Macmahon Holdings Limited (MAH) Earnings Call Transcript & Summary

Welcome to the Macmahon's 2025 First Half Results Presentation. I'm Mick Finnegan, and with me is our CFO, Ursula Lummis. Thank you for joining us today. We appreciate your interest in Macmahon and the opportunity to present our results during this busy period. We'll run through the presentation lodged on the ASX platform this morning, and then we'll be happy to take your questions. Starting with the financial highlights on Slide 2. Macmahon again made an excellent start to the financial year with strong growth in revenue that translated into earnings growth, cash generation and an uplift in returns. This is also the first reporting period, including our acquisition of Decmil, a major addition to accelerate growth in our civil infrastructure business. Group revenue was up 22% to $1.2 billion, and underlying EBITDA was $181.3 million. EBITA, our key earnings guidance metric was $78.1 million. This was up around 15% on the prior corresponding period and including our usual stronger second half performance places us on track for our full year guidance, which I will talk more about later. You will see that the business generated strong underlying operating cash flow, which was up 18% to $163.4 million for the half and free cash flow of $49 million. With this strong cash flow generation continuing into the second half, together with the receipt of the final installment of the Dawson asset sales, we expect FY '25 closing net debt to approximate the FY '24 closing position. As you know, we have been very focused on reducing capital intensity in the business and increasing our return on average capital employed. I'm particularly pleased that the business has continued to deliver improvements on this front. with the return on average capital employed up to 17.5% on a rolling 12-month basis, and this would be 18.2% if half 1 was annualized. This provides greater scope to increase shareholder returns, and we have increased the interim dividend per share to $0.055 fully franked, up from $0.045 unfranked in the prior corresponding period. Looking ahead, we have a strong order book and our tender pipeline at $24.8 billion is the highest it has been with the inclusion of Decmil and underpins our continuing positive view on the outlook. Now that our Civil business has scale, I wanted to talk through the operating highlights individually for both the Mining and Civil segments. Beginning with the Mining segment on Slide 3, comprising our surface and underground businesses, the focus for the period was on securing contract extensions and continuing to reduce capital intensity whilst expanding our footprint in Indonesia. Good progress was made on all of these fronts. Notably, in surface, we've been awarded more than $500 million of new work in Indonesia at the Awak Mas and Poboya gold projects, both with low capital requirements. We remain focused on low capital solutions in our existing and new work to achieve and exceed our 20% return on average capital employed target while maintaining our revenue base. In underground, we secured a range of contract extensions, including at Daisy Milano, Ulysses, Olympic Dam and Fosterville. We have a robust underground tender pipeline of around $7.2 billion in opportunities in Australia and in Indonesia, which supports the continued growth of the business. We are targeting revenue growth of 50% in the next 2 to 3 years for the underground business, which is aligned with our overall capital-light growth strategy. As you can see to the right, the first half of FY '25, the Mining segment delivered approximately $1 billion of revenue and $66 million of underlying EBITA at a margin of just under 7%. Over to Slide 4 on our Civil business, Decmil performed well and in line with our expectations. The integration of the business has been fully completed and Decmil has hit the ground running with $333 million of new work awarded since we acquired the business. I won't go through the individual projects listed here, but they include road, dam and wind farm projects, extending the diversity of our revenue books and order book. For the first half, our Civil segment delivered $190 million of revenue, underlying EBITA of $11 million and a margin of 6% as expected. This result excludes Homeground and is supported by the closeout of legacy projects and the commencement of newly awarded contracts. We remain excited on the growth outlook for this segment with a $10.2 billion tender pipeline and $2.7 billion expected to be awarded in the next 12 months. This includes work in infrastructure, renewables and resources civils. Turning briefly to our corporate activities on Slide 5. With the acquisition of Decmil, we acquired the Homeground accommodation village in Gladstone, which approximately has 1,392 beds. As this is a noncore asset for the group, we are exploring opportunities to optimize the divestment of this asset. Under other activities, we highlight the implementation of a new corporate operating model, which enhances ownership and accountability within each separate operating division. While we are seeing the tight labor market in Australia normalize, we are still experiencing