IVE Group Limited (IGL) Earnings Call Transcript & Summary

Hello, everyone, welcome to IVE Group's First Half FY '26 Results Webinar. I'm Lauren Hayes, your host today. Joining me on the call are Managing Director, Matt Aitken, and Chief Financial Officer, Darren Dunkley. We'll begin with a 20 to 30 minute presentation, followed by 15 minutes of Q&A. [Operator Instructions] I'll now hand over to Matt to begin the presentation.

Thanks, Lauren. Good morning, everyone. Welcome to the presentation of IVE Group's H1 FY '26 results. I'm joined this morning by our CFO, Darren Dunkley, and together we will step you through what is a solid result for the first 6 months of FY '26. IVE is Australia's largest diversified marketing company, operating across every major marketing discipline. For 105 years, we have evolved alongside brands, technology and consumer behavior. And through the ongoing execution of strategy, partnerships and targeted acquisitions, we've brought strategy, data, creativity, production, technology and fulfillment into one connected system. In our world, markets continue to shift, channels evolve and customer expectations don't stand still. As I mentioned earlier, we've spent more than 100 years evolving with every major change in media, technology and marketing trend through continuously building our capabilities around what brands need next. That's why we're still here and we'll be here for the next 100 years. Clients navigating change and complexity need experienced partners who know how to adapt and execute at pace, and we are that partner who's been doing it for over a century. In June last year, we held our maiden Investor Day, and during that day, we presented our 5-year strategy to 2030. We've just come through the first 6 months of that strategy journey. And so I wanted to update investors on progress against various initiatives that we outlined during that time back in June. In terms of our ambition targets, as you'll see from today's presentation, we now have the EBITDA margin above 15% and the net debt remains below 2x and in line with our own target of circa 1.5x. If we turn our attention to the bottom of the slide, despite revenue softness in a particular part of the business, which we will talk about later in this presentation, we've continued our relentless focus on growing organic revenue and winning new business. And you can see from the slide, some of the great brands that have signed on with IVE during H1 FY '26 and will be trading with us as we go into H2. From a capital management perspective, we've continued to be active in the share buyback. And we've listened to investors who have asked us to move back to a dividend payout ratio policy, foreshadowing at least at last year's AGM, our intention to reinstate this policy from FY '27 onwards. We have a continual focus in optimization of the business with a number of initiatives executed and/or commenced in H1. The Kemps Creek supersite has been well spoken of, and I will pick up on that later in the presentation. We're currently consolidating sites in Victoria, moving our packaging business into our main Braeside facility. And we've undertaken a number of acquisitions, some of which are driving market consolidations and leveraging our cost base in existing markets that we're already in, specifically BMS and Impressu. But equally, we're always driving expansion and growth opportunities, with H1 examples being the fact that we're building Kemps Creek also to house a state-of-the-art packaging facility to facilitate the growth of that strategy, the Daily Press acquisition to enhance and build further on our creative and content offering, focusing on a more deliberate move into the event space, which I'll have more to say about later, and the Queensland production presence through Impressu, providing a solid footprint to grow in that state and ride the wave of population growth and investment happening in Queensland ahead of the 2032 Olympics. At an innovation level, we've refreshed all the key customer-facing technology in the business. We've had extremely good feedback from existing clients and it's been central to some of our new business wins. And we're continuing to focus on AI and automation initiatives with priority given to initiatives that help with revenue, growth and cost efficiency. As I said at the start of this page, we're only 6 months into a 5-year strategy journey. As you can see, we've made meaningful progress in H1 and we have a number of initiatives in play for H2. This strategy underpins our vision to be Australia's leading integrated marketing solutions provider, delivering impactful, human-centered experiences across all channels. As previously mentioned, today, we're presenting a solid half year result. Margin expansion is consistent with our strategy that we've spoken about before. Whilst we saw revenue softness in the catalog and publishing sector with some clients cutting pagination and volume. We've also seen companies coming back into that catalog channel during the half 2, and I'll have more to say about that later in the presentation. Cash flow remains strong, gearing is conservative. And whilst we've had an on-market buyback in place during H1, we haven't been active with that buyback since October. In terms of key updates, the 3PL expansion in Victoria that we've spoken about previously concluded in H1 with Dandenong South operational ahead of schedule. The schedule is going to be 80% full with some of the recent new business wins that will start delivering in H2. We commenced preparations to relocate the JacPak business into our Braeside facility in H2 and to in-source the raw materials and finished goods requirements into Dandenong South. New South Wales expansion is on track with the Kemps Creek build and it will be supported by major new clients coming online during calendar 2026. And again, I'll touch on Kemps Creek later in this presentation. And the team are also continuing to work through the AASB S2 climate-related financial disclosure obligations the company will have to report at 30 June, 2026, which is an ongoing cost imposed on the business, especially when you consider many competitors are not listed entities. In terms of the key initiatives outlined on this page, I will cover all of those in more detail later in the presentation. I'm going to take the financial dashboard as read, as Darren will cover all of the metrics in the coming slides. So at this point, I'll hand over to Darren to walk through the next section of today's presentation.

