Q4 2026 Infragreen Group Ltd Earnings Call
Operator 2: Hello, and welcome to the Infragreen Group Limited FY2026 full year results briefing. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, please press star one on your telephone keypad. I would now like to turn the conference over to Declan Sherman, Managing Director and Chief Executive Officer. You may begin.
Operator: Hello, and welcome to the Infragreen Group Limited FY2026 full year results briefing. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, please press star one on your telephone keypad. I would now like to turn the conference over to Declan Sherman, Managing Director and Chief Executive Officer. You may begin.
Speaker #1: After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, please press star 1 on your telephone keypad.
Speaker #1: I would now like to turn the conference over to Declan Sherman, Managing Director and Chief Executive Officer. You may begin.
Speaker #2: Good morning, everyone, and thank you for joining Infragreen's FY26 results call. It's Declan Sherman here, CEO of Infragreen Group, and I'm joined by Martin McIvor, our CFO, and Jane Pryor, our company secretary.
Declan Sherman: Good morning, everyone, and thank you for joining Infragreen's FY2026 results call. It's Declan Sherman you've got here. I am the CEO of Infragreen Group, and I am joined by Martin McIver, our CFO, and Jane Prior, our Company Secretary. Before we begin, I would like to note that today's discussions may include forward-looking statements about our expectations for the business. I would encourage you to refer to our ASX announcements and accompanying materials released this morning for the full disclaimers and reconciliations. Today, I will take you through the group results first, then we will walk through each of the four businesses, before covering our priorities for FY2027. We will then open up the line for any questions. Just turning our mind to the group highlights. Total EBITDA for FY2026 was AUD 23.9 million, up from AUD 18.6 million in FY2025, which was growth of approximately 29%.
Declan Sherman: Good morning, everyone, and thank you for joining Infragreen's FY2026 results call. It's Declan Sherman you've got here. I am the CEO of Infragreen Group, and I am joined by Martin McIver, our CFO, and Jane Prior, our Company Secretary. Before we begin, I would like to note that today's discussions may include forward-looking statements about our expectations for the business. I would encourage you to refer to our ASX announcements and accompanying materials released this morning for the full disclaimers and reconciliations. Today, I will take you through the group results first, then we will walk through each of the four businesses, before covering our priorities for FY2027. We will then open up the line for any questions. Just turning our mind to the group highlights. Total EBITDA for FY2026 was AUD 23.9 million, up from AUD 18.6 million in FY2025, which was growth of approximately 29%.
Speaker #2: Before we begin, I'd like to note that today's discussion may include forward-looking statements about our expectations for the business. I'd encourage you to refer to our ASX announcements and accompanying materials released this morning for the full disclosures.
Speaker #2: For the full disclaimers and reconciliations, today I'll take you through the group results first. Then we'll walk through each of the four businesses. Before covering our priorities for FY27, we'll open up the line for any questions.
Speaker #2: So, just turning our mind to the group highlights. Total EBITDA for FY26 was $23.9 million, up from $18.6 million in FY25, which was growth of approximately 29%.
Speaker #2: That's a meaningful step up in the profitability across our portfolio. And importantly, it wasn't just concentrated in one half. The first half EBITDA was $10.5 million versus $8.9 million in 2025, and the second half EBITDA was $13.4 million versus $9.7 million in the second half of '25.
Declan Sherman: That's a meaningful step up in the profitability across our portfolio, and importantly, it wasn't just concentrated in one half. The H1 EBITDA was AUD 10.5 million versus AUD 8.9 million in 2025, and the H2 EBITDA was AUD 13.4 million versus AUD 9.7 million in the H2 of 2025. The great thing is growth really accelerated throughout the year, with the H2 up around 38% on the prior corresponding period. As a result, we note that we had a record Q4 with the underlying EBITDA of AUD 7.6 million, which means we are starting FY2027 with some very strong momentum. We are always very focused on cash flow across the business, and during FY2026, we generated AUD 11.7 million in underlying cash flow, which was a great result. That was a 38% increase on FY2025.
Declan Sherman: That's a meaningful step up in the profitability across our portfolio, and importantly, it wasn't just concentrated in one half. The H1 EBITDA was AUD 10.5 million versus AUD 8.9 million in 2025, and the H2 EBITDA was AUD 13.4 million versus AUD 9.7 million in the H2 of 2025. The great thing is growth really accelerated throughout the year, with the H2 up around 38% on the prior corresponding period. As a result, we note that we had a record Q4 with the underlying EBITDA of AUD 7.6 million, which means we are starting FY2027 with some very strong momentum. We are always very focused on cash flow across the business, and during FY2026, we generated AUD 11.7 million in underlying cash flow, which was a great result. That was a 38% increase on FY2025.
Speaker #2: So the great thing is, growth really accelerated throughout the year, with the second half up around 38% on the prior corresponding period. As a result, we note that we had a record fourth quarter, with underlying EBITDA of $7.6 million, which means we are starting FY27 with some very strong momentum.
Speaker #2: We're always very focused on cash flow across the business, and during FY26, we generated $11.7 million in underlying cash flow, which was a great result.
Speaker #2: That was a 38% increase on FY25. As a result, the dividends that we received from the businesses we're invested in increased by 111% to $6.3 million.
Declan Sherman: As a result, the dividends that we received from the businesses we are invested in increased by 111% to AUD 6.3 million. Once again, another great result. You can observe how the business has grown over the last three years and, with a positive outlook in FY27, we may go close to doubling our earnings in just three short years. We have done this while generating significant cash flow throughout and without using a significant amount of financial leverage, which is a great result. There has been some tremendous compound growth across all metrics, revenue, EBITDA, underlying cash flow, and net profit after tax. This is underpinned by the strong organic growth that has been occurring across the portfolio. The organic growth in the business in FY26 was 24%, which has been the key pillar of growth. We typically achieve growth across four of our pillars.