shortages in key areas, particularly in Queensland, and skilled labor requirements for equipment maintenance and operators across the country. Slide 6 is a recap of our key mining projects, the tenure cost curve profile and related commodity exposure. I won't go through the full list, but some key points to note are: we successfully added two projects in Indonesia being the Awak Mas and Poboya gold projects, as I mentioned earlier. And there are several projects coming up for extension during the year, including one of our cornerstone projects, Byerwen, all of which are progressing well. Similarly, Slide 7 shows an overview of our key civil projects, including size, scope and contract structure. Some points to note here include, since the acquisition of Decmil, we have been awarded the Ison Road Extension, Warradarge wind farm, Marble Bar Road upgrade, Borumba Hydro start-up camp and the Covalent Logistics Road, adding more than $330 million to our order book. The contract size of key projects is greater than $50 million in revenue. And as the civil business grows, so too will the size of our key projects, but this will not be at the expense of the equitable risk allocation we currently have. I think it's pretty apparent from the prior slides that Macmahon has diversity across its operations and Slide 8 here adds some further information to substantiate that. Diversifying our service offering and in particular, growing our underground mining and civil infrastructure businesses is something I'll talk more about in my strategy discussion. While surface still comprises more than half of our revenue mix, the acquisition of Decmil has significantly boosted Civil's revenue contribution to around 17% and is expected to increase going forward. This compares to around the 10% level in the first half of FY '24. Gold remains a key feature of our mining project list I showed earlier and also of our overall commodity exposure. Gold price is at record levels, which is driving strong activity in the sector and opportunities in the tender pipeline. It is good to be represented in a strong sector, but we continue to monitor revenue diversification in our operations and tendering activities. Copper, met coal and lithium also make notable contributions to revenue with copper and coal in particular, having strong demand and production profiles going forward. The business is relatively diversified by client exposure, and you can see our client mix comprises many Tier 1 global and Australian miners. Moving to Slide 9 on people and safety. The safety and well-being of our people is our highest priority at Macmahon. This is at all levels in the organization and across corporate offices and work sites where we aim to promote a culture of awareness and continuous improvement. Importantly to our group, TRIFR continues to improve, reducing from 3.64 in FY '24 to 3.19 in the first half of FY '25. Our focus on safety extends to mental health and well-being, and we continued our strong mines rollout to another 13 sites. This program includes extensive employee engagement, leadership training and client engagement collaboration to raise awareness and break down the stigma around mental health as well as connecting and supporting thousands of individuals to create a community of support across the mining industry. This is in addition to conducting an active employee survey program and training wellness champions across our teams. We continue to invest in the development of our people, and this is demonstrated by the fact that 347 of our people on various training programs at 31 December 2024. Importantly, this included many new and young people joining the business and commencing their careers. Similarly, we also continue to invest in our current and emerging leaders with a range of programs across the business, including the popular Macmahon Winning Way and emerging leader leadership programs, which is covered in detail on the next slide. Turning to the Macmahon Winning Way on Slide 10. This is a program we commenced in 2020 to create a winning culture and continued investment in our people. Respect@Macmahon is a cross-functional company-wide program to drive culture, mitigate psychosocial harm and eliminate sexual harassment. We provide our leaders with appropriate tools and confidence as needed to succeed in their roles through our Macmahon Winning Way. We focus on our emerging leaders through structured development programs to ensure we promote within our workforce. All these are measured through our challenged develop, grow performance and development program. Operating our business sustainably is an important objective for Macmahon and one we remain committed to. Slide 11 outlines some of our sustainability-related activities and metrics. We also prepare a stand-alone sustainability report along with our annual report each year. In the interest of time, some items to call out include our active recycling program with 227 tonnes of tires repaired and recycled into the business during the period. Our investment in people and wellness that I have discussed and an investment into strengthening our cybersecurity capabilities. I'll now hand over to Ursula to discuss the financials.

