Kelsian Group Limited (KLS) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the Kelsian Group FY '26 Results Briefing. [Operator Instructions] I would now like to hand the conference over to Mr. Graeme Legh, Group CEO. Please go ahead.

Thank you, Mel, and good morning, everyone and welcome to Kelsen Group Limited's Full Year Results Presentation for the 12 months ended 30 June 2026. I'm Graeme Legh, Kelsian Group CEO, and I'm joined this morning by Andrew Muir,, Kelsian Group CFO. Today, I'll begin with an overview of the group's record results for FY '26 and the key strategic, operational and sustainability achievements that have been delivered during the year. Andrew will take you through the detailed group financial performance and the results from each of our operating divisions. I will then discuss the outlook for FY '27 and provide details of our growth pipeline and priorities. FY '26 was an important year for Kelsian. We delivered another record result, strengthened the balance sheet, advance the streamlining of our operating portfolio, continued the disciplined execution of our growth priorities, and positioned our operations to capitalize on the growth pipeline across our markets. Before turning to the FY '26 results, I want to provide an overview of the Kelsen Group's global operations and the key characteristics of our business, which is set out on Slide 3. Kelsian is a leading multimodal transport operator connecting people and places across Australia, the United States, Singapore, the United Kingdom and the Channel Islands. To give you a sense of our operating scale, at 30 June, we employed 13,300 people and operated more than 6,300 buses and 120 vessels for more than 100 operating locations. Over the year, our services delivered $384 million essential customer journeys. In Australia, we're the largest multimodal bus and ferry operator with significant contracted bus operations across all Mainland capital cities and a portfolio of contracted marine services. In the U.S. We are the second largest motor coach operator with operations spanning 7 states across the South and Southwest of the country. In Singapore, we're the third largest public transport bus operator, and in the U.K., we have an established operating platform, bringing bus franchising expertise to the regional U.K. bus market. A key feature of the portfolio is the quality of the revenue base. More than 90% of group revenues contracted or nondiscretionary in nature, primarily backed by government and high-quality corporate customers. The combination of our proven operational capabilities, our scale, long-term customer relationships and predictable, resilient revenues provides a strong platform for our disciplined growth into the future. Turning to Slide 5. I'm very pleased today report another record result for Kelsian. Group revenue increased by 8.8% in FY '26 to $2.403 billion, with growth across all geographies. We underlying EBITDA increased by 10.8% to $315.8 million, which after adjusting for the delayed Kanger oil and mobilization costs is at the top end of our updated FY '26 EBITDA guidance range of between $303 million and $312 million. Underlying EBIT was up 14.5% to $155.7 million, and underlying net profit after tax and before amortization was up 17.2% to $111.1 million. The result demonstrates the resilience of our business model. The majority of FY '26 revenue was contracted and contractual indexation mechanisms provided important protection against inflationary pressures and the significant volatility in fuel prices witnessed in the second half of the period. Growth was supported by both new contract wins and existing contract growth, including from employee shuttle service contracts in the United States, the full year contribution from the banks down rail placement bus services increased service levels and contract indexation from our bus public transport contracts and improved performance in marine and tourism. Importantly, the earnings result again translated into strong cash generation and a stronger balance sheet. Net operating cash flow was $220.1 million, up 7.3% and leverage reduced to 2.46x, meaning we are now within our target leverage range of between 2x to 2.5x underlying EBITDA. Over the 3-year period to June 2026 underlying EBITDA has grown at a compound annual rate of approximately 25%. After one-off costs associated with acquisitions, the tourism portfolio divestment and the implementation of the new group finance system statutory net profit after tax was $53.5 million, up 16.6%. Moving to Slide 6. FY '26 was a year of strong operational execution and meaningful strategic progress. Operationally, the United States continued to perform strongly with the ramp-up of new and existing industrial contracts solid growth in corporate and technology employee transport Services and a pleasing charter contribution. In