Thank you, Matt, and good morning, everybody. I'll just now take you through the financial section of the presentation, starting with the underlying profit and loss on Pages 10 and 11. We'll start off with the revenue. Revenue of $476.5 million, which is down 6.2% on PCP, noting that this does include circa $5 million of acquisition revenue in the period. As Matt already touched on, this was mainly driven by softer revenue in catalogs and publishing and was foreshadowed at our November AGM. CX and data, Creative and 3PL revenues all performed strongly and were up on PCP. As Matt also touched on, the new clients in the period wins include such great brands as Bunnings, Subway, Bapcor, Weldclass, Mirvac, to name a few on that list, and obviously, there were others. Packaging new business wins set to come online late in the second half of FY '26 and into FY '27 and beyond. Underlying earnings. Strong material gross margin, coupled with tight cost control, drove EBITDA and NPAT margin expansion. It's a pleasing result given cost increases absorbed during the period also. EBITDA up 1.8%. EBITDA margin increased from 15% -- increased to 15.8%, up from 14.6%. EBIT down 3.3%, and this is partly driven by an increase in AASB 16 depreciation due to the new Dandenong lease. Pre-AASB 16 depreciation is flat on PCP. NPAT of $28.4 million. On a pre-AASB 16 basis, NPAT was in line with PCP. On MGM, material gross profit margin, which is revenue less material cost of goods sold, MGM improved to 50.7%, up from 48.5% in the prior period. All revenue streams experienced either stable or improved MGM in the period. Further improvement in MGM reflects our leveraging of the improved buying power as the group's scale increases as well as continuing changes in business mix. Non-operating items of $5.8 million pre-tax related to $3.4 million of Lasoo operating loss in line with PCP and budget. $2.3 million of restructuring costs, predominantly related to the relocation costs of Dandenong and the Sydney supersite. $1.4 million of the acquisition costs relating to the acquisitions in the period. This was offset, partially offset by $1.4 million of net profit on sale of property and fixed assets. Turning to the balance sheet on Page 12. Our balance sheet remains strong. Net debt increased to $172.3 million, reflecting acquisition consideration funding, coupled with seasonal working capital increases and elevated CapEx for the growth initiatives. Gearing is broadly in line with expectations of 1.5x pre-AASB EBITDA or 1.2x post-AASB EBITDA, noting that acquisition consideration was paid late in H1 with earnings being mainly reflected in H2 and beyond as well as noting seasonal working capital is higher in H1 than H2. Senior debt facility increased in December by $80 million to $330 million of total facility. This is to provide further growth and expansion capacity. Undrawn debt facility at the end of December was $106 million. Capital expenditure, Page 13. Capital expenditure is temporarily elevated due to the growth initiatives currently underway. In line with expectation, capital expenditure was $22.5 million net of disposal proceeds for the half, including $12.2 million, which related to sheet fed press replacement and build-out of the packaging capacity at Kemps Creek and Braeside. As we previously stated, $7 million of this spend was deferred from FY '25 to align with the Kemps Creek relocation in FY '26. Capital expenditure also includes $6.1 million related to the fit out of Dandenong and Kemps Creek sites. Excluding one-off growth initiatives, capital expenditure is expected to normalize in FY '27. Cash flow and dividends on Page 14. We are a high cash-generating business, and operating cash conversion to EBITDA remains strong at 84%. Working capital is expected to remain relatively stable moving forward, broadly in line with revenue and seasonality. Fully franked interim dividend of the $0.095 per share, stable on PCP and consistent with guidance. I'll now hand you back over to Matt so he can take you through the balance of the presentation. Thank you.