Thank you, Mick. Good morning, everyone, and thank you again for joining us today. Before I run through the financial results for the first half, I wanted to take a moment on Slide 13 to look at the half yearly performance over time. The first thing to note is the strength of the first half results for FY '25 with Macmahon achieving increases across the board in revenue, underlying EBITDA, underlying EBITA, and importantly, also in the return on average capital employed. The growth delivered in the first half includes the acquisition of Decmil. You can see a very clear and consistent trend of growth in revenue and across earnings over the last 4 years as shown in the chart. Although the return on average capital employed has been varied over the years, there has been a continued trend upwards as we execute our capital-light strategy. Slide 14 summarizes our profit and loss for the 6 months. As Mick mentioned earlier, revenue is up 22% and underlying EBITA is up 14.7%. This is attributable to the acquisition of Decmil, the extensions of Daisy Milano and Ulysses as well as the commencement of the Poboya gold project in Indonesia and organic growth across our existing projects. Underlying EBITDA growth of 3% was impacted by the inclusion of Decmil, which is proportionately lower depreciation. Our effective borrowing rate increased to 6.7% since the 31st of December, which was up from 6.4% at the 30th of June, and this reflects the higher interest rates on the new borrowings, including the Decmil funding. You will also see that past tax losses have been fully utilized and Macmahon is now paying tax in Australia with our effective tax rate coming in at 31.1% Statutory profit was $30 million and was down on the prior corresponding period, primarily due to the adjusting items of approximately $17.1 million. These items included the Decmil acquisition and the related costs, share-based payments and the customer contract amortization. Excluding adjusting items, the underlying NPATA and underlying earnings per share was up 18.7% and 17.5%, respectively. Slide 15 sets out the major cash movements between the closing net debt at the 30th of June '24 and the 31st of December '24. Underlying operating cash flow was strong at $163.4 million with EBITDA cash conversion of approximately 90%. We expect strong operating cash flow to continue into the second half of the year. Total capital expenditure was $102.8 million for the first half with most of this relating to sustaining CapEx. Our full year capital expenditure target remains unchanged at $233 million. The other major impact on our net debt position was the acquisition of Decmil, for which we paid approximately $104 million of cash and assumed $11 million of net debt. The associated corporate development costs were $8.3 million. Turning to Slide 16. The acquisition of Decmil has resulted in an increase across all balance sheet metrics, particularly net debt, intangible assets and goodwill as well as the recognition of Homeground and the deferred tax losses included in other assets. I'd like to reiterate that the increase in net debt to $237 million with an increased gearing of 26.2% is a short-term spike following the acquisition of Decmil. Our strong cash generation expected in the second half should see net debt reduced back to around the FY '24 levels and will be reflected in leverage and gearing. Cash and available banking facilities totaled $274 million at the end of the first half, and our return on average capital employed of 17.5% continues to trend upwards towards our target of 20% or greater. With that, I will now hand back over to Mick before we open for questions.

