just exceeding AUD 14 billion. The award of a major contract with the Department of Defence supporting base infrastructure across Northern Territory and South Australia marks what I believe to be one of the most significant and exciting milestones in Service Stream's history. This is a culmination of a five-year journey. We sought to strategically expand the group's addressable market into an area we believe will benefit from a significant and increased level of investment into the future. We are incredibly pleased with the team's performance and again, happy to report the mobilization program has progressed well, meeting or exceeding the targets that we set.

Speaker #2: We account for those options, and work in hand is just exceeding $14 billion. The award of a major contract for the Department of Defence, supporting base infrastructure across the Northern Territory and South Australia, marked what I believe to be one of the most significant and exciting milestones in Service Stream's history.

Speaker #2: This is a culmination of a five-year journey. We sought to strategically expand the group's addressable market into an area we believe will benefit from a significant and increased level of investment into the future.

Speaker #2: We're incredibly pleased with the team's performance and, again, happy to report the mobilisation programme has progressed well, meeting or exceeding the targets that we set.

Speaker #2: Our enhanced net cash balance sheet also provides strategic optionality, as the business continues to actively pursue both organic and M&A growth opportunities. We announced a small, strategic bolt-on acquisition of RIE Group in May of this year, which has added new capabilities and expanded the Group's markets.

Leigh MacKender: Our enhanced net cash balance sheet also provides strategic optionality as the business continues to actively pursue both organic and M&A growth opportunities. We announced a small strategic bolt-on acquisition of RiE Group in May of this year, which has added new capabilities and expanded the group's markets. We, of course, continue to assess other M&A opportunities as they present in market. Continuing through to slide 9, we again provide insight into the group's diversified revenue profile, representing another positive attribute of our focus, which has been driven over recent years and now reflects a higher quality, lower risk revenue base. Over the past 12 months, we continue to see an improved mix of works delivered across the group, with operations and maintenance revenues holding steady at 73%.

Speaker #2: We, of course, continue to assess other M&A opportunities as they present in the market. Continuing through to slide nine, we've again provided insight into the group's diversified revenue profile, representing another positive attribute of our focus, which has been driven over recent years and now reflects a higher-quality, lower-risk revenue base.

Speaker #2: Over the past 12 months, we’ve continued to see an improved mix of works delivered across the group, with operations and maintenance revenues holding steady at 73%.

Speaker #2: Minor capital works, reflecting 25%, we again feel is an appropriate balance. It provides our business with exposure to our clients' capital expenditure programs, and work is most commonly delivered under multi-year panel arrangements.

Leigh MacKender: Minor capital works reflecting 25%, we again feel is an appropriate balance that provides our business with exposure to our clients' capital expenditure programs and work is most commonly delivered under multi-year panel arrangements. These panel arrangements offer the ability for our business to review and selectively bid on specific opportunities that fit our criteria. Most importantly, we are really pleased to report the financial performance driven across these minor capital works has continued to improve over the last 12 to 18 months and now is consistently representing a higher margin than the O&M works as it should. If we look at the commercial models that govern the group's work, this is a real strength, as you will note that we see 90% delivered under either a lower risk schedule of rates or cost reimbursable alliance style model.

Leigh MacKender: Minor capital works reflecting 25%, we again feel is an appropriate balance that provides our business with exposure to our clients' capital expenditure programs and work is most commonly delivered under multi-year panel arrangements. These panel arrangements offer the ability for our business to review and selectively bid on specific opportunities that fit our criteria. Most importantly, we are really pleased to report the financial performance driven across these minor capital works has continued to improve over the last 12 months to 18 months and now is consistently representing a higher margin than the O&M works as it should. If we look at the commercial models that govern the group's work, this is a real strength, as you will note that we see 90% delivered under either a lower risk schedule of rates or cost reimbursable alliance style model.

Speaker #2: These panel arrangements offer the ability for our business to review and selectively bid on specific opportunities that fit our criteria. And most importantly, we are really pleased to report that the financial performance driven across these minor capital works has continued to improve over the last 12 to 18 months, and now is consistently representing a higher margin than the O&M works.

Speaker #2: As it should. If we look into the commercial models, the governed, the group's work, this is a real strength, as you'll note that we see 90% delivered under either a lower-risk schedule of rates or a cost-reimbursable lifestyle model.

Speaker #2: We continue to improve diversification across the group in terms of the industry sectors and, therefore, the clients that we're supporting. The business certainly now reflects a multi-network service provider, aligned to those strategic priorities I spoke of earlier.

Leigh MacKender: Continue to see improved diversification across the group in terms of the industry sectors and therefore clients that we are supporting. The business certainly now reflecting a multi-network service provider aligned to those strategic priorities I spoke of earlier. We note 70% of our work was on behalf of either the local or federal government entities, with the remaining 30% on behalf of tier 1 industrial asset owners and operators. Moving on to major contract renewals and new business on slide 10. I have often spoke about the importance of the business retaining contracts as they proceed to market at the end of their respective terms. This has been an area our business has been incredibly strong on, and that needs to be coupled with securing profitable, incremental new growth.

Speaker #2: And we note that 70% of our work was on behalf of local or federal government entities, with the remaining 30% on behalf of tier-one industrial asset owners and operators.

Speaker #2: Moving on to major contract renewals and new business on Slide 10. I've often spoken about the importance of the business retaining contracts as they proceed to market at the end of their respective terms.

Speaker #2: This has been an area where our business has been incredibly strong, and that needs to be coupled with securing profitable, incremental new growth. On this slide, we'll provide insight into just a few of those major agreements that were secured across the group over the year.

Leigh MacKender: On this slide, we will provide insight into just a few of those major agreements that were secured across the group over the year. This is certainly not an exhaustive list, but a small selection of those secured. Whilst I will not go into the detail, we are happy to see strong retention rates, but also these agreements, particularly new contract wins being secured right across our broad markets. Moving to slide 11, we can see how these contract awards have assisted in maintaining a very strong level of work in hand across the group. As I noted from the outset of the call, the work in hand balance now reflects AUD 8.2 billion in future contracted works. That only reflects the initial term.

Speaker #2: This is certainly not an exhaustive list, but a small selection of those secured. And whilst I won't go into the detail, we're happy to see strong retention rates, but also these agreements—particularly new contract ends—being secured right across our broad markets.

Speaker #2: Moving to slide 11, we can see how these contract awards have assisted in maintaining a very strong level of work in hand across the group.

Speaker #2: As I noted from the outset of the call, the work-in-hand balance now reflects $8.2 billion in future contracted works. And that only reflects the initial term. If we include the multi-year extension options, which exist across almost all of our agreements, the balance would be higher.

Leigh MacKender: If we include the multiyear extension options which exist across almost all of our agreements, there is another AUD 6 billion of work, taking the work in hand to AUD 14.2 billion. That reflects circa five times revenue cover, as we said yesterday. Importantly, that quality of the work in hand is much higher. Again, 85% reflecting operations and maintenance contracts. Slide 12 will provide some insight into our reporting segments. I am starting with telecommunications on the left-hand side. In early FY26, the division successfully transitioned to a new field service agreement with NBN, reflecting one of the group's material contracts, as well as mobilizing a major operation across VIC, SA, NT, and WA. Positive steady progress has been made, also ramping up and executing our fiber network upgrade program with NBN, known as NTD, with several major tranches being successfully designed and built across SA, ACT, and WA.

Speaker #2: There's another $6 billion of work, taking work in hand to $14.2 billion. That reflects over five times revenue cover as we see here today. But importantly, the quality of the work in hand is much higher.

Speaker #2: Again, 85% reflecting operations and maintenance contracts. And slide 12 will provide some insight into our reporting sequence. Starting with Telecommunications on the left-hand side, in early FY26, the division successfully transitioned to a new field service agreement with NBN, reflecting one of the group's material contracts, as well as mobilising a major operation across VIC, SA, and TNWA.

Speaker #2: Positive and steady progress has been made in ramping up and executing our fibre network upgrade program with NBN, known as NTP, with several major tranches being successfully designed and built across SA, AC, T, and WA.

Speaker #2: In addition to re-signing several major agreements, the business also secured a number of small intercity fibre construction deployments on behalf of clients such as Telstra and Ausgrid.

Leigh MacKender: In addition to re-signing several major agreements, the business also secured a number of small Intercity Fibre construction deployments on behalf of clients such as Telstra and Ausgrid, and they are underway. This is the first time our organization has taken part in these types of programs. It has been positive to see the division able to secure, mobilize, and execute this new work type, which will no doubt continue in support of data center deployments, renewable energy projects, and network resilience operations happening right around the country. Moving to utilities, and in line with my earlier comments, it has been another busy and productive period for our utility division.

Speaker #2: And they are underway. This is the first time our organisation has taken part in these types of programmes. It's been positive to see the division able to secure, mobilise, and execute this new work type, which will no doubt continue and support the data centre deployments, renewable energy projects, and network resilience operations happening right around the country.

Speaker #2: Moving to utilities, and in line with my earlier comments, it's been another busy and productive period for our utility division. Again, we are pleased to report the strategic optimisation programme has made further significant progress, as evidenced by what is a sustainable step-change in margins and our ability to reach an EBITDA exit rate with a six-handle, well ahead of the 18-month time period we discussed under six months ago.

Leigh MacKender: Again, we are pleased to report the strategic optimization program has made further significant progress as evidenced by what is a sustainable step change in margins and our ability to reach an EBITDA exit rate with a 6 handle well ahead of the 18-month time period we discussed only 6 months ago. This bodes well for the future of the division, being one of the main growth engines of Service Stream. We are not only demonstrating the business can secure new multiyear O&M contracts to support growth, but the earnings from these contracts and revenues are of a higher quality and providing a much more substantial contribution to the group. In terms of the division's improvement programs, we continue to identify a range of optimization initiatives to support further uplift in margins, albeit future progress will be slower than it has been demonstrated in the last half.

Speaker #2: This not only involves the future of the division being one of the main growth engines of Service Stream, but we've also demonstrated that the business can secure new multi-year O&M contracts to support growth. The earnings and revenues from these contracts are of higher quality and are providing a much more substantial contribution to the group.

Speaker #2: In terms of the division's improvement programs, we continue to identify a range of optimisation initiatives to further uplift margins, albeit future progress will be slower than what has been demonstrated in the last half.

Speaker #2: At the same time, we're confident the business will continue to expand and grow. As I mentioned earlier, in May, the business was delighted to announce the acquisition of a small bolt-on business with Rye Group.

Leigh MacKender: At the same time, we are confident the business will continue to expand and grow. As I mentioned earlier, in May, the business was delighted to announce the acquisition of a small bolt-on business with RiE Group, a leading provider of industrial maintenance and electrical capabilities, and has expanded our operations to include now oil and the LPG markets across Queensland. Whilst small, the business enhanced our capabilities and expanded those addressable markets, and we are confident that when paired with what is a growing industrial division within our business, we will see some positive progress in terms of new contracts being secured over the course of the next 12 to 18 months.

Speaker #2: A leading provider of industrial maintenance and electrical capabilities, we have expanded our operations to now include oil and the LP&G markets across Queensland. Whilst small, the business has enhanced our capabilities and expanded those addressable markets, and we're confident that, when paired with what is a growing industrial division within our business, we'll see some positive progress in terms of new contracts being secured over the course of the next 12 to 18 months.

Speaker #2: As I said earlier, the Utility division reflects one of the major growth engines, and it's great to see strong organic growth in terms of new multi-year contract wins across water and industrial markets being secured and mobilised throughout this year.

Leigh MacKender: As I said earlier, the utility division reflects one of the major growth engines, and it is great to see strong organic growth in terms of new multiyear contract wins across water and industrial markets being secured and mobilized throughout this year. They will certainly provide a contribution in 2027. Finally, assets and facilities. This division reflects the combination of the group's legacy transport and new Defence operations. These two divisions each hold very similar capabilities aligned with strategic asset management. As Defence operations are growing and expanding into mobilization, which concluded last month, it has made sense to bring these two divisions together and leverage the back-of-house expertise that exists across our capable teams.

Speaker #2: They will certainly provide a contribution in 2027. And finally, Asset and Facilities. This division reflects a combination of the group's legacy transport and new defence operations.

Speaker #2: These two divisions each hold very similar capabilities, aligned with strategic asset management. As defence operations are growing and expanding since the mobilisation, which concluded last month, it's made sense to bring these two divisions together and leverage the back-of-house expertise that exists across our K4 teams.

Speaker #2: I'm not only looking to provide a great platform for our skilled staff to expand their focused skills, but also to avoid duplication of back-office indirect resource base and costs in a division that we're confident will continue to grow and expand into the future.

Leigh MacKender: Not only provides a great platform for our skilled staff to expand their focus and skills but avoids duplication of back office, indirect resource base, and costs in a division that we are confident will continue to grow and expand in the future. In addition to Defence operations, Service Stream is well positioned to secure incremental new works across the transport market, with several long-term maintenance contracts opportunities presenting each year. Turning now to slide 13. I wanted to provide a dedicated update on the status of our Defence mobilization following the contract award in September and the go-live, which commenced only 5 months ago in February this year. Again, I say with great pleasure and pride that the business was able to confirm it was successful in securing that long-term asset management contract with the Department of Defence.

Speaker #2: In addition to defence operations, Service Stream is well positioned to secure incremental new works across their transport market, with several long-term maintenance contract opportunities presenting each year.

Speaker #2: Turning now to slide 13, I wanted to provide a dedicated update on the status of our defence mobilisation following the contract award in September and the go-live, which commenced only five months ago in February this year.

Speaker #2: Again, I say with great pleasure and pride that the business was able to confirm that we've successfully secured that long-term asset management contract with the Department of Defence.

Speaker #2: Mobilisation commenced in earnest in September, and we're pleased to confirm that operations successfully went live on 1 February. We've overseen successful engagement with more than 1,600 resources, deployed 350 vehicles, and mobilised resources across 100 sites, all within the perimeter of the agreed mobilisation budget and the required timeline.

