Intelligent Monitoring Group Limited (IMB) Earnings Call Transcript & Summary

All right. Welcome, everybody, to the February 2025 first half year results for IMG Group. I hope those that got to see that enjoyed the video. That's a live feed video taken about a month ago, actually from one of our sites of some guys turning up to try and rip off some trucks in the weekend who were escorted on the way out by our new video guarding service, which we'll talk about a little bit today. So just dipping into the results overview. We've got a fairly full presentation today. So just to lay the ground rules, what we'll do is we'll go through the presentation. Jason will take us all through the financials. If you have questions, feel free to raise your hand and unmute and ask your question. Happy to take questions on the way through, but it's probably a little bit clunky. At the end of the financial section, we will pause though and just take questions on the financials and then go through to the end and obviously happy to take questions. We are recording this. So if you need to drop off or you would like to watch it later, I'm sure we can organize getting a version of it for you. So really happy to be producing these results today. The underlying adjusted EBITDA or adjusted EBITDA of $17.5 million has us in line with where we wanted to be to get us to the result, which we're guiding to reaffirming today greater than $38 million of like-for-like adjusted EBITDA. If you take into account the acquisitions we've made, particularly DVL and then now KOBE to come through, which we aim will sell tomorrow, that puts us above $40 million target adjusted EBITDA for the year. So really happy. Revenue growth across the business. Obviously, the acquisitions have added a lot of revenue and profitability. But actually, what we're happy with is the underlying revenue growth, which will flush out a little bit in this presentation, and that flows through to adjusted cash flow being up 44% notable feature, of course, of this period is the refinancing. And I guess our debt ratio is hitting a level that we are happy with. The debt refi will kick off on March 17. We'll take you through that. Jason will take you through those details as well. And ultimately leaving us with a business which is, we think, performing -- starting to perform very well. It's got a lot of prospects, but is also incredibly cheap, not just to the industry, but also to itself through parts of the journey. So just to go through us for those that aren't familiar with us now. So we are the largest security monitoring service business in Australia. We've got over 200,000, 210,000 customers. As I like to say to people, we are present from Cape York to Stewart Island in New Zealand. We've got a very stable part of our business, which is really the monitoring and recurring services business, but the monitoring business generates $6.9 million a month of highly recurring revenue. We're getting larger. We've got nearly 600 people closing on after the settlement of KOBE across Australasia, a good mix of people and got fabulous institutional support in the market from a couple of key shareholders and others that you also can't see on the register. So a really solid group starting to take place. In terms of how that fits together, so Intelligent Monitoring Group really is made up of 3 constituent parts. Essentially, though, there's a New Zealand part and an Australian part. The New Zealand part is ADT. That's our only brand and presence and asset in New Zealand. It's about 31% of our Group EBITDA, and we'll talk a bit about its performance in the slides today. In Australia, we're made up of really 3 principal operating identities or entities. There's the ADT Group. At Group is the business that has also got ACG and AAG, DVL and now KOBE under it. and they present as ADT on one side of the shirts and their brand on the other side. So they've been integrated somewhat by personality but retain their own unique flavor. Signature Security Group, which is really our residential and SME focused direct business. And then we've got our wholesale business, which is essentially what I always call the foundation assets of IMG Group, the old [ TreatProtect ] business, which are our bureau rooms. So we look after probably over 45% now of the rest of the industry, the independent security providers monitoring and do the monitoring for them. In terms of the history of the Group, I'd like to keep adding to this because it reminds us all where we came. Effectively, this was a turnaround business 2016 to 2019, entered into really a recovery phase, which is when I joined the Board with a couple of other people, Peter King and the Chairman, a fair bit of work to do there to get the business rightsized to get a strategy to get -- start to get the financials into order and then now a really clear move to growth, which is taking us to the top probably in terms of player in the industry, but in still a very fragmented industry where we're only really now starting to bring forward almost globally leading technology. And so now we're into a growth phase and up to a sort of $40 million EBITDA business on a senior debt facility, very sort of standard industrial type operation. We've got some core values, probably not worth overlaboring today, but they are important to me, and I believe in them in terms of creating an organization. I spend time internally on this. My belief is you need to be very transparent. You need to be able to work with a lot of people and you need to aim to be very good at what you do. If you want to generate a successful organization, certainly, if you want to turn one around, which we've done in our journey, but also to now be in a strong organization that can go forward in an enduring fashion. So they are important to us. I'll now bring Jason in and Jason take your time and welcome aboard and take everyone through the financials. ..

