IPD Group Limited (IPG) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the IPD Group 1H '26 Results Call. [Operator Instructions] I would now like to hand the conference over to Mr. Michael Sainsbury, CEO. Please go ahead.

Thank you very much, and welcome, everybody. Great to have you here with us today. Excited to be able to run you through our half year financial 2026 results deck. Moving forward to Slide 2, I will talk through it so you can advance with me. Three presenters here today, although predominantly, it will be myself and Jason. So just by way of introduction, my name is Michael Sainsbury, and I'm an Executive Director and CEO of the group. I've also got Jason Boschetti with us, who is CFO of the group; and David McFadyen, who's Investor Relations. Moving forward to Slide 3, a little bit of an overview of what we'll share today, the agenda. So I'll give a quick overview of the business and the performance. We'll then dive a little bit deeper with Jason drilling into some of the financial metrics. Jason will then hand back to me to give a market and business update and then give a deeper look at the strategy and the future-looking outlook, and we'll close off by opening up for some questions, time permitting at the end. Moving forward to Slide 4, which is just a title slide for the overview. Slide 5. For those of you who aren't familiar and haven't had the visibility of the business, deep visibility of the business, it's important we start with our vision, which obviously sets the parameters for the future for the organization, and that's to help build a future where sustainable electrical infrastructure creates a better life for all. And I'll go into it in more depth in the coming slides, but all of our businesses buy into that and are well aligned with that vision. How are we going to do that? Our mission is obviously to enhance every aspect of infrastructure through energy efficiency, through automation and secure connectivity while prioritizing the safety and well-being of people inside our organization and outside our organization with the products and solutions we take out to the market. Slide 6. So we talk here about our connected group and the group now consists of 5 highly complementary businesses where we service a wide range of sectors, a lot of which are attached to strong tailwinds, promoting a good environment for the outlook for the future. I start at the top there with the IPD business, which is the core business, I guess, the business which the group was built around. That is providing electrical infrastructure and solutions in a distribution model with also the capacity to be able to build customized solution to meet the customer expectations. It's certainly 50% of the total business and the biggest part of our business. On the left there, we have CMI, which was an acquisition from the company almost 2 years ago now. CMI is in industrial power, cabling and connectivity. A large portion of its revenue is derived from the sale of cable and then the remaining revenue is done through plugs and connectivity via connectors into an industrial environment, predominantly into mining space. On the right-hand side there at the top, we've got EX Engineering, which specializes in hazardous area electrical equipment, both as components and as well as customized solutions for that hazardous area environment. That was also an acquisition for our business. And at that stage, it was a Perth or a WA-based business. We are expanding that on to the East Coast in this financial year. Down the bottom left, we've got our most recent acquisition, which is Platinum. Platinum is a business that does critical cabling solutions for Mining and Resources sector. Our most recent acquisition closing off the transaction on the 31st of December and a really great addition to our portfolio with a great sales synergies across the whole group. And lastly, the bottom right there, we've got our Addelec Power Services business. Addelec is an engineering services provider for the electrical infrastructure, a very, very, very strong bias towards calibration and testing for electrical assets, but it also does have a strong specialization in the EV charging space. So they are the 5 businesses that make up the parent company or fall under the parent company of IPD Group. Moving to Slide 7. We give a bit of a corporate snapshot there. So our ASX code is IPG. Our share price at $4.62 based on the 18th of February, which was late last week. Our IPO date, which was the 17th of December 2021, so just over 4 years ago. We have just under 104 million shares on issue. Our net debt at the moment is $24.4 million, and we'll talk in more depth around that in coming slides. Our market capitalization at that share price of $4.62 is $480 million. The Board consists of 4 directors, 3 of them non-exec directors with the recent transition from Mohamed Yoosuff as an Executive Director to non-Exec and then myself as Executive Director and CEO. It's a well-operating Board, harmonious Board with a good spread of skill sets to be able to complement each other. Bottom left there, we give you the share price performance from 2021 December, where we listed and showing you the performance over that period. Our shareholder breakdown on the bottom right there is 87% of our shares are held by external and a large portion of them institutional investors and then 13% of that is held by Board, management and employees. Moving forward to Slide 8, and this is obviously where the rubber starts to hit the road and provides some good overview of our business, and I'm pleased to say that we're reporting continued growth exceeding the top end of our guidance. Revenue at $192.7 million, which is an increase of 8.9% on the prior comparative period. EBITDA at $25.4 million, up 7.6% on the prior comparative period. Underlying EBIT at 7.4%, up on the prior comparative period at $21.7 million. Our underlying net profit after tax at $14.4 million, up 8.3%. Our underlying earnings per share at $0.138, up 7% on the prior comparative period. Operating cash flow, free cash flow, $17.1 million. Net debt at $24.4 million. Pleased to say that Data Centre revenue represents [ 32.8% ] (sic) [ $32.8 million ] of our total revenue, which is a growth of 16%, and I'll give some more detail about that in coming slides. Just to reinforce the acquisition of Platinum Cables on the 31st of December, completed the acquisition and an interim dividend has been announced at $0.068, which is up 6.3% on the prior comparative period. So overall, a very strong set of numbers and a good result for the first half of the year. I'll move forward to Slide 9, which is a heading slide there around our financial performance, and I'll hand over to Jason Boschetti to start from Slide 10 for you.