Leigh MacKender: Mobilization commenced in earnest in September, and we are pleased to confirm the operation successfully went live on 1 February. We have overseen successful engagement with more than 1,600 resources, deployed 350 vehicles, and mobilized resources across 100 sites, all within the perimeter of the agreed mobilization budget and the required timeline. I am very pleased to report that operations are performing well. We received positive feedback from our valued client about the progress and the quality of the works that have been completed. Work volumes have consistently and incrementally increased over those initial five months in line with our expected forecast, and we hit a steady run rate that will support that circa AUD 240 million in annual revenues being delivered across the business in FY27.

Speaker #2: I'm very pleased to report that operations are performing well, and we've received positive feedback from our valued clients about the progress and the quality of the works that have been completed.

Speaker #2: Work volumes have consistently and incrementally increased over those initial five months, in line with our expected forecasts, and we hit a steady run rate that will support that circa $240 million in annual revenues being delivered across the business in FY27.

Speaker #2: And margin contribution across those works has certainly exceeded our expectations, with the division not only breaking even in the first five months, but actually contributing a small profit, which is a very pleasing sign.

Leigh MacKender: The margin contribution across those works has certainly exceeded our expectation, with the division not only breaking even in the first five months but actually contributing a small profit, which is a very pleasing sign. Moving forward, our teams are continuing to focus on optimizing our field workforce and operations. We have also commenced forming a multidisciplinary team from right across Service Stream who are now charged with identifying, bidding, and looking to secure some of the initial capital works and other projects that are on offer in this market with a target date of early in calendar year 2027. Switching gears now, I wanted to just briefly touch on the business' success in making a meaningful and positive contribution with regards to the sustainability of Service Stream's operations.

Speaker #2: And moving forward, our teams will continue to focus on optimising our field workforce and operations. We've also commenced forming a multidisciplinary team from right across Service Stream, who are now charged with identifying, bidding, and looking to secure some of the initial capital works and other projects that are offered in this market, with a target date of early in calendar year 2027.

Speaker #2: Switching gears now, I wanted to just briefly touch on the business's success in making a meaningful and positive contribution with regards to the sustainability of Service Stream's operations.

Speaker #2: Our business has a very clearly defined strategy aligned to our five sustainable pathways, which are safety, people, community, environment, and governance. These areas represent those in which we can not only make a meaningful contribution, but also align with the feedback from our stakeholder engagement over several years.

Leigh MacKender: That business has a very clearly defined strategy aligned to our five sustainable pathways, with these being safety, people, community, environment, and governance. These areas represent those that we can not only make a meaningful contribution, but align with the feedback of our stakeholder engagement over several years. Highlights over the full year include, but are not limited to, 100% offset of the group's Scope 2 electricity usage. We deployed more than 130 hybrid vehicles as we work to reduce our emissions in a measured yet meaningful way. In line with our commitments detailed in our Innovate Reconciliation Action Plan, we are very proud to report 179% increase in First Nations spend across local communities which we service and support. That spend now reflects more than AUD 33 million per annum, and there has also been a 44% increase in indigenous participation right across our workforce.

Speaker #2: Highlights over the full year include, but are not limited to: 100% offset of the Group's Scope 2 electricity usage; the deployment of more than 130 hybrid vehicles as we work to reduce our emissions in a measured yet meaningful way; and, in line with our commitments detailed in our Innovate Reconciliation Action Plan, we're very proud to report a 179% increase in First Nation spend across local communities which we service and support.

Speaker #2: That spend now reflects more than $33 million per annum. And there's also been a 44% increase in Indigenous participation right across our workforce.

Speaker #2: Again, we're very proud of the achievements across those five pathways, and we look forward to sharing more information in the Group’s Sustainability Report, which is due for release in early October.

Leigh MacKender: Again, we are very proud of the achievements across those five pathways, and we look forward to sharing more information in the group's sustainability report, which is due for release in early October. Finally, before I hand to Linda, I touch on our safety performance. As I have stated many times, the health and safety of Service Stream's workforce, our clients, and the community in which we operate is our number one priority. Financial year 2026 reflected a challenging year with regards to performance across lag indicators, which shifted back slightly as new contract mobilizations and operations commenced. One of the challenges we often find is bringing on new resources into the group's safety ecosystem presents a challenge, and unfortunately, we had a slight increase in recordable incidents and lost time injuries.

Speaker #2: And finally, before I hand over to Linda, I want to touch on our safety performance. As I have stated many times, the health and safety of Service Stream's workforce, our clients, and the communities in which we operate is our number one priority.

Speaker #2: Financial year 2026 reflected a challenging year with regard to performance across lag indicators, which shifted back slightly as new contract mobilisations and operations commenced.

Speaker #2: One of the challenges we often find is that bringing new resources into the group's safety ecosystem presents a challenge, and unfortunately, we had a slight increase in recordable incidents and lost time injuries.

Speaker #2: I think it's important to note that the performance still reflects a very strong level when compared across our industry peers. But driving improvement is a major focus for our safety and operational teams right across the business.

Leigh MacKender: I think it's important to note that performance still reflects a very strong level when compared across our industry peers. But driving improvement is a major focus for our safety and operational teams right across the business. As we move forward, teams are focusing on high-risk work activities, uplifting the skills and capabilities of our frontline supervisory networks, and holding a steadfast focus on those new contract mobilizations as they commence. Linda.

Speaker #2: And as we move forward, the teams are focusing on high-risk work activities, uplifting the skills and capabilities of our frontline supervisory networks, and maintaining a steadfast focus on those new contract mobilisations as they commence.

Speaker #1: Thank you.

Speaker #3: Thanks, Leigh. And good morning. As Leigh has touched on in these comments, we've had another great year, which has reflected positively across our financial metrics outlined on page ten.

Linda Kow: Thanks, Leigh. Good morning to everyone on this call. As Leigh has touched on in his opening comments, we've had another great year, which is reflected positively across our financial metrics outlined on page 17. Total revenue for the group was AUD 2.48 billion, a slight increase of 2.3% on last year. This includes the strong start we've had across our Defence operations, with the contract now operating at a level that supports the AUD 240 million per annum contract value we announced back in September. Telco revenue, however, was slightly lower this year, largely due to the transition between different programs of work in that segment. EBITDA from operations was AUD 163.4 million, an increase of 11.8% from last year. Group EBITDA margins have continued to improve and are up another 60 basis points to 6.6%.

Speaker #3: So the working for the group was $2.48 billion, a slight increase of 2.3% on last year. This includes the strong start we've had across our Defence operations, with the contract now operating at a level that supports the $240 million per annum contract value we announced back in September.

Speaker #3: Calgary revenue, however, was slightly lower this year, largely due to the transition between different programs of work in that segment. EBITDA from operations was $163.4 million, an increase of 11.8% from last year.

Speaker #3: Group EBITDA margins have continued to improve and are up another 60 basis points to 6.6%. This uplift reflects the continuing improvement in the quality of earnings through a focus on delivery, risk appetite of commercial models, and operating leverage throughout the group.

Linda Kow: This uplift reflects the continuing improvement in quality earnings through focus on delivery, risk appetite and commercial models, and operating leverage throughout the group. The group's adjusted NPAT for the year was AUD 81.1 million, up 18.4% on last year, which equates to an adjusted earnings per share of AUD 0.131 per share. This reflects the EBITDA uplift and is also aided by a lower effective tax rate this year due to increased JV dividends. Sorry. Statutory net profit after tax was AUD 56.9 million, after allowing for the amortization of customer intangibles and ERP transformation costs, of which the SaaS component has been written off. As per usual, we've included in the appendix a reconciliation of our headline metrics to the corresponding statutory metrics. We've had another year of exceptional operating cash flow performance, generating AUD 186 million, which is an OCSB conversion rate of 114%.

Speaker #3: The group's adjusted impact for the year was $81.1 million, up 18.4% on last year, which equates to an adjusted earnings per share of 13.1 cents.

Speaker #3: This reflects the EBITDA uplift, and is also aided by a lower effective tax rate this year due to increased JV dividend. We are both sorry.

Speaker #3: Statutory net profit after tax was $56.9 million, after allowing for the amortisation of customer intangibles and ERP transformation costs. Of which the status component has been beaten off.

Speaker #3: As per usual, we've included in the appendix a reconciliation of our headline metrics to the corresponding statutory metrics. We've had another year of exceptional operating cash flow performance.

Speaker #3: Generating $186 million, which is an OCSB conversion rate of 114%. This is despite the additional working capital investment required to mobilise the new defence contract.

Linda Kow: This is despite the additional working capital investment required to mobilize the new Defence contract. Consequently, we've been able to further strengthen our balance sheet, with net cash increasing further to AUD 81 million. Finally, capping off the headlines, the directors have declared a final dividend of AUD 0.035 per share, fully franked, which takes the total FY26 dividend to AUD 0.065 per share, which is an increase of 18.2% on last year. Now on to segment performance. As Leigh has noted, we have combined our Transport and Defence operations to form a new Asset and Facility Management recording segment. This is underpinned by common strategic asset management capabilities across both businesses and provides additional capacity to further scale our Defence operations. Revenue for the segment was AUD 367 million, which includes AUD 88 million from the new Defence contract, which has been progressively ramping up from 1 February.

Speaker #3: Consequently, we've been able to further strengthen our balance sheet, with net cash increasing further to $81 million. And finally, capping off the headlines, the directors have declared a final dividend of 3.5 cents per share, fully franked, which takes the total FY26 dividend to 6.5 cents per share—an increase of 18.2% on last year.

Speaker #3: Now, I want to discuss segment performance. As Leigh has noted, we have combined our Transport and Defence operations to form a new Asset and Facility Management reporting segment.

Speaker #3: This is underpinned by common strategic asset management capabilities across both businesses and provides additional capacity to further scale our Defence operations. Revenue for this segment was $367 million, which includes $88 million from the new Defence contract, which has been progressively ramping up from the 1st of February.

Speaker #3: The Defence property and asset services contract is based on a blend of recurring programme maintenance and corrective maintenance—in other words, it can be variable—so it's been great to be able to reach a run rate that provides confidence on a $240 million per annum, as we exit the year.

Linda Kow: The Defence Property and Asset Services contract is based on a blend of recurring program maintenance and corrective maintenance and other works, which can be variable. It has been great to be able to reach a run rate that provides confidence on a AUD 240 million per annum announced as we exit the year. Transport also had a good year, benefiting from additional New South Wales pavement repair work, achieving revenue growth of 14%. EBITDA for the year was AUD 24.8 million, up AUD 7.6 million from the prior year. Pleasingly, this Defence contract made a positive contribution, not just in H2, but across FY26 overall, noting we had continued to carry a team post-tender to support the award of the contract in September and then prepare for mobilization.

Speaker #3: Transport also had a good year, benefiting from additional New South Wales payment repair work, achieving revenue growth of 14%. EBITDA for the year was $24.8 million, up $7.6 million from the prior year.

Speaker #3: Pleasingly, this defence contract made a positive contribution not just in H2, but across the FY26 overall, noting we had continued to carry a team post-tender to support the award of the contract in September, and then prepare for mobilisation.

Speaker #3: Albeit a small contribution, we had expected a small loss or break-even outcomes this year, given the size, the scale of the mobilisation, and the ramp-up profile.

Linda Kow: Albeit a small contribution, we had expected a small loss of breakeven outcomes this year given the size and scale of the mobilization and the ramp-up profile. This initial contribution also provides confidence on expected Defence earnings contribution into 2027. Transport operations also performed well, with strong outcomes from additional minor capital works undertaken. I should note the results for those of you who analyze our half on half, does include a one-off stipend from the NZPPC bid, which we recognized in H2. Slide 19, Utilities. FY26 has been another positive year for the Utility segment, which has achieved a step change in improvement in its quality of earnings over recent successive reporting periods. Looking back, EBITDA margin has now increased by around 3% over the past three years through portfolio repositioning, disciplined bidding controls, and work execution.

Speaker #3: This initial contribution also provides confidence on expected Defence earnings contribution into 2027. Transport operations also performed well, with strong outturn from the additional minor capital works undertaken.

Speaker #3: I should note, for those of you who analyse our half-on-half, it does include a one-off stipend from the NZPP bid, which we recognised in H2.

Speaker #3: Slide 19, utilities. FY26 has been another positive year for the utility segment, which has achieved a step change in improvement in its quality of earnings over recent successive reporting periods.

Speaker #3: Looking back, EBITDA margin has now increased by around 3% over the past three years, through portfolio repositioning, disciplined bidding controls, and work execution. Revenue for the year was $1.05 billion, which was $42.2 million, or 4.2%, up on PCP.

Linda Kow: Revenue for the year was AUD 1.05 billion, which was AUD 42.2 million or 4.2% up on PCP. The water sector has again continued to provide strong organic growth through the expansion of existing contracts and also new clients such as Queensland Urban Utilities. However, there were some revenue offsets due to our disciplined bidding controls resulting in some expiring contracts not being renewed as we flagged in half. EBITDA from operations was AUD 60.7 million, up AUD 15.4 million or 33.9% on last year. EBITDA margin was 5.8% with a second half exit rate of 6% well ahead of target. I should note that Utility margins are naturally biased to be higher in the second half due to the recognition of annual contract incentives. The business continues to target further margin improvements, but given recent gains, incremental gains are expected to be realized at a more gradual pace.

Linda Kow: Revenue for the year was AUD 1.05 billion, which was AUD 42.2 million or 4.2% up on PCP. The water sector has again continued to provide strong organic growth through the expansion of existing contracts and also new clients such as Queensland Urban Utilities. However, there were some revenue offsets due to our disciplined bidding controls resulting in some expiring contracts not being renewed as we flagged in half. EBITDA from operations was AUD 60.7 million, up AUD 15.4 million or 33.9% on last year. EBITDA margin was 5.8% with a H2 exit rate of 6% well ahead of target. I should note that Utility margins are naturally biased to be higher in the H2 due to the recognition of annual contract incentives. The business continues to target further margin improvements, but given recent gains, incremental gains are expected to be realized at a more gradual pace.

Speaker #3: The water sector has again continued to provide strong organic growth, through the expansion of existing contracts and also new clients, such as QUU. However, there were some revenue offsets due to our disciplined bidding controls, resulting in some expiring contracts not being renewed, as we flagged in the half.