Australia, operating performance of our key urban public transport contracts improved as service changes we implemented and the impact of depo electrification and government fleet replacement delays became more manageable. These initiatives help offset the higher repairs and maintenance costs associated with operating older diesel vehicles. The mobilization of the new Kangere Barry contract has been delayed with commencement in now scheduled for October 2026. Approximately $3.5 million of mobilization costs for this new service were not incurred in FY '26 and will now be incurred in FY '27. In Australian bus, we signed a 2-year extension of our Sydney Region 6 bus contract from 1 July 2026 on improved terms and successfully commenced the Ipswich and logo services in Queensland. Both provide us with a stronger operating platform as we enter FY '27. In the United Kingdom, the award of Liverpool Bus contracts commencing in January 2027 and validated our strategy of establishing operating presence ahead of regional U.K. bus franchising. We also acquired South Wales Transport positioning Kelsian for the pipeline of franchise opportunities expected across Wales. In July, we were awarded new long-term dairy contracts in Auckland and entered into an agreement to acquire Bellary, establishing a strategic platform for further growth in New Zealand. Across the group, our focus remains on operational excellence, disciplined capital management and growth that meets our capital management and allocation framework returns. Alongside the FY '26 results, today, we've also released an update on the proposed tourism portfolio divestment from within our ceiling, marine and tourism division. In February, we announced the Journey Beyond had agreed to acquire the identified those portfolio operations for total cash consideration of $161 million. The transaction was subject to ACCC and Verb approvals and other customary conditions. Since the announcement in February, the ACCC has been assessing the potential divestment of 2 transactions. The main tourism portfolio and separately, the SeaLink operations to Rates Island in WA. Health in and Journey Beyond have agreed that Selina Nest will no longer form part of the tourism portfolio. Having removed stealing ones from the transaction perimeter, we are confident we have a compelling case for ACCC approval of the remaining tourism transaction. SeaLink Roma is a profitable stand-alone commuter-fairy business with a strong brand and from Kelsian perspective, it is business as usual for our WA marine operations team. Kelsian has significant marine operations outside of the tourism portfolio, and we now intend to continue to operate ceiling-test alongside our transport commuter ferry operation and the other retained ferry operations around Australia and soon to be in New Zealand. We continue to work with Journey Beyond to satisfy the acquired regulatory approvals for the remaining tourism portfolio, which accounts for more than 90% of the original transaction value and we still expect this transaction to complete in the first half of FY '27. Post completion, Kelsian will be a more focused global commuter and contracted transport business delivering bus, motor coach and marine transportation services. Before handing to Andrew, I want to acknowledge the important role Kelsian plays with the many local communities we serve and in enabling cleaner, more accessible and more connected cities. Kelsian is a people business. Our employees provide important transfer services that connect communities every day and a thank you to our people and passengers remains our highest priority. We continue to work with our government and corporate partners to improve service quality, support mode shift to public transport and accelerate the transition to lower emission fleets and infrastructure. In FY '26, the group delivered improved safety outcomes for our workforce with a 24% improvement in lost time injury rates and a 23% improvement in total recordable injury rates. It was pleasing to see the improvement in these key injury frequency measures while maintaining our focus on continuing improvement to deliver stronger safety outcomes across the group. We now operate 454 zero-emission buses across Australia, and our Australian bus scope line intensity reduction target remains on track. There was 0 significant spills to the environment across our operations, and we exceeded our target for female Board representation. We also directed $4.2 million to indigenous suppliers and continued our partnership with the Royal Flying Doctor Service. Overall, our services played a critical role connecting communities, delivering more than 384 million essential customer journeys during the year. I will now hand to Andrew. He will take you through the group's detailed financial performance and the results from each of our operating divisions.