Thanks, Darren. Just turning to Page 16 -- 15 and 16, in relation to the key initiatives. As I said earlier, we've spoken a lot about Sydney supersite and the site consolidation project in our [ investor calls ] over the last 12 months. This project is now nearing completion with construction of the entire building complete. So those photos on that page are actual photos, no longer artist's impressions. We are currently in progress of fitting out internally, and this includes the new presses and finishing equipment have arrived and are currently being installed to support the packaging capacity expansion. We expect relocation of our businesses from the existing sites to commence in April, and we will exit all legacy sites by the end of the financial year. We also expect the site to deliver a range of financial and operational benefits as we move into FY '27, one of those being the mitigation of $3.1 million of additional rent had we stayed in our existing sites, which is something we previously communicated. This will be a world-class facility, a showcase for customers and a fantastic site for our 400 to 500 staff that will be based there, and I look forward to welcoming investors to the site later in 2026. Lasoo continues to perform strongly and in line with expectations and previous market commentary. The growth in retailers and unique users is driving year-on-year improvement in all metrics. The GTV in Q2 of $8.1 million was higher than what we guided at the AGM, where we said it was going to be $7.5 million. And in November, the monthly GTV hit $3 million for the first time, and we saw a particularly strong December with GTV up 94% on PCP. GTV standing for gross transaction value. The average basket sizes remained steady throughout the half at circa $200 per order, and we continue to onboard new retailers into the marketplace. Retailers like Bi-rite, digiDirect, dusk, Vinnies and Decathlon. And Lasoo still remains on track to breakeven during FY '28, as previously guided. Despite experiencing revenue softness in catalogs, we remain of the view, as do many customers, that it's a very valuable and meaningful media channel that delivers tangible results. To prove this, we've undertaken further research to better understand current market trends, evolving consumer behavior and the role catalogs play in shoppers' lives. Importantly, we've partnered with external data providers, including data providers from the retailers and one of the Big 4 banks to quantify and demonstrate the measurable ROI our clients achieve from catalog marketing activity. Current trends indicate that consumers are becoming more selective, value-driven and intentional in their purchasing decisions. While e-commerce continues to grow, physical stores remain critical as trusted connection points within the shopper journey. Our research went into significant detail to measure the true commercial media impact for our clients. The results were clear. Stores with letterbox catalog distribution significantly outperformed those with no catalogs or in-store catalogs only across all 4 key performing metrics. Our analysis, based on external independent data, shows that when catalogs are delivered to letterboxes, retailers see a 2.5% uplift in scanned sales through the checkout or across the counter, a 3% increase in foot traffic, measurable growth in new and lapsed customers and an increase in average transaction spend amongst existing shoppers. And whilst these percentage uplifts may appear modest at face value, within grocery retail, for example, these results represent a very, very high ROI. The research has been extremely well-received by retailers with a number of retailers reentering the catalog channel or increasing activity off the back of the research, and I would call out Bunnings and Coles as being 2 retailers in the last 6 to 12 months that have both reentered the channel and/or increased volume considerably. Events, if we turn the page and we go to events, events is emerging as a standalone value proposition and target market for the group that leverages our unique capabilities in creative and content, brand activations and merchandise and apparel. Growth in the size, complexity and holistic marketing demands of major events is an attractive revenue growth opportunity for us with both prospects and existing customers. We've had a long history of playing a major role in bringing events to life, dating back to the work we did for the Comm Games in 2018, the FINA World Swimming Champs in 2022, the Women's Soccer World Cup in 2023. And more recently, we've partnered with Tennis Australia for the last 3 years on every major tennis tournament around the country, including the Australian Open, and I'll cover more on the next slide around what we did for the Australian Open in 2026. There are numerous events outside of some of those I've mentioned. There are numerous major events occurring in Australia over the next 6 years. And we see this as a major opportunity to continue to grow our events revenue further. And I've outlined a number of those opportunities on this page, bookended by the Olympics in Queensland in 2032. Complementing the events business is our move into licensing, something we've been working on for the last 2 to 3 years. We now have license agreements for the supply of merchandise and apparel with Football Australia. That license dates back to the Women's World Cup in 2023 when we were producing merchandise and apparel during that time. Rugby Australia, which covered last year's British and Irish Lions tour, extends all the way through the Men's World Cup and out to the Women's World Cup in 2029. And the NFL, as they look to bring games into