Speaker #3: EBITDA from operations was $60.7 million, up $15.4 million, or 33.9% on last year. EBITDA margin was 5.8%, with the second-half exit rate of 6%, well ahead of target.

Speaker #3: I should note that utility margins are naturally biased to be higher in the second half, due to the recognition of annual contract incentives. And the business continues to target further margin improvement. Given recent gains, increased rental gains are expected to be realized at a more gradual pace.

Speaker #3: Moving on to Telecommunications on slide 20. The Telco segment result does reflect the cycling off from the strong 2025. Following the significant contract renewals over the past 18 months, the business now operates across a very stable base of four O&M contracts and minor capital works across both fixed line and wireless programs.

Linda Kow: Moving on to Telecommunications on slide 20. The Telco segment result does reflect the cycling off from the strong 2025. Following the significant contract renewals over the past 18 months, the business now operates across a very stable base of four O&M contracts and minor capital works across both fixed line and wireless programs. Revenue for the year was AUD 1.06 billion, down 9% on last year. This does reflect the cycling off those programs in 2025 and the transition to new contracts during the current year, including NBN field services. Revenue was also impacted by the slow ramp-up of the next tranche of the NBN fiber upgrade program through different design phases. Consequently, EBITDA was down AUD 12.8 million on PCP.

Speaker #3: Revenue for the year was $1.06 billion, down 9% on last year. This does reflect the cycling offwards programmes in 2025, and the transition to new contracts during the current year, including NBN Field Services.

Speaker #3: Revenue was also impacted by the sole ramp-up of the next tranche of NBN fiber upgrade programmes through design phases. Consequently, EBITDA was down 91 million, 12.8% on or 12.8 million on EBITDA was 91 million, sorry, down 12.8 million on PCP.

Speaker #3: This reflects the revenue reduction, as well as a small margin reduction, following the transition to the new NBN Field Services agreement in the first half.

Linda Kow: This reflects the revenue reduction as well as a small margin reduction following the transition to the new NBN field service agreement in the H1. Pleasingly, following that reset, there has been a slight improvement in H2 margins to 8.7%. Slide 21 summarizes the group P&L, presenting both the statutory and recording metrics. We have already touched on group revenue drivers for the year. The only other call-out is there should be a full year pull-through, benefit of the Defence PAS contract into FY27 of around AUD 150 million alone, which will be a meaningful contributor to the FY27 growth aspiration. Group EBITDA operations growth this year was predominantly delivered through margin expansion, which increased by 60 basis points to 6.6%. Utilities underpinned a significant portion of this improvement, lifting their margin by 130 basis points to 5.8%.

Speaker #3: Pleasingly, following that reset, there's been a slight improvement in the second half margin to 8.7%. Slide 21 summarises the group figures in our presenting both the statutory and reporting metrics.

Speaker #3: We've already touched on group revenue drivers for the year. The only other callout is that there should be a full pull-through benefit from the Defence PAD contracts into FY27, of around $150 million alone, which will be a meaningful contributor to the FY27 growth aspirations.

Speaker #3: Group EBITDA from operations growth this year has been predominantly delivered through margin expansion, which increased by 60 basis points to 6.6%. Utilities underpinned a significant portion of this improvement, lifting their margin by 130 basis points to 5.8%.

Speaker #3: Defence also contributed positively, which is in contrast to the prior year, where we were still incurring tendering costs. And finally, there has been additional corporate cost recovery across operating units, resulting in lower unallocated costs.

Linda Kow: Defence also contributed positively, which is a contrast to the prior year where we were still incurring tendering costs. Finally, there has been additional corporate cost recovery across operating units, resulting in lower unallocated costs. NCAD has increased significantly again this year by another 18.4%, AUD 81 million. D&A was lower than expected due to fully amortized items offsetting the increase in new assets and contract mobilization. There will be a pull-through impact next year, though, particularly given the phasing of new contract mobilization. Tax. There has been some benefit from a lower effective tax rate due to franking credits received on higher JV dividends. This is expected to normalize in the next year. As noted previously, NCAD excludes AUD 21 million of SaaS systems investment costs, which were charged to statutory profit. These costs will be non-occurring once the program is completed.

Speaker #3: Enterprise has increased significantly again this year, by another 18.4%, to $81 million. DNA was lower than expected due to fully amortized items offsetting the increase in new assets from contract mobilisations.

Speaker #3: There will be a pull-through impact next year, though, particularly given the phasing of the new contract mobilisation. Tax: there has been some benefit from the lower effective tax rate due to franking credits received on higher JB dividends.

Speaker #3: This is expected to normalise in the next year. And as noted previously, NPAT excludes $21 million of SAS in these SAS Invest systems investment costs, which were charged to statutory profit.

Speaker #3: These costs will be non-recurring once the programme is completed. Now, moving on to group cash flow, which is on slide 22. As noted in the headlines, we have again delivered an exceptional cash flow outcome for the year, achieving an EBITDA to OCF conversion rate of 114%.

Linda Kow: Now, moving on to group cash flow, which is on slide 22. As noted in the headlines, we have again delivered an exceptional cash flow outcome for the year, achieving an EBITDA to OCFP conversion rate of 114%. This is now the third consecutive year of greater than 100% EBITDA cash flow conversion, which has enabled the balance sheet to become leaner with working capital reduced to 9.8% of LTM revenue. Despite increases to effective tax and investment cash flows this year, we have been able to further improve the net cash position by AUD 7 million to AUD 81 million. This is also net of opportunistic share purchases to fulfill our equity-based incentive requirements for AUD 13 million. Cash CapEx for the year was AUD 48.8 million, which includes AUD 25 million in relation to the final FY25 installment.

Speaker #3: This is now the third consecutive year of greater than 100% EBITDA cash flow conversion, which has enabled the balance sheet to become leaner, with working capital reduced to 9.8% of LTM revenue.

Speaker #3: Despite increases to expected tax and investment cash flows this year, we've been able to further improve the net cash position by $7 million to $81 million.

Speaker #3: This has also netted opportunistic share purchases to fulfil our equity-based incentive requirements of $30 million. Cash tax for the year was $48.8 million, which includes $25 million in relation to the final FY25 installment.

Speaker #3: Investment cash flows, including SAS IT upgrade costs, were $44 million, representing a modest 1.8% of revenue. Over $40 million of new fleet and equipment for new contracts were deployed this year, although about half of it was leased.

Linda Kow: Investment cash flows, including SaaS IT upgrade costs, were AUD 44 million, representing a modest 1.8% of revenue. Over AUD 40 million of new fleet and equipment for new contracts were deployed this year, although about half of it was leased. IT upgrade costs, which includes the SaaS component I mentioned, encompasses our people and payroll systems, and finance systems, as well as a new field solution we deployed for Defence. These projects are expected to be predominantly completed by the end of FY27. Importantly, the vast majority, 75% of investment spend this year, was invested to support new contracts for business optimization. Finally, on this slide, lease liability payments did increase by 20% to AUD 30 million, reflecting the additional fleet deployed across our new contracts. Now turning to the balance sheet and capital management on slide 23.

Speaker #3: IT upgrade costs—which include the SAS component itemised—encompass our people, people and payroll systems, and finance systems, as well as the new field solution we deployed for defence.

Speaker #3: These projects are expected to be predominantly completed by the end of FY27. Importantly, the vast majority—greater than 75%—of investment spend this year was invested to support new contracts or business optimisation.

Speaker #3: Finally, on this slide, liability payments did increase by 20% to $30 million, reflecting the additional fleet deployed across our new contracts. Now, turning to the balance sheet and capital management on slide 23.

Speaker #3: Consistent with prior periods, our balance sheet and capital management approach seeks to maintain a strong balance sheet position, enable reinvestment in the business and support growth, provide M&A opportunity, and deliver sustainable dividends to our shareholders.

Linda Kow: Consistent with prior periods, our balance sheet and capital management approach seeks to maintain a strong balance sheet position, enable reinvestment in the business and support growth, provide M&A optionality, and provide sustainable dividends to our shareholders. The group's balance sheet is in a strong position, underpinned by our capital light business model and strong cash conversion. The business currently has access to circa AUD 400 million of liquidity, taking into account existing facilities and net cash. This has enabled the business to invest more confidently across organic and inorganic opportunities to support and optimization initiatives. Noting the expansion into Defence is and will be highly accretive, and there are no financial constraints in supporting our business to secure further organic growth.

Speaker #3: The Group's balance sheet is in a strong position, underpinned by our capital-light business model and strong cash conversion. The business currently has access to approximately $400 million of liquidity, taking into account existing facilities and net cash.

Speaker #3: This has enabled the business to invest confidently across organic and inorganic opportunities to support optimisation achieved and optimisation initiatives, noting the expansion into defence is, and will be, highly accretive, and there are no financial constraints in supporting our businesses to secure further organic growth.

Speaker #3: We embarked on the upgrade of our finance and people systems during the year, and also invested in a new field management system to support the defence contract, which is currently being refined.

Linda Kow: We embarked on the upgrade of our finance and people systems during the year, and also invested in a new field management system to support the Defence contract, which is currently being refined. These implementations are largely expected to be completed in FY27 and will deliver scalable platforms that can support further growth and enable further productivity initiatives. Maintenance CapEx and IT upgrade costs next year are indicatively expected to be in line with the current year, running at around 1.5% of revenue. With regards to strategic acquisitions, the acquisition of RiE was completed in July, and we are continuing to assess other M&A opportunities that meet our strategic criteria. Finally, delivering sustainable dividends to our shareholders is important.

Speaker #3: This implementation is largely expected to be completed in FY27, and will deliver scalable platforms that can support further growth and enable further productivity initiatives.

Speaker #3: Maintenance capex and IT upgrade costs next year are indicatively expected to be in line with the current year, running at around 1.5% of revenue.

Speaker #3: With regards to strategic acquisitions, the acquisition of RIA was completed in July, and we are continuing to assess other M&A opportunities that meet our strategic criteria.

Speaker #3: And finally, delivering sustainable dividends to our shareholders is important. This is reflected in the increase in our final dividend to 3.5 cents per share, for a full-year dividend of 6.5 cents per share, up 80% on last year.

Linda Kow: This is reflected in the increase in our final dividend to 3.5 cents per share, with full-year dividends of 6.5 cents per share, up 18% on last year. That's all from me, so I'll now hand you back to Leigh to take you through the remainder of this presentation.

Speaker #3: And that's all from me, so I'll now hand you back to Leigh to take you through the remainder of this presentation.

Speaker #1: Thank you, Linda. We're at the tail end of today's presentation, but I'll move to trading conditions and group outlook, and direct everyone firstly to slide 25.

Leigh MacKender: Thank you, Linda. We're at the tail end of today's presentation, but I'll move to trading conditions and group outlook and direct everyone firstly to slide 25, market dynamics. We provide an update here around the group's major markets and the level of annual expenditure over the short to medium term. We continue to see strong demand from infrastructure owners and operators as they undertake expansion and upgrades across their critical assets. That investment is generally driven by a range of factors, which includes population growth, aging infrastructure, the energy transition, digitalization, and the impact of more common and extreme weather events. We now have a strong foothold into both Defence and industrial sectors, which have expanded the group's total addressable market and now exceeds over AUD 60 billion in annual maintenance expenditure. This continues to grow year on year, with outsourcing continuing to also incrementally increase.

Leigh MacKender: Thank you, Linda. We're at the tail end of today's presentation, but I'll move to trading conditions and group outlook and direct everyone firstly to slide 25, market dynamics. We provide an update here around the group's major markets and the level of annual expenditure over the short to medium term. We continue to see strong demand from infrastructure owners and operators as they undertake expansion and upgrades across their critical assets. That investment is generally driven by a range of factors, which includes population growth, aging infrastructure, the energy transition, digitalization, and the impact of more common and extreme weather events. We now have a strong foothold into both Defence and industrial sectors, which have expanded the group's total addressable market and now exceeds over AUD 60 billion in annual maintenance expenditure. This continues to grow year-on-year, with outsourcing continuing to also incrementally increase.

Speaker #1: Market dynamics. We provide an update here around the Group's major markets and the level of annual expenditure over the short to medium term. It gives an industry strong demand from infrastructure owners and operators that are undertaking expansion and upgrades across their critical assets.

Speaker #1: And that investment is generally driven by a range of factors, which include population growth, aging infrastructure, the energy transition, digitalisation, and the impact of more common and extreme weather events.

Speaker #1: We now have a strong foothold in both the defence and industrial sectors, which have expanded the group's total addressable market and now exceeds $60 billion in annual maintenance expenditure.

Speaker #1: And this continues to grow year on year, with outsourcing also continuing to incrementally increase. We continue to see a strong pipeline of opportunities ahead, both associated with O&M and minor capital works, consistently coming to market through competitive tender processes.

Leigh MacKender: We continue to see a strong pipeline of opportunities ahead, both associated with O&M and minor capital works consistently coming to market through competitive tender processes. The business continues to diligently assess these and looks to take part in the competitive processes for those which we believe aligns to our group risk appetite and will provide the most attractive returns for our shareholders. Turning to slide 26 on the growth agenda. Growth and ongoing diversification is understandably a major focus for the business and a core component of our group's strategic plan. Linda and I are often asked about management's growth targets, both year on year and over the longer term. It might be beneficial to provide some insight into what our approach is and the targets that we set to meet or exceed each year.

Leigh MacKender: We continue to see a strong pipeline of opportunities ahead, both associated with O&M and minor capital works consistently coming to market through competitive tender processes. The business continues to diligently assess these and looks to take part in the competitive processes for those which we believe aligns to our group risk appetite and will provide the most attractive returns for our shareholders. Turning to slide 26 on the growth agenda. Growth and ongoing diversification is understandably a major focus for the business and a core component of our group's strategic plan. Linda and I are often asked about management's growth targets, both year-on-year and over the longer term. It might be beneficial to provide some insight into what our approach is and the targets that we set to meet or exceed each year.