All right. Thank you, everyone. Thank you for joining us today. Welcome. Just try and keep this reasonably brief. It is a good news story, though. Firstly, EBITDA, as we discussed in the 4C and our recent get together is $17.5 million for the half. It's up on the comparative period, and it's in line with our guidance for the full year. You can see that EBITDA margin at 22%. The revenue was up, as Dan mentioned, whilst largely through acquisition, it's promising that the underlying sort of like-for-like growth is about 6% to 7% up on last year. The profit and I'm going to go a little bit all over the place just to give you guys a good spread of this. After some of the adjustments of some of the nonrecurring costs and the impairment charge is up on last year, $7.5 million profit after adjustments. Abnormal items, we'll cover off in a separate slide. The largest of that is the Signature impairment, which I'll talk to in the next slide. Depreciation and leases, we've separated out D&A, again, which we'll talk through in an upcoming slide. And then gross profit up on the same period, albeit affected by the change out of the capitalization of 3G in Australia, the 3G project and ADT owned customer work in Australia. So then overall, great results for the half, in line with the expectations and still talk to the tax shield of just over $23 million that will keep us in a good position for the next few years. So this just walking through the adjustments to EBITDA. So the reported EBITDA of $9.9 million the impairment of receivables of $1.3 million, up on the same half last year, but this is largely the ADT-owned book, the ADT book and an alignment of bad debt provisioning across the business, taking into account the existing IMS rules and just changing that through. We're working through that. We see that shrinking over time. The impairment of assets, obviously, that is the Signature business that has been impaired in the results. You'll see that when you read through the financial statements released today. That that's come about from the auditor's review of the Signature business, obviously. So the Signature business is fundamentally made up of the Adeva purchase, some of the assets of the original Mammoth Security business that was the direct business that was previously on watch or VIP. And then we added the ADT Residential business through Project Funnel Web that we've talked about in the quarter 1 review and the quarter 2 review, where we have actually benefited as a business from getting the synergies out of that resi business, but we have improved costs, but the actual business unit itself as we've just sort of been working through the costs and how we allocate them to the business hasn't quite lined up with the expectations, and that's where the auditors have seen us recommended or taken the impairment position. I mean on the flip side, they didn't allow us to write up ADT for the benefit that ADT got from the cost change or reallocation, but it is what it is. Then we come down to sort of the more static abnormals, and I see there's a question here. So we might -- I'll just cover off the abnormal piece, and then I'll just take that question that's there. So the abnormals are in line with the conversation we had around the 4C at the half for quarter -- so it's a cost of acquisition of the various acquisitions we've had in the half or just in the half. There's cost of refinancing, the cost of restructuring the business around Project Funnel Web. There was a large redundancy cost in the half, and we break that out again in a separate slide. And then obviously, we just got a couple of little things there, share-based expense and interest income. So we might take questions now, Shanane, if that is okay.

We've got a question from Tom in Q&A, Jason. Do you want me to read that out? Or are you happy to?

Yes. So just it's a question about the D&A current run rate of CapEx, about $5 million. We will talk about CapEx in a couple of slides' time, Tom. But yes, it will slow. That is right. We're still sort of thinking sort of $9 million for the full year and then the key one-off cash costs we're expecting in the second half. So yes, we also talk about that in the slide as well because there are some cash costs obviously of the refinancing as well as some noncash costs. So I might just go through to the -- we might just keep rolling on, Tom, if that's okay because I think we actually have the answers just in a couple of slides' time. Okay. So depreciation and amortization, obviously, it's a big number. It has grown versus last year total number. So just to sort of, I guess, break it out into something a little bit cleaner that makes a little bit more sense. We've sort of split it into 4 key pockets. So two depreciation pockets, one just being sort of standard business depreciation on plant and equipment, normal things that businesses buy and depreciate for the running of their business. And obviously, our leases, we have a lot of buildings around the we utilized for AASB 16 standards there to run those leases. The biggest pool in that D&A space is amortization of both subscriber assets, which is a lot of those pre-IMG acquisition of ADT costs and ADT Care customer. So a lot of CapEx in New Zealand being written down now rather than being on the 12-year schedule that JCI ran the asset book on. It's running at a 5-year depreciation schedule, which is obviously more in line with sort of the global standards. And then the intangible amortization, which is sort of all of that acquired customers, acquired customers, brands, et cetera, as we've purchased over the years. And again, it's the same thing. It's that change in moving away from last year in the half, we were still under the provisional accounting standards pre the ADT business combination. We hadn't actually completed the entry calculations and finalize the combination -- business combination of ADT, which we did in the full year results as communicated, but also the JCI amortization schedule was on 12 years. So you can see that as we recognized all of that goodwill and intangibles as well as the ADT brand, the brands associated with the other acquisitions that we bought and then put them on to the 5-year schedule, you see that that's the lift in amortization year-over-year, but that now should stabilize and write down to nothing. So we can probably move on. So we just talk about Australia versus New Zealand. You can see here that the underlying growth in Australia is 6% overall. A lot of that is in -- sorry, acquisitions made up a lot of the revenue growth in Australia, but the underlying growth is quite positive at 6% for the year. The adjusted EBITDA margin at 19.7% in Australia is primarily due to the change in capitalization of subscriber assets and 3G project last year that ceased. And New Zealand is performing as expected with good revenue growth, good profitability growth, and we'll continue to do so as the New Zealand economy starts to turn around. The balance sheet, good story here, not a lot of noise, $26.2 million cash at the end of December. There are some real cash costs coming in the next month or so, but cash is stable and growing, in fact, even. Gross debt, $83.7 million; net debt, $57.1 million, which gives us really good net debt to underlying EBITDA number and in line with our -- with guidance gives us net debt to EBITDA of about 1.4x currently. The good news in the balance sheet is the refinancing piece, which we'll come back to after -- which we will come back to -- then from a cash flow perspective, those of you who joined us on the call, I felt like only a couple of weeks ago, this is essentially the same slide that we walked you guys through. We had operating cash flows of $1.9 million. We had nonrecurring costs of $2 million cash costs, of which half of that is the acquisition costs associated with ACG, AAG, DVL, even a small bit of Adeva on the first couple of days of the year. The equity raise cost that we had for November as well as the cost of the debt refinancing work that we've done so far. We had small and final JCI transition costs of about $0.5 million. And then we saw through Project Funnel Web, one-off cost of redundancies and restructuring of about $0.5 million. We talked at the 4C session about the cash drag from the acquisitions and buying the APAR books and some cash in those businesses. The EBITDA versus the operating cash flow has created a timing drag of about $3.6 million in cash compared to EBITDA. And then obviously, CapEx in the half was $5.2 million. $2.8 million of that is New Zealand 3G. And then to answer Tom's question from before, we expect that we will be around $9 million for the year. We still expect that, that's a reasonable expectation for CapEx. That $2.8 million in NZ is about halfway through the number that we expected for the 3G conversion project. And there's no major capitalization in the rest of the business for standard business operating PPE.