Fantastic. Thank you, Michael, and I'm also very pleased to announce another record performance for the half year ending 31st of December 2025. As Michael mentioned, we're on Slide 10, looking at the financial overview slide. During the half, IPD Group achieved continued growth, exceeding the top end of the earnings guidance range provided in November 2025. The group delivered record revenue, EBITDA, EBIT and net PAT results. Revenue of $192.7 million was up 8.9% and underlying EBITDA of $25.4 million was up 7.6% on the prior comparative period. The underlying result represents the first half of FY '26, excluding $444,000 worth of acquisition costs incurred for the acquisition of Platinum Cables. There was continued revenue growth across the core and traditional IPD business, up 11% on the prior comparative period. CMI was up 2% on the prior comparative period and EX Engineering up 55% on the prior comparative period. Excluding Kingsgrove bus depots delays, Addelec's revenues remained unchanged with the prior comparative period. Larger projects have contributed to revenue growth, and there is a competitive dynamic on larger projects, which has resulted in gross margins of 33.3% for the period. The first half of FY '26 gross profit margins, however, have improved by 20 basis points on the second half of FY '25. Operating expenses as a percentage of revenue decreased by 1.9%, which ensured that EBITDA and EBIT margins remained consistent. With the acquisition of Platinum Cables completed on the 31st of December 2025, there was no profit contribution during the first half of FY '26 from Platinum Cables. I'll touch on a few other highlight slides on the slides to come. If you could advance to Slide 11, sales and earnings growth. As mentioned, revenue of $192.7 million was up 8.9% on the pcp. There was continued revenue growth across the core IPD business, 11% growth, and IPD's diverse product offering continues to drive growth in key infrastructure sectors, including Data Centres, Infrastructure, Industrial, Mining and Water and Waste Water. Combined revenue from these sectors has grown 13% on the prior comparative period, with Data Centre revenue rising 16% on the pcp to $32.8 million. We had one large Data Centre order that was expected to be delivered in December 2025, which was rescheduled and delivered in January 2026. If this order was delivered in December, as expected, Data Centre revenue would have been up approximately 25% on the prior comparative period. CMI revenues increased 2% on the pcp. CMI's Cable revenue grew 7.1% on the second half of FY '25 despite being marginally lower versus the pcp, only by 0.5%. CMI Minto Plugs were up 11% on the pcp. CMI's EBIT increased 8.1% on the prior comparative period, with the business ending the period with a solid order book, which is expected to deliver ongoing growth into the second half. EX Engineering delivered 55% growth on the prior comparative period with that growth partly driven by key oil and gas cable supply contract. Excluding this contract, EX Engineering's revenue would have increased by 23% on the prior comparative period. And again, excluding the Kingsgrove bus depot delays, Addelec's revenues remained unchanged with the prior comparative period. Underlying EBITDA of $25.4 million was up 7.6% on the prior comparative period. Continued growth for the group drives earnings above the top end of the guidance range provided in November. Operating expenses as a percentage of revenue decreased by 1.9%, improving EBITDA margins from the second half of FY '25. And you can see that underlying EBITDA growth on the graph on the right-hand side. I'll move forward on to Slide 12, which covers off the balance sheet. After our acquisition of Platinum Cables on the 31st of December 2025, the group had $172 million in net assets on its balance sheet. IPD Group secured $37.5 million of new debt to fund the acquisition of Platinum Cables, which was predominantly funded purely from that new debt acquired. At the 31st of December, the group had a net debt position of $24.4 million, which consisted of $48.6 million of combined debt and $24.2 million in cash. Net leverage at the end of December was 0.5x. That's net debt on the pro forma EBITDA being the last full financial year of FY '25. A contingent cash payment has been recognized for the acquisition of Platinum Cables up to the maximum of $7.5 million, which is a 5x multiple on EBIT growth ending at the 31st of December 2026. I'll move on to Slide 13, net working capital and dividend. We have got continued investment for future growth. Net working capital now sits at $88.9 million. Our inventories increased $20 million on the pcp of 30th of June 2025. $12.6 million of this was acquired with the acquisition of Platinum Cables, an additional $7.4 million was procured IPD to support current projects and our future growth. Operating free cash flow, which is the operating cash flow before interest and tax outflows was 67.5% for the first half of FY '26 with this increased investment in working capital in the first half. However, reflecting on the 12-month rolling operating cash flow, conversion was 92.2% for the calendar year 2025. Dividends. $14.4 million in underlying net profit after tax from ordinary activities was up 8.3% on the prior comparative period. And today, the directors declared a fully franked dividend -- interim dividend of $0.068 per share for the first half of FY '26. $0.068 per share equates to a payout of $7.1 million and a payout ratio of 50%. Again, I'm pleased to announce another record performance. And now let me hand back to CEO, Michael Sainsbury, to take you through the next slide.