Speaker #1: The business continues to diligently assess these and looks to take part in the competitive processes for those which we believe align to our group risk appetite and will provide the most attractive returns for our shareholders.

Speaker #1: Turning to slide 25 on the growth—sorry, slide 26 on the growth agenda. Growth and ongoing diversification is understandably a major focus for the business and a core component of our group's strategic plan.

Speaker #1: Linda and I are often asked about management's growth targets, both year on year and over the longer term. So it might be beneficial to provide some insight into what our approach is, and the targets that we set to meet or exceed each year.

Speaker #1: At the outset, we ideally target growth of between 5% to 10% year on year across all operations. Arguably, we push towards the top of the range.

Leigh MacKender: At the outset, we ideally target for growth of between 5% to 10% year on year across all operations. Arguably, we push towards the top of the range. Most importantly, that range is not a ceiling, not a floor. Whilst it is more challenging to control revenue, as there are fluctuations in client volumes and a portion of operations are by virtue reactive. There are, however, levers we have greater control over with respect to labor and optimization costs right across the business. Whilst we target revenue growth, we have a steadfast focus on ensuring that the group's earnings are achieving that annual target. Organic growth is our primary focus, and we are fortunate that through much of the works to reshape and diversify our operations, we have several positive elements that support strong organic growth.

Leigh MacKender: At the outset, we ideally target for growth of between 5% to 10% year-on-year across all operations. Arguably, we push towards the top of the range. Most importantly, that range is not a ceiling, not a floor. Whilst it is more challenging to control revenue, as there are fluctuations in client volumes and a portion of operations are by virtue reactive. There are, however, levers we have greater control over with respect to labor and optimization costs right across the business. Whilst we target revenue growth, we have a steadfast focus on ensuring that the group's earnings are achieving that annual target. Organic growth is our primary focus, and we are fortunate that through much of the works to reshape and diversify our operations, we have several positive elements that support strong organic growth.

Speaker #1: Most importantly, that range is not a ceiling, not a floor. And whilst it's more challenging to control revenue as we have fluctuations in client volumes and a portion of operations are, by virtue, reactive, there are, however, leaders who have greater control with respect to labour and optimisation costs right across the business.

Speaker #1: So, whilst we target revenue growth, we have a steadfast focus on ensuring that the group's earnings are achieving that annual target. Organic growth is our primary focus, and we are fortunate that, through much of the work to reshape and diversify our operations, we have several positive elements that support strong organic growth.

Speaker #1: Ninety-seven percent of the revenue falls under contracts which have mechanisms to adjust for inflationary pressures. So we generally see 3% to 5% uplift year on year.

Leigh MacKender: 97% of the revenue falls under contracts which have mechanisms to adjust for inflationary pressures. We generally see a 3% to 5% uplift year on year. In addition, we are often fortunate to secure incremental portion of our clients' spend, predominantly to our role as an O&M provider and having that strong and consistent point of presence right across their network. The third element is that we have a wonderful client base, so we continue to invest in the upgrade and expansion of their assets. So the opportunities to secure specific minor capital works and project base. We also, of course, have the opportunity to take market share as client programs proceed to market at the end of their natural contract terms, just as we have with several of the wins this year that we have referenced on the call.

Leigh MacKender: 97% of the revenue falls under contracts which have mechanisms to adjust for inflationary pressures. We generally see a 3% to 5% uplift year-on-year. In addition, we are often fortunate to secure incremental portion of our clients' spend, predominantly to our role as an O&M provider and having that strong and consistent point of presence right across their network. The third element is that we have a wonderful client base, so we continue to invest in the upgrade and expansion of their assets. So the opportunities to secure specific minor capital works and project base. We also, of course, have the opportunity to take market share as client programs proceed to market at the end of their natural contract terms, just as we have with several of the wins this year that we have referenced on the call.

Speaker #1: In addition, we're often fortunate to secure incremental portions of our clients' spend, predominantly linked to our role as an O&M provider, and having that strong and consistent point of presence right across their network.

Speaker #1: The third element is that we have a wonderful client base that we continue to invest in through the upgrade and expansion of their assets. So, there are opportunities to secure specific minor capital works and project-based work.

Speaker #1: And we also, of course, have the opportunity to take market share as client programs proceed to market at the end of their natural contract terms, just as we have with several of the wins this year that we've referenced on the call.

Speaker #1: So, we have a strong position to secure incremental organic growth across those four areas. In addition to this, we've also undertaken a number of strategic acquisitions over the last 10 years.

Leigh MacKender: We have a strong position to secure incremental organic growth across those four areas. In addition to this, we have also undertaken a number of strategic acquisitions over the last 10 years. Many will know we take a very diligent approach to M&A, given the inherent risks. We believe Service Stream is well positioned in terms of our track record, the strength of our balance sheet, and our general performance, that should we find a target which aligns with strategy and meets our diligent criteria, that we can proceed. Advancing in terms of group outlook on slide 27. I have outlined today, Service Stream is in excellent health and great position. The business has a strong, diversified work order book exceeding AUD 14.2 billion in the works. This is heavily biased to lower risk, long-term O&M agreements.

Speaker #1: And many will know we take a very diligent approach to M&A, given the inherent risks. We believe Service Stream is well positioned in terms of our track record, the strength of our balance sheet, and our general performance. That should help us to target deals that align with our strategy and meet our diligent criteria so that we can proceed.

Speaker #1: And finally, in terms of group outlook on slide 27—so I've outlined today, Service Stream is in excellent health and a great position. The business has a strong, diversified work order book, exceeding $14.2 billion in works.

Speaker #1: This is heavily biased towards lower-risk, long-term O&M agreements. Mobilisation of several new agreements had already been secured in the prior year, associated with defence, water, and industrial clients, that will support growth, revenue, and earnings in '27.

Leigh MacKender: Mobilization of several new agreements already being secured in the prior year associated with Defence, water, and industrial clients will support growth in revenue and earnings in 2027. There continues to be a strong pipeline of other works proceeding to the market through competitive tender. The group expects this confident building earnings growth in FY27. It is supported by the improved and sustainable financial performance that we have demonstrated and the mobilization of those recently secured agreements, as well as leveraging our scalable and diversified platform. That concludes our presentation today. On behalf of the Service Stream board, I would like to express our personal thanks to our fantastic staff working right across the country for their continued efforts and their dedication. I also thank all those on this call. I will now hand back to the moderator to open up for questions.

Speaker #1: And there continues to be a strong pipeline of other works proceeding to the market through competitive tender. So the group expects and is confident in delivering earnings growth in FY27, supported by the improved and sustainable financial performance that we've demonstrated, the mobilisation of those resources to secure agreements, as well as leveraging our scalable and diversified platform.

Speaker #1: And that concludes our presentation today. On behalf of the Service Stream Board, I'd like to express our personal thanks to our fantastic staff working right across the country for their continued efforts and dedication.

Speaker #1: I also thank all those on this call, and I'll now hand back to the moderator to open up questions.

Speaker #2: Thank you very much. We will now conduct the Q&A session. As a reminder, to ask a question, please press *11 on your telephone and wait for your name to be announced.

Operator: Thank you very much. We will now conduct the Q&A session. As a reminder, to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. If you wish to withdraw your question, please press star 1 1 again. First question comes from the lines of William Park from UBS.

Speaker #2: If you wish to withdraw your question, please press star 11 again. The first question comes from the line of William Park from UBS.

Speaker #3: Hi Leigh and Linda, thanks for taking my questions. Just a first question around margins for both utilities and defence. So, firstly with utilities—clearly a 6% margin in the second half—you’re saying it’s going to improve, but at a sort of gradual rate.

William Park: Hi, Leigh and Linda. Thanks for taking my questions. First question, just around margins for both utilities and Defence. Firstly, with utilities, clearly 6% margin in H2. You are saying that it is going to improve, but at a gradual rate. Is that a ceiling margin that you are thinking about with this segment? That is on utilities. With Defence margin, AUD 88 million of revenue contribution in FY26, could you give us a sense as to what sort of margin that you have delivered at the EBITDA level and whether if that is, I mean, that is obviously exceeded your expectations around nil margin for this year. Has that reshaped your thinking around where Defence margin could potentially go? Thank you.

Speaker #3: Is that sort of a ceiling margin that you're thinking about with this segment? So that's on utilities. With Defence margin, $88 million revenue contribution in FY26—could you give us a sense as to what sort of margin you've delivered at the EBITDA level, and whether that's— I mean, that's obviously exceeded your expectations around nil margin for this year.

Speaker #3: Has that sort of reshaped your thinking around where defence margin could potentially go? Thank you.

Speaker #4: Hi, Will. Thanks. Thanks for the question, and thanks for joining the call. Look, as it pertains to utility, we've gotten there pretty quickly, and obviously we aspire to continue to improve, as we mentioned on the call.

Linda Kow: Hi, Will. Thanks for the question, and thanks for joining the call. Look, as it pertains to utilities, we have gotten there pretty quickly, and obviously we aspire to continue to improve, as we mentioned on the call. I actually do not think we have a ceiling, and it really reflects the nature of our commercial model and the opportunities we take. As you know, our commercial model range from a blend of alliance style, which is cost plus, and so your margin is actually capped by that arrangement, subject to your ability to earn incentives. A schedule of rates, which is quite low risk, but there is better margin embedded within that. What we have seen recently as well is our team have been able to execute on some one-off capital projects, which generally, because they are smaller projects type work, deliver a better margin.

Speaker #4: I actually don't think we have a ceiling, and it really reflects the nature of our commercial model and the opportunities we take. As you know, our commercial models range from a blend of a lifestyle, which is cost-plus, and so your margin is actually capped.

Speaker #4: By that arrangement, subject to your ability to earn incentives, scheduler rates—which is quite low risk—but there's better margin embedded within that. And then, what we've seen recently as well is our team have been able to execute on some minor capital projects, which, generally, because they are smaller project-type works, deliver a better margin.

Speaker #4: So I think it's really going to be a question about that mix over time. I don't think there's a ceiling per se, but as you can see, this has been a journey.

Linda Kow: I think it's really going to be a question about that mix over time. I don't think there's a ceiling per se, but as you can see, this has been a journey. It's a journey that we're naturally concerned in terms of providing the guidance, but that hasn't stopped us from trying. That's probably the best guidance I can give you. But certainly, you should see that continue to improve. For defensive guidance, typically for mid-single digits, we were just a tad below that for keep the earnings for the last 5 months, which is a really great outcome given that lots of moving parts outside looking in. The scale of this mobilization, I can't even describe it to you. I think we are still aboard an opportunity to continue to bed down the operations, but we are seeing really good, positive momentum around contract structure.

Speaker #4: It's a journey that we're naturally conservative in terms of providing the guidance, but that hasn't stopped us from trying. So that's probably the best guidance I can give you, but certainly you should see that continue to improve.

Speaker #4: Look, Defence is typically guided for mid-single digits. We just had to lower that for the earnings for, call it, the last five months.

Speaker #4: Which is a really great outcome, given that there are lots of moving parts outside looking in. The scale of mobilisation—I can't even describe it to you.

Speaker #4: I think we are still afforded an opportunity to continue to bed down the operations, but we are seeing really good, positive momentum around contracts, contract structure, but also additional earnings opportunities.

Linda Kow: Also additional earnings opportunities. Some of that goes towards giving us the confidence to 40. Hopefully, we're having a conversation in a year's time that we see more than that. As you know, additional volume always comes with it, incremental margin as well, because your overhead is fixed. I think, yes, there is a bias upside, which is what the analysts have generally said. But at the moment, we've said mid-single digit, where we're going to get there with the bias upside.

Speaker #4: And some of that goes towards giving us the confidence at 240. Hopefully, we're having a conversation in a year's time that we see more than that.

Speaker #4: And as you know, additional volume always comes with it incremental margin as well, because your overhead is fixed. So I think, yes, there is a bias to the upside, which is what the analysts have generally said.

Speaker #4: But at the moment, we've said mid-single digits; we're going to get there with the bias to upside.

Speaker #1: I agree. We'll note just that I think everyone has really summarised that well. I think we've demonstrated with utilities, really, that first-principle basis on which we're looking at and assessing margins, contract by contract. We've done that over eight halves now.

Leigh MacKender: I agree. Will, can I just add, I think everyone has really summarized that well. I think we've demonstrated with the utilities, really that first principle basis of which we're looking and assessing margins contract by contract. We've done that over 8 halves now. We've got a plan which we've formulated for this year and the next 2 years following. It shows we should be able to deliver incremental improvement. So we're confident we'll be able to see that. I agree with Linda's comments on Defence. I think we all agree. We thought, and a guide might put it, might break even for the first 5 months, and we only started literally 5 months ago. But to see that positive contribution, not far from the margin that we expected to drive over the first year, gives us real confidence that there's that bias upside within the references.

Speaker #1: We've got a plan which we've formulated for this year and for the next two years following. It shows we should be able to deliver incremental improvement.

Speaker #1: So, we're confident we'll be able to see that. And I agree with Linda's comments on Defence. I think we'll plead; we thought—and the guidelines are that I might break even for the first five months, and we only started literally five months ago.

Speaker #1: But to see that positive contribution, not far from the margin that we expected to drive over the first year, gives us real confidence that there's that biased upside within the references.

Speaker #3: Thank you, that's very clear. And just on the telco side, could you provide some color around how you're thinking about top-line trajectory from here on, and obviously delivering an 8.8% margin for the second half?

William Park: Thank you. That's very clear. Just on the telco side, could you provide some color around how you're thinking about top-line trajectory from here on and obviously delivering, 8.8% margin for H2? It sounds like to me that's sustainable going forward. But just any steer on, I guess, the revenue trajectory for telco and whether there's sort of a half-on-half skew that we should be thinking about into 2027.

Speaker #3: It sounds to me like that's sustainable going forward. But just any steer on, I guess, the revenue trajectory for telco and whether there's sort of a half-and-half skew that we should be thinking about into '27?

Speaker #1: Yeah, that's a great question. We really appreciate it, Will, because we know that everyone does sort of really have an eye towards that telco heritage.