Australia for the first time from 2026 onwards. And the current AFC Women's Asia World Cup, which is about to kick off, and we will continue to grow that space accordingly. If we turn the page, and I'll just turn the spotlight a little bit on what we've been doing with Tennis Australia and the AO, in particular in 2026. You can see from those pictures on that page there some of the work that we are producing in this event space. It's only a small sample of everything we did at the 2026 AO. We've just come off the back of that. It was a huge project with Tennis Australia, the biggest we've done for them in the last 3 years, they spent between $3.5 million and $4 million with us on this event this year. Their brief was to deliver a world-class, immersive experience across Melbourne Park that elevated the event environment, engaged fans on-site and on-screen and brought partner brands to life. And you can see from those images and you can watch the video links that we've embedded in this presentation to get a better understanding of how we transformed Melbourne Park into a cohesive, high-energy, festival-style environment. So if you're looking at some of those pictures and you're wondering, what did I really do? That bottom left picture with the screens embedded in it, we've built all of those structures, installed all of those structures for the screens to be embedded in. The DJ booth on the bottom right, we've brought to life all of the hospitality areas, all of the signage, all of the lighting in Grand Slam Oval, ballpark. And you'll see there also a KIA clip with an opportunity to play a video on that tile. That is off the back of our relationship with one of our large clients, being Kia, also being the major sponsor of the Australian Open and we've worked with Kia to bring together their activation that they had at the Australian Open and really showcase that for them, and I'll let you play that in your own leisure. If we go to the next slide, again, I won't play this video at this point in time. I'll leave you to play it. But again, I reiterate that what you're looking at there on those screens is everything that IVE -- not everything, but some of what we have built, designed, built and installed for the Australian Open in 2026 in addition to a lot of other work right around Melbourne Park and Grand Slam Oval. Turning to acquisitions. As we foreshadowed at our Strategy Day last year, we intended on using the strength of the balance sheet to support targeted accretive acquisitions that support business growth and expansion as well as consolidate existing markets that we operate in, particularly where it enables us to leverage our existing cost base. On the following slides, I'll briefly recap some of the acquisitions that we took place during H1. And all of this information was communicated in our market releases during Q2. All 3 acquisitions are performing extremely well. Integrations are either complete, in the case of BMS or on track in the case of Daily Press. The staff and customers are very happy and trading is in line with our expectations and consistent with what we noted in the market releases. Given I did cover Impressu and BMS at the AGM, I'll cover Daily Press on Page 25 in a little bit more detail for today's presentation. Late in December, we acquired Daily Press for total consideration of up to $35 million. And Daily Press is an agency that has revenues of $23 million and earnings of $5.5 million. And we believe there's approximately $1 million of synergies to unlock once it's fully integrated as we walk through 2026. The acquisition of Daily Press is a strong fit with our 2030 strategy and our intention to grow the creative and content part of IVE. It's a good fit with our existing creative business, which also incorporates the Elastic agency that we acquired almost 2 years ago now. And it further strengthens our existing offer. It adds depth in social and performance marketing. And the business, being Daily Press, also owned a SaaS marketing platform called Indy, that we think has a great growth potential once launched in the coming months. There was also very little customer overlap, which means there's great opportunity to sell more IVE products and services to Daily Press clients over time. In terms of consideration, we paid $25 million upfront. There is a further $10 million of deferred consideration that could be paid over the next 24 months, depending upon the achievement of performance hurdles. Turning to Page 27 now for outlook and guidance. Capital expenditure will remain broadly unchanged, $45 million net of proceeds. Net debt as at 30 June, 2026 is expected to be 1.5x or below 1.5x pre-AASB 16, which is less than 1.2x on a post-AASB 16 basis. We still expect to pay an annual dividend of $0.18 per share fully franked, and thereafter we'll return to a dividend payout ratio of 55%- to 5% of underlying earnings. Underlying impact is expected to be around $50 million, and this excludes the favorable impact of the H1 acquisitions. And on a pre-AASB 16 basis, the guidance is around $52.5 million, which compares with $51 million in FY '25. As many of you would know, the company's had a buyback in place for the last 12 months, and I mentioned that earlier, with approximately 1.7 million shares being acquired and then canceled during that time. It is our intention to reinstate the buyback for the next 12 months and utilize that capital management initiative, should the Board form the view that the share price is undervalued. I'd like to thank all of our staff, customers and partners for their contribution towards a solid H1 result. We're now happy to open the call for questions. Thank you and good morning.