Thanks, Ursula. Let's move to Slide 18. I talked earlier about Macmahon's revenue diversification. Increasing diversification in the business has been a key strategic objective, both from a risk management perspective, but also to grow cashback return on average capital employed. We've done this by initially expanding into and growing our underground mining operations and more recently accelerated our expansion into civil infrastructure through the acquisition of Decmil. You can see on the chart the growing contribution of these capital-light businesses to our revenue base, which was around 10% when we commenced this journey in FY '18 to 40% now in the first half of FY '25. And with an increasing contribution from Decmil and around 70% of our tender pipeline across both the civil and underground businesses, this matches our long-term target of 2/3 of the business in these areas. This supports our objective to increase our ROACE to over 20%. Slide 19 shows our work in hand by year. The current order book remains robust at $4.3 billion. This excludes extension variations and churn yet to be awarded, but in some cases, we feel it close. Around $2.2 billion of work is secured through FY '25, which underpins our guidance for this year. We remain focused and motivated to convert the significant tender pipeline of opportunities and currently have around $6.4 billion of outstanding tenders submitted with a good representation of civil and underground work. Slide 20 reiterates our messages around capital management at Macmahon, which is aligned with our capital-light growth strategy. Our priorities remain unchanged and include maintaining a resilient balance sheet and liquidity, retain growth funding flexibility and increased returns to shareholders. The charts on the slide show Macmahon's record against these objectives. Macmahon's performance has been strong across all three objectives since the refocus on capital-light growth. Debt has been trending down. The Decmil acquisition has been strongly EPS accretive, and we have increased returns to shareholders through improvement to fully franked dividends and an increased payout ratio. While net debt has clearly increased in the short term, this is related to funding the Decmil acquisition, as Ursula said. And as we've said, we expect debt levels to reduce back towards FY '24 levels at the full year. That brings us to Slide 21 on our FY '25 guidance and priorities, our final slide before we break for questions. The outlook for FY '25 remains positive, and we reaffirm our expectations for continued growth and retain our guidance of revenue of $2.4 billion to $2.5 billion and underlying EBITA of $160 million to $175 million. Our expectations are underpinned by a strong first half, together with the commencement of new work in the second half, $2.2 billion of secured revenue and a robust order book and pipeline. Our priorities for FY '25 remain unchanged and reflect much of what we've discussed today. There is a continuing positive outlook for activity in both the mining sector and civil infrastructure investment in Australia, reflected in the tender pipeline of nearly $25 billion. I am confident we are focused on our priorities and remain well positioned to continue our positive cash-back trajectory. And with that, I'd like to hand back to our operator to open for questions.

[Operator Instructions] Your first question comes from Jakob Cakarnis with Jarden Australia.

Can you just help us through the margin run rate as you get through the second half of '25? I think traditionally, you've had a second half skew to the earnings. I'm just wondering some of the impacts of Decmil if that continues to flow through, please?

Yes, for sure, Jakob. Look, the second half will be heavier. There was some new work announced with the Awak Mas, CPM open pit. They're still expecting some CPM underground to come through. We're expecting extensions at Telfer and a step-up there in the scope. A lot of the civil works that was announced in the first half, that $333 million, we have a full half of all of that work in the second half. And then, of course, there's escalation scope creep and the churn that we typically see. So we did point to a 45-55 split at the start of the year. We still expect that to be the case. But obviously, we need to demonstrate that in the second half.

And what could bring you unstuck on that earnings mix, Mick? Like are we considering weather at all? Is there anything else in there that I need to think about? Or it's just a matter of what you've got in hand flowing through and the margin is going to follow?

Look, we were probably a bit cautious in this presentation when we put out that we had $2.2 billion of secured work for this year. If you add in escalation scope creep, the churn. And then one or two of the extensions that will affect the second half. It's probably closer to 2.4, 2.45. But because it wasn't signed, we didn't want to compromise the credibility of what we put out. So I guess it's important for me to point that out. So in terms of acquiring the work, I don't see that as a significant risk. It's all about execution. And you mentioned wet. We did have a wet November, December on the East Coast. That carried through to January and the first half of Feb. We have had a cyclone come through the Northwest of WA, the impact there, not as much as on the East Coast. We do take a bit of a position, but you could see that in the 6.8% margin in mining, I guess, last year was 6.9%. So you can see it's a bit off. And most of that's attributable that rain at the back end. And we did need to restructure some underground contracts. But look, to answer your question, it's more about execution. If there were some one-offs significant weather events, I say a pandemic or something like that, that would affect it. But I think we got the work. We just got to execute it. And there is some additional new work that may or may not come in, but looks close, particularly with the extensions I mentioned. So if that comes in, obviously, we're insulated a bit. But primarily, it's execution, Jakob.