Thanks Graeme, and good morning, everyone. I'm really pleased with the record full year financial results that Kelsen delivered with revenue growth across all divisions and group margin expansion. Revenue increased by 8.8% to just over $2.4 billion. Key drivers were the ramp-up of new and existing contracts in the United States, the full year contribution from the Bankstown Rare replacement project in Sydney. The benefits of the contract indexation mechanisms we have in our long-term contracts with government and service growth across the group. Underlying EBITDA was $315.8 million, up 10.8% and margins improved. The margin improvement reflected growth in key USA employee shuttle contracts, the Bank Cowal replacement contribution in Sydney and fuel mitigation strategies in the noncontracted operations. Below EBITDA, depreciation increased, reflecting the expanded USA Motor coke fleet new vessels coming into service in the Marine business and the broader asset base supporting recently commenced contracts. The effective rate of tax was 20.1% and slightly below our expectations for an effective tax rate of between 22% and 25%. This was due to international tax rate differentials and the benefits of shipping exempt shipping income in Australia. Underlying EBIT was $155.7 million, up 14.5%. Underlying NPATA was $111.1 million, up 17.2% and earnings per share before amortization increased 16.8% to $0.49 per share. Statutory NPAT of $63.5 million was an improvement of 16.6% on the prior year. Included in the statutory results were one-off costs associated with several small acquisitions completed in the period. Costs associated with the divestment of the tourism portfolio and implementation costs of the new global group finance system. Combined, the totaled $14.5 million after tax. Reflecting the strength of the result and cash generation of the business, the Board has declared a fully franked final dividend of $0.10 per share, an increase of $0.05 per share taking the full year dividend to $0.18 per share. Turning to Slide 11. Cash generation remains the strength of the business and continues to be well supported by long-term contracts and a high proportion of contracted or nondiscretionary revenue. Gross operating cash flow was just under $300 million and net operating cash flow increased by 7.3% to $220.1 million. Cash conversion was just over 91%, underpinned by the predictable and defensive nature of our contracted earnings. Investing cash flow was $136.6 million and reflected a combination of sustaining maintenance expenditure and targeted growth investments, particularly in the United States and U.K. as well as the 2 new Kangoo Island vessels and associated infrastructure. I'll provide some more details on the split of capital expenditure on Slide 13. The group ended the year with $176.3 million of cash reserves, providing strong liquidity and flexibility as we move into FY '27. The business is generating meaningful cash while funding growth CapEx and increased dividends and continuing to bring leverage lower as earnings grow. Slide 12. Leverage reduced from 2.7x a year ago to 2.46x at 30 June 2026 and is now within our target leverage range of between 2 and 2.5 times. The reduced leverage has been underpinned by earnings growth, strong operating cash generation and disciplined capital expenditure. In relation to our borrowings, it's important to distinguish between Kelsey's corporate borrowings and special purpose vehicle debt on a balance sheet attached to government-backed contracted assets because the economic risk of these is quite different. Limited recourse SPV debt funds government contracted assets. It's ring-fenced from the rest of the Kelsian Group is serviced by the associated contract cash flows. It amortizes with the assets and importantly, is excluded from our covenant leverage calculation. In addition, a small component of our corporate debt relates to government-backed contracted assets that are expected to be recovered at the end of the relevant contract or move into an SPV structure. At 30 June, we had $32.3 million of government-backed contracted assets on the Kelsian's balance sheet, pending transfer into the SPV wingspan structure. Excluding those contracted government-backed assets and the associated earnings leverage would have been 2.37x at year-end. The key point for investors is that this financing structure supports government fleet investment including the rollout of electric buses, while materially reducing stranded assets and residual value risk for Kelsia. We remain focused on maintaining a strong balance sheet while retaining flexibility to invest where opportunities meet our return with leverage back inside the target range, we retain the flexibility to take advantage of organic and inorganic growth opportunities we see across the group. Turning to capital expenditure. Total net CapEx in FY '26 was $133 million after taking into account proceeds of $8 million from asset sales. The largest chunk of CapEx investment was in the International Bus Division, principally relating to new and secondhand motor coaches to support the ramp-up of new and existing contracts in the United States. buses for the new Liverpool contract, which commences in January plus new buses in Jersey, which we anticipate will move into an SPV structure. Marine and Tourism CapEx was $31.6 million, reflecting the Cango Oil in vessels and infrastructure expenditure and vessels in Southeast Queensland. $15 million has been carried forward into FY '27 because of the revised delivery timetable for the new Cango Island boats in infrastructure. Australian bus capital investment was $14.9 million comprising motor cultures in the resources sector of