Leigh MacKender: Yeah. No, that is a great question. We really appreciate it, Will, because we know that everyone does sort of really have an eye towards that telco heritage. As Mike would have said before, it is a very strong pillar, and an important pillar of this business. We are really pleased to see in line with our expectations. We said that we thought telco would have a 20 basis point improvement over the course of H1 to H2, and it is exactly what we have delivered. We can see the forecast. The team are really diligent about how to drive that. In terms of revenue, firstly, before I go to the earnings for 2027, the team are absolutely targeting some revenue growth into 2027. It is more challenging in telco compared to utilities because the market is just so much smaller.

Speaker #1: As I might have said before, it is a very strong and important pillar of this business. So I'm really pleased to see that it's in line with our expectations. We said that we thought telco would have a 20 basis point improvement over the course of the first half to the second half, and that's exactly what we've delivered.

Speaker #1: We could see the forecast. The team are really diligent about driving that. In terms of revenue, firstly, before I go to the earnings for '27, the team are absolutely targeting some revenue growth.

Speaker #1: Into 27. Now, it is more challenging in telco compared to utilities because the market is just so much smaller. But as I said before, we've been able to secure some incremental build work with Intercity Fibre, and we've got that great position now that our operations are bedded in after a year of mobilising, that we can hopefully get some additional programs of work.

Leigh MacKender: But as I said before, we have been able to secure some incremental build work with Intercity Fibre, and we have got that great position now that our operations are bedded in after a year of mobilizing, that we can hopefully get some additional programs at work. So we are absolutely budgeting and targeting top-line growth for telco. It will certainly not be to the level of utilities and Defence, et cetera, but we are still targeting growth. I think we will also continue to see a slight improvement on our EBITDA margin across telco. I think in the order of what we saw this year will probably be reflective of what we target again. The team are really quite diligent. They have got a clear plan around how they can grow and improve that quality of earnings.

Speaker #1: So we are absolutely budgeting and targeting top-line growth for telco. It will certainly not be to the level of utilities and defence, etc., but we're still targeting growth.

Speaker #1: I think we'll also continue to see a slight improvement in our EBITDA margin across Telco. I think, sort of in the order of what we saw this year, we'll probably be reflecting what we target again.

Speaker #1: The team are really quite diligent. They've got a clear plan around how they can grow and improve that quality of earnings. So I think we'll be able to replicate a similar sort of margin trajectory or uplift in '27.

Leigh MacKender: So I think we will be able to replicate that similar sort of margin trajectory or uplift in 2027.

Speaker #3: Thank you. And then my next question, just around M&A opportunities. I mean, there's been an article out there recently talking about certain targets and so forth in your space.

William Park: Thank you. My next question is just around M&A opportunities. There has been an article out there recently talking about certain targets and so forth in your space. Obviously, you have got a slide in there which kind of sets out how you are thinking about M&A more extensively than what you have outlined in the past. Can you just step through to the extent that you could, just step through the target markets that you are looking at, or are you looking at bolt-on like you have done recently, or is transformative acquisitions of a great scale, is that something that you guys are open to? Thank you.

Speaker #3: And obviously we've got a slide in there which kind of steps out how you're thinking about M&A more extensively than what you have outlined in the past.

Speaker #3: Can you just step through to the extent that you could, just step through sort of the target markets that you're looking at, or are you looking at sort of bolt-on like you've done recently, or is transformative acquisitions of a great scale?

Speaker #3: Is that something that's open to— Is that something that you guys are open to? Thank you.

Speaker #1: Yeah, no, it's a great question, Will, and certainly we've noted with interest all of the commentary around strip talk and others about the processes we're apparently in.

Leigh MacKender: Yeah, no, it is a great question, Will, and certainly, we have noted with interest all of the commentary around Street Talk and others about the processes we are currently in. Look, I think we have been sharing over the course of the last 12 months. Linda and I think the business, if I look at the last 14 months, we have undertaken at least 12 different reviews across targets of varying shapes and sizes. I think that is what we continue to do. But we are very open in what is a very diligent approach to looking at those, and they need to meet a set of criteria, and arguably high criteria at that. We are certainly looking at a range of opportunities. While I cannot comment on that specific one, which is referenced in the press.

Leigh MacKender: Yeah, no, it is a great question, will, and certainly, we have noted with interest all of the commentary around Street Talk and others about the processes we are currently in. Look, I think we have been sharing over the course of the last 12 months. Linda and I think the business, if I look at the last 14 months, we have undertaken at least 12 different reviews across targets of varying shapes and sizes. I think that is what we continue to do. But we are very open in what is a very diligent approach to looking at those, and they need to meet a set of criteria, and arguably high criteria at that. We are certainly looking at a range of opportunities. While I cannot comment on that specific one, which is referenced in the press.

Speaker #1: Look, I think we've been sharing over the course of the last 12 months. Linda, I think the business—if I look at the last 14 months—we've undertaken at least 12 different reviews across targets.

Speaker #1: So, varying shapes and sizes. So I think that's what we continue to do. But we are very open to what is a very diligent approach to looking at those.

Speaker #1: And they need to meet a set of criteria, and arguably high criteria at that. So we're certainly looking at a range of opportunities. Whilst I can't comment on that specific one, which is referenced in the press, we are looking—if I think about our current portfolio—I think we are underweight in Power in terms of our utility operations.

Leigh MacKender: We are looking. If I think about our current portfolio, I think we are underweight in power in terms of our utility operation. We have got a great operation in power across Vic and SA, but we are looking to certainly any opportunity that can help expand that. In a similar vein for utilities, we see lots of opportunities across industrial. Just like we acquired RiE Group, the industrial market is significantly inside on scale. I mean, there are a lot of opportunities not only across generation assets, gas and coal, but also oil, LPG. So those industrial markets referenced, I think a great opportunity. Look, we are also very active and confident in looking at targets now around Defence. We had a number of opportunities come up throughout the course of the year, two years ago.

Speaker #1: We've got a great operation in power across VIC and SA, but we're looking to certainly add any opportunities that can help expand that. In a similar vein for utilities, we see lots of opportunities across industrial, just like we acquired RIE Group.

Speaker #1: The industrial market is significant in size and scale, and we think there's a lot of opportunities—not only across generation assets, gas, and coal, but also oil, LP, and G.

Speaker #1: So those industrial markets reference, I think, are a great opportunity. We are also very active and confident in looking at targets now around defence. We had a number of opportunities come up throughout the course of the year, two years ago.

Speaker #1: But prior to securing that strong R&M base, we just didn't want to start to go into, I suppose, a minor capital works or sort of construction-at-arms within Defence before we had that annuity base.

Leigh MacKender: But prior to securing that strong O&M base, we just did not want to start to go into, I suppose the minor capital works or a sort of construction arm within Defence before we had that annuity base. So now that we have got those PAS contracts, I think Defence would represent a third area. And fourth, I think, asset management, facility management. Hard assets is certainly an area that we are demonstrating competence on. And we think anything around that social infrastructure or broader asset categories around government portfolio would certainly be of interest to us.

Speaker #1: So, now that we've got those PADs contracts, I think defence would represent a third area. And for that, I think asset management, facility management.

Speaker #1: Hard assets is certainly an area that we are demonstrating confidence in, and we think anything around that social infrastructure or broader asset categories around the government portfolio would certainly be of interest to us.

William Park: Thank you. Then just one last question, just around some of the cost items and below-the-line items. So corporate cost, I appreciate your comment, Linda, on this, but is that sort of a sustainable level going forward, number one? And number two, on SaaS investment, the ERP modernization cost AUD 21 million below the line. Is that the level that you would expect to generate in FY27, or does it sort of taper off?

Speaker #3: Last question, just around some of the cost items and below-the-line items. So, corporate cost—I appreciate your comment, Linda, on this—but is that sort of a sustainable level going forward, number one?

Speaker #3: And number two, on SAS investment, the ERP modernisation cost—$21 million below the line—is that the level that you would expect to generate in FY27, or does it sort of taper off?

Speaker #2: Yes. So, the first question was about sort of getting off—kind of think. So, what was the first question, Will?

Linda Kow: Yeah. The first question was? I am getting old, I cannot think. What was the first question, Will?

Speaker #3: Oh, sorry. Corporate costs—whether that's corporate costs that you... yeah.

William Park: Oh, sorry. Corporate costs, whether if that-

Linda Kow: Oh, corporate costs. Sorry, yeah.

William Park: Yeah, corporate costs for you.

Linda Kow: That is corporate cost.

William Park: Yeah.

Speaker #2: Yeah. Look, we've simply guided corporate costs with an allocator around $15 to $20 million. This year is a little bit lower because we actually allocate some of our corporate resources into the defence, into the defence expert, you can imagine, because we obviously have some corporate activity around that.

Linda Kow: Yeah. Look, we have simply guided corporate cost will be unallocated around AUD 15 to AUD 18 or AUD 20 million. This year is a little bit lower because we actually allocated some of our corporate resources into the Defence, as you can imagine, because we obviously have some corporate activity around that. There probably will be a return to that similar level next year, depending on all the corporate activity that we do, and we are quite active, as we have just discussed. In terms of the SaaS cost, look, the guidance I gave, and look, personally, I am frustrated by the accounting policy because to me that is CapEx. So the guidance that I have used is that maintenance CapEx, whether you call it SaaS or whatever you want to call it, is 1.5% of revenue next year. You can pick whether you want to cut the line.

Speaker #2: There will probably be a return to a similar level next year, depending on all the corporate activity that we do. And we are quite active.

Speaker #2: As we've just discussed, in terms of the SAS cost—look, the guidance I gave, and look, personally I'm frustrated by the accounting policy because, to me, that is CapEx.

Speaker #2: And so the guidance that I give is that that maintenance CapEx, whether you call it SAS or whatever you want to call it, is one and a half percent of revenue next year.

Speaker #2: You can pick whether you want to cut the line, but it will be slightly higher next year because we are now in the intense part of the deployment.

Linda Kow: But it will be brought slightly higher next year because we are now in the, I call it, the intense part of the deployment. Last year, we only started the journey. But hence I provide that guidance for that 1.5% so that this is convincing the quantum that we are expecting to invest in what I call BAU plus maintenance. Does that make sense?

Speaker #2: Last year, we only started the journey. But hence, I provide that guidance of that 1.5% so that investors can ring sense.

Speaker #2: Quantum that we're expecting to invest in what I call BAU/maintenance. Does that make sense?

Speaker #3: Yes, thank you. Thanks for answering my question.

William Park: Yes. Thank you. Thanks for answering my question.

Speaker #1: Thank you, Will. Appreciate

Leigh MacKender: Thank you, Will. Appreciate it.

Speaker #4: Thank you. Next, we have Amanda Kelly from Barrenjoey Capital Partners.

Operator: Thank you. Next, we have Amanda Kelly from Barrenjoey Capital Partners.

Amanda Kelly: Hey, team. Hope you're doing well. I just have a question, I guess. You guys sound like you're getting increasingly disciplined with how you're tendering on contracts. I'm just wondering what you're seeing in the broader market on pricing and tendering terms, I guess particularly in the current environment where inflation's a bit higher.

Speaker #5: Hey, team. Hope you're doing well. I just have a question, I guess. You guys sound like you're getting increasingly disciplined with how you're tendering on contracts.

Speaker #5: I'm just wondering what you're seeing in the broader market on pricing and tendering terms, particularly in the current environment where inflation is a bit higher.

Speaker #1: Yeah, no, look, thank you very much. Appreciate your support, appreciate the question. Yeah, you're absolutely correct. We certainly are, and we've had this broader approach for the last 12 or even 24 months now, where we really revised our risk appetite.

Leigh MacKender: Yeah. No, look, thank you very much. Appreciate your support. Appreciate the question. Yeah, you're absolutely correct. We certainly are, and we've had this probably approach for the last 12 or even 24 months now around, we've really revised our risk appetite. We thought the pendulum swung too far in terms of some of the terms, conditions, and risks that our business and probably the broader market was taking. So we've certainly been quite adamant. For example, we need to set or secure a kind of improved set of terms. For example, we still undertake construction-based activities. We see lots of operations coming through in those minor capital works or even larger scale construction works. But we'll only do the latter under a cost reimbursable alliance style model. So those are some of the sorts of examples. We are seeing a very strong pipeline.

Speaker #1: We thought the pendulum swung too far in terms of some of the terms, conditions, and risks that our business—and probably the broader market—was taking.

Speaker #1: So we've certainly been quite adamant for example, that we need a sorry, quite adamant that we need to set or secure the kind of improved set of terms.

Speaker #1: And, for example, we still undertake construction-based activities. We see lots of operations coming through in those minor capital works, or even larger-scale construction works.

Speaker #1: But we'll only do the latter under a cost-reimbursable or aligned-style model. So those are some of the sorts of examples. We are seeing a very strong pipeline.

Leigh MacKender: We're not bidding on more than we are bidding on, which is a great opportunity for us and a great position to be in. In terms of the competitive position, though, that hasn't changed. It is still incredibly competitive. We have, I think, our two major listed peers, which are much larger and more diversified than us, coming right down to the wire on every significant O&M contract. You have a smattering of tier 2s and 3s and other areas that may have a geographical presence or capability. Certainly still very competitive. We did reference, though, in the pack, one of the things that I have certainly seen in my, I've been in the business 22 years now, I am starting to certainly see increased barriers to entry coming up right across our market.

Speaker #1: We're not bidding on more than we are bidding on, which is a great opportunity for us and a great position to be in. In terms of the competitive position, though, that hasn't changed.

Speaker #1: It is still incredibly competitive. We have, I think, our two major listed peers—who are much larger and more diversified than us—coming right down to the wire on every sort of significant O&M contract.

Speaker #1: And you have a sort of smattering of Tier 2s and 3s and other areas that may have a geographical presence or capability. So it's certainly still very competitive.

Speaker #1: We did reference, though, in the pack, one of the things that I have certainly seen in my business—22 years now—I am starting to certainly see increased barriers to entry coming up right across our market.

Speaker #1: So, things such as ESG requirements, cybersecurity, and supply chain—these sorts of areas—our clients, given the Tier 1 sort of asset and operators, are increasingly pushing more and more into what are higher levels of requirements and therefore increasing barriers to entry.