Declan Sherman: As a result, the dividends that we received from the businesses we are invested in increased by 111% to AUD 6.3 million. Once again, another great result. You can observe how the business has grown over the last three years and, with a positive outlook in FY27, we may go close to doubling our earnings in just three short years. We have done this while generating significant cash flow throughout and without using a significant amount of financial leverage, which is a great result. There has been some tremendous compound growth across all metrics, revenue, EBITDA, underlying cash flow, and net profit after tax. This is underpinned by the strong organic growth that has been occurring across the portfolio. The organic growth in the business in FY26 was 24%, which has been the key pillar of growth. We typically achieve growth across four of our pillars.
Speaker #2: Once again, another great result. You can observe how the business has grown over the last three years, and with a positive outlook for FY27, we may come close to doubling our earnings in just three short years.
Speaker #2: We've done this while generating significant cash flow throughout, and without using a significant amount of financial leverage, which is a great result. So there's been some tremendous compound growth across all metrics—revenue, EBITDA, underlying cash flow, and net profit after tax.
Speaker #2: This is underpinned by the strong organic growth that's been occurring across the portfolio. The organic growth in the business in FY26 was 24%, which has been the key pillar of growth.
Speaker #2: We typically achieve growth across four of our pillars. Organic growth was the key pillar of growth in FY26. In terms of the outlook for the markets in which we operate, it continues to be incredibly strong.
Declan Sherman: Organic growth was the key pillar of growth in FY26. In terms of the outlook for the markets in which we operate, it continues to be incredibly strong. When we go through each of the businesses and we look back over historically how we have performed, and what the outlook has been, I feel like coming into FY27, we have the most positive outlook across each of the sectors that we have had since our inception five years ago. Martin McIver will talk to each of the businesses and the outlook for those markets in a couple of minutes. As a general comment, the quality of our portfolio and the underlying assets have been the key driver to the strength of the result. The positioning in the markets they serve will ensure this result is not just repeatable but continues to grow over the coming years.
Declan Sherman: Organic growth was the key pillar of growth in FY26. In terms of the outlook for the markets in which we operate, it continues to be incredibly strong. When we go through each of the businesses and we look back over historically how we have performed, and what the outlook has been, I feel like coming into FY27, we have the most positive outlook across each of the sectors that we have had since our inception five years ago. Martin McIver will talk to each of the businesses and the outlook for those markets in a couple of minutes. As a general comment, the quality of our portfolio and the underlying assets have been the key driver to the strength of the result. The positioning in the markets they serve will ensure this result is not just repeatable but continues to grow over the coming years.
Speaker #2: When we think and go through each of the businesses, and we look back over, historically, how we've performed and what the outlook has been, I feel like coming into FY27, we have the most positive outlook across each of the sectors that we've had since our inception five years ago.
Speaker #2: Martin will talk to each of the businesses and the outlook for those markets in a couple of minutes. As a general comment, the quality of our portfolio and the underlying assets has been the key driver of the strength of the result.
Speaker #2: And the positioning in the markets they serve will ensure this result is not just repeatable, but continues to grow over the coming years. We continue to review a number of acquisition opportunities, but we balance that with rigorous discipline, which has been the key to our success historically.
Declan Sherman: We continue to review a number of acquisition opportunities, but we continue to marry that with rigorous discipline, which has been the key to our success historically. We looked at a number of opportunities throughout the year. We completed three acquisitions through the Pure Environmental business. Before turning to the performance of each of the businesses, I wanted to touch on the ESG performance for the year because it is critical to how we think about the quality and durability of our earnings. On the environmental side, our operations created 145 million liters of drill muds and a further 92 million liters of wasted oily waters, while diverting 134,000 tons of organic waste from landfill. We recycled 73,000 tons of scrap metal and installed 58,000 kilowatts of clean energy capacity across the portfolio. Our assets also provided 495 megawatt hours of backup generation, supporting grid stability.
Declan Sherman: We continue to review a number of acquisition opportunities, but we continue to marry that with rigorous discipline, which has been the key to our success historically. We looked at a number of opportunities throughout the year. We completed three acquisitions through the Pure Environmental business. Before turning to the performance of each of the businesses, I wanted to touch on the ESG performance for the year because it is critical to how we think about the quality and durability of our earnings. On the environmental side, our operations created 145 million liters of drill muds and a further 92 million liters of wasted oily waters, while diverting 134,000 tons of organic waste from landfill. We recycled 73,000 tons of scrap metal and installed 58,000 kilowatts of clean energy capacity across the portfolio. Our assets also provided 495 megawatt hours of backup generation, supporting grid stability.
Speaker #2: We looked at a number of opportunities throughout the year. We completed three acquisitions through the Pure Environmental business. Before turning to the performance of each of the businesses, I want to touch on the ESG performance for the year, because it's critical to how we think about the quality and durability of our earnings.
Speaker #2: On the environmental side, our operations treated 145 million litres of drill muds and a further 92 million litres of waste and oily waters, while diverting 134,000 tonnes of organic waste from landfill.
Speaker #2: We recycled 73,000 tonnes of scrap metal and installed 58,000 kilowatts of clean energy capacity across the portfolio. Our assets also provided 495 megawatt-hours of backup generation.
Speaker #2: Supporting grid stability. On social, we developed a group-wide Infragreen safety strategy to assess the effectiveness of safety systems in each of our businesses, and a gap analysis against that framework is currently underway.
Declan Sherman: On social, we developed a group-wide Infragreen safety strategy to assess the effectiveness of safety systems in each of our businesses, and a gap analysis against that framework is currently underway. We also standardized safety performance reporting across the group, covering both lead and lag indicators, giving us much better visibility and consistency than we had previously. Alongside that, we prepared a social impact strategy to guide targeted community programs going forward. On governance, we established a business-wide risk register, which is now monitored directly by the audit and risk committee. We updated our business health check framework and completed a review of every business we own against it. We completed cybersecurity reviews across each business, giving the board and management a clear picture of the relevant framework and maturity levels to the group.