our business, replacement buses for Stradbroke Island and electrical charging infrastructure. FY '27 forecast CapEx is approximately $123 million. including $85 million of sustaining maintenance CapEx, the carryforward of $15 million from FY '26 and approximately $23 million of committed growth CapEx in various operating divisions. Any additional growth CapEx will remain subject to meeting our strategic and investment for tenets. Turning now to the divisional performance and starting with Australian bus on Slide 15. Revenue growth was underpinned by contract indexation and the full year contribution from Bankstown Rail Place and Services. The division delivered an improved margin despite inflationary pressures and fuel volatility. The contractual indexation mechanisms provided effective protection against fuel price movements and other inflationary cost pressures and the operating improvement initiatives implemented during the period improved performance. Sydney operations improved and stabilized over the year as network service changes were implemented and the impact of depot electrification and government fleet replacement delays became more manageable. We signed a 2-year extension of the Region contract in Sydney, which commenced on 1 July 2026 on improved terms, providing a stronger foundation for FY '27. The Bank on Rail project continued to make a meaningful contribution for all of FY '26 and is now expected to wind down during the first half of FY '27. The division also successfully commenced the Ipswitch and Logan contract during the year, representing Kelsian's first competitively tendered fast contract in Queensland and establishing an important platform for future growth in state. To Slide 16. International bus was the strongest divisional contributor to group growth, with revenue increasing 17.4% and underlying EBITDA increasing 28.1% led by the United States as a key contributor to the FY '26 results. Ahi achieved strong revenue and margin growth as new industrial employee shuttle contracts commenced and ramped up much faster than expected and existing contracts expanded. During the period, we leased 2 additional depots in the Gulf region to support the larger fleet and improve maintenance capability and vehicle availability. Corporate and Technology employee shuttle activity continued to grow, including a new data center contract, while charter activity was supported by major events, including the FIFA World Cup. The USA pipeline of new and existing industrial contracts remain strong. We continue to see opportunities to grow with existing clients and opportunities for new work across LNG, energy, data center and major infrastructure markets. Singapore delivered another stable result. The Sentosa contract commenced successfully during the year, and the Bolon contract expanded with additional services, supported by strong operational and maintenance performance. In the U.K., our strategy was validated by the award of Liverpool City school bus contracts commencing in January 2027 and the acquisition of South Wales Transport also provides local capability and incumbency ahead of significant regional bus franchising pipeline. For Marine and Tourism, Marine and Tourism delivered revenue growth despite subdued consumer confidence and fuel price volatility with yield management, surcharges and operational initiatives helping to protect earnings. The business also managed the uncertainty associated with the proposed divestment of the tourism portfolio as well. Performance benefited from contracted ferry demand, improved utilization of new vessels and yield management. Elevate's fuel costs impacted the noncontracted part of M&T but was mitigated through targeted surcharges, fare adjustments and operational efficiency initiatives. The team has continued preparation for the launch of the new Kangara Island vessel contract. Service commencement is now scheduled for October 2026, and our focus is on a safe and reliable transition while maximizing returns from the increased capacity, frequency and improved customer value proposition. Post divestment, the retained Marine businesses have similar infrastructure like characteristics to our public transport bus contracts. Revenue from the division will be less sensitive to changes in economic conditions, and will be backed by long-term high-quality service contracts with lower capital intensity. Finally, turning to corporate costs. The increase during the year related to several items. These included the performance of our captive insurance structure and elevated claims activity for bus accidents, the recognition of noncash long-term incentive expense and continued investment in cybersecurity. The key corporate milestone was the successful go live of the global Workday finance system on 1 July 2026, supporting stronger governance, controls, data visibility and process consistency across the group. The platform standardizes processes, strengthen governance and control and provides a more scalable finance environment for the group. Work on the Workday HR implementation has commenced and is scheduled to go live in the first half of FY '28.. The anticipated FY '27 implementation cost for Workday HR are $12 million. While implementation costs have affected near-term earnings, the new platform is expected to deliver efficiency, governance and controls over time, as more than 13 legacy systems are retired and data and processes are standardized and automated across the group. The successful finance go-live establishes a stronger platform for governance, control data visibility and process consistency as the group continues to grow. I'll now hand back to Graeme to discuss growth and the outlook for FY '27