So I think, Jason, it would be fair to say that $9 million is a high number, like the reality is it's the New Zealand piece that really swings that in the second half and then the underlying rest of the business CapEx should be relatively low. We don't have any major projects or things playing.

No, exactly. I'd suggest we'd be closer to $8 million. But yes, certainly $9 million is what we've called out. We don't see us going over $9 million. Refinancing. So this is a really exciting time for us moving out of the hold -- moving out of the debt position and refinancing our overall debt facility will release cash back into the business, which is a great opportunity for the business and obviously, just reducing that finance cost substantially in the coming years by over half. You can see here that if we were to sort of rework that into the numbers, we had we would expect to see a post refinancing effect on profit of about $13.6 million and coincidentally, about $13.6 million positive impact on the cash flow for the half if we had already refinanced on the 1st of July. So it's a great result. It's a huge uplift in underlying profit and cash flow just from the refinancing. So it's a great position for the business to be in. We settled that. We expect to settle that in the coming days, and we expect to have cash flowing mid-March. So there will, however, be some P&L impact of the refinancing. The two main pieces are cash impact of around $2 million out for the facility establishment fee and the advisory fee is for the team that have been helping us get this really great result from the [ NAB ] team. And then what we have been doing as is spelled out in the notes in the financial statements is we had been capitalizing the costs -- borrowing costs and the warrants given to TOR and Longreach for the current facility. Because that hasn't gone to term, there's a balance of $4.6 million in both unamortized borrowing costs and unamortized warrant costs. They will flush through the P&L. They're a noncash impact, but the good news there, we go from a finance cost forecast of about $13.8 million in FY '25 to a very real estimated finance cost of $6.2 million for FY '26. So that is alone a significant benefit to the business, which we're really looking forward to working with NAB on that going forward. So that's me done, which is good. But we'll now open the floor to questions, and we can probably just take them live, Shanane, if anyone has any questions. But of course, anyone can connect with me after, and I'm happy to walk you through anything.

I'll just reiterate and Jason and I are both available.

No, we Sorry, Denis, I was just -- sorry to talk over you. Yes. No, Nicolas has just asked if we will put any capitalized costs of the refinancing below the line, but we will take the cash cost as a one-off, but we're not going to capitalize any of the new costs associated with the facility.

Yes. So both that $2 million and that $4.6 million, our intention is to have them as essentially nonrecurring charges in the second half. And then the prime reason for that is, again, subject to sign off is that we'd like to have a really clean interest line moving forward. So everything we've been trying to do as we've had to pull out of the ADT accounting, the JCI accounting is to get to a really clean business line so that things flow straight through the business. So we will have to drop those through, which I know is annoying for people and it does create an abnormal sense to our business, but they are one-off charges that obviously bring significant benefit that we will take. I think in that -- in line with that, just a comment about those other -- the $2 million in the half adjustments around costs. Look, outside further M&A, we don't have -- we certainly don't have a forecast for any redundancies to come through or we certainly don't have another project funnel type scenario necessarily in front of us at this time. And the advisory fees -- and sorry, the JCI transition, which we should also just note having ceased has gone. So really, the extent that, that's been a feature of this journey that we've been on will really shrink down now. And where and if there are what we will call essentially nonrecurring items, we'll call them out, but the magnitude effect should really start to fade into our past as we move forward. Same with CapEx to Tom's point, -- now we see capitalization in Australia fully. That business is very clean. In New Zealand, because we have the medical business, which is a lease business, that doesn't go away completely, but it becomes again very small relative to the business. So we would expect those to go. And then really, we're just focused on driving profitable growth, cash flow driven profitable growth through the business to build up the scale of what we do. So we'll come back to more -- any questions at the end and so we can take offline. So look, I'll just go through the rest of the preso and then take questions at the end. So really just turning to strategy and forward. So I guess, firstly, I would just like to call up our corporate strategy has been really clear for the last 3 years. It's been to improve the business. It was initially a turnaround that then bought a like much larger turnaround than ADT and it's now been buying quality businesses. So really, the focus has been driving cash flow. Half-on-half underlying cash flow growth of 44% speaks to