Declan Sherman: On social, we developed a group-wide Infragreen safety strategy to assess the effectiveness of safety systems in each of our businesses, and a gap analysis against that framework is currently underway. We also standardized safety performance reporting across the group, covering both lead and lag indicators, giving us much better visibility and consistency than we had previously. Alongside that, we prepared a social impact strategy to guide targeted community programs going forward. On governance, we established a business-wide risk register, which is now monitored directly by the audit and risk committee. We updated our business health check framework and completed a review of every business we own against it. We completed cybersecurity reviews across each business, giving the board and management a clear picture of the relevant framework and maturity levels to the group.
Speaker #2: We also standardised safety performance across the group. Safety performance reporting across the group, covering both lead and lag indicators, is giving us much better visibility and consistency.
Speaker #2: And we had previously. Alongside that, we prepared a social impact strategy to guide targeted community programs going forward. On governance, we established a business-wide risk register, which is now monitored directly by the Audit and Risk Committee.
Speaker #2: We updated our business health check framework and completed a review of every business we own against it. We also completed cybersecurity reviews across each business, giving the board and management a clear picture of the relevant framework and maturity level for each of the group.
Speaker #2: All of this is really important work, which just further enhances the strength and capabilities of the businesses that we're invested in. So, now I'd like to hand it over to Martin to talk through each of the businesses that we're invested in and the financial results.
Declan Sherman: All of this is really important work, which just further enhances the strength and capabilities of the businesses that we are invested in. Now I would like to hand it over to Martin to talk through each of the businesses that we are invested in and the financial results.
Declan Sherman: All of this is really important work, which just further enhances the strength and capabilities of the businesses that we are invested in. Now I would like to hand it over to Martin to talk through each of the businesses that we are invested in and the financial results.
Speaker #3: Thank you, Declan. We have four businesses that we're invested in: two businesses in recycling and waste recovery, and two businesses in the energy transition.
Martin McIver: Thank you, Declan. We have four businesses that we are invested in, two businesses in the recycling and waste recovery, and two businesses in the energy transition. We will step through each of the business performances throughout the year, but they all delivered strong results. Starting with Pure Environmental, it is a hazardous and regulated waste business operating from 10 sites across Queensland and Western Australia. Really pleasingly, the H2 was quite strong with AUD 19 million EBITDA. That was generated through contract wins and increasing volumes, including drill muds in Queensland. Pure invested AUD 6.6 million in growth CapEx during the year. Together with the strong H2 run rate from FY26, is a good positive start to FY27. As you will have read in the materials, the Pure shareholders are progressing with a potential sale of the Pure business. We remain positive about Pure's long-term growth outlook.
Martin McIver: Thank you, Declan. We have four businesses that we are invested in, two businesses in the recycling and waste recovery, and two businesses in the energy transition. We will step through each of the business performances throughout the year, but they all delivered strong results. Starting with Pure Environmental, it is a hazardous and regulated waste business operating from 10 sites across Queensland and Western Australia. Really pleasingly, the H2 was quite strong with AUD 19 million EBITDA. That was generated through contract wins and increasing volumes, including drill muds in Queensland. Pure invested AUD 6.6 million in growth CapEx during the year. Together with the strong H2 run rate from FY26, is a good positive start to FY27. As you will have read in the materials, the Pure shareholders are progressing with a potential sale of the Pure business. We remain positive about Pure's long-term growth outlook.
Speaker #3: We'll step through each of the business performances throughout the year, but they all delivered strong results. Starting with Pure Environmental, it's a hazardous and regulated waste business operating from 10 sites across Queensland and Western Australia.
Speaker #3: Really pleasingly, the second half was quite strong, with $19 million EBITDA. That was generated through contract wins and increasing volumes, including drill muds in Queensland.
Speaker #3: Pure invested $6.6 million in growth capex during the year. Together with the strong second-half run rate from FY26, this is a positive start to FY27.
Speaker #3: As you will have read in the materials, the Pure shareholders are progressing with a potential sale of the Pure business. We remain positive about Pure's long-term growth outlook.
Speaker #3: But if the opportunity presents itself, we may participate in that sale, and we'll keep the market informed. The other item to note with Pure is that part of their funding is a convertible note, and Infragreen has invested in convertible notes in Pure.
Martin McIver: If the opportunity presents itself, we may participate in that sale, and we will keep the market informed. The other item to note with Pure, part of their funding is a convertible note, and Infragreen has invested in convertible notes in Pure. For Infragreen, this materially nets off where Pure records a financing cost through an increase in the valuation of those Pure convertible notes through the year. So they record that financing cost, which reduces our share of profits. We recognize a fair value gain on our investment in those convertible notes. The after-tax benefit is in the order of AUD 300,000 for Infragreen. Minemet Recycling is an integrated metals recycler with extensive international trading networks. Through the year, its revenue was higher, and it is certainly supported by strong non-ferrous prices.
Martin McIver: If the opportunity presents itself, we may participate in that sale, and we will keep the market informed. The other item to note with Pure, part of their funding is a convertible note, and Infragreen has invested in convertible notes in Pure. For Infragreen, this materially nets off where Pure records a financing cost through an increase in the valuation of those Pure convertible notes through the year. So they record that financing cost, which reduces our share of profits. We recognize a fair value gain on our investment in those convertible notes. The after-tax benefit is in the order of AUD 300,000 for Infragreen. Minemet Recycling is an integrated metals recycler with extensive international trading networks. Through the year, its revenue was higher, and it is certainly supported by strong non-ferrous prices.
Speaker #3: For Infragreen, this materially nets off where Pure records a financing cost through an increase in the valuation of those Pure note convertible notes through the year.
Speaker #3: So they record that financing cost, which reduces our share of profits. We recognise a fair value gain on our investment in those convertible notes.