Thank you, Jason. So Slide 14, there is a title slide, just announcing the market and business update. If we move straight to Slide 15, and we talk about here a really good market update, focusing on growth, innovation and opportunity. And there's 3 key sectors that we'll call out here. Directly -- indirectly, there are 3 autonomous sectors, but there is a link between all 3 of these sectors. I'll start on the left there with Water and Waste Water, a massive opportunity for us as an organization and an investment into this space like we haven't seen for quite a long time. You can see some notes in there that water needs are rising. Sydney Water has estimated that the Data Centres could be -- could add between 15% and 20% to the water demand by 2035. And this is because of the cooling technology that's being introduced in Data Centres. So that in itself will drive an uptake in Water and Waste Water. It will then make up 35% of the nonresidential drinking water demand. So therefore, the link between that and Data Centres. If we talk about the Infrastructure investments, there's $8.9 billion being committed to the National Water Grid Fund, backing over 180 water projects across Australia, covering infrastructure, planning and construction. This space for us is materially attached to the IPD business in the automation and control where pumping is paramount, but not exclusively, there is opportunity certainly in cabling and maintenance and repair, so opportunities across the whole organization and a significant investment into this vertical space. In the middle there, we talk about Data Centre and Data Centre infrastructure. With DeepSeek AI models claim that they'll use 10% to 40% less energy. However, the rise in AI adoption will offset those savings. And there is a significant investment into Data Centres. We are -- Australia is now the world #2 behind the U.S. in terms of investment into the Data Centre space. When we last reported to the market, it was forecasted that there would be close to $26 billion worth of money invested into this space. In the last 6 months, that has doubled to a pipeline now of $52 billion in pipeline for Data Centre projects. So that is a massive opportunity. And while it was big for us 6 months ago, materially, it's twice as big. And we have found a niche in a couple of our product portfolios. The ABB, the power distribution product is obviously well attached to this space with some strong momentum. But we've also got a product called busduct, which is a replacement for cable in the white spaces in Data Centres and drives a significant upside for us as well, where we have a really good, strong product portfolio and well accepted in Data Centres. So a really significant opportunity. I've called out the power distribution and the busduct, but there are switchboard systems, there is cable, there is energy management. There is a whole plethora of products that go around this space as well. And the last one that I'll talk to there is Mining and Resources. Materially, this is much more important for the organization now as a result of the Platinum acquisition because most of their revenue comes from this Mining and Resources sector. So it's experiencing steady growth. It's driven by a steady increasing investment in hard mining and the industry of electrification. It's actually a double-edged sword driving Mining investment. So you've got rising global demand and positions us at the forefront of the Data Centre and AI-enabled mining transformation. So what we're seeing there is some of the raw materials of copper and the likes of being mined certainly a lot more to be able to support cables and battery energy storage. So we're seeing a large upswing in the mining opportunity on the back of the Data Centre demand and the raw materials that are required to deliver that. We're also seeing a massive investment from the mine sites around the electrification of their economy. So we're talking about their fleets going more towards electric fleets, renewable energy for their solutions there. So Mining is certainly a significant part of our business now and certainly a significant part of our growth forecast for the future. Moving forward to Slide 16, and I'll go into a little bit deeper there. So Mining. First and foremost, I'll draw to your attention the 4 businesses that we call out. Platinum, most of its revenue comes from that Mining environment. CMI, certainly all of the Minto Plugs and a portion of their cable goes into Mining. EX Engineering playing in the hazardous area space has a significant footprint in Mining and IPD with switchgear and switchboard systems and a whole lot of other products as well fit well into the Mining environment as well. So 4 of our 5 businesses materially attached to Mining and significant. And I mentioned it before, but I'll reinforce it again. It's transforming through electrification and data-driven operations that will deliver better operational efficiency to these mine sites and sustain the accelerating of those global energy transition. We talk about the fleet transition and on-site battery storage. We talk about the introduction of micro -- renewable energy microgrid using wind and solar to be able to support the energy requirements of these end users. We talk about the AI-driven operations where it requires the Data Centres. We talk about electrical infrastructure upgrades to support that mining electrification. There are some really key points mentioned here, up to 86% cost reduction using an electric-powered fleet as opposed to a diesel-powered counterparts and give reference that down in the notes below. Battery electric underground mining truck is found to be 25% faster and producing 80% less heat. So it's certainly some good bias there to be able to move towards that electric fleet as opposed to diesel-powered fleet. And certainly supporting the Australian Net Zero Plan with the updated target. Target aims at 62% to 70% emission reduction by 2035, and that's coming upon us faster than we all can imagine and net zero by 2050. All of this means that a good strong tailwind in the mining environment that will have a positive impact on our business. Slide 17. So we've included this slide for the last couple of years, and it's important that I highlight it here. On the left, we have at the top there, our revenue by product category for the first half of 2026. And power distribution significantly and a large portion of that comes from the ABB business coming from power distribution. You can see there that it goes down to power monitoring at 4%. Down the bottom on the left there, we have the revenue by end market. And materially and historically, Commercial or General Construction has been our largest vertical at 31% with Mining, Industrials and Infrastructure space at 24%. Data Centres at 17%, which has, as we said before, has grown at 16% and materially with that one slippage for Amazon would have seen us representing 25% growth. Water and Waste Water at 13%, which has been growing steadily, others at 7%, utilities at 4%, food and beverage at 3%. Important to point out, and I reinforce this that less than 1% of our revenue comes from that Residential Construction space. On the right-hand side, you can see the changing nature of our portfolio as a result of the acquisition of the Platinum business. So we're showing you on the right here the pro forma revenue by category. You can see a dilution of the power distribution there. And as I said before, materially, a large portion of that is ABB, which means the supplier concentration around ABB has reduced as a result of the acquisition of Platinum and Cables have grown from 21% of our total revenue to 29% of our total revenue. So they are the 2 areas to call out in that top graph. If I go down to the bottom there, the pro forma revenue by end market, you can see now that, that Infrastructure, Industrial and Mining has now grown to our biggest vertical segment at 31% with Buildings now coming in underneath that at 28%. Data Centres pro forma has reduced from 17% to 15%, but that is, as I say, as a washout of the acquisition of Platinum. And then the rest remain not necessarily a massive amount of change or 1% dilution across the rest, which has rolled up to the top. So it gives -- reinforces the changing nature of our business and the changing environment as a result of the Platinum acquisition. If I move forward to Slide 18, and I'll go into a little bit of a deeper dive here about the individual businesses that make up that group as presented in an earlier slide. And I talk firstly to the IPD business, which is obviously solutions in electrical power, control and automation. On the left-hand side there in the blue box, we talk to some of the initiatives and the highlights that we've been focusing on in the first half of the year. We've seen an increase in LV electrical distribution market share with the ABB product predominantly across all 1,000-volt space, which goes into Mining and certainly into that Data Centre space. Strong growth of busduct systems into large commercial and Data Centre opportunities, supported by a very strong focus on presales capabilities to support our customers and also project delivery through the life cycle of the order as well. We've had a focused approach on the Techno low-voltage modular switchboard offer into that switchboard