what we've done. And I think the refinancing endorsed by NAB and all the work that went on there, which was substantial further endorses that. Reduced debt. I be back and reflect that probably when I joined the Board, there was negative cash flow and negative EBITDA. So the debt ratios were well -- but effectively, we've tracked those from 5.5x net debt to EBITDA down to -- we're forecasting around 1.4x -- 1.4x, 1.5x, I guess, point being we've taken them down to sort of what we thought were sensible debt levels for an industrial business that can reinvest and grow and ultimately pay dividends. noting, of course, we've got these tax losses. So I think they will still be a feature of our -- any capital management or strategies moving forward. And then the final bit is in our strategy has been to improve growth. And I think that thing for me personally today is looking at the underlying organic movements that are starting to come through the business now is what actually really excites us because at the end of this journey was always to be to create a great enduring business that can go and become a market leader. And we absolutely feel like we're in the zone for that. I feel like we're in the early days of being there, but there's a big long journey in front of us. So seeing that come through and looking forward to talking about that at the '25 result. And I guess the point being the numbers in the second half that we're expecting to give will also set us up for a really, really strong FY '26. So it's about improving the trajectory and accelerating from here. The 3 growth areas we've talked about, the first driver has always been to get the commercial and enterprise business back up and running essentially from ADT back towards being the leader there in that space, again, we're probably not quite the leader there yet, but we aren't far away either. We certainly would be in the top 5 biggest players in Australasia now. Second is monitoring, 2 major pieces to the monitoring strategy and growth. One was to reduce the actual upfront cost of security monitoring by bringing new product, which we've done. The second is to actually improve the service itself, which is around the guarding service, which we'll talk about. And then the third is a longer-dated piece, which we are working on, but will take time around ADT Care, which is really around aging in place and using technology in an aging world and environment around sensor technology. Turning to the commercial piece. I think this is really instructive and ultimately what has been driving that growth in Australia. This -- when we took over ADT, it had done $2 million of recurring -- of sort of service and installation commercial revenue the year before we took it over. Now bearing in mind, in 2016, it produced $134 million of revenue. So JCI had run that business had turned that business off. It actually exited that business. By June of 11 months into our ownership and by June of our first year or 11 months, we got that business back to a run rate of $1 million organically. So no acquisitions in that, just reengaging with customers for a $10 million sort of number for FY '24 for the total year. which was 11 months of our ownership. You can see we've broken down the FY '25 result into the ADT piece. So the like-for-like piece, no acquisition impact produced $8.2 million. So effectively $16 million, continuing that growth story underlying. And then we've also shown the effect of the AAG and ACG business on top. To bring it up to speed, if you include all of the, I guess, the pieces that make up our ADT commercial business now being AAG, ACG, DVL and then shortly KOBE, we're now run rating a business that has a revenue of about $5.5 million a month. We're really encouraged by what we're seeing in this business, the conversations we're having, the deepening and widening is absolutely proving up the strategy that we had, which is to become the national provider of choice again to enterprise security customers. To give you a feel for that, these are the type of customers that we look after. And to be fair, really a lot of our growth hasn't come to this point through more than just engaging with our customers again and actually then increasing the amount of work they do with us. So essentially taking share from others with existing customers as they're looking to develop. You'll note some names like NEXTDC, which are clearly growing very quickly. But all of our customers, by and large, have work pending as they look to use the latest technology systems to actually improve security, but also workflow processes and a whole raft of things within their business, primarily around access control as the base. Looking at the video guarding piece, that's our commercial business. I'll just play a quick video, another one here, which I enjoy and then I'll talk.

In a world where safety is paramount, every action counts. With the power of video monitoring, we are actively monitoring 58 live sites, keeping a vigilant eye on potential threats and ensuring the safety of our customers. Thanks to video monitoring, 11 confirmed arrests have been made, swift, efficient and effective. Police respond faster to verified events equipped with critical video evidence and it doesn't stop there. Video monitoring help prevent 2 attempted burglaries, stopping crime before it could happen, saving our customers thousands in damages and asset loss.