Speaker #3: The after-tax benefit is in the order of $300,000 for Infragreen. Minimum Recycling is an integrated metals recycler with extensive international trading networks. Through the year, its revenue was higher, and it's certainly supported by strong non-ferrous prices.
Speaker #3: However, the margins in the quarter were down on what we had expected due to a couple of factors, one being the softer ferrous pricing throughout the year.
Martin McIver: However, the margins were down on what we had expected due to a couple of factors, one being the softer ferrous pricing throughout the year, and higher shipping costs in the H2 of the year, and some shipping delays at the tail end of the year, reducing the amount of shipments that could go in June. We are seeing some potential positives or some slight positives in the ferrous pricing, and we are keen to see that progress throughout 2027. What is pleasing with this business is Q4 was a very strong quarter, and leading into FY27, we expect to deliver improved results. Energybuild is a renewable energy solutions company for new build residential housing, and it includes solar and battery system installations, installation of smart meters and EV chargers, amongst other solutions for the new build residential housing market.
Martin McIver: However, the margins were down on what we had expected due to a couple of factors, one being the softer ferrous pricing throughout the year, and higher shipping costs in the H2 of the year, and some shipping delays at the tail end of the year, reducing the amount of shipments that could go in June. We are seeing some potential positives or some slight positives in the ferrous pricing, and we are keen to see that progress throughout 2027. What is pleasing with this business is Q4 was a very strong quarter, and leading into FY27, we expect to deliver improved results. Energybuild is a renewable energy solutions company for new build residential housing, and it includes solar and battery system installations, installation of smart meters and EV chargers, amongst other solutions for the new build residential housing market.
Speaker #3: And higher shipping costs in the second half of the year, as well as some shipping delays at the tail end of the year, reduced the amount of shipments that could go in June.
Speaker #3: We are seeing some potential positives, or some slight positives, in the ferrous pricing, and we are keen to see that progress throughout '27.
Speaker #3: What is pleasing with this business is Q4 was a very strong quarter, and leading into FY27, we expect to deliver improved results. Energy Bills is a renewable energy solutions company for new build residential housing.
Speaker #3: And it includes solar and battery system installations, installation of smart meters and EV chargers, amongst other solutions, for the new build residential housing market.
Speaker #3: It is the number one solar installer for new-build residential housing by a long way, and is quite proud of being able to maintain a dominant position in the market.
Martin McIver: It is the number one solar installer for new build residential housing by a long way, and is quite proud of being able to maintain a dominant position in the market. The revenue, profit, and net free cash flows throughout FY26 grew strongly, with solar installations now consistently above 1,000 per month and continuing to grow. Batteries throughout the year were approximately 14% of our revenue. Based on the current battery installation rates and the orders that we have coming into our system, the revenue from batteries is expected to remain at or around the 14% as we grow into FY27. Merredin Energy is a diesel-fueled gas turbine peaking power station located at Merredin in Western Australia. 98% of the revenue that Merredin receives is from capacity credit payments for being available to generate electricity on demand.
Martin McIver: It is the number one solar installer for new build residential housing by a long way, and is quite proud of being able to maintain a dominant position in the market. The revenue, profit, and net free cash flows throughout FY26 grew strongly, with solar installations now consistently above 1,000 per month and continuing to grow. Batteries throughout the year were approximately 14% of our revenue. Based on the current battery installation rates and the orders that we have coming into our system, the revenue from batteries is expected to remain at or around the 14% as we grow into FY27. Merredin Energy is a diesel-fueled gas turbine peaking power station located at Merredin in Western Australia. 98% of the revenue that Merredin receives is from capacity credit payments for being available to generate electricity on demand.
Speaker #3: Revenue, profit, and net free cash flows throughout FY26 grew strongly, with solar installations now consistently above 1,000 per month and continuing to grow.
Speaker #3: Batteries throughout the year were approximately 14% of our revenue. Based on the current battery installation rates and the orders that we still have coming into our system, revenue from batteries is expected to remain at or around 14% as we grow into FY27.
Speaker #3: Merit & Energy is a diesel-fueled gas turbine peaking power station located at Merit in Western Australia. Ninety-eight percent of the revenue that Merit receives comes from capacity credit payments, for being available to generate electricity on demand.
Speaker #3: Merit also receives top-up revenue when it is called on to generate power. Merit remains an important part of the WA power network, supporting the transition to renewable generation.
Martin McIver: Merredin also receives top-up revenue when it is called on to generate power. Merredin remains an important part of the WA power network, supporting the transition to renewable generation. The capacity credits in the medium to longer term, we are expecting some positive results. In October 2027, there is a CPI catch-up in the rates on top of the usual annual CPI review, and there is a rebasing of the capacity credit rates in 2032, and that is all looking positive for an increase. Coming to our underlying EBITDA for the year. As Declan pointed out, strong growth year-on-year, across the combined group of businesses, which is great, and a record Q4. That record Q4 is continuing the momentum into FY27.
Martin McIver: Merredin also receives top-up revenue when it is called on to generate power. Merredin remains an important part of the WA power network, supporting the transition to renewable generation. The capacity credits in the medium to longer term, we are expecting some positive results. In October 2027, there is a CPI catch-up in the rates on top of the usual annual CPI review, and there is a rebasing of the capacity credit rates in 2032, and that is all looking positive for an increase. Coming to our underlying EBITDA for the year. As Declan pointed out, strong growth year-on-year, across the combined group of businesses, which is great, and a record Q4. That record Q4 is continuing the momentum into FY27.
Speaker #3: The capacity credits in the medium to longer term have some positive—we're expecting some positive results. In October '27, there's a CPI catch-up in the rates on top of the usual annual CPI review.
Speaker #3: And there's a rebasing of the capacity credit rates in 2032, and that's all looking positive for an increase. So, coming to our underlying EBITDA for the year, as Declan pointed out, there's strong growth year on year.
Speaker #3: Across the combined group of businesses—which is great—and a record fourth quarter. And that record fourth quarter is continuing the momentum into FY27.