[Operator Instructions] First, we'll start with Chris Savage from Bell Potter.

Darren, probably one more for you to start with. The GM was a pleasant surprise at 50.8%. Do you think you can keep that 50% level for the full year and going forward?

We do believe that our material gross margin, Chris, is sustainable moving forward. Again, we've shown that historically that it's been stable, and over the last few periods, we've been able to grow that MGM. So we believe, moving forward, that it will be sustainable.

And with the acquisitions, do they positively or negatively impact the MGM?

Look, they will -- I mean, yes, they will positively impact the MGM, remembering that MGM is revenue less material cost of goods sold. And for example, Daily Press is predominantly creative content revenues, which is not a lot of material, so that would increase the MGM, but also at the same time would increase the creative direct labor. But on a whole, it will certainly support a sustainable MGM moving forward.

And just on the guidance, are the restructure costs still expected to be around that $13 million mark?

Yes. We've got -- well, we've got Lasoo, as we've already guided it at circa around $4 million, which is in line with FY '25. And then we've got the balance of $10 million post-tax related really predominantly to the relocation costs of the Sydney supersite would be the main.

The restructure costs were quite light in the first half. So there's going to quite a jump up in the second.

Well, remember that we're in H2. We don't move into the Sydney supersite until sort of mid-H2. So they are still to come.

And the acquisition costs in H1 of $1.4 million, is there much more expected in H2?

No.

Next up, we have Jonathon Higgins from Unified Capital Partners.

So maybe just first, just on the revenue side of things. You've obviously sort of called out at the AGM and then just called out the actual results today and been pretty in line with what your guidance is. Can you describe the opportunity on revenues across the group, noting obviously they're down a bit year-on-year? And also maybe weave in I think some of the opportunity you've talked about packaging and the like into the back half?

I mean, the new business momentum from the teams, Jon, has been really good. And it's always been a strong focus of the business to grow organically. We've outlined a number of clients there that we've won, like Bunnings. So we've always done catalogs for Bunnings and the Bunnings magazine, but we've actually won a new contract with Bunnings to do a lot more in and around supporting the running of their stores and how their stores are marketed. So that's a big separate contract which is onboarding now and really won't commence probably in full flight till we get through to FY '27. We've obviously picked up the Domino's relationship as part of acquiring the Impressu business, but there's a lot more work in Domino's that IVE could be doing based on IVE's products and services outside of what the Impressu business was doing. Sydney Airport represents a great opportunity, particularly in and around the merch and apparel, as does Subway with everything we're doing in that space and some other franchisee groups. So look right across the board, whether it's still in our print channels, whether it's in our marketing tech space. We're doing some great work with the banks, so extra sort of share of wallet work there with the banks, whether it's out in brand activations with event stuff, as you're seeing. I mean, I've focused largely on major external events today and didn't really talk a lot about all the events work we do for customers and exhibitions work as well right through to a lot of wins in our logistics space, our 3PL space. I'm really excited about the new business that we're winning, but we've got to at the same time, be able to outpace some of that change that we're seeing in our more traditional channel in and around some of that catalog and publication space.

Understand. Maybe just a couple more from me. Like, I mean, in terms of the operating margins, just tying into Chris's question earlier, like, the material margins were obviously pretty strong. Operating margins and cost control was also the case. Is this something that you think you can continue to cascade into future periods? Like, it's pretty disciplined performance in the context of the R?

At the moment, Jon, from our perspective, we're not seeing any reason why we shouldn't be able to continue to keep that strong control on the cost base and the move into, say, JacPak into Braeside, and then the Sydney businesses into the Kemps Creek site is just a further step towards really tight control around operating costs and expenses. And then from a margin perspective, notwithstanding any change in work mix, if you like, we think the current margin structure is sustainable.

Sorry, that was going to be my next question, just the last one, just to tie it up. So you've undergone sort of some pretty reasonable consolidation activities on sites and the like. The New South Wales one looks like the tail end of this. Can you just sort of describe where you're at in those consolidations? Is there any obviously further ambitions with what you can see with the businesses you've got in hand? Or are we sort of coming to a slower period on that?

I think we're coming to a slower period on it, Jon. If I think about our presence in Victoria, we have big presence in the Western Sunshine and then a big presence out in the Southeast and Braeside and Dandenong South. They're the two central locations for us down there. Here in Sydney, we're very much centered around that western part of Sydney with this move. We'll be retaining a portion of a site at Silverwater, Huntingwood, Erskine Park and Kemps Creek, and that will really be the extent of it for us, unless we have other general business activity or new business activity coming out of the mix that we don't foresee at the moment. So we're definitely, in our opinion, coming to the tail end of what's currently in front of us.