Leigh MacKender: Things such as ESG requirements, cybersecurity, supply chain, these sorts of areas our clients, given the tier 1s are the best owners operators, are increasingly pushing more and more into what is higher levels of requirements and therefore increasing barriers to entry. Whilst we're required to invest in those, I think ultimately that is a strength as we move forward because we're able to meet or exceed a lot of those, and that can be a challenging aspect for tier 2 and tier 3s, which just don't have those significant systems and frameworks in place.

Speaker #1: So whilst we're required to invest in those, I think ultimately that is a strength as we move forward, because we're able to meet or exceed a lot of those. That can be a challenging sort of, I suppose, aspect for tier 2 and tier 3s, which just don't have those significant systems and frameworks in place.

Amanda Kelly: Thank you. Just one more on the transport business. The H2 there looks pretty solid. I'm just wondering if you can talk about some of the pockets of strength that you've seen there, and also any change in the way that you're tendering for work there.

Speaker #5: Thank you. And just one more on the Transport business. The second half there looks pretty solid. I'm just wondering if you can talk about some of the pockets of strength that you've seen there, and also any change in the way that you're tendering for work there.

Speaker #2: Yeah, look, our Transport business is naturally second half-weighted because, really, the additional work that they do around capital projects is reliant on the weather.

Linda Kow: Yeah, look, our transport business is naturally H2 biased because really the additional work that they do around capital projects, it's reliant on weather, and so you are generally doing a lot of that upgrade work in the H2 of each year. That generally attracts a better margin. A lot of that work that we referenced, table repair work at Up 15 Sydney, was done then, and the team were able to extract really good outcomes from that. So that's just a natural part of our business cycle. I think the comment around the tendering alignment applies equally to transport.

Speaker #2: And so, you are generally doing a lot of that upgrade work in the second half of each year, and that generally attracts a better margin.

Speaker #2: And so a lot of that work that we referenced, the pavement repair work set up for 15 Sydney, was done then, and the team were able to extract really good outcomes from that.

Speaker #2: So, that's just a natural part of our business cycle. I think the comment around the tendering alignment applies equally to Transport—there's no differentiator.

Leigh MacKender: Yeah.

Linda Kow: There's no restriction on that.

Leigh MacKender: No, I agree. We've got a number of opportunities. Transport is a much smaller market for us, as we've said before. But we certainly have each of the state authorities where we've got current contracts within New South Wales, we've got a couple in Victoria, one in South Australia, one in WA. And we continue to see those authorities splitting up their regions into four or five areas, and those are routinely coming out to market. So we've currently got three or four of those, I think, out in the market at the moment going through our tender process within just the transport sector. So there's opportunities to secure those. Now, those opportunities like the big rail one we secured last year, might be AUD 30 million to AUD 40 million a year.

Speaker #1: No, I agree. We've got a number of opportunities in transport. It is a much smaller market for us, we've said before, but we certainly have each of the state authorities where we've got current contracts. Within New South Wales, we've got a couple in Victoria, one in South Australia, and one in WA.

Speaker #1: And we continue to see those authorities splitting up their regions into four or five areas, and those are routinely coming out to market. So we've currently got three or four of those, I think, out in the market at the moment, going through our tender process within just the transport sector.

Speaker #1: So there's opportunities to secure those now. Those opportunities, like the big roads one we secured last year, might be $30 or $40 million a year.

Speaker #1: It's not substantial research, but certainly substantial to the transport operations turning over that sort of $300-odd million level. So there could be a good uplift there over the course of the next 12 months.

Leigh MacKender: It's not substantial for Service Stream, but certainly substantial to the transport operations turning over that sort of AUD 300 odd million levels. So there could be a good uplift there over the course of the next 12 months.

Speaker #5: Thank you.

Amanda Kelly: Thank you.

Leigh MacKender: Well, thank you for your question.

Speaker #1: Well, thank you for the question.

Speaker #4: Next, we have Lindsay Battle from GS.

Operator: Next we have Lindsay Bettiol from Goldman Sachs.

Lindsay Bettiol: Hey, Leigh. Hey, Linda. Hopefully you can hear me.

Speaker #6: Hey, Linda, hopefully, you can hear me.

Linda Kow: Hi, Lindsay.

Speaker #2: Hi, Lindsay.

Speaker #1: Good morning.

Leigh MacKender: Good morning.

Lindsay Bettiol: Hey. Couple of questions from me. First, just on the water business. It looks like, obviously a strong year. It looks like it was an even stronger H2. My understanding is that Yarra Valley Water contract you announced a few months ago doesn't commence until October. I just want to understand the water business. My math might not be perfect here, but it looks like it's run rating AUD 300 million in the H2, which when you add Yarra Valley on top, gets you to AUD 700 million-ish for next year.

Speaker #6: Hey, a couple of questions from me. First, just on the water business—it looks like, I mean, it was obviously a strong year. It looks like it was an even stronger second half.

Speaker #6: And my understanding is that the Yarra Valley Water contract you announced a few months ago doesn't commence until October. So I just want to understand the water business.

Speaker #6: I mean, my math might not be perfect here, but it looks like it's kind of run-rating mid-$300 million in the second half, which, when you add Yarra Valley on top, gets you to like $700 million-ish for next year.

Leigh MacKender: Yeah.

Speaker #6: Does any of that sound plausible, realistic? Have I miscalculated anything? Just high-level thoughts on water would be great. Thanks.

Lindsay Bettiol: Does any of that sound plausible, realistic? Have I miscalculated anything? Just high level thoughts on water would be great. Thanks.

Leigh MacKender: No, look, you are correct. Certainly, it's been a great year. We've talked before about what's taken us a decade to get to this position in terms of water, and we're certainly very excited about what that bodes for the future. Water is one of those areas I talked before about that's just benefiting from continual investment in aging infrastructure, but also population growth. That's supporting significant investment. Given our O&M base, we're seeing just that consistent growth. You are correct with regards to Yarra Valley Water. That was a multi-year, 10-year contract that we secured this year. That is new incremental revenue, and that has not started yet. That is going to add to the business. So it's a profile application.

Speaker #1: No, I looked through. I'm correct. Certainly, it's been a great year. I mean, we've talked before about what's taken us a decade to disappear to this position in terms of water, and we're certainly very excited about what that poses for the future. Water is one of those areas we've talked before about as just benefiting from continual investment in aging infrastructure, but also population growth.

Speaker #1: And that's supporting significant investment, given our own end base. We're seeing just that consistent upward trend. You are correct with regards to Yarra Valley Water.

Speaker #1: So, that was a multi-year, or 10-year, contract that was secured this year. That is new incremental revenue, and that has not started yet. So, that is going to add to the business as a prior application.

Speaker #1: I don't yet know exactly the number, but I don't think you're out of that side of the estimates that you referred to earlier. And that will commence on or around the middle of October.

Leigh MacKender: I don't yet know exactly the number, but I don't think you're out of that side of the estimates we referred to earlier, and that will commence on or around the middle of October. So there's that contract there. We also have Millmerran and others like the industrial shutdown maintenance agreement that we've secured. So there's some industrial and water revenues that are already secured for last year that have not yet contributed to utilities. That's why for those that know me, I'm quite cautious, but we know we do have enough there to see good top-line growth coming through in the utilities in the year ahead.

Speaker #1: So there's that contract there. We also have Millmeren and others, like the industrial shutdown maintenance agreement that we've secured. So there's some industrial and water revenues that are already secured from last year that have not yet contributed to utilities.

Speaker #1: And that's why those are quite cautious. But we know we do have enough there to see good top-line growth coming through in utilities in the year ahead.

Speaker #6: Brilliant, thank you. And then just on telco margins again, I think your earlier commentary was it looks like you’ve exited the year doing high kind of 8s. You talked to improvement again to be expected in FY27.

Lindsay Bettiol: Brilliant. Thank you. Just on telco margins. Again, I think your earlier commentary looks like you've exited the year doing high kind of eights. You talked to improvement again to be expected in FY27. I think in the past you've said it would be difficult or it shouldn't be my base expectation that the telco business gets back to a nine handle. Has your view changed there at all, or are we getting kind of toppy on telco margins?

Speaker #6: Just trying to— I think in the past you've said it would be difficult, or that it shouldn't be my base expectation, that the telco business gets back to a nine handle.

Speaker #6: Has your view changed there at all, or are we getting kind of toppy on telco margins?

Speaker #1: No, look, I think our view is still very aggressive with the commentary we've provided for the last 18 months. I mean, we strategically offered some sharper pricing to one of our major clients to secure, effectively, a 10-year maintenance arrangement.

Leigh MacKender: No, look, I think our view is still very, very simple. The commentary we've provided for the last 18 months. We strategically offered some sharper pricing to one of our major clients to secure effectively a 10-year maintenance arrangement. That is something I do every day of the week and twice on Sundays again. That, we guided the market that that would drop our margin from 9 to 8.5, which is exactly what happened in the prior year. We then guided in the H1 2026 that we would be potentially up to sort of a 20 basis point improvement from 8.5 to 8.7. So exactly as forecast. We sit here now, I think there's still bias for upside. It's going to be, I think, probably 10 basis points, maybe 20 basis points, but that's about it.

Speaker #1: And that is something I do every day at a league, twice on Sundays again. We guided the market that that would drop our margin from that 9% to 8.5%, which is exactly what happened in the prior year.

Speaker #1: And we then guided the first half of '26, that there would be potentially up to, sort of, a 20 basis point improvement from 8.5 or 8.7.

Speaker #1: So exactly where forecast. The city now, I think there's still bias for upside. It's going to be, I think, probably 10 basis points, maybe 20 basis points, but that's about it.

Leigh MacKender: I think we're not striving for and don't expect them to get back to a nine handle this year. I think that's probably to stress too far. I think they will see, again, bias for upside on growth. Growth really has to come from our clients spending more in their programs. There's a number of opportunities to see that happen. As we know, everyone is increasingly reliant today on telecommunication services. So we think there is a bias for that to continue to grow, but they are absolutely confident they should see a small margin improvement over the course of 2027.

Speaker #1: I think we're not striving for, and don't expect them to get back to a nine handle this year. I mean, that's probably a distress too far.

Speaker #1: I think they will see, again, bias for upside and growth. Growth really has to come from our clients spending more in their programs. There are a number of opportunities to see that happen.

Speaker #1: And as we know, everyone is increasingly reliant today on telecommunication services. So, we think there is a bias for that to continue to grow.

Speaker #1: But they are absolutely confident they should see a small margin improvement over the course of '27.

Speaker #6: Perfect. And then just maybe a final question from me, just following on from something that was asked earlier—just on defense margins. It sounds like, well, I think you said directly that over the period you were close to where you're expecting margins to settle in defense.

Lindsay Bettiol: Perfect. Then just maybe following, final question for me, just following on something that was asked earlier. Just Defence margins, it sounds like, or I think you said directly, over the period, you are close to where you are expecting margins to settle in Defence. Presumably, mobilization at the front end of that contract maybe weighed on margins a little bit. I guess my question is, should we then assume that you exited the period doing north of 5% margins on that contract? Does that math

Speaker #6: Presumably, like mobilization at the front end of that contract, maybe wait on margins a little bit. I guess my question is, should we then assume that you exited the period doing kind of north of 5% margins on that contract?

Speaker #6: Is that does that math?

Leigh MacKender: No

Speaker #1: No.

Speaker #6: Square?

Lindsay Bettiol: square?

Leigh MacKender: No.

Speaker #1: No, I wouldn't suggest that. So, we originally guided this year because of the nature of defense operations. We started in February; we started small, and then it was basically incrementally increasing on a daily basis.

Lindsay Bettiol: Okay.

Leigh MacKender: I wouldn't suggest that. We originally guided this year, because the nature of Defence operations, we started in February, we started small, and then work was basically incrementally increasing on a daily basis. So let's say you start at 30% work volumes, they are then incrementally increasing from February to June to reach a run rate that would support AUD 240 million over the course of 2027. So in the set, we may see that growth. We will see how we go. But we are very pleased to see a positive contribution. So we thought we were going to break even. It actually delivered a positive contribution. It didn't get to the mid-single digit margin, i.e., 5% that we are hoping for, but it wasn't that far away.

Speaker #1: So, you're saying you start at sort of 30% of work volumes, then incrementally increase from February to June to reach a run rate that would support $240 million over the course of '27.

Speaker #1: So, in the set, you may see that growth. We'll see how we go. But we're very pleased to see a positive contribution. So, we thought we were going to break even.

Speaker #1: It actually delivered a positive contribution. It didn't get to the mid single-digit margin, i.e., 5%, that we're hoping for, but it wasn't that far away.

Speaker #2: I think what's built up within that figure is your comment around mobilization. That was actually only a small net cost for us because we were actually paid for that asset.

Linda Kow: I think the other thing I would put in that, Benji, is your comment around mobilization. That was actually only a small net cost to us because we were actually paid for that asset. What we were able to do was really manage our mobilization costs to basically fit within the mobilization fee we were afforded and not go too much over, and that really assisted with the delivery over the last half.

Speaker #2: What we were able to do was really manage our mobilization costs to basically fit within the mobilization fee we were afforded, and not go too much over.

Speaker #2: And that really assisted with the delivery over the last half.

Speaker #6: Okay. No, that all makes sense. Okay, great. Thank you both.

Lindsay Bettiol: Okay. No, that all makes sense. Okay, great. Thank you both.

Speaker #1: Thank you very much. I do appreciate the question.

Leigh MacKender: Thank you very much. We appreciate the question.

Speaker #3: Thank you. Next, we have Ian Mamoru from Audit Minute. Please go ahead.

Operator: Thank you. Next, we have Ian Maloon from Ord Minnett. Please go ahead.

Speaker #7: Good morning, Leigh. Good morning, Linda. Thanks for taking my question. Just looking at slide 13 with Defense operations—so, just obviously the plus $150 million on the existing contract—sort of first question is, is there any kind of milestones ahead to kind of retest the size of that?