builder channel and dedicated sales and estimation teams driving strong year-on-year growth for a product now that has a portfolio that has been growing strongly over the last 4 years. We've seen strong growth in our industrial communications portfolio into key strategic segments, specifically renewables through early engagement of our strategic sales team and the sales team focusing much earlier into projects than we have in the past. And we've seen the development of what we call IPD Build, which is an online configurator tool. It's a web-based tool. It enables customers to be able to build up quotations and get drawings instantly from this web-based tool. It will bring efficiencies to our business where we don't have to get our estimating team to quote on everything. A lot of it will be able to be done seamlessly and instantly by our customers. And that will obviously support them. And it's a further, I guess, investment for us into digitization and process streamlining. Some of the major projects that we've embarked on in the first half of the year, we're showing there the Firmus Data Centre, which was down in Tasmania. We've done the supply of the switchboard systems and all the low-voltage switchgear through a company called JLE Group with the parent company as MAAS Group. We've continued our strong relationship and performance with the Amazon Data Centre. We're not only supplying the ABB power distribution into their PDUs, but we're now supplying busduct into multiple sites across New South Wales and Victoria with this product portfolio of busduct. A leading retailer who we're not able to mention, but we've done the automated distribution center in Victoria, and we supplied all of the switchboard systems, the low-voltage switchgear and distribution boards to that retailer in Victoria. And the Fulham Solar Farm, where we've done the Battery Project, which has the IO switches and a communication box package there. So some large-scale opportunities and certainly some strong reference sites to be able to leverage off for future success in associated areas. Slide 19 is -- I'll give a bit of an overview of the Addelec Power Services business. And just for reinforcement, it's solutions for high voltage with a strong focus on EV charging infrastructure. In terms of the initiatives, we've successfully implemented a technician utilization initiative where we've seen an increase in that utilization by an average of 20% over the first -- over the last year. So it was one of the challenges in that business, utilization of our tradespeople was certainly one of the areas that impacted the financial performance of Addelec in the past, but pleased to say the initiatives we put in place is having a positive effect there. We have been signed up as an authorized value partner for ABB motion and motion predominantly is made up of the variable speed drives and motors range from ABB. So we're now able to support their services requirements as a value partner of them, and they only have a finite amount of resources, and they use us for workflow overflow and to be able to support their business as well. We've also seen that with the ABB charging business, the EV charging business. So we are also an AVP for the EV charging business as well. Pleased to say that in the New South Wales workshop of the Adelaide there, where we're doing variable speed drive repairs and servicing, and we're doing calibration. We've increased that. We've grown that by over 200% in the first half of the year. In terms of major projects, we successfully delivered the Perth Transit Authority Malaga bus depot, which is the electrification of that bus depot out there in the first half of the year over in WA. We've successfully delivered Sydney Airport's first EV charging infrastructure, and that positions us well for future opportunity around that Sydney Airport, where there will be a large investment into the electrification around the airport. Our Power Services team have tested and calibrated over 18,000 assets in the first 6 months of the year. And we do this for utilities. We do it for the large electrical contractors. A large portion of this is being done for the Victorian utilities out of our services facilities down in Victoria. But as I said in the initiatives and highlights, we've seen the workshop in New South Wales also grow in this space. And we've won the contract to provide the Anakie Solar Farm with the HV equipment, which was a big win for the business as well. So that's the Addelec Power Services business. If I move forward to Slide 20, which talks about the EX Engineering business, electrical safety solutions for hazardous areas. As we said before, a really strong first half result there and some of the initiatives that we've done to underpin that. We certainly -- a lot of time and effort put into the preparation for the transfer of the Stahl distribution. So Stahl is a hazardous area manufacturer, global manufacturer, and it's much better aligned with the EX business than it is the IPD business. So a lot of preparation being done in the first half of the year to transition that over to EX. And we believe that because of the nature of the specialized nature of that EX business in the hazardous space, that they will have a lot more success and drive future demand of that portfolio with the specialization in that space. So we've now kicked that off and that started in January 2026. And we've set up 2 warehouses and 1 workshop on the East Coast, where we've had no real increase in our cost base because we are using the CMI facility there, which is great because we manufacture Minto Plugs from there, and we now have the capacity to be able to manufacture that hazardous area, switchboard systems, local control stations also for that environment as well. There's been a continued increase in the demand for DEXEN Enclosure. DEXEN Enclosure goes into what we call an EX d market, which is predominantly in grain with the likes of CBH. So certainly a lot of time and effort being put into that space. And we've got a new -- a key account manager that supports that. It's a role we've created supporting the grain industry and additional engineering resources in there to support that -- to be able to support that grain. And CBH is certainly a big part of the EX business, but we look to expand that with others in that space. A lot of cross-selling of cables supplied by CMI. There was a $1 million order from EX Engineering, which was in the first half of this year, which is one of the actions that are underpinning the strong results in that area. The shame of that was it was one of CMI's competitor that was specified for the cable. We've now changed that specification where in the future, that oil and gas site will accept CMI cables. So that's a big win for us. So it was $1 million in the first half of the year, which was a competitor's cable. We'll now see that through the synergies created inside the organization as a CMI opportunity as well. And a number of custom enclosures manufactured has grown by 79% year-on-year in that EX business. The great part about that is building custom. It makes it harder to be price checked. It makes it much more specialized. It's a stickier environment. So that growth is certainly good and represents a significant opportunity for us in the future as well. If I talk about the CMI business now, obviously, CMI business experts in electric cable and power connections. On the left-hand side there, we've got a lot of initiatives. I spoke quite excitingly and enthusiastically about this business when we last delivered to the market, and there's certainly a lot going on there. National projects and tendering team has been expanded to enhance quotation opportunities and streamline the coordination of the large-scale project deliveries. Our ambition is to take CMI what has been traditionally a Tier 2, Tier 3, Tier 4 electrical contractor base, continue to embrace that environment, but also move it upstream into that Tier 1 space, and that investment will certainly support that. We've signed a distribution agreement for a company called Mennekes, which is a plug and socket system, which is effective January 1. Mennekes manufacture a high-quality, very, very, very well-specified plug and receptacle system, which goes into what's called an IEC plug and socket system, which goes into refrigeration of containers, we call reefer and a lot of opportunity in ship to shore, but also in Data Centres. So we're not only expanding our play in our existing portfolios in that CMI business, but we are expanding the portfolio into parallel products that complement that environment as well. We've successfully relocated operations to maintain a modern and more efficient facility in Wetherill Park. So the warehouse where we used to store all of our cable for CMI was old, was antiquated, certainly not efficient. We've moved that into a new facility in Wetherill Park, which is bigger in scale to enable us to support a larger business scale, but also much more efficient and certainly for our people, a much more comfortable environment than where they were before. We've successfully integrated a new cable manufacturing facility following a comprehensive factory audit. What this will do is expand our capacity around cable, the technical compliance coverage and the supplier resilience, giving us a more