So the good news with this guarding business, and I think the notable thing here is we really turned this on at the start of this year. And currently with our full guarding service, we only had 58 active sites. And so per that discussion, we've actually confirmed 11 arrests from events that happened on those sites. And we also scared off per the video at the start of this, these are all live -- these are all pictures taken from real events to which we have been involved since the start of the year with the service. It's hard in a way for me to overemphasize how much of a change this is for the security monitoring industry, what we do, the effectiveness of what we do and the impact that it actually has -- the positive impact and delivery that it actually has. So how does it actually work? Just to spell it out quite simply, effectively, our video guarding service or our guarding service, which we refer to ADT Guard Signature Guard. Effectively, we use cameras and detection systems to detect an event live real time. And in fact, in situations, we are now judging whether we can assess or believe an event might occur. So for instance, people are loitering around a premise and look like they may do something. Those signals, camera footage go live using very clever sort of AI-based systems into our monitoring rooms, which I've nicknamed we've now internally renamed back caves because that's where we're actually fighting crime and processing these things. Where we see the signals, we see the events and because we are seeing them live, we -- and we're in A1 graded room. And I think that's a really important thing to say. There's not something -- even if you bought the technology together that we have, there's very few people to which when we call the police with a live event, the police will respond. And so I've noted that first video, if you did see it, at the start of this presentation where a couple of people ran on to the site to try and rip off some cars, we detected that event, we called it out live to them. So we ultimately scared them off. So nothing actually happened. It was recorded as an event, but it wasn't -- it was just a deterrence. The really interesting thing is we also did call the police, and they were there within 12 minutes. And so in that case, we probably maybe shouldn't have called on the police because we don't want to overuse the police, but the police will respond very quickly to a verified event. So now -- well, for the first time, there's value in having monitoring and security monitoring. It is actually live, it's real and it can be proactive. And it's really the solution that people have always wanted or thought they were getting when they would get a monitored system. And so the 1 million-odd customers in Australia have already got monitoring, but has reacted monitoring a first port of call to now go back through and sell this video guarding service, and we're very excited about what it can mean. What does it allow you to do? So the key things are essentially what you're doing with video guarding. If you think about it, if anybody is familiar with the home security system and the home isn't necessarily, by the way, our target market. We really want to get around commercial Australia first because we have scarce resources and it's a very big opportunity. But effectively, what you're doing with our video guarding services, you're setting alarm like you would set a traditional home alarm. And so if you're in an office environment, you set that alarm and the cameras are effectively being activated at night. All of the events and everything is being recorded in the cloud and allows us to keep it up there for long periods of time as well. Then in the event of an event, so somebody comes on to site, our cameras detect them, they wake up, detect them, goes to our rooms and our rooms are able to make an assessment. They're able to react in a number of ways. It depends a little bit on the client instruction. But one of the things we can do is we can actually talk down through the cameras live. And so that actually, the feedback from the customer base so far is that's the most powerful feature because it actually is a very active deterrent for someone who comes on site and actually realize that somebody is actually watching them and that the police have actually been called. And so they tend to scuddle pretty quickly has been our experience. And it's very, very proactive. One of the interesting things about our system too, though, is it doesn't necessarily require you putting in a normal new system. We're actually able to connect our technology to existing camera sets provided the camera sets are good enough. And so that it actually means it also isn't necessarily a huge upgrade cost depending on what the nature of your current security system is. So why I use it? Primarily, I think it's because of the rapid response. So now we've cut out the need to call out a guard or to verify an event or have someone attend site to make sure something has happened before the police will respond. Now we're in the game of actually catching people live. And so that's the game the police are on. That's the game they prefer. If you're a police person, you love nothing better than actually catching someone that saves an awful lot of paperwork and hassle and actually gives you some job satisfaction. So they're a key partner. They're very -- it's very scalable. And I think that's the key here. We've actually need this to be scalable. It is scalable in our setup, so we can do this in lots of places and be effective. And it really does provide protection in a way that is very much akin to having a guard sitting outside your property 24 hours a day. And by the way, a guard that doesn't get sick, doesn't take toilet breaks, doesn't disappear. And I think in that context, therefore, it's incredibly cost effective. So if you are a customer that does have a guard at the moment, we can make a case now that perhaps that is actually an investment you don't need to make in a full-time 24-hour security guard a year for a site will cost you $300,000 to $400,000. So the opportunity for us to do that for less than that is very, very large. So that are 2 big growth areas for us, commercial, as you've seen coming through and then the monitoring. In terms of inorganic because we are still looking to build out our footprint. We just put up our historic base here. We've updated it now to include DVL and KOBE. So just to reflect on the journey in the early days of building the business, we were really buying customer bases, old customer bases, and I mean old in that they were old sort of signal alarm bases. Now as we're looking to accelerate, build our footprint and then be able to deploy this new technology, we've been more focused on buying full-service businesses and working with the staff to enable us to be able to look after bigger and more complex customers. And we would note we haven't paid more than -- it's 3.7x there. I think that would probably be a little bit generous on the upside, but we are certainly very focused on where we do these we've been increasingly buying quality, and we've been able to hold the multiples. So when we look forward on our road map, we still have a lot of opportunities. I've been very clear that though that we only will exercise or do what is strategically sensible for us and at a time that it is sensible. So we asked the question of the capital raise last year to be allowed to have a capital base such that we can execute when we feel the business is in the right place and when we get the right deals, and we're thankful to be in that position. Our real priorities though are to grow -- continue to grow our geographical coverage. So we really want direct wage technicians and a skilled workforce. And the overall workforce in this industry is probably flat to potentially even declining with baby boomers. And so one of the core skills and enabling features of us. And one of the reasons for us to be big and to get bigger is to be able to actually reeducate and create this back to being a profession and security services -- and around the technical security services was a profession and then it fragmented with no real leadership, and it's our goal is to reawaken and redo that and use our scale to do that. The other thing that we're open to is just vertical customer basis to accelerate our growth. And so whilst we touch lots of industries, there are certain industries and areas that we could accelerate that could be highly accretive and beneficial to us and also diverse files that we look at. The criteria, though, as I say, to people that we do engage with is very clear. People can see what we've been paying, and we have no intention of paying more than that. And so it makes the conversations around value fairly straightforward. So to sum up, we've pushed time here. We are really happy with this result. I think when you reflect on it, it marks a period where we finished getting off JCI systems fully. And that can't be underestimated as to the amount of work that took in the first 12 months of JCI. We've got our debt refinanced to NAB. We were pretty consistent in saying that, that was going to be in our future. And I would say I was very happy with the turnout from the commercial banks. It was really, really encouraging. That being said, I was a bit surprised that people were so surprised about it. I think we've been pretty straight in flagging that's where we were going and that, that potential was there. And so it's nice to see that come through. And hopefully, that's a nice tick for people. We've set all our acquisitions in really just delighted with the businesses that we've bought in the last 18 months. Every one of them is continuing to perform, to grow, to embrace being part of a group to bear with us as we bring them in, as we learn about bringing them in and cultures. And it's really what gets us excited to be part of and it really is the quality. So it's nice to see disparate businesses with really high-quality people actually coming together and realizing that there are other businesses like that, too, and then forming that into something bigger. We did create the Signature security business, which notwithstanding the point about the impairment was actually very successful in actually helping us focus up the organization and essentially bring together the end-to-end residential business from technicians through to sales, which had been lacking under the ADT group that we had bought. We raised equity, acquired DVL. We completed through this period, the DD on KOBE, which again, we are looking to settle tomorrow. We also completed the 3G upgrade program in Australia, which can't be underestimated in terms of the effort and hours for many, many people that went into that to get our now customer base fully on 4G plus systems in Australia. And then, of course, this ADT Guard and Signature Guard, which I really strongly believe is one of the 2 significant parts of our future. It just changes our business, what we do, the industry and also the addressable market. And so the second half of this year is just going to be focused on consolidating. We've got the platform. We've had the platform for a bit now, and we're looking forward to just working hard on it. We're looking forward to organic growth, which, again, if you take the second half numbers that we're expecting to deliver through and then roll them into FY '26, you should expect to see a very good FY '26 in front of us. To finalize it off, I always like to do this just simply because it's a marker, I guess, for me as much as anything. But essentially, when I took over the job, at least prior to the ADT transaction, this is just a way of sort of showing how far we've come. So we started with a gear business effectively. And at that point, we actually turned it around to the extent that it was producing some cash and a positive EBITDA. We've taken that business, we've scaled it up. But ironically, it's both the safest it's ever been. From a gearing point of view, it's the most stable it's ever been. It's the most diverse it's ever been. But it's actually probably not the cheapest it's ever been, but it's certainly not expensive by its historic metric and/or industry multiples. And I think that's probably the key point here. We'd like to build an enduringly great Australasian business. But to do that, we're going to have to continue to do the work and deliver the results. And hopefully, we'll benefit from that in a global multiple sense. So I'll call time there. I'm happy to take any more questions people might have, and we can work through them, and then we'll come back.

We've got a few of them in the Q&A section. So we've got questions coming in. I'll start from the oldest question. So that was from Tom. So Tom just wants to know the customer interest uptake for video guarding, our sales pipeline and, obviously, the product revenue uplift versus the traditional monitoring?

Yes. So effectively, a guard customer is worth about 5x more than a traditional alarm customer. That's probably the best metric I can give you. In terms of the pipeline, the growth, all we have done so far is started to engage with our existing customer base and offer it to them outside of any specific commercial discussions we're having. So we are having commercial discussions. We've had some very successful commercial discussions. A semipublic form that this is, I'm happy to talk about a few, but encouraged not to go too wide. Sinai schools up here in Queensland is a good example. Jewish school network that had actually picked up on the solution prior to the difficulties that the Jewish community is going through in Australia at the moment, but now looking to ramp that further. Hastings Deering and the number. And so we haven't aggressively gone to the market with it yet. We've actually been working hard on the back end of it all to make sure that we are going to be positioned to be able to scale it well. I think the comment I make about guarding is it works incredibly well. It's incredibly effective as long as you do it properly. And so we now -- I analogize internally, a little bit externally. We're in the airline industry world now. The planes have to stay in the air 24 hours a day and nothing can go wrong. And so we're just making sure our processes, our people, our alignment is there whilst we build up the sales book. We're now progressively going to widen it. One of the challenges we have, I think, is our success rate on selling it is incredibly high. Like I'll go as far as to say, when we actually get the chance to sit down and explain what it does relative to traditional offer, it's 100% in. So our conversion rate on a sale when we explain it is incredibly high. The challenge with that is if we actually took that out to our entire base and/or the entire industry and all the people that could use it, there is no scenario we could deliver that. All that would happen is, we'll have massively blowout times. So we're looking to learn more about that over the next 6 months and start to ramp up the sales volumes as we go forward. So I think our confidence comes, one, because it works and we know internally what that means. Two, we've seen a bit of success overseas with some other players that have done it where it's emerging as well. Three is just in