Ian Maloon: Good morning, Leigh. Good morning, Linda. Thanks for taking my question. Just looking at slide 13 with Defence operations. Just obviously the plus 150 on the existing contract. First question is there any kind of milestones ahead to kind of retest the size of that existing contract? Secondly, thinking about your point around opportunities to expand into other government-related assets and infrastructure projects. Is that specific to the geographies that have been won already? How should we be thinking about that as a potential contributor? Is 2027 too early? Is 2028 too early?

Speaker #7: Existing contract. And then secondly, thinking about your point around opportunities to expand into other government-related assets and infrastructure projects—is that specific to the geographies that have been won already, and how should we be thinking about that as a potential contributor?

Speaker #7: Is 27 too early? Is 28 too early? Yeah, I guess the scope of the opportunities there, too. Thank you.

Leigh MacKender: Yeah.

Ian Maloon: I guess, the scope of the opportunities there too. Thank you.

Speaker #1: No, no worries at all, Leigh. Thanks for the question. And also, Ian, thank you very much for the work. I got a copy of the insights and the presentation you were presenting around some of the markets that you face into.

Leigh MacKender: No worries at all, Ian. Thanks for the question, mate. Also, Ian, thank you very much for the work. I got a copy of the insights and presentation you were presenting around some of the markets which we face into, and generally appreciate that. That was a great read. In terms of Defence operations, I know we are still at this stage just standing firm on that AUD 240 million across the full year. A couple of things to note there is, obviously, we have not had a full year yet. We have only had five months. We did see a strong uptick as volumes grow in the latter part of those five months, both with the mobilization. But we are also just trying to determine, is that going to be something we are going to see in terms of seasonality?

Speaker #1: And generally appreciate that. That was a great read. So, in terms of defense operations, we're still, at this stage, just standing still on that $240 million across the full year.

Speaker #1: A couple of things to note there is obviously we haven't had a full year yet—it's only been five months. We did see a strong uptick as volumes grew in the latter part of those five months, both with the mobilization, but we're also just trying to determine: is that going to be something we're going to see in terms of seasonality?

Speaker #1: Is it going to just be that slight bias in the second half, associated with what sometimes happens across many clients, which is a push to spend in the latter part of the financial year?

Leigh MacKender: Is it going to just be that slight bias in the second half associated with what sometimes happens across many clients, which is a push to spend in the latter part of the financial year. So still confident on the AUD 240. In terms of the, as a sort of minimum. In terms of the minor capital works and project works, and this has got a lot of airplay, so I think it is a great question to raise and go through. There is certainly an opportunity not only in our existing regions, but right across Australia. We have 1,600 plus resources now which are Defence certified and accredited across many disciplines, trade disciplines. We are sort of forming and have formed that multidisciplinary team from across our utilities, industrial, telecommunications, and Defence area to sort of come together. That team started last month.

Leigh MacKender: Is it going to just be that slight bias in the H2 associated with what sometimes happens across many clients, which is a push to spend in the latter part of the financial year. So still confident on the AUD 240. In terms of the, as a sort of minimum. In terms of the minor capital works and project works, and this has got a lot of airplay, so I think it is a great question to raise and go through. There is certainly an opportunity not only in our existing regions, but right across Australia. We have 1,600 plus resources now which are Defence certified and accredited across many disciplines, trade disciplines. We are sort of forming and have formed that multidisciplinary team from across our utilities, industrial, telecommunications, and Defence area to sort of come together. That team started last month.

Speaker #1: So, still confident on the $240 million in terms of that as a sort of minimum. In terms of the minor capital works and project works—and this has gotten a lot of airplay, so I think it's a great question to raise and go through.

Speaker #1: There's certainly an opportunity, not only in our existing regions, but right across Australia. We have over 1,600 resources now, which are defense certified and accredited.

Speaker #1: Across many disciplines, trade disciplines. And we are sort of forming and have formed that multidisciplinary team from across our utilities, industrial, telecommunications, and defense area to sort of come together.

Speaker #1: That team started last month. They are now starting to look at different opportunities. But those opportunities are not just limited to SA and NT.

Leigh MacKender: They are now starting to look at different opportunities. But those opportunities are not just limited to SA and NT. We are looking at, for example, be they telecommunications or HV upgrades or other works right across the geography of Australia. So we are certainly targeting that. Again, we are going to continue to be measured in line with our risk appetite. We do not want to rush to failure there. The greatest contribution we can provide for the business and our shareholders is going to be continuing to sort of generate that strong momentum out of the O&M work. But we are confident we will win something in those projects and minor capital workspace. I think that we will start to see that contribution.

Speaker #1: We are looking at, for example, whether there are telecommunications or HV upgrades or other works right across the geography of Australia. So, we are certainly targeting that.

Speaker #1: Again, we're going to continue to be measured at the moment with our risk appetite. We don't want to rush to fail. The greatest contribution we can provide for the business and our shareholders is going to be continuing to generate that strong momentum out of the L&M work.

Speaker #1: But we are confident we'll win something in those projects and minor capital works space, and I think we'll start to see that contribution.

Speaker #1: We've targeted January, is what we sort of said to the team. We'd like to sort of form your team, start to have a look at some of those opportunities.

Leigh MacKender: We have targeted January, Ian, as we sort of said to the team, we would like to sort of form your team, start to have a look at some of those opportunities, and we would earmark and have sort of targeted internally for a small contribution from those sort of coming into January in terms of our internal targets.

Speaker #1: And we would earmark and sort of target it internally for a small contribution from those, sort of coming into January in terms of their internal targets.

Ian Maloon: Very good. Then just maybe a follow-up for Linda, just in terms of the CapEx kind of ahead of the defense mobilization. Is that all in 2027 or is there some incremental to come? Just back solving your sort of maintenance CapEx guidance, we will talk at about another 20 kind of pre-tax to go into

Speaker #7: Very good. And then just maybe a follow-up for Linda, just in terms of the CapEx ahead of the defense mobilization. Is that all in '27, or is there some incremental to come? And just back-solving your sort of maintenance CapEx guidance, it looks like about another $20 million pre-tax to go into the SaaS platform?

Linda Kow: Yeah

Ian Maloon: the SaaS platform. So, does that knock it on the head in FY27 or is there

Speaker #7: So, does that knock it on the head in FY27, or is there still a little bit more to come?

Linda Kow: Yes

Ian Maloon: still a little bit more to come?

Speaker #2: Yeah, that's the defense that was done. In actual practice, it probably slowed it a little bit too much, and we've actually explored some of that to some other BUs, just because outside looking in it's a brand new contract for us.

Linda Kow: Yeah, that is it. That is done. In actual fact, we probably deployed it a little bit too much and we have actually redeployed them to some other BUs, just because they are outside looking in a brand-new contract for us. But no, that is done. What we will be spending money on in terms of new deployments will be Yarra Valley Water, anything else new that we spend, but clearly nothing to the same scale as defense, given how big of a contract that was.

Speaker #2: But no, that defense is done. What we'll be spending money on in terms of new deployments will be Yarra Valley Water, and anything else new that we spend.

Speaker #2: But clearly nothing to the same scale as Defense, given how big a contract that was.

Speaker #7: Thank you. And then just on the SaaS program—sorry, I might have missed that point. Is the spending similar in FY27 as it is in 26, in terms of above the line, or...? Yeah, yep.

Ian Maloon: Thank you. Then just on the SaaS program, sorry, I missed that point maybe. Is it similar spend in FY27 as 2026 in terms of

Linda Kow: Yeah

Ian Maloon: above the line or not? Yeah.

Speaker #2: Yeah, I think if we understood more, because we are now in the sort of deployment phase a little bit. Last year was still initiation.

Linda Kow: Yeah, I think it will be a little bit more because we are now in the sort of deployment phases of it. Last year was still initiation. Having said that, I understand Mark's sentiment, hence why I gave that guidance of that 1.5% envelope for maintenance, call it IT investments. That is how I see it. It is just an accounting standard that requires me to expense an investment. So I see that as interchangeable with my BAU maintenance CapEx, and I provide that guidance of 1.5% on revenue.

Speaker #2: Having said that, I understand that sentiment. Hence, why I gave that guidance of that 1.5% envelope for maintenance—call it IT investments. I don't think I see it.

Speaker #2: It's just the standard, kind of at the outset, that required me to expense an investment. So, I see that as interchangeable with my BAU maintenance CapEx.

Speaker #2: And I provide that guidance at one and a half percent on my revenue.

Ian Maloon: Very good. Thanks. Thanks, Linda. Thanks, Leigh. Congrats on the result.

Speaker #7: Very good. Thanks. Thanks, Linda. Thanks, Leigh. Congrats on the result.

Speaker #1: Thank you, Matt. Appreciate the support. Thank you, Leigh.

Leigh MacKender: Thank you, Matt. Appreciate the support. Thank you, Eileen.

Speaker #3: Thank you. Next, we have Mitchell Sonogan from Macquarie.

Operator: Thank you. Next we have Mitchell Sonogan from Macquarie.

Speaker #8: Good morning, Leigh and Linda. Thanks for taking the questions. A fair few of them have been asked, but maybe just on utilities. I know you gave a bit of a comprehensive view of the opportunities out there, Leigh, but do you mind just giving any more sense of bigger tender opportunities similar to what you recently announced with Yarra Water?

Mitchell Sonogan: Good morning, Leigh and Linda. Thanks for taking the questions. A fair few of them have been asked, but maybe just on utilities. I know you gave a bit of a comprehensive view of the opportunities out there, Leigh, but do you mind just giving any more sense of bigger tender opportunities similar to what you recently announced with Yarra Valley Water? Are there many of those sorts of opportunities in the near-term pipeline? Thank you.

Speaker #8: Are there many of those sorts of opportunities in the near-term pipeline? Thank you.

Speaker #1: No, thank you, Mitch. Appreciate the support. Appreciate the question. Yeah, look, when utilities seem to be a growth area, we've got a number of these sort of L&M opportunities that do come through the pipeline.

Leigh MacKender: No, thank you, Mitch. Appreciate the support. Appreciate the question. Yeah, look, I mean, utilities is considered a growth area. We've got a number of these sort of O&M opportunities that do come through the pipeline. We talked about last year, I think at the half, we talked about three, and we were successful in securing two of those that I was sort of obscurely referencing. We generally have a success rate across the business of about 30%, and that hasn't moved at all over the period. Again, we are quite pleased. So in terms of current utility operations, there are a couple of those opportunities. I don't expect to see any of those major opportunities announced in the H1, though should we be successful. The tender process for these is generally the 6-plus month process.

Speaker #1: We talked about last year, I think it's a half—we talked about three—and we were all successful in securing two of those that I was sort of obscurely referencing.

Speaker #1: We generally have a success rate across the business of about 30%, and that hasn't moved at all over the period. And again, we are quite diligent.

Speaker #1: So, in terms of current utility operations, there are a couple of those opportunities. I don't expect to see any of those major opportunities announced in the first half, though, should we be successful.

Speaker #1: The tender process for these is generally a six-plus-month process. But there are always a couple of other opportunities that do come out. So I'd be confident there's probably two or three coming through, and we should expect, likely like last year, to be announcing and confirming some sort of limited utilities, certainly over the course of the next 12 months.

Leigh MacKender: But there are always a couple of other opportunities that do come out. So I would be confident there is probably two or three coming through, and we should expect, like we did last year, to be announcing or confirming some sort of winners in utilities certainly over the course of the next 12 months.

Speaker #8: Okay, thank you. And just on M&A, I know we've only had the keys technically for a few weeks now, but maybe just a quick update on RIE Group.

Mitchell Sonogan: Okay, thank you. And just on M&A, I know you have only had the keys technically for a few weeks now, but maybe just a quick update on RiE Group. Obviously, a smaller strategic bolt-on, but yeah, just keen to understand, one, how you see the strategic benefits of that business, but two, how you are seeing the opportunities now you are actually owning it for a few weeks.

Speaker #8: Obviously, a smaller strategic bolt-on, but yeah, just kind of understand, one, how you see the strategic benefits of that business, but two, how you see the opportunities now that you've actually owned it for a few weeks.

Speaker #8: Thanks, guys.

Leigh MacKender: Yeah.

Speaker #1: No, thanks, Mitch. It's really good. Linda and I both joined our utility team at their annual conference in the Gold Coast a couple of weeks ago.

Mitchell Sonogan: Thanks, guys.

Leigh MacKender: No, thanks, Mitch. It is really good. Linda and I both joined our utility team in their annual conference in Melbourne a couple of weeks ago. And I again caught up with Jamie, the owner of the business, who now works for us. He and his wife. And it was great to catch up with them. For those that do not know the history here, I mean, RiE is an amazing business. It is a small family-run business. And it probably has 40-odd people operating in different times. And they work for a tier 1 client base. We were very impressed with the client contracts that they hold. Not working for EPCs, but actually working directly with the clients themselves, across, as I said, traditional generation assets, coal, gas, also the LNG, LPG, and sovereign oil. So, it was great to be able to have that come through.

Speaker #1: And I again caught up with Jamie, the owner of the business, who now works for us—he and his wife. And it was great to sort of catch up with them.

Speaker #1: And for those that don't know the history here, I mean, RIE is an amazing business. It's a small, family-run business. And it probably had 40-odd people operating at different times.

Speaker #1: And they work for a Tier 1 client base. We're very impressed with the client contracts that they hold—not working for our peers, but actually working directly for the clients themselves.

Speaker #1: Across traditional generation assets, coal, gas, but also the LNPG. So and sorry, and oil. So it was great to be able to have that come through.

Speaker #1: We put the feelers out to our utility, transport, and other divisions to say, look, whilst we've got advice and we'd rather do something more strategic and significant, we certainly didn't want to pass up any strategic opportunities.

Leigh MacKender: We put the feelers out to our utility transport and other divisions to say that whilst we have a bias and we would rather do something more strategic and significant, we certainly did not want to pass up any strategic opportunities. RiE was one that we were keeping an eye on over the last 12 to 18 months. Our team in utilities have known that business really well. Being heavily Queensland biased, many of the executives there have known that business, and we are very confident it would be a great fit. It was great to bring that in. I think what we will probably see is being able to hopefully leverage their client relationships, our balance sheet, our industrial capabilities to secure maybe some additional station maintenance at these sites or some of these large shutdowns.