Speaker #3: The strong growth in earnings for the year has translated into strong growth in underlying net free cash flows, with €11.7 million in net free cash flows for the year.
Martin McIver: The strong growth in earnings for the year has translated into strong growth in underlying net free cash flows, with AUD 11.7 million net free cash flows in the year. That is including Pure, has invested AUD 6.6 million in growth CapEx, within that calculation as well. But certainly good, strong cash flows and good cash conversion from EBITDA. The net debt on a look-through basis, our share of net debt from the businesses, as well as the position for Infragreen Headco, has seen a reduction in net debt down to AUD 14.1 million, and it is now only 0.6 times pre-AASB 16 EBITDA. This provides Infragreen and our businesses with significant balance sheet strength to fund future investments in CapEx and acquisitions at the appropriate time.
Martin McIver: The strong growth in earnings for the year has translated into strong growth in underlying net free cash flows, with AUD 11.7 million net free cash flows in the year. That is including Pure, has invested AUD 6.6 million in growth CapEx, within that calculation as well. But certainly good, strong cash flows and good cash conversion from EBITDA. The net debt on a look-through basis, our share of net debt from the businesses, as well as the position for Infragreen Headco, has seen a reduction in net debt down to AUD 14.1 million, and it is now only 0.6 times pre-AASB 16 EBITDA. This provides Infragreen and our businesses with significant balance sheet strength to fund future investments in CapEx and acquisitions at the appropriate time.
Speaker #3: And that is including, Pure has invested $6.6 million in growth capex within that calculation as well. But certainly, good strong cash flows and good cash conversion from EBITDA.
Speaker #3: The net debt on a look-through basis—our share of net debt from the businesses, as well as the position for Infragreen Headco—has seen a reduction in net debt, down to $14.1 million.
Speaker #3: And it’s now only 0.6 times pre-AASB 16 EBITDA. This provides Infragreen, and our businesses, with significant balance sheet strength to fund future investments in capex and acquisitions at the appropriate time.
Speaker #1: Thanks, Van. Just moving on to talk about shareholder communications and some progress we've made against some of those milestones. We've been very deliberate about increasing our cadence in terms of communications with shareholders throughout the year, especially on the back of the falling share price.
Declan Sherman: Thanks, Martin. Just moving on to talk about shareholder communications and some progress we have made against some of those milestones. We have been very deliberate about lifting our cadence in terms of communications with shareholders throughout the year, especially on the back of the falling share price. Starting in March and April, we commenced the Institutional Investor Outreach Program, which remains ongoing, and appointed a new investor marketing consultant to support that effort. May and June, we released a trading update alongside our FY27 guidance and an update on our strategic review. We also completed an investor site visit, which is very valuable, as well as commencing our on-market share buyback. In July, we completed an independent valuation of our business, and in August, this month, we have completed obviously our FY26 report. We are confirming our FY27 outlook, and we will continue our share buyback.
Declan Sherman: Thanks, Martin. Just moving on to talk about shareholder communications and some progress we have made against some of those milestones. We have been very deliberate about lifting our cadence in terms of communications with shareholders throughout the year, especially on the back of the falling share price. Starting in March and April, we commenced the Institutional Investor Outreach Program, which remains ongoing, and appointed a new investor marketing consultant to support that effort. May and June, we released a trading update alongside our FY27 guidance and an update on our strategic review. We also completed an investor site visit, which is very valuable, as well as commencing our on-market share buyback. In July, we completed an independent valuation of our business, and in August, this month, we have completed obviously our FY26 report. We are confirming our FY27 outlook, and we will continue our share buyback.
Speaker #1: Starting in March and April, we commenced our institutional investor outreach program, which remains ongoing, and employed a new investor marketing consultant to support that effort.
Speaker #1: In May and June, we released a trading update alongside our FY27 guidance and an update on our strategic review. We also completed an investor site visit, which was very valuable, as well as commencing our on-market share buyback.
Speaker #1: In July, we completed an independent valuation of our business. In August—this month—we've completed, obviously, our FY26 report. We're confirming our FY27 outlook, and we'll continue our share buyback.
Speaker #1: Looking ahead, in terms of further milestones, we've got our AGM in November, at which point we'll provide a further update on trading for the FY27 year.
Declan Sherman: Looking ahead, in terms of more milestones, we've got our AGM in November, at which point we'll provide a further update on trading for the FY27 year. On capital management, the share buyback remains ongoing. There are certain rules and restrictions which impact when we can buy shares. But to the extent that we are able to be participating freely in the market, then, depending on where the share price is trading, we certainly intend to be pursuing that buyback. Over the next six to 12 months, our focus continues to be on portfolio optimization, including potentially divesting select businesses. You've heard us give an update on Pure Environmental, reviewing new investment opportunities, and importantly, ongoing capital management more broadly. Just in conclusion, I want to close by drawing it all together.
Declan Sherman: Looking ahead, in terms of more milestones, we've got our AGM in November, at which point we'll provide a further update on trading for the FY27 year. On capital management, the share buyback remains ongoing. There are certain rules and restrictions which impact when we can buy shares. But to the extent that we are able to be participating freely in the market, then, depending on where the share price is trading, we certainly intend to be pursuing that buyback. Over the next six to 12 months, our focus continues to be on portfolio optimization, including potentially divesting select businesses. You've heard us give an update on Pure Environmental, reviewing new investment opportunities, and importantly, ongoing capital management more broadly. Just in conclusion, I want to close by drawing it all together.
Speaker #1: On capital management, the share buyback remains ongoing. There are certain rules and restrictions which impact when we can buy shares. But to the extent that we are able to participate freely in the market, then depending on where the share price is trading, we certainly intend to be pursuing that buyback.
Speaker #1: Over the next 6 to 12 months, our focus continues to be on portfolio optimization, including potentially divesting select businesses. You've heard us give an update on Pure.