That's helpful. And then just last, last one for me. Obviously, you've given a pie chart of balancing in the revenue mix moving forward. It looks like it's roughly 1/3, 1/3, 1/3 from each of your functions. Just wondering if you could talk to the state of the civil market as you're seeing it, Mick. You've obviously folded in Decmil now that's fully integrated. Just wondering some observations, if you can help us there about the starting margin that we're seeing in this result and kind of the aspirations of where you can go to moving forward, please?

Yes, for sure. So if I could just start, that split, obviously, we say 1/3, 1/3, 1/3. It will never worked out perfectly. But the reason for that is it's a really neat blend of the margins. So underground is a high margin, moderate CapEx. Surface is the 8% margin, higher CapEx and the -- under traditional contracts, albeit we're moving away from some of those. And civil slightly less, but very little CapEx and obviously very good for cash flow. So that's why we're chasing that. We think that gives us a cash back ROACE of 20% or greater. So the people that have followed us know why we're doing that. And the civil and the underground segments are still subscale. We want to get them to $700 million and above closer to $1 billion to get scale, which will get us closer to that blend of 8%. If we get Indo growing another 10% of the business to say, 15%, well, that's always been a good margin territory for us. So that's why we have the split. In terms of the margin in the first half, we pointed people to 5% to 7% for the Civil business. Coming in at 6%, I was pretty pleased. Within Civil, typically, the higher end of that range I gave you is the resources. The renewables are probably the middle and the government work probably towards the bottom. And obviously, we've got our -- our equitable allocation of risk in all of those contracts now. So seeing the [ 6 ], I was pleased considering that it's still subscale, I would -- in my opinion, so growing. And to see that percentage gave me margin gave me confidence that it will achieve what we intended to. And in terms of the addressable market out there of our $24.8 billion pipeline, $10.2 billion of it's in the civil area. About $2.7 billion of that are tenders out, and we expect award in the next 12 months. And it's quite a nice split between those three segments that I spoke to you about. And then beyond that, are some bigger jobs because if we're going to grow that business where we want it, the key contracts have to be more than your $50 million to $100 million jobs. And I think we're building relationships with some, some bigger Tier 1s where we can help them in the contract model that we want to utilize, and they seem to have an appetite for to start to push towards those bigger jobs. And the remaining $8 billion in that pipeline in Civil has an appropriate amount of those types of jobs in them. So do I think we could achieve our targets of where we want to get to in the next 3 years, like we stated when we acquired Decmil at the moment, it certainly looks like that and the team we've got, I think, can execute that. We just need to stay focused.

[Operator Instructions] Your next question comes from James Lennon with Petra Capital.

Congratulations on the results. I just had a couple of questions around margins, I think, as well. Just in terms of the gross profit there, obviously, it's come -- the margins come down as you've integrated Decmil. Is that pretty much now stabilized? Do you think there's a bit more to go in terms of where that sort of margin will end up at the GP line?

No, no. I think the integration, the way we're looking at it internally, James, is it's all but complete. There's probably -- it's triggered us reviewing our operating model, which I'd say is 80% complete and where we really do empower and provide ownership to specific skills and activity areas, what we call operating divisions. I think there's still some synergies to come out of that. But no, we consider it complete and anything else from here should be an improvement. But you're right, the 6.9% going to 6.6% is the introduction of Decmil at that 6%.

Okay. And just on the other costs there, obviously, there was a big jump there. A lot of that you've pointed out was SaaS and customization and I think some M&A and stuff in there. But the share-based payments, what should we expect for that going forward because that was quite a big jump as well.

Yes. Look, I'll let Ursula go through all four if it's all right, James, because I think it's really important because we don't usually have those sorts of numbers. And a lot of them are unrepeatable