diversified supplier base and overall production capacity. So -- and it could very well possibly drive some increase in margins with a slightly better cost model from this newly integrated supplier as well. We've implemented a packaging recycling program where suppliers collect the empty pallets from our -- and boxes during their delivery runs, which obviously improves sustainability and reduces waste, which is a key part of our strategy moving forward. And we've developed a customized phase indication plug as part of the Minto offer to meet major customer site-specific requirements, which will improve their reliability and the operational clarity for that site as well. In terms of major projects, a significant SWA cable supply contract for a major project in Northwestern Australia. SWA is steel-wide armored cable. So it is much stronger and it's less ability to be able to damage it in these industrial and harsh environments. We supported a government infrastructure project in Cairns with specialized cabling solutions. We've supplied the mains and submains cable for a commercial building development in Darling Harbour, which is the redevelopment of that precinct down there in Darling Harbour. We've partnered with a Tier 1 contractor to provide customized termite-proof cable for a critical infrastructure project just outside of Brisbane. We've worked closely with one of our national wholesaler partners to deliver highly specialized fire-rated cable, and it's called LSZH, which is a low smoke zero halogen cable, very specialized into a major hospital upgrade project in Melbourne. We've manufactured and delivered Minto Plugs, receptacles and the dummy plugs in a very short time frame into Western Australia mine site for substation upgrade, and they're exceedingly pleased with our performance there and the value that we bring to their business and continuous supply of the Minto range for a global partner into major mining infrastructure projects across Asia, and that's a number of countries that we call out there. So that is the 4 businesses -- sorry, I haven't -- traditionally the IPD business. I will give a little bit of an update on Platinum. It's obviously a forward-looking update. I will talk to the initiatives and highlights that they've done in the first half of the year, and obviously, we'll be the beneficiary of that moving forward. So cabling solutions for the Mining and Resources sector, the successful introduction for market a new longwall mining cable range, strong MV XLPE. XLPE is a range of cable, strong volume leverage from growth initiatives and focus into that Mining space, a significant investment into people development and recruitment to further enable product development and customer responsiveness. And it is one of the things that they hold themselves at the core is their responsiveness and the customer-centric attitude in the Platinum business. And the diversification initiatives into non-mining markets is certainly generating activity, and we talk specifically there into transport is a big one for that space there. In the major projects, the tender submission for a WA iron ore decarbonization project plus other significant strategic project pipeline upgrades. We've designed, supplied and secured regular new value-add comms cables and enclosures into 2 new mines that we haven't supported before and 3 significant low-voltage and medium-voltage power cable projects have been supplied as well. Ultimately, Platinum have always kept their customer base and the sites that they sell into close to their chest because they don't want to be bringing that to the attention of all their competitors, which is why we keep that quite broad in there, so we don't give a leg up to our competitors in that space there. Moving forward to Slide 23, which is a title slide around strategy and outlook. So we'll move straight to Slide 24, where we talk about our strategic pillars. And obviously, as an organization, we are committed to long-term shareholder value creation. And there's 4 pillars that will support that. The top left there is around business growth. We talk about that breaking that up into 2 areas. I've got 3 points there to cover that. Organic growth, we're going to add products and solutions to our portfolio to expand and maximize the long-term value creation for those high potential customers. And the agreement with Mennekes in the CMI business, we're looking to -- we've just signed an agreement with a company for emergency lighting distribution in Australia. So that will also be an addition to our portfolio. So we continue to add portfolios that fit within our business model and our customer base to have a bigger basket to support our customers. We've invested over the last couple of years in what we call strategic solutions, which is a demand creation team working much earlier in a project cycle around specification and demand creation. And it's strengthening our expertise in UPS, busduct and highly specialized mining cables to capitalize on these high-demand sectors. So that team work across the group, and you can see by the inclusion of mining cables into that space that they will certainly be working with end users and consultants about driving specification, which will have a benefit for the Platinum business. But as importantly, we continue to look to accelerate our growth using our funds and as you've seen with the Platinum business using debt where it's appropriate. And if we find the right business in terms of scale, going to market to raise to support acquisitions. And we want to continue to invest in strategic acquisitions to increase our earnings, our market share and our sector reach. And I do say that our M&A pipeline is as robust as I have seen it with lots of really good conversations going on with complementary businesses. Top right there, we talk to the operational efficiency. While we want to continue to grow, we want to do that with, obviously, efficiency and scale, and we want to leverage our shared services, the economies of scale that our shared services provide and we look at reducing our costs and expand -- while still maintaining and expanding our industry reach. In terms of the synergies and emerging technologies, we're going to use partnerships and emerging technologies to develop innovative, adaptable solutions that will drive value and growth. So while we want to grow, we want to grow our top line at a much faster rate than we do our bottom line. Our cost base, not our bottom line, our cost base. The bottom left there is around sustainability, which is a big part of our strategy. And what we talk about there is reducing the environmental footprint, cutting what are we going to do, cutting grid energy reliance by using renewable energy. We're transitioning our vehicles to electric hybrid fleets that obviously support that and support our own product portfolio. And new lease arrangements will -- we are demanding solar energy supply as part of that renewable ambition. We also want to make a lasting social impact. So we understand that as a business that's growing and part of the ASX, we want to make a large -- a lasting social impact. We want to support charities, and we intend to support charities, industry initiatives and education to support and strengthen the electrical industry. And the bottom right there, I feel somewhat uncomfortable having this last because ultimately, people are the key to our business success, and our success has come on the back of being able to attract really good people to our business. So our success depends on strong, engaged and diverse workforce, essential in sustaining our growth. Two areas of focus: employee well-being and development, employ -- enhancing that employee satisfaction, the engagement and safety remains a massive focus for us as a management team while being inclusive and a supportive workplace. A strong focus around talent attraction, which we've done a really good job at over the last couple of years, I think we could put -- we certainly -- I think we can improve our retention, and we are certainly focusing on that with some introduction of some new policies and some new really attractive investments for the organization to retain our people. And it's about keeping our talent. It's about having diverse talent to strengthen our team and uphold this to high standards of the organization. If I move forward to Slide 25, which I'm sure is the slide you've all been waiting for. The headline there around sustained solid performance. The Board expects the company to deliver a solid full year performance. This is going to be supported by several positive operational and financial indicators. The strong first half results provide a robust foundation for the remainder of the year. January and February trading continues to demonstrate positive momentum across key business segments, including the recently acquired Platinum business. The company enters the second half with a healthy order book, a well-qualified opportunity pipeline, both of which provide us with confidence in the sustainability of the revenue and the earnings growth into the future. So Slide 26 there is just our disclaimer, and it's important that you read through that. And Slide 27 takes us to the question-and-answer slide. So I will open the floor to any questions. And hopefully, we've got all the answers for you.