Speaker #1: Reviewing new investment opportunities, and importantly, ongoing capital management more broadly. So just in conclusion, I want to close by drawing it all together. FY26 was really a year of strong performance.
Declan Sherman: FY26 was really a year of strong performance, and we believe that performance is underpinned by genuinely strong investment fundamentals. That's really the core message I want to leave with everyone today. Just firstly, on performance, we delivered strong growth in earnings and cash flow across the portfolio, and the outlook remains very positive. As I said at the outset, we recorded record earnings in the Q4. Our strategic review continues with a clear focus on closing the gap between the share price and underlying value, and on capital management, our continued share buyback remains highly accretive at the current levels. Finally, the board has determined a fully franked dividend of AUD 0.005 per share.
Declan Sherman: FY26 was really a year of strong performance, and we believe that performance is underpinned by genuinely strong investment fundamentals. That's really the core message I want to leave with everyone today. Just firstly, on performance, we delivered strong growth in earnings and cash flow across the portfolio, and the outlook remains very positive. As I said at the outset, we recorded record earnings in the Q4. Our strategic review continues with a clear focus on closing the gap between the share price and underlying value, and on capital management, our continued share buyback remains highly accretive at the current levels. Finally, the board has determined a fully franked dividend of AUD 0.005 per share.
Speaker #1: And we believe that performance is underpinned by genuinely strong investment fundamentals. That's really the core message I want to leave with everyone today.
Speaker #1: Firstly, on performance, we delivered strong growth in earnings and cash flow across the portfolio, and the outlook remains very positive. As I said at the outset, we recorded record earnings in the fourth quarter.
Speaker #1: Our strategic review continues with a clear focus on closing the gap between the share price and underlying value. On capital management, our continued share buyback remains highly accretive at the current levels.
Speaker #1: Finally, the board has determined to fully frank a dividend of 0.5% per share. Secondly, on fundamentals, our portfolio is built on uncorrelated real assets, which underpin a stable income stream.
Declan Sherman: Secondly, on fundamentals, our portfolio is built on uncorrelated real assets, which underpin a stable income stream, something we see as particularly valuable in a period of ongoing domestic and global uncertainty. We have a strong cash flow profile with a long history of profitability and senior management in each of the businesses with genuine long-term experience. We operate in markets with strong long-term tailwinds supporting earnings growth, and we see numerous short-term catalysts for further earnings outperformance across the group. Looking forward to FY27, we're continuing to guide to underlying EBITDA of AUD 26 million to AUD 28 million. I note directly, we continue to believe our share price is significantly undervalued relative to the independent valuation we completed in July, which is a key part of the thinking behind our continued buyback activity. With that, I'll hand back to the operator and open the line for questions.
Declan Sherman: Secondly, on fundamentals, our portfolio is built on uncorrelated real assets, which underpin a stable income stream, something we see as particularly valuable in a period of ongoing domestic and global uncertainty. We have a strong cash flow profile with a long history of profitability and senior management in each of the businesses with genuine long-term experience. We operate in markets with strong long-term tailwinds supporting earnings growth, and we see numerous short-term catalysts for further earnings outperformance across the group. Looking forward to FY27, we're continuing to guide to underlying EBITDA of AUD 26 million to AUD 28 million. I note directly, we continue to believe our share price is significantly undervalued relative to the independent valuation we completed in July, which is a key part of the thinking behind our continued buyback activity. With that, I'll hand back to the operator and open the line for questions.
Speaker #1: This is something we see as particularly valuable in a period of ongoing domestic and global uncertainty. We have a strong cash flow profile, with a long history of profitability, and senior management in each of the businesses with genuine long-term experience.
Speaker #1: We operate in markets with strong long-term tailwinds, supporting earnings growth. And we see numerous short-term catalysts for further earnings outperformance across the group. Looking forward to FY27, we're continuing to guide to underlying EBITDA of $26 to $28 million.
Speaker #1: And I note directly, we continue to believe our share price is significantly undervalued relative to the independent valuation we completed in July, which is a key part of the thinking behind our continued buyback activity.
Speaker #1: So with that, I'll hand back to the operator and open the line for questions.
Speaker #2: Thank you. If you would like to ask a question, please press star one on your telephone keypad. If you would like to withdraw your question, simply press star one again.
Operator 2: Thank you. If you would like to ask a question, please press star one on your telephone keypad. If you would like to withdraw your question, simply press star one again. One moment, please, for your first question. Your first question comes from Ken Wagner of PAC Partners. Your line is open.
Operator: Thank you. If you would like to ask a question, please press star one on your telephone keypad. If you would like to withdraw your question, simply press star one again. One moment, please, for your first question. Your first question comes from Ken Wagner of PAC Partners. Your line is open.
Speaker #2: One moment, please, for your first question. Your first question comes from Ken Wagner of PAC Partners. Your line is open.
Speaker #4: Thank you. Good morning, Declan. Good morning, Martin. Well done on the result. Just a question on Pure—on the dual-mode volumes, 145 million for the full year.
Ken Wagner: Thank you. Good morning, Declan. Morning, Martin. Well done on the result. Just a question on Pure, on the drill mud volumes, AUD 145 million for the full year. I think it was AUD 63 million at the half, so some good increase in the H2. How should we think about that going forward into 2027? Do we annualize H2 and think about it that way, or are you expecting further volume increases going forward and I guess, beyond into future years as well?
Ken Wagner: Thank you. Good morning, Declan. Morning, Martin. Well done on the result. Just a question on Pure, on the drill mud volumes, AUD 145 million for the full year. I think it was AUD 63 million at the half, so some good increase in the H2. How should we think about that going forward into 2027? Do we annualize H2 and think about it that way, or are you expecting further volume increases going forward and I guess, beyond into future years as well?
Speaker #4: I think it was 63 at the half, so some good increase in the second half. How should we think about that going forward into '27?