our own conversations with customers, like we know that when somebody understands what this does, the proposition around it, it's incredibly compelling. So now we're in the phase of taking all of those lessons together and actually applying them and growing them forward. We'll publish the recording of this. Well, look, we'll try to -- I'm not entirely sure of the technology, actually, to be really honest. This is just a question around publishing this recording. We'll do our best, but please interact with us, and we can probably get you a copy of it. It may be easier than us, say, publishing it totally. Which other competitors own A1 graded security rooms? Look, most of the majors, so Chubb, Sapio, Secom, I think that -- I think there's something like 50 A1 rooms in Australia and then there's a bunch of lesser graded rooms. Some people call themselves A1 and they're not actually technically, they use a different standard. I think the point about the A1 room is, to me, they've made no sense spending the money on being A1 graded until now. A1 grading did get you essentially a slightly better relationship with the police, but it's still very much was entailed around you having to verify events. I think now that we verify ourselves and then can go straight, there's value. I make the point, ultimately, with video, I think the successful players because I'm assuming others will follow here and come along as well. But they don't have the brand we have, they don't have the scale we have. They don't have the start we have at the moment. So it's ours to take. Ultimately, though, the long-term success is going to be our relationship with the police and the way we handle events and that it works. And when I look at the other competitors and certainly the intensity to which the team have embraced this and the way they're going about it, I feel good that we'll be able to craft a really, really strong branded position here that will both be hard to replicate from a physical point of view with the A1 rooms, but also -- I think having -- you need to play, you will need an A1 room, but that's not sufficient. You actually need to understand the linkages of the technology and actually bringing it together, and I think that will be hard. The question here about the organic growth pipeline, how we track? Look, there's the 2 parts of the business. There's the commercial business and the residential business. I think with the residential business, I mean, to be clear, we're expecting to go through a bit of a mix change here. So we're coming off the back of the 3G upgrades, and so we did have some -- we had above average customer attrition last year. So an average residential customer will start here for about 7 years and you either resell them because they moved house and stay with you or they don't. But as we go through that we're now prioritizing guarding, which is much higher value. So our first proposition is guarding and then we will sell down to the traditional alarm systems. We have a good feel of that as we get into that process, we'll start to be able to provide more color around that. In the commercial business, look, we're really tracking forward pipeline and discussion of the building pipeline. And so we will probably, I'd say, at the full year results start to put forward a pipeline type number for the market to track. We obviously have a sense of what it is. It's obviously pretty attractive at the moment, given we're growing and the conversations we are having and expecting to have. I'm just wanting, I guess, myself some time to understand them a little bit better so that we give proper driver information to you. So we're on a journey here and disclosure will get better. But really, it's pipeline for commercial and net customer -- well, it's actually gross customer addition, which is the driver for residential. The churn itself is largely just industry, as I say, people moving houses, it tends to be your key driver. So then it's really about gross adds. Our gross adds are positive, obviously. We have hundreds of inbound leads every month. And what we focus on at the moment is getting -- the whole point of bringing the Signature business together was to speed up the leads and the installation process to customers so that we would have less lag or losing people in the sales process. And now it's focused on actually selling the guarding, which is 5 times more valuable than that. But look, we will grow that information as we feel more comfortable about it and how to use it properly as a driver. A question from Nick. Just the $38 million EBITDA pre-acquisitions, the confidence you can grow EBITDA? Look, a lot of the second half is growth. So I mean in our forecast, just to be clear for the second half, is around a little bit to the prior point, pipeline growth and our budget and expectations for the second half. We're pretty confident about that. I mean it is really being driven by that commercial business at this stage. I don't expect that guarding business to really pull us at a group level probably for another 6 to maybe 12 months. I mean, I think that engine will really kick in and go at a level that will really pull the group along. So yes, we're confident. And yes, it's from work that we are in discussions on that we can see coming. And so the only risk in that, I guess, is in our view, would be timing. And at this stage, we're comfortable with that. We're also comfortable though that, that pipeline continues to grow. It's not just a 1-year thing. These customers that we're doing work on have a lot of work and they've got continuous work. So again, I'll just without overlaboring the point, reflect on NEXTDC's journey where they're consistently upgrading and building and expanding and using new technology. And so I'd be very surprised if NEXTDC needs us less next year than they do this year, and that will be a core -- would be a reasonably good part of our growth expectation in the second half amongst a number of others. So it's not reliant on any one in particular. So I'll just keep working through. Yes, so a question here from Richard. Thanks, Richard. Just on the acquisitions. All of the acquisitions are trading -- well, they're certainly trading in line with our expectations. And I would say virtually all of them are trading with growth. And so to make the point without again overlaboring it, that NEXTDC relationship actually came via ACG. So by virtue of that pipeline, that growth in that particular customer amongst others again, they are growing as is ADT as we've shown in this chart. So it's really across the board. We certainly wanted to settle them. So our attitude in the first period of ownership has always been the key KPI for me is not to lose good people, like we're buying these businesses for a reason for the talent to retain the customers they have and then to engage and work and open them up. Most of the acquisitions we bought have been effectively got to a point of the owners being happy, and that's code for sort of, in a way, capping growth and not being prepared to go much further with their businesses that is through being happy. And so what we bring to the table is a -- we'd like to think it was sort of a re-enthusiasm in the business to be able to do more and actually grow those businesses. And so we don't -- I don't have a clear like-for-like view. We'll try and do that for the full year result to just show that the acquisitions have been successful as we think they have and then what they mean. Going to your second point about the guidance. Yes, look, margin, unfortunately, we've got this issue with the prior back history of the 3G. So in terms of the 25% to 22%, that's really the