[Operator Instructions] Our first question comes from Philip Pepe with Shaw and Partners.

Congratulations on a strong first half result and a very positive outlook statement. Just on the outlook for margin, I appreciate the business mix change. But with the Aussie dollar above 70. If that sticks above 70, what happens to your margin? Can you keep the benefit of that? Or do you hedge or pass it on?

Yes. We've got a robust hedging strategy, Phil. So -- and again, we've got a significant stock profile at the same time as well. So the time stock goes into production and sits in our warehouse and comes through, it takes some time for that currency movement to flow through our books. But we'll have the ability over time to manage that. We've managed our vendors quite well through the tough period of, I guess, currency drops. So it will probably start to level itself out a little bit now as opposed to anything else. But yes, we've definitely got the ability to control our pricing into the market, Phil, and we've got a long lead time into that dynamic because we, again, hedge our supply, but we also have got a natural hedge in our stock profile at the same time.

Excellent. And if I could sneak in a second one just on the outlook for Data Centres. Bit of press recently about the acceleration we're expecting to see later this calendar year, certainly into '27. I appreciate you mentioned that the size of the price has gotten bigger. How much visibility do you have in terms of revenue to IPD Group? Is it 6 months or 12 months? How early -- how much in advance are you getting orders for your field equipment?

So I'll answer that question in 2 ways, Phil. If I talk about visibility of Data Centres, we are in -- busduct is one of the first products that need to be -- there's an engineering component to it, and it has to be -- what we do Revit drawings and that sort of thing, which means that it's customized to the site to go through penetrations and around piping and infrastructure that's in the build. So it gets us much earlier engagement into that Data Centre. So if I talk about visibility of the opportunity, we're talking probably 12 months out now or even maybe further than that. Quotation pipeline, busduct is early because of the nature of that in the customization of it and with switchgear and switchboard systems probably coming maybe 6 months before the opportunity is in front of us. So busduct a bit earlier and switchgear around about 6 months. But in terms of the actual visibility of the Data Centre expansion because of -- and I guess we've invested, as I mentioned before, significantly into that strategic sales, which is working earlier. And they've identified -- that strategic sales has identified around about $350 million worth of opportunity, which is not in our quotation pipeline yet because we're trying to influence specification. And you could bet your bottom dollar feel that probably a significant part of that $350 million opportunity is around Data Centres. So yes, we're in a better position than we've ever been in getting much earlier visibility in that space.

Your next question comes from Matthew Chen with Moelis & Company.

Congrats on the results. Just wanted to ask how you guys are thinking about pricing across your product portfolio and essentially -- especially an update on that given that product portfolio has been updated in recent times.