And lastly, we have Shane Bannan at PAC Partners.

Can I just ask you to unpack a little bit what's going on with that catalog? I mean, you talk a good story in terms of what you're putting for these retailers in terms of what enhancements they will gain if they use the facility. But obviously, they took a big, good step back in the first half. If I could just get some sort of quantification of that and the prospect of that building back in the current half given the effort you've been putting behind pointing out the upsides of adopting the facility.

No, that's right, Shane. So in Q1, we had Officeworks inform us that they were going to step away from putting catalogs into letterboxes moving forward. So that will flow through into H2. We've seen reductions in quantities from the 2 smaller of the supermarkets. But at the same time, from the bigger 2, we've seen increases. So that's not consistent across that sector, but it has certainly impacted H1 and would flow through into H2, in my opinion, unless something changed. We've seen customers cut pagination and/or volume as a way of saving money, and clearly, we're seeing a lot of retail pressure on, we can see it in the results. Having said that, in the past, we've been a bit more countercyclical where when times have been tough in retail, they tend to spend more. I wouldn't necessarily say we're seeing that right now. But what I would say is, off the research that we've done, and particularly this latest round, this is round #2 in the last 12 to 18 months, this latest round with all of this independent data in there, it is being well-supported by the retailers who are across their catalog programs and/or are seeing issues with revenue and are looking to lean back into it. So we've certainly got customers who have reentered, and I've named Coles and Bunnings as 2 and I've got other customers who I can't name, who are increasing quantities as they look into the sort of that Easter period or the mid to back half of H2 off the back of some of the research we're showing them and the trading that's currently going on. But I'm not going to sit here and suggest that all of that volume's going to return in H2, that we've sort of seen stuck away in H1. But I would also say that, when we went through the Investor Day in June last year, we did talk about the print component of our revenue streams walking back by sort of single-digits in a year-on-year basis based on what we thought would happen. Clearly, we do everything in our power to stop that happening as well.

Just in terms of quantification, we're talking about sort of $30 million to $40 million at the revenue level that when it comes to this sort of area?

Yes, more on the $30 million space there, Shane.

That's got to go for a full 6 months in the current period, then we've got some building back for these other guys. So net-net, you might be able to sort of breakeven in the second half in terms of the impact on revenue?

Yes.

Okay. Matt, I know in past times, you made a big play for the uniforms business. That didn't crack a mention so much in the presentation. I'm assuming, have you sort of stepped back on that, given he miss dealt on the McDonald's contract?

Yes. No, still a growth sector for us and definitely one that we called out in that Investor Strategy Day last year and still up on Slide 6 of this presentation today. And something -- so we're growing organically in that space, Shane, so we're continuing to pitch for contracts win work. But I also have a view that it's an area that we'll make an acquisition in over time. I just haven't found the right acquisition for us there at the moment. And in addition to that, we've had some other acquisitions in H1 that have taken priority over that strategy for access to the balance sheet, and I'm very happy with those three acquisitions that we've done in H1.

Just lastly, Matt, I know in the past, you always looked at Lasoo and said, look, this is an opportunity to build a business, and obviously, you're a long way through that process. But I think you also sort of suggested that you're not the natural owner. I'm just wondering how your thinking has evolved insofar as that's concerned?

The thinking, Shane, is we've got to really get it to breakeven and/or small profit to potentially have an event of either bringing another equity owner in with us and/or it being appealing enough for someone to acquire office. If we're still of that view as we get into the FY '28 financial year, that we're not the right owner for that business. It has some synergy with IVE today, so it's not completely a square peg, round hole. But I think given we've already spent the bulk of the money we needed to spend to get it to break even, and we're that close to getting there based on the current numbers and current run rates, still indicating we'll get there in FY '28, we want to see it through to that period. And then we will start to look for potentially an equity partner or a liquidity moment as we go past FY '28 and out towards FY '29 and onwards.

Matt, over to you to run through the submitted questions.