Leigh MacKender: We put the feelers out to our utility transport and other divisions to say that whilst we have a bias and we would rather do something more strategic and significant, we certainly did not want to pass up any strategic opportunities. RiE was one that we were keeping an eye on over the last 12 months to 18 months. Our team in utilities have known that business really well. Being heavily Queensland biased, many of the executives there have known that business, and we are very confident it would be a great fit. It was great to bring that in. I think what we will probably see is being able to hopefully leverage their client relationships, our balance sheet, our industrial capabilities to secure maybe some additional station maintenance at these sites or some of these large shutdowns.

Speaker #1: And RIE was one that we were keeping an eye on over the last sort of 12 to 18 months. Our team in utilities had known their business really well.

Speaker #1: Being somewhat heavily Queensland-biased near the executives, they've known that business. And we're very confident it would be a great fit, so it was great to bring that in.

Speaker #1: I think what we'll probably see is being able to hopefully leverage their client relationships, our balance sheet, and our industrial capabilities to secure maybe some additional station maintenance for these sites, or some of these large shutdowns.

Speaker #1: So, we know from history, some of these shutdowns can be anywhere between $10 million to $30 million for one-off shutdowns. So whilst RIE is small, the capabilities are strong, and when leveraged across our broader industrial base, I think we are confident—quite confident—that we'll be able to secure one or two of these contract opportunities over the next sort of 12 to 18 months.

Leigh MacKender: We know from history, some of these shutdowns can be anywhere between AUD 10 million to AUD 30 million per shutdown. Whilst the client is small, the capabilities are strong, and when leveraged across our broader industrial base, I think we are confident, quietly confident, that we will be able to secure one or two of these contract opportunities over the next 12 to 18 months, to support that growth.

Speaker #1: To support that growth.

Speaker #3: Thank you. Just a moment for our next question, please. Next, we have Nicholas Danish from OBC.

Operator: Thank you. Just a moment for our next question, please. Next, we have Nicholas Danish from RBC.

Speaker #7: Oh, thank you. Thanks, Leigh and Linda, and congrats on the result. Just one question, just around work in hand. I think it was reported at $8.2 billion at the end of this period, and $9.2 billion in February.

Nicholas Danish: Thank you. Thanks, Leigh and Linda, and congrats on the result. Just one question, just around work in hand. I think it was reported at AUD 8.2 billion end of this period and AUD 9.2 billion in February. Then if I look at the incremental contracts won during the period, I think it was AUD 1 billion, and then you guys have earned about AUD 1.245 billion. I am just trying to make that math add up. Am I incorrect or is my math incorrect? If you could help me step that through, that would be helpful.

Speaker #7: And then if I look at the incremental contracts won during the period, I think it was $1 billion, and then you guys have earned about $1.245 billion.

Speaker #7: So I'm just trying to make that math add up. Am I incorrect, or is my math incorrect? And if you could help me step through that, that would be helpful.

Leigh MacKender: No, you are right, Nick. One of the things with work in hand, it is always at a point in time and the organization draws down on that. Be it AUD 1.3 billion of revenue in H2 2026, AUD 2.4 billion across the year. So we are drawing down from that work in hand, which is why we importantly reference the extension options that exist and said in my 2022 views, 91% of them go through extension options. So you have AUD 8.2 billion or AUD 8 billion in that initial period, then you have another AUD 4.2 billion in extension, sorry, AUD 6.2 billion in extension options. So there is about AUD 14 billion, about 5x contract cover. So I see some of the reports. We are not concerned that there is insufficient work in hand.

Speaker #1: No, you are. I mean, one of the things with working hands is that it's always at a point in time, and the organization draws down on that.

Speaker #1: You give $1.3 billion of revenue in the second half of '26, $2.4 billion across the year. So we are drawing down from that working hand, which is why we importantly reference the extension options that exist.

Speaker #1: And so, in my 22 years, 99% of them go through extension options. So you've got $8.2 billion in that sort of initial period, and then you've got another $4.2—or sorry, $6.2 billion—in extension options.

Speaker #1: So, there's about $14 billion in about five times contract cover. So I see some of the reports of the revenue. We're not concerned that there is insufficient work in hand.

Speaker #1: We've got 85% of our work that we need for this year already secured. We always challenge our BUs to be a little bit more aggressive in terms of their growth targets.

Leigh MacKender: We have 85% of the work that we need for this year, already secured. We always challenge our BUs to go a little bit more aggressive in terms of their growth targets. But we have certainly got 5x contract cover and a number of opportunities that go well beyond that 5-year period. So feel very, very comfortable the work in hand is-

Speaker #1: But we've certainly got five times contract cover and a number of opportunities that go well beyond that sort of five-year period. So, feel very, very comfortable with the work in hand.

Speaker #7: Got it. Okay, very clear. Thank you. And the second one is just around Defense. Obviously, you've done an excellent job thus far mobilizing, so congrats to you.

Nicholas Danish: Got it. Okay. Very clear. Thank you. The second one is just around Defence. Obviously, you have done an excellent job thus far, mobilizing. So congrats to you. I suppose from here, I am just curious on what the key constraints for further growth is. Is it around labor? Is it around the actual pipeline of work available to you from your client? What are the things that are the key constraints to that business growing from where we are today and where it is run rating today?

Speaker #7: I suppose, from here, I'm just curious about what the key constraints for further growth are. Is it around labor? Is it around the actual pipeline of work available to you from your client?

Speaker #7: What are the things that, yeah, are the key constraints to that business growing from where we are today and where it's run-rating today?

Speaker #1: Is that—are you specifically talking about defense or utility? Sorry, Nick.

Leigh MacKender: Is that- Are you specifically talking about Defence or utility, sorry, Nick?

Speaker #7: Yes, defense, defense, defense.

Nicholas Danish: Yes. Defence.

Leigh MacKender: Defence, yeah, look, I think firstly, Defence, very similar to many of our other clients, has an aging infrastructure base, and they've been very open with the strategic plans and things around the significant upgrade of facilities, particularly those in northern Australia. I mean, hundreds of billions of dollars going into an upgrade of our capabilities. I think we're certainly going to see the benefit of some of that investment. Whether or not we choose to take part in the actual upgrade of those sites and the capital works, if we were awarded and go through a procurement process is one thing. But I think the nature of our operations, being that we are maintaining the asset base in those allocated regions, means you are actually maintaining a base which will be invested in and continue to expand.

Speaker #1: Defense. Yeah, I think firstly, defense. I mean, very similar to many of our other clients, it has an aging infrastructure base. And they've been very open with their strategic plans and things around the significant upgrade of facilities, particularly those in the Northern Hemisphere.

Speaker #1: And the hundreds of billions of dollars that’s going into an upgrade of our capabilities. So, I think we’re certainly going to see the benefit of some of that investment. Whether or not we choose to take part in the actual upgrade of those sites and the capital works, if we were awarded and go through the procurement process, is one thing.

Speaker #1: But I think the nature of our operation has been that we are maintaining the asset base in those allocated regions. It means you are actually maintaining a base which will be invested in and will continue to expand.

Speaker #1: So, we should say we would expect to see, as compared by client, an incremental increase associated with that investment and the expansion of the assets.

Leigh MacKender: We should see, we would expect to see, as confirmed by the client, the incremental increase associated with that investment and the expansion of the assets. There's, of course, an ability for us to take on those minor capital works and bid on those select programs, not only in our two areas but right across the country. A range of opportunities as new Defence programs often come through competitive tender processes. Again, very similar to what we see in the four areas I outlined in our growth agenda. We have organic growth, which is generally driven by that sort of inflationary adjustment across our contracts. You have additional spend as clients look to spend more in upgrading their programs. Being the O&M provider, you do. It's not guaranteed, but you've certainly got a strong presence and capability.

Speaker #1: There's, of course, an ability for us to take on those minor capital works and bid on those select programs, not only in our two areas, but right across the country.

Speaker #1: So, a range of opportunities. There are new defense programs that often come through competitive tender processes. So again, very similar to what we see in the four areas I outlined in our growth agenda.

Speaker #1: We have organic growth, which is generally driven by that sort of inflationary adjustment across our contracts. You have additional spend; there are clients who spend more in upgrading their programs.

Speaker #1: And being the O&M provider, you do—it's not guaranteed—but you've certainly got a strong presence and capability. Additional capital works and programs you can certainly bid on, and then you have new contracts.

Leigh MacKender: Additional capital works and programs can certainly bid on, and then you have new contracts. I think that is applicable across not only Defence but across all of our markets in tech.

Speaker #1: And I think that that is applicable not only across defense, but across all of our markets and sectors.

Speaker #2: Yeah, Nicholas, on the last bit there—I think I heard you also ask about the constraints for us accessing more of that defense opportunity.

Linda Kow: Yeah. Nick, the line's a bit bad, but I think I heard you also ask about the constraints for us, accessing more of that Department of Defence opportunity. I would actually say that right now, the constraints are actually us because we're still coming up that learning curve and understanding what that opportunity set. We're doing quite a lot of work internally, actually understanding life on base and what those relationships are and who are the different providers that we can tap into. As Leigh mentioned, we have already stood up a much larger workforce than we need, and we are in the process of standing up a multidisciplinary team across our business as an area of focus.

Speaker #2: And I want you to say that right now, with the constraints, it's actually us, because we're still coming up that learning curve and understanding what that opportunity set is. We're doing quite a lot of work internally, actually understanding lifelong base and what those relationships are, and what are the different providers that we can tap into.

Speaker #2: As Leigh mentioned, we have already stood up a much larger workforce than we need, and we are in the process of standing up a multidisciplinary team across our business as an area of focus.

Linda Kow: I think putting together our transport teams with our Department of Defence teams creates more of that bandwidth, particularly around things like bidding and back ops, Department of Defence strength, to really try to drive that rather than try to build that capability from start. I think right now where we are, we're only 5 months in, so we're still quite young at this, but we see a lot of opportunity.

Speaker #2: And also, I think putting together our transport teams with our defense teams creates more of that bandwidth, particularly around things like bidding and back-offs for defense strength, to really try to drive that rather than trying to start building that capability and stand and start.

Speaker #2: So I think right now, where we are, we're only five months in, so we're still quite young at this. But we can see a lot of opportunity.

Speaker #7: Yep, very positive. Okay, thank you very much. Thanks for your time, and congrats on the result.

Nicholas Danish: Yep, very positive. Okay. Thank you very much. Thanks for your time and congrats on the result.

Speaker #1: Thank you. Thanks, Nick.

Leigh MacKender: Thank you. Thanks, Nick.

Speaker #3: Thank you. Our last question comes from Ollie Burston from CLSA.

Operator: Thank you. Our last question comes from Oliver Burston from CLSA.

Oliver Burston: Yeah, Ollie, good morning.

Speaker #8: Good morning, Leigh and Linda. Most of my questions have already been asked, but maybe just a follow-up from me on defense and those minor capital works opportunities.

Leigh MacKender: Good morning, Leigh and Linda. Most of my questions have already been asked, but maybe just a follow-up from me on defense and those minor capital works opportunities. Would it be fair to assume that these will be accretive to defense margins going forward?

Speaker #8: Would it be fair to assume that these will be accretive to Defense margins going forward?

Leigh MacKender: Ollie, thank you, Ollie. It is great to have a question, and we look forward to engaging with you over the course of the roadshow and beyond. Yeah, look, I cannot comment specifically on defense operations, but I think one of the attributes you generally expect is minor capital works, as a sort of a lower risk, lower value sort of construction project. We are not doing big dollar constructions in-service. Your minor capital works generally sort of indicates that sort of AUD 10 million of revenue is our ceiling, before we look to have an alternative model where it might rely on style cost plus. Generally, what we find for those ones, we do expect target, a higher margin because there is some element, even though they are low risk, there is some element of risk.

Speaker #1: Oh, no, thank you, Ollie. It's great to have a question, and we look forward to engaging with you over the course of the roadshow and beyond.

Speaker #1: Yeah, look, I can't comment specifically on defense operations, but I think one of the attributes you generally expect is minor capital works as a sort of lower risk, lower value construction project.

Speaker #1: We're not doing big-dollar constructions in the servicing. Minor capital works generally indicate that about $10 million in revenue is our ceiling.

Speaker #1: Before we look to have an alternative model—where it might be alliance or cost plus—generally what we find for those ones is, you do expect to target a higher margin because there is some element, even though they're low-risk areas, that there is some element of risk.

Speaker #1: So we would be expecting a higher margin contribution for the works in our own right. But you are correct—what we also see, and this was evident across our utilities areas and areas of gas, water, electricity, is that you do see incremental benefit because you've already got a base of indirect staff and having to mobilize, etc.

Leigh MacKender: So we would be expecting a higher margin contribution for the work in their own right. But you are correct. What we also see, and this is evident across our utilities areas, whether it is gas, water, electricity, is that you do see incremental benefit because you have already got a base of indirect staff who do not have to mobilize, et cetera. So you can often see incremental enhanced margins associated with successfully delivering those mining capital works.

Speaker #1: So you can often see incremental, enhanced margins associated with successfully building those minor capital works.

Speaker #7: Great. Thanks, guys. Congrats on the results.

Oliver Burston: Great. Thanks, guys. Congrats on the results.

Speaker #1: Yep. Thank you, Ollie. I look forward to catching up.

Leigh MacKender: Yep. Thank you, Ryan. Look forward to catching up.

Speaker #3: Thank you. That concludes our Q&A session. I will now hand back to Leigh.

Operator: Thank you. That concludes our Q&A session. I will now hand back to Leigh.

Leigh MacKender: That looks that is it from myself and Linda. We really appreciate everyone taking the time out of your day. We look forward to engaging with analysts and shareholders over the course of the next two weeks during our roadshow. Thank you for joining us.

Speaker #1: That looks like that's it from myself and Linda. We really appreciate everyone taking the time. We understand it's a busy day, and we look forward to engaging with analysts and shareholders over the course of the next two weeks during our roadshow.

Speaker #1: Thank you for joining us.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.

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