Yes, Mate. So certainly, as a result of copper in the last 3 months, in particular, growing and growing quickly and a large portion of our portfolio now in cable, any quotes we put out for cable are only valid for 24 hours because of the -- I guess, the fluctuating nature of copper and the impact that has on the cable. So we get the ability to be able to reprice that based on copper fluctuation. So that is a massive change because what used to be we will validate our quotes, hold our quotes valid for 1 month, but it's literally 24 hours now. If I -- and that is having a flow-on effect even into the IPD business. We're seeing some of our suppliers look to increase their pricing on the back of commodities increasing. As Jason said before, we have really good ability to be able to use that as a positive influence on us because -- we have 4 months' worth of stock, 3 to 4 months' worth of stock on hand. We have another 3 to 4 months generally or 3 months on the Water or on order with our customers where the pricing is locked in. So literally, any price increase materially, we won't tend to see it for 6 months. But because of the noise that goes on in the market around commodities and the impact of that on pricing, it gives us the ability to be able to use that as an opportunity to increase our pricing to the market, which could give us some margin leverage. So that -- I feel comfortable that we're protected. We could potentially use that as an opportunity. We did put our pricing up just over 4% on the 1st of March, and we will be doing some other price increases on products that are impacted as a result of this rising commodity pricing, but we'll do that outside of a portfolio-wide increase. So more, I guess, focused pricing approach on those ones that are materially affected. With any new products that come in, Mate, it's the typical bell curve. You've got to price it competitively to get it into the market and get acceptance and get penetration into the market. Once you build that, you can certainly look to get your price lift -- your pricing up a little bit once you get acceptance, but we've still got to be market relevant. But we understand that we're a business with a large focus on engineering and technical support and value add to our customers. And any new products that we bring on, we expect to be able to bring in gross margins equal to that of the organization or greater to support a growing result, not a dilution of the result.

Our next question is from Bruce Bennett with Aust Yieh Enterprises.

Bruce Bennett here. I'm glad I'm able to be involved today. Thank you again for the good result. I've got a couple of queries. One relates now to the proportion of the investment in cabling and whether or not this is going to be able to provide the same level of growth and returns as other parts of the business. And we've got now what, almost 30% of the business in cables. Are you worried that we're going to be able to maintain the growth given that there's that much involved in cabling? That's my first question.

To answer that question, Mate, both the cable businesses, CMI and now Platinum actually have a positive impact on EBIT and EBITDA margins. So that actually brings a positive result to the organization. And when I talk to you about growth opportunities, Bruce, materially, every product that we sell in our business hangs off the end of a cable. So if there's an upgrade in the product or a new site where there is as much opportunity in cable growth as there is any other part of our business. The other thing is that CMI have a market share, which is actually lower than the IPD business. And our expectation is to grow it at twice the market rate. And certainly, there's plenty of opportunity to grow the market in the CMI business. And even in the Platinum business, while they do very well in that mining environment, expanding their cable portfolio into areas like traffic and other areas, but also expanding it -- they're predominantly in hard rock mining, but into other areas of mining is something that the group can bring scale, can bring investment. So I guess to summarize all that, Bruce, I'm extremely enthusiastic about the growth opportunities attached to cable and the positive impact that will have on the business, not the dilutive impact.

All right. Now another question relates to Platinum. It would appear that Platinum doesn't manufacture their cable, they source it from overseas. Is that correct?

That's correct, Mate, yes.

Yes. Now I was wondering, so really, they don't have any particular IP or any particular equipment or anything like that. So I assume most of the money you paid for Platinum was goodwill.

Yes, it's a fair assumption. However, a large portion of what Platinum does is a very highly engineered-type environment. So while they use third-party manufacturers to do that, they are working extremely closely with these mine sites and understanding their requirements and understanding the technical nature and the safety focus and all that sort of thing of the cable requirements. And a lot of the time, the products that they take to market are engineered by the technical team in the Platinum business working with the end user to identify the requirements and then taking that to our partners on a global scale. So if you want to -- we're not relying upon them to provide us with the engineering, we're doing that in-house. So yes, so there is some IP attachment to it just in the design of the product. And I think that will only grow into the future once we expand into other areas as well. And it's fair to say that CMI would struggle -- we said that CMI would have taken a decade to get into this space. And all of our competitors manufacture the cables that Platinum are doing offshore. Nobody manufactures it in-house. The only cable that's manufactured here in Australia, and I think it will only be for the next couple of years because there's some financial incentives to manufacturing it here at the moment, which will expire in a couple of years' time. So I expect all of our competitors that manufacture here locally as much as it kills me to say it, I think that they'll move that manufacturing offshore. But all of our competitors get any cables, the equivalent cables that we take to market offshore. So we're not in any different position than the rest of our competitors.

And so in the case that you've got net tangible assets now at $112 million. Just of an indication, how much of that is goodwill? The reason I'm saying that is because we suddenly find things are going really well now. But in a couple of years' time, if things go bad, suddenly, there will be a huge write-down in the goodwill of the business and we'll be down $50 million or something. I'm just wanting to get an indication now of that $112 million in intangible assets. What would you indicate? Is that half of that goodwill? Or how much of that is goodwill in that intangible assets?

Almost all of that is goodwill, Bruce. There's a small amount of R&D work that we capitalize from the CMI business, and we -- Platinum haven't historically gone down that path. So almost all of that balance right now is the goodwill. And again, from a head entity that has been quite acquisitive, that goodwill balance is a number of acquisitions. That's made up of the past 9 acquisitions that we've made, Bruce.

So you haven't depreciated any of that goodwill. You think all that goodwill is still valid.

All of that goodwill is completely still valid, 100% yes.

So then the final question I've got is, when we look at net tangible assets per share, they've been -- that's Appendix 4D. They've been reduced from $0.72 a share to $0.52 a share. Can you explain what's happened there?