Thanks, Andrew. Turning to Slide 20. The foundations are in place for another strong result in FY '27. In FY '26, our focus on operational execution delivered another record result. We strengthened the balance sheet, and we continue to build a significant growth runway across several geographies. Our key focus areas are continuing to drive operational efficiencies, contract extensions, new contract wins, delivering service growth and capitalizing on growth opportunities in the United States and the United Kingdom. Specifically, we will transition and mobilize the new Kango Island contract prepared for the New Zealand ferry contracts commencing in July 2027 and continue the orderly separation of the Tourism portfolio from the retained marine operations. In terms of guidance for FY Underlying EBITDA is expected to be between $320 million and $335 million, assuming no significant deterioration in the operating environment. Guidance is inclusive of the $3.5 million of mobilization costs for Cango Island, which due to delays will now be incurred in FY '27. Importantly, because the Tourism portfolio transaction remains subject to regulatory approvals and the timing of completion is not yet known, FY '27 guidance includes the contribution from the Tourism portfolio for the full year, assuming no change to the operating portfolio. We will update guidance when there is sufficient visibility on completion and the financial impact of the transaction. I'm also pleased to report that the group has commenced the new financial year strongly, with July trading being in line with expectations. Slide 21 brings the growth strategy together under 3 complementary pillars all anchored in disciplined capital allocation, a focus on our core strengths and sustainable shareholder returns. First, we will protect and grow our core markets across Australia, the U.S., the U.K. and Singapore, by retaining and expanding contracted bus and marine services, improving the performance of existing networks and leveraging our customer relationships, operational capability, efficiencies of our scale and our track record. Second, we will selectively grow our international platforms and enter attractive new markets. The immediate priorities are continued growth in the U.S. execution of the U.K. bus franchising opportunity and expansion in New Zealand, targeting long-term contracted earnings in markets with strong fundamentals. Third, we will pursue targeted strategic opportunities, including bolt-on acquisitions in our existing geographies that enhance capability scale or geographic reach while recycling capital from noncore assets where appropriate. Across all 3 pillars, underwriting and returns discipline remains central and all growth must meet our strategic and financial hurdles and support long-term value creation. Slide 22 sets out an important structural tailwinds supporting the long-term outlook for Kelsian. Investment in better public transport creates a reinforcing cycle of improved services, higher patronage and further network investment. With households increasingly focused on transport affordability Governments are investing in more frequent, reliable and accessible public transport as part of broader cost of living, congestion and sustainability objectives. We are seeing tangible evidence of that policy support. New South Wales is investing $452 million to expand bus services. Victoria is enhancing its urban box network, and Western Australia has announced additional investment in berry services and electric process. Governments are investing in service frequency, infrastructure and technology at the same time as households are increasingly focused on transport affordability in the context of ongoing cost of living pressures. The opportunity exists to convert that investment and amordability support into sustained passenger growth through improved frequency, connectivity and customer experience. Better frequency, reliability and connectivity can attract and retain passengers. Client patronage then support stronger asset utilization, more efficient network planning and the case for further investment into public transport services and infrastructure. The broader system benefits are also important, reduced congestion, lower emissions, more affordable transport and reduced pressure on road capacity. Kelsian is well placed to participate in this cycle as a trusted operating partner with scale, local relationships and a strong track record of mobilizing and improving complex transport networks. Turning to Slide 23. The United States is 1 of our most attractive growth markets, and we believe the platform we have established provides strong foundations for the next phase of our growth. We are positioned across high-growth sectors, including industrial, corporate and technology employee shuttle services. In particular, major investments in energy, data centers and infrastructure are supporting sustained demand for workforce transportation. Hai is already the second largest motor coach operator in the United States, but the market remains highly fragmented with more than 87% of operators running fewer than 25 coaches. That creates a significant opportunity to scale from our established platform. Our customer base also supports recurring organic growth. Since the acquisition in June 2023, we have maintained a 100% renewal track record for key contracts while expanding services with a number of important existing customers. The growth pathway is, therefore, multidimensional. New contract wins, expansion with existing customers, entry into adjacent geographies and end markets and disciplined bolt-on M&A where it strengthens our capability, scale or geographic reach and meet our return requirements. The U.K. represents 1 of the group's most significant capital-light organic growth opportunities. The tender pipeline is building progressively across multiple regional authorities with more than 2,000 buses currently anticipated to be franchised in the next 12 months and an estimated addressable market of approximately 10,000 buses over the next 3 to 5 years. Our recently announced Liverpool contract wins provide important early validation of the strategy. The contract commenced in January '27 and and together with our operating platforms in Liverpool and Wales, strengthen our local capability, our relationships and our income sequentials. The opportunity is attractive because the franchise model can provide long-term contracted earnings without requiring the same level of balance sheet capital as a traditional asset-heavy expansion. We'll remain selective and disciplined, focusing on markets where our operating capability, local position and customer proposition gives us a clear strategic advantage and where returns meet our investment hurdles. Our objective is not simply to build scale, it is create a high-quality defensible regional platform that can compound through successive franchise opportunities. In closing, FY '26 demonstrates the quality and resilience of Kelsian's business model and the progress we have made in positioning the group for its next phase. We delivered record earnings and strong cash generation, reduced leverage into our target range and continue to simplify the portfolio. At the same time, we are well placed for the next phase of growth with credible growth platforms in the United States, the U.K. and New Zealand, while retaining strong positions across our Australian markets. The priorities for FY '27 are clear: deliver operationally, progress and complete the tourism portfolio divestment, maintain capital discipline and convert the best opportunities in our growth pipeline into sustainable earnings and long-term shareholder returns. Finally, on behalf of the Board and the management team, I would like to thank our people right across the group for their commitment to the transport services they provide to our customers and communities every day. And with that, I will now hand back to Mel who will facilitate any questions for Andrew and I. Thank you.