effect of the capitalization coming out. 22% is a pretty good base, I think. I still am focused on the idea that we can generate a 25% to up to 30% margin -- EBITDA margin business over time. It will take a little bit of time. I certainly wouldn't -- I'm not expecting it to go down from here. I think the only reason that it would be just mix in an acquisition, so just the effect of essentially acquired earnings or margins in a different business. By and large, all the businesses that we've looked at, again, they are quality, long-standing, robust, sustainable businesses tend to have pretty similar margins. So I doubt that there'll be a big pull one or another. But personally, I think this is a good base to sit at. And then we will look to grow that margin as we grow over time. And again, I think the 25% in the first instance is my target. Working capital requirements. Yes, we're now getting into a more normalized environment. And I think that's probably a key point from this half result is just to say these numbers, whether it's in the balance sheet, the P&L, if you accept the couple of abnormals and things that you need to now still adjust for gives you a firm foundation, we believe, to build forward on. Working capital requirement is not great for the business. And there obviously is a receivables and payable cycle, but it's not something that I suspect to drag on our cash flow going forward. We are still -- Jason made the point about the receivables. And yes, as we go through that ADT book, it is still checking out things that will fade over time, but there is also opportunity to pull cash forward in parts of our businesses as we are improving. And so I think working capital will cease to be a particular feature. I think the only reason it's over featured here recently is just again because of those acquisitions where there was that timing lag between EBITDA and cash flow on acquisition that washes out as you move forward. And so those businesses, the EBITDA and the cash flow starts to line up. Just having a look now, there's a comment from Jared just around the acquisitions effectively. Yes, look, there are other acquisition targets. So we did mention in the ways that there are acquisitions. I think one thing we didn't verbally say on this call, but is in the presentation is we now have with NAB not just an awesome interest rate and a great funding partner and a secured facility that's going to bring a lot of benefit to the group. But further than that, they really want to back us and see us grow and continue to move forward. So we have a $35 million acquisition facility. And to be blunt about it, that facility was really a crafted number. And what I mean by that is if we really wanted, it probably could have been more. There was an offer that could have been more. Likewise, it could have been less too. What that number was really pitched around was the trade-off between the cost of the facility. So there is a cost of having the facility that is all in the numbers and trying to target the scale and size of what's in front of us. So what that allowed us to do is effectively -- you'll note that a number of the transactions of recent times have been $7 million to, I think, $15 million, $16 million, but typically more like a $7 million to $9 million acquisition. I think having this facility just allows us to effectively widen the lens a little bit and, say, well, hey, like actually, there is probably another category of acquisition that may or may not be apparent. I'm not saying it will be, but it just allows us to open our scope a little bit. The only thing we would need to raise money for as we are today, and I think this is the wider point about the debt is we have no need nor expectation to raise equity any time really in the foreseeable future, except for what I'd call a large transaction, of which there are probably 2 to 3 that I could see that could be potentials, and they would be substantial. I won't call them company transformative acquisitions, but they certainly would be significantly scaling. Are they likely? I'd say they're possible. Are they about to happen anytime soon? No, they're not. They are sort of long-dated conversations that I have, but they are not -- there's no certainty or likelihood that they will ever happen. So it leaves us in a position of being very, very well-funded being able to focus on the pipeline as we put forward, which has continued to grow, which will allow us to then build our business out in a managed fashion through time. I think I've been also pretty clear, like I believe that there is -- given we are trying to create an industry-leading sort of effectively professional services business, given our customers are high -- often Tier 1 grade A type customers, too, I believe there's a halo, a, from being listed and being increasingly successful. And I think that's one of the reasons we've been surprised at the inbound calls and conversations, pleasantly surprised on the commercial and enterprise book as people have seen us come along and that strategy is being validated by people calling us. I think being an ASX 300 sized company would still improve that further. And so whilst it's not something we're going to do for the sake of it, I think we're very much keen and focused on the idea of moving the business through over time over the next couple of years to get to an ASX 300 company. So as we find things that make sense, as they add value, as they add to our portfolio and if they help bulk us out, I think that all makes good sense, and we're in a good position now of not having to really work hard for the capital. We're very thankful to everybody for putting us in the position of being able to now diligently work through. So the answer to your question is, yes, there is DD taking place on a number of acquisitions, but none of which we would look to do until such time as we feel comfortable with KOBE, for instance, and that everybody and everything is performing as we would like it to be. So I think somebody once said little bit about us and probably me more pointedly, the chances that we will do nothing, if you know the bad history of this business, are incredibly low. I'll pause there and sorry for rambling a little bit. I'll just check if there was anything else I missed. No. Look, I'll go to close here. Obviously, our numbers and details are all available in public. My mobile number is out there. For those that don't have it just give me an e-mail, [email protected]. Happy to take questions. We are really happy with this. We are in the best shape we've ever been. We've soundly financed. We are seeing cash build in the business now month-on-month. Our financing rates are going to fall dramatically. Our reputation in the industry is now back, and I'd say at all-time high, certainly in an IMG way. We're attracting independent security companies to our businesses, bureau dealer customers. We're in meaningful really strong discussions with vendors and product suppliers because they see what we're doing and they see the position that we're taking in the industry. We have commercial customers calling us, asking to engage. I think our biggest challenge is really making sure we have the people trained, looked after and more of them to be able to unlock the opportunity that sits in front of us, and that's certainly what we're going to spend the next 6 months focused on, including doing all the other things we want to do to keep this being a successful investment company and place to work for everybody. So I'll call time there. So thank you, and look forward to seeing some of you around the traps as we get around over the next couple of weeks. Thanks very much.