Yes. Sorry, Bruce, we've got another call after this. But no, the difference on that has just been the combination with the acquisition, of course. So there's a bit of timing difference there around the debt that is having an impact on that tangible assets, Bruce. So whilst we've got the combination of Platinum Cables folding in, we've had to take $37.5 million worth of debt to fund it, and that's creating the timing difference on tangible assets. As we pay that debt down, we're going to see that movement in tangible assets.

I think we've got time maybe for one more.

Our last question will be Adam Dellaverde with Taylor Collision.

You can hear me okay?

Yes, Mate. Got you loud and clear, Mate.

Okay. Just a point of clarification, if you will. I think at one point, you were referring to Data Centres in percentages and another time in millions, the 32.8 number...

Yes, you're right, Mate. In my -- in the opening, I referred to $32.8 million, which is the actual dollar value, $32.8 million is the dollar value that Data Centres contributed in the first half of the year. The percentage growth is 16%. And as I said, there was one order for Amazon, which slipped the week into January. If that had been delivered in the last week of December as we expected, and we're just supporting them through the cash flow situation, it would have been 25% growth. But my apologies, I did get that wrong. Thanks for the pickup.

I'll ask mine in a cluster given we're tight on time, if that's all right.

Yes.

So in Data Centres, what we've seen, I guess, from others supplying in is like once you supply one product, you kind of start talking to the contractors or the counterparties and you start trying to get other products source or complementary products source. And I know you were doing some stuff with some trials with busduct. So I'm just curious, as you look at your pipeline, is that -- is the opportunity in Data Centre about new contractors? Is it about more with the same sort of contractors or hyperscalers that you're working with? Or is there sort of some other opportunities you can talk to? That's the first one. Second one is we've noticed data days ticked up kind of for everyone, and I think everyone is sort of busy on Data Centres. So I'm wondering if you've sort of seen sequential improvement in the half and what that does to pricing? I think competitive pricing was a factor in some of the projects earlier on. So just to read there.

So it's a really good question, Adam. And no, the answer is there's a double-edged sword there. We're working with our existing partners to expand our portfolio we put in there. And you're right, once we build up strong relationships offering one product, we look to expand that into multiple products. So that is part of the growth strategy. But having said that, you'll see in the slide that I showed about the IPD business earlier, we're talking about the likes of Firmus, which we haven't spoken about before with that JLE business, which is a new customer for us. So it's a double-edged sword. We're going to look to expand with our existing, but we're also talking to a number of new customers, new contractors, new Data Centre providers in that space to also expand our opportunity as well. In terms of pricing, look, Mate, it's a competitive market, and there's no doubt because of the growth opportunities in this space, there's some keen eyes on it and a lot of people are working hard there. But the good part for us is we get such visibility now, and the question came earlier about these Data Centre projects that while it might come with a gross margin realization lower than that than the traditional business, the attachment to it around working capital requirements and even delivery costs are significantly lower because we tend to not even receive them in. They go straight to the customer, particularly with busduct. And it's one order entry for multiple millions of dollars rather than being using our customer service teams to enter in hundreds of orders to make up that sort of quantum. So -- the gross margin is on these large -- particularly these larger projects is lower than the organization would normally see. But if you roll that down to an EBIT level because of the low cost attachment to it, it sort of washes out at the same sort of net margins, Mate.

That's helpful. And just on the synergy side, some of these acquisitions are now starting to look really complementary in the sort of high-voltage hazardous space. Is there -- can you quantify any of the stuff? I know you've got sort of 2 warehouses on the same street now, for example.

Yes. So in Melbourne, we've co-located all of our businesses that are down there into one facility. We're doing that at the moment in Perth. We're co-locating all of our facilities into one area to one location in Perth. So your question is valid. I guess my thoughts on it, Adam, it won't be a cost saving synergy exercise. It's more about being able to expand into a growing business and a growing opportunity pipeline, but doing it with less cost attachment than it would take if we did it disparately with multiple sites. So I don't think you'll see a massive cost reduction in our P&L as a result of this strategy, but we're certainly able to take on bigger facilities, and you see the benefits in efficiency in the way we do it. But yes, we're certainly using it as the opportunity to accommodate an expanding business, not the business we've necessarily got today.

All right. And just finally, sorry, I taken a lot. Services, is this -- how confident are you that this is the last time that segment will run a loss?

Yes. I'm confident around that because I wasn't going to bring it up today, but I think I have to here now. But Kingsgrove, we still haven't got 100% design from the end client in Kingsgrove bus depot. We've been asked to reprice the installation, which represents a good opportunity for us to increase the size of the opportunity, but we've been able to -- unable to reprice it because the design is still not complete. But I expect we'll recognize some revenue in this year. When I talk about the strategy, and I mentioned it earlier that we put in that one of the biggest strains on the P&L for that Addelec business was the utilization issues around labor and the initiatives we put in place there are supporting it. And it's much more of a focus and intent there around calibration than it has been in the past, which is a high-margin, high-yield business. So we're certainly putting a lot of time and effort into bringing it back to a point where it's a positive contributor to the business and not an anchor. So I'm confident the actions we're putting in place will underpin a result. It may actually reduce a little bit in top line as a result of that change, but it will certainly have a positive impact at a bottom line perspective.

There are no more further questions at this time. I'll hand it back to Mr. Sainsbury for closing remarks.

Thank you very much. So thank you to everybody for joining us today. The team and myself are really proud of what we've achieved, and it's a record result above the guidance. So we're pleased and we're enthusiastic and proud of that. However, I say this and I say this clearly, we're only scratching the surface at this stage. The business is in a very strong position, and our outlook statement reinforces that some real good positive momentum for the future and opportunity to continue to grow. So thanks for your ongoing support. I look forward to catching up with a lot of you throughout the next couple of days and over the next 6 months, and appreciate everything you guys do to support us.

Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.