Thank you [Operator Instructions] And your first question comes from Cameron McDonald with E&P.

Questions for me. Just in terms of the tourism portfolio and the slight change to that. You've previously guided that the portfolio generated about $24 million, $25 million of EBITDA. If we're adjusting our expectations to now keep rates, what's the adjustment to the group earnings that we should be expecting off the back of that?

Thanks, Cameron. Look, the RadNet portfolio is pretty much in line -- Rodbusiness story is pretty much in line with the rest of the portfolio in terms of its contribution. So I think you can see that we've outlined the difference in the total consideration and the contribution that was expected from not net, which is slightly under 10%, and that's similar from an earnings perspective.

Okay. Awesome. And then just on 2 questions on Hai, if I can. The -- you've called out some benefits from the World Cup. Can you quantify that so that we have an understanding of what the potential headwind next year actually looks like with that?

I mean it was certainly a few million dollar benefit directly out of the World Cup. Now whether that's a direct headwind or not is to be seen. We certainly plan on getting utilization out of those assets that were used by the World Cup. But it was a nice bonus in FY '26 with that peak in demand in that June period, which is typically when we see our charter services start to wind down for the year. So repeating that size and opportunity at that time of the year is probably more difficult looking into FY '27 than it was -- that was delivered in FY '26.

. Okay. And then just staying on Hai, you've got some good growth in that contract market and corporate market. When are you starting or have you started turning your mind to more public transport type services and contracts?

We certainly have. That's a focus, and we've had a pretty good track record delivering on those contracts since we bought the business in 2023, having renewed all of our existing relationships with some key state transport authorities in Texas, Colorado and New Mexico. So they certainly remain a focus, and we continue to go after them. They probably do get a bit round out in the grand scheme of things when you compare them to the contribution that comes from those significant industrial sector clients in the Gulf area. That's why it all gets to be round out, but we certainly have not lost focus on the opportunity in the transit world in the U.S. for the Hai business.

Are there any contracts coming up that you'd potentially be interested in bidding on either in the existing states or new sort of adjacent states?

So our focus at the moment is very much within our existing geography. And there's a pretty steady pipeline of ongoing opportunities. The nature of the U.S. business is that the contract size is probably smaller than we see in Australia and the contract term is not quite as long. So it's really an ongoing cycle of bidding for those opportunities. But our focus at this stage is on bidding for opportunities where we've got existing or adjacent operations as opposed to bidding in new cities where we don't have a presence.

Your next question comes from Ryan Norozi with Jarden..