We've got 4 or 5 questions up here currently, and I'll pick off a couple and -- between Darren and I, we will dance through them. So we have a question here about whether we'll benefit from a stronger Australian dollar? Yes, we will on our imports. I would note that we don't import a lot of our raw materials against the US dollar. The bulk of our raw materials are imported against the euro. So if that Australian dollar improves against the euro, then yes, we will, and we've seen some of that helping our margin structure, obviously, during H1, but certainly as we turn into H2. We will remain opportunistic to some of those potential opportunities that may present as we go through H2 and we'll use our balance sheet accordingly if that opportunity is there on that. There's a question about do we have a manager overlooking each state or a national manager. So we run a structure of divisional CEOs. In addition to Darren and myself, there are people in sustainability and CMO. So we have divisional CEOs looking after specific parts and areas of the business that are closely aligned. And underneath each of those divisional CEOs, we have a general manager of the site, a head of operations and a head of sales, and we have a Chief Sales Officer for that. So hopefully, that gives you an indication broadly of our structure. We have P&L accountability, but for the leadership, right down to a site level, that flows back up through the CEO level and then back up through to Darren and I. Can we provide a little more detail on our progress with packaging and future targets? Sure. So one of the things that we've experienced in FY '26 has been some of the new business that we've won hasn't quite onboarded as quickly as what we would have wanted. And I can give you an example of, say, 2 clients, Sara Lee and Sanitarium, that are 84% of budget or of the numbers we expect them to do in the FY '26 period. But they are showing signs of getting up to that 100% run rate, particularly Sara Lee. We have another client that we expected to do -- new client that we expected to do $1.4 million in the current financial year, and it's worth $4 million to $5 million on an annualized basis and they've only done $200,000 year-to-date, which is in and around largely the testing process we go through with clients before we go live. So that's been disappointing, but it is an indication of the long lead times some of these bigger contracts can take to onboard. And we have a major contract starting at the start of July that I can't name yet, but it will be one of our biggest packaging contracts in the business and that has been 18 months in the making. So we've done all the testing. We're ready to start producing live product in the next couple of months, and that product will be saleable from the start of July onwards. So from my perspective, the FY '27 packaging revenues will continue to show growth and be healthy. The business has continued to grow through FY '26, but some of those bigger revenue opportunities that we've had a line of sight on for some time now have definitely taken longer to come to fruition than we would have expected.

Darren here. There is a question here on our increase in net debt and the impact on interest expense moving forward, and if there is any penalties in relation to us paying down that net debt, which there isn't. So at FY '25, we updated the market that we had just refinanced the business for a further 4 years. As part of that refinancing, we negotiated slightly reduced margins on prior facility for interest expense. Our net debt, yes, it has increased from 30 June, and that's really on the back of, as we've already discussed, the upfront consideration on the acquisitions that we did in late H1 as well as to fund the CapEx, the growth CapEx initiatives that we have and also our seasonal higher point in working capital. From a net debt perspective, moving forward for the H2 and beyond, look, we take a very conservative approach with our net debt. We will definitely look at bringing it down wherever we can. I would say now would currently be a high point in our net debt. We haven't got all the benefits of all of the earnings from those acquisitions, even though we've outlaid large amounts of consideration for those acquisitions. Working capital as at 30 June is generally lower, but 31 December, we'll see those benefits flow through to our cash flow and reduce our net debt, and we are again looking at, obviously, it's elevated CapEx in FY '26 to fund the growth initiatives that we have. And we do expect CapEx to normalize in FY '27 to again support lower net debt, more conservative net debt moving forward. We are not penalized if we pay down our net debt. And it's a continued focus for us to keep the interest expense number as low as we possibly can. Just to clarify as well, the interest expense number for the H1 pre-AASB 16 was $4.7 million, and that compared to $5.7 million in PCP. So what you see in the accounts also reflects the take on of the new lease and the AASB impacts there. And the AASB impact increased to $3.2 million from $2.7 in PCP. I hope that answers that question.

Just while we're on that, we've got a question about the senior debt facility. The senior debt facility is provided by major banks in Australia, not by private...

Yes, majors. Yes, correct.

And a number of those are the Big 4. We've got one question just around. Are we likely to implement a DRP in the future? At this stage, there's no plans to, but the Board will continue to explore all options as we move forward. Lauren, I think that's all the questions as we can see on the screen at our end.

Thanks, Matt. That concludes today's Q&A and the IVE Group first half FY '26 results webinar. Thank you for your continued interest and support. If you have any follow-up questions, please get in touch with the team. A replay of today's webinar will be available shortly on the IVE Group and ShareCafe websites. We appreciate your time and look forward to speaking with you again at the full year results.