Speaker #4: Do we annualize the second half and think about it that way, or are you expecting further volume increases going forward? And I guess beyond, into future years as well.
Speaker #1: Yeah, it was a particularly good second half for the dual-mode, that's for sure. I think, at this stage, we're seeing a continuation of those levels.
Declan Sherman: Yeah. It was a particularly good H2 for the drill mud, that's for sure. I think, at this stage, we're seeing a continuation of those levels. Although, historically that has been very high. So, we're optimistic that it will continue to proceed that way. There's a number of developments happening out in that region, not just with respect to gas, but also some oil development that's going on as well, which means that over the next three to five to 10 years, there should be continued active drilling and redrilling of wells out there, which should continue to drive volume growth for the drill mud. So yeah, the outlook for that part of the business over the medium and long term is particularly positive.
Declan Sherman: Yeah. It was a particularly good H2 for the drill mud, that's for sure. I think, at this stage, we're seeing a continuation of those levels. Although, historically that has been very high. So, we're optimistic that it will continue to proceed that way. There's a number of developments happening out in that region, not just with respect to gas, but also some oil development that's going on as well, which means that over the next three to five to 10 years, there should be continued active drilling and redrilling of wells out there, which should continue to drive volume growth for the drill mud. So yeah, the outlook for that part of the business over the medium and long term is particularly positive.
Speaker #1: Although, historically, they have been, that has been very high. So we're optimistic that it'll continue to proceed that way. There are a number of developments happening out in that region.
Speaker #1: Not just with respect to gas, but also some oil development that's going on as well, which means that over the next 3 to 5 to 10 years, there should be continued active drilling and re-drilling of wells out there. This should continue to drive volume growth for the dual-mode.
Speaker #1: So, yeah, the outlook for that part of the business over the medium and long term is particularly positive.
Speaker #4: Yep, great. Thank you. And just on, again, on Pure—in the absence, perhaps, of the sale process, because it might be a bit academic otherwise—but scope for geographic expansion. I think you've spoken about it before, but I was wondering what the thoughts are around beyond Queensland and WA?
Ken Wagner: Yep. Great. Thank you. Just, again, on Pure, in the absence perhaps of the sale process, because it might be a bit academic otherwise, but scope for geographic expansion, I think you've spoken about it before, but I was wondering what the thoughts are around beyond Queensland and WA.
Ken Wagner: Yep. Great. Thank you. Just, again, on Pure, in the absence perhaps of the sale process, because it might be a bit academic otherwise, but scope for geographic expansion, I think you've spoken about it before, but I was wondering what the thoughts are around beyond Queensland and WA.
Speaker #1: Yeah, absolutely. Our market share is still relatively small, with our focus predominantly on Queensland and WA. So, there are a number of opportunities to expand into the other states, as well as, to be honest, to keep growing in Queensland and Western Australia.
Declan Sherman: Yeah, absolutely. Our market share is still relatively small, with our focus predominantly on Queensland and WA. So, there is a number of opportunities to expand into the other states, as well as, to be honest, to keep growing in Queensland and West Australia. So we have looked at and continue to look at a number of opportunities to expand into the states. New South Wales has been a bit of a focus. We're seeing some opportunities there. But that's not to say there's not opportunities in the other states. So certainly over time, there's the opportunity to, yeah, regionally continue to expand that business.
Declan Sherman: Yeah, absolutely. Our market share is still relatively small, with our focus predominantly on Queensland and WA. So, there is a number of opportunities to expand into the other states, as well as, to be honest, to keep growing in Queensland and West Australia. So we have looked at and continue to look at a number of opportunities to expand into the states. New South Wales has been a bit of a focus. We're seeing some opportunities there. But that's not to say there's not opportunities in the other states. So certainly over time, there's the opportunity to, yeah, regionally continue to expand that business.
Speaker #1: So we have looked at, and continue to look at, a number of opportunities to expand into the States. As you know, New South Wales has been a bit of a focus.
Speaker #1: We're seeing some opportunities there, but that's not to say there aren't opportunities in the other states. So certainly, over time, there's the opportunity to, yeah, regionally continue to expand that business.
Speaker #4: Great. Okay, thank you. I've got a couple of others, but I'll jump back in the queue. Thanks.
Ken Wagner: Great. Okay. Thank you. I have got a couple of others, but I will jump back in the queue. Thanks.
Ken Wagner: Great. Okay. Thank you. I have got a couple of others, but I will jump back in the queue. Thanks.
Speaker #2: Once again, if you have a question, it is star one on your telephone keypad. We have a follow-up question from Ken Wagner with PAC Partners.
Operator 2: Once again, if you have a question, it is star one on your telephone keypad. We have a follow-up question from Ken Wagner with PAC Partners. Your line is open.
Operator: Once again, if you have a question, it is star one on your telephone keypad. We have a follow-up question from Ken Wagner with PAC Partners. Your line is open.
Speaker #2: Your line is open.
Speaker #4: Thank you. Not as much of a queue as I thought—sorry about that. Meriden, it looks like it operated for about six hours, assuming it was at capacity.
Ken Wagner: Thank you. Not as much of a queue as I thought. Sorry about that. Merredin, it looks like it operated for about six hours, assuming it was at capacity. Appreciate it is a peaking plant. Are you expecting going forward on that one that it will become used more often and those volumes will be highest? Yeah.
Ken Wagner: Thank you. Not as much of a queue as I thought. Sorry about that. Merredin, it looks like it operated for about six hours, assuming it was at capacity. Appreciate it is a peaking plant. Are you expecting going forward on that one that it will become used more often and those volumes will be highest? Yeah.
Speaker #4: I appreciate it's a peaking plant. Are you expecting, going forward, that it will be used more often? And will those volumes be higher?
Speaker #1: Yeah, yeah, generally, that is the expectation. This was acquired a year ago, but that's certainly the expectation. And I think, at the moment, everyone is reforecasting, sort of more generally, what the electricity demand outlook is going to be.