Before I get into my question, just a clarification on the last question, please. When you said the World Cup is a few million dollar benefit for this year, was that to the EBITDA line? Or are you talking the revenue line?

That was at EBITDA. I mean, just to clarify, though, we're not expecting that to completely drop out. There will certainly be utilization from those assets this year. It's just whether we get that sort of peak in utilization at that exact same period like we're getting in FIFA.

So maybe $2 million or $3 million EBITDA, but not all of that winds out. There's obviously we're going to replace some of the

Correct. Correct. It doesn't just drop right

Yes. Perfect. Just on my question. Just in terms of -- can you just talk through the -- maybe for this year, what the incremental EBITDA contribution was from sort of the LNG projects that you've won ramping up? And the incremental benefit into FY '27, please, just in terms of finishing to annualize because obviously, first half 2016 was ramp-up mode, second half more normal of '26 and then FY '27 is probably the full run rate for those 2 contracts.

Yes, that's probably right, Ari. So I mean, obviously, a big component of the growth delivered in the International Bustecsegment, which was, I think, 28% growth in EBITDA A big proportion of that was driven by the ramp-up in those industrial sector contracts. Now they probably ramped up or they did ramp up faster than expected during FY '26 and we got a bigger earnings contribution out of those contracts, then we expect it -- when we're sitting here at this time last year. What that means for FY '27 is the growth rate, we're certainly expecting to moderate out of those contracts. There is still further growth to come, but the rate of growth is going to be at a much lower level than what was witnessed over the course of FY '26. We do expect those new contracts to both reach full capacity at some point in FY '27, but that is dependent on the EPC, the prime contractors and their ability to continue to hire. So a bit beholden to how quickly they can hire the construction workforce as to how quickly we get to that full capacity. But sitting here today, we would expect to get the full capacity for both those contracts at some point during FY '26. i

Got you. And like back of the unreleased on my just rough calcs like that should be another -- the LNG ramp-up in '27 or '26 would be another $5 million to $6 million of EBITDA. Is that roughly in the ballpark of how -- am I thinking about that the right way?

Yes. I mean roughly, probably not quite that high, but roughly that's probably not a million miles away from the mark.

Got you. And then last one, just in terms of oil prices, obviously, you've delivered a very strong result despite oil prices going up 50%, 60% from a few months ago. To what extent are you factoring headwind -- net EBITDA headwind from oil prices into guidance for FY '27. And to what extent is that realistic versus just obviously provisioning for some uncertainty rightly so.

Yes. So I think the result really demonstrates how limited the impact of oil prices is on our business as a whole to deliver this result in an environment where we've seen oil prices move to the extent they have, given we're a very significant user of diesel, I think, demonstrates the market, how well our contracts protect us from movements in things like fuel price when you look at the group as a whole. Now there are pockets of our business that are more exposed to oil prices. The big 1 of that is in the Marine and Tourism division where we don't have that contractual protection in a number of our operations. And we certainly saw some headwinds in the final quarter of FY '26 in those operations, both from higher input prices for our operation in diesel, but also more generally, just in terms of reduce demand given higher cost of living pressures on the consumer side. Now we're expecting that to continue for those parts of marine and tourism business. So looking at that division on its own, there is certainly some headwinds there as we look towards FY '27 but I think from a group perspective, we remain very comfortable that as a whole, our business is well protected from changes in oil prices for any further change in oil prices moving forward.

Got you. And sorry, very last one, if I can sneak 1 in. Just the bus EBITDA margins, they stepped up in the second half to about 11.5%, and the first half was 11%. So you're making progress there. How do we think about the ramp-up into FY '27? Should there be a further step-up progressively in first half 2017 above the 11.5% and then second half further improves? Or is 11.5%, probably the run rate steady state for the business in FY '27, please?

Yes. I think 11.5% is probably pretty good. Look, we want to keep pushing and we -- there still is improvement to be made out of that business, but it is probably more incremental, and it is probably driven by delivering on some of the growth initiatives that the government has out there in terms of investment into the bus network as those growth services come in, they come in at a higher margin than the baseline business, which over time gives us further incremental margin expansion. But I think looking at second half FY '26 to first half FY '27, not expecting any big changes either up or down from where that margin was the