Declan Sherman: Yeah. Generally, that is the expectation. This is a quieter year, but that is certainly the expectation. I think at the moment, everyone is reforecasting more generally what the electricity demand outlook is going to be, with an expectation there is going to be a significant increase in that. So, definitely expect it is going to be used more often. But the timing and how that is used is dependent on what investment into either new generation or new storage capacity comes into the South West Interconnected System.
Declan Sherman: Yeah. Generally, that is the expectation. This is a quieter year, but that is certainly the expectation. I think at the moment, everyone is reforecasting more generally what the electricity demand outlook is going to be, with an expectation there is going to be a significant increase in that. So, definitely expect it is going to be used more often. But the timing and how that is used is dependent on what investment into either new generation or new storage capacity comes into the South West Interconnected System.
Speaker #1: We expect there's going to be a significant increase in that, so definitely expect it's going to be used more often. But the timing and how that's used is dependent on what sort of investment into either new generation or new storage capacity comes into the Southwest Interconnected System.
Speaker #4: Yeah. And when that is operating, that's at cost plus, is that right? You think it's spot prices in the market?
Ken Wagner: Yeah. When that does operate, that is at cost plus. Is that right? You do not get spot prices in the market?
Ken Wagner: Yeah. When that does operate, that is at cost plus. Is that right? You do not get spot prices in the market?
Speaker #1: Correct. Yeah.
Declan Sherman: Correct. Yeah.
Declan Sherman: Correct. Yeah.
Speaker #4: Yep. Okay. So does that drag your margins down a little bit? Is that a way to think about it?
Ken Wagner: Yeah. Okay. Does that drag your margins down a little bit? Is that the way to think about that?
Ken Wagner: Yeah. Okay. Does that drag your margins down a little bit? Is that the way to think about that?
Declan Sherman: Yeah, it does, but it is all incremental gross profit and all incremental.
Declan Sherman: Yeah, it does, but it is all incremental gross profit and all incremental.
Speaker #1: Yeah, it does. But it's all incremental gross profit, and all incremental profit to the bottom line. Yeah.
Ken Wagner: Yeah
Ken Wagner: Yeah
Declan Sherman: profit to the bottom line. Yeah.
Declan Sherman: profit to the bottom line. Yeah.
Speaker #4: Yep, understood. No, that's fine, thank you. And I guess one last one on energy build. Again, there was good momentum in the second half, and particularly in the fourth quarter, I think.
Ken Wagner: Yep. Understood. No, that's fine. Thank you. I guess one last one on Energybuild. Again, it was good momentum in the H2 and particularly Q4, I think. Again, similar question to one I had on Pure. Do you think is annualizing the H2 the right way to think about it, or are you seeing further increases in volumes there?
Ken Wagner: Yep. Understood. No, that's fine. Thank you. I guess one last one on Energybuild. Again, it was good momentum in the H2 and particularly Q4, I think. Again, similar question to one I had on Pure. Do you think is annualizing the H2 the right way to think about it, or are you seeing further increases in volumes there?
Speaker #4: Again, similar question to one I had on Pure. Do you think annualizing the second half is the right way to think about it, or are you seeing further increases in volumes there?
Declan Sherman: Yeah. There's no reason why the level at which it's trading in the H2 shouldn't continue into the new year. We're seeing that, right? As well as there's incremental product lines that we're looking at as well, which could be further accretive, which at the moment are not in our base case expectations, but to the extent they come through, that would be additive to that.
Declan Sherman: Yeah. There's no reason why the level at which it's trading in the H2 shouldn't continue into the new year. We're seeing that, right? As well as there's incremental product lines that we're looking at as well, which could be further accretive, which at the moment are not in our base case expectations, but to the extent they come through, that would be additive to that.
Speaker #1: Yeah, like there's no reason why the level at which it's trading in the second half shouldn't continue into the new year. And we're seeing that, right, as well as there's incremental product lines that we're looking at as well.
Speaker #1: Which could be further accretive—which, at the moment, they're not in our base case expectations—but to the extent they come through, that would be additive to that.
Ken Wagner: Great. Yep. Okay, thank you.
Ken Wagner: Great. Yep. Okay, thank you.
Speaker #4: Great. Yep. Okay, thank you.
Martin McIver: We should just add to that, Ken, we are also engaging with additional builders.
Martin McIver: We should just add to that, Ken, we are also engaging with additional builders.
Speaker #1: We should just add to that, Ken, that we're also engaging with additional builders. So there's additional growth in the sector where we haven't had some of those customers on board yet.
Ken Wagner: Right.
Ken Wagner: Right.
Martin McIver: There is additional growth in the sector where we have not had some of those customers on board. There is certainly opportunity to grow beyond where the current run rates are.
Martin McIver: There is additional growth in the sector where we have not had some of those customers on board. There is certainly opportunity to grow beyond where the current run rates are.
Speaker #1: So yeah, there's certainly opportunity to grow beyond where the current run rates are.
Speaker #4: Yeah, I think you've got 12 of the top 20. So, are there a couple in that top 20 you're going after, or is it sort of some of the smaller ones?
Ken Wagner: Yeah, I think you got 12 of the top 20. Are there a couple in that top 20 you are going after, or is it some of the smaller ones?
Ken Wagner: Yeah, I think you got 12 of the top 20. Are there a couple in that top 20 you are going after, or is it some of the smaller ones?
Speaker #1: We're going strategically after key people.
Martin McIver: We are going strategically after key people.
Martin McIver: We are going strategically after key people.
Speaker #4: Yep. Okay. Thank you.
Ken Wagner: Yep. Okay. Thank you.
Ken Wagner: Yep. Okay. Thank you.
Operator 2: This concludes the question and answer session and does conclude today's conference call. We thank you for joining, and you may now disconnect.
Operator: This concludes the question and answer session and does conclude today's conference call. We thank you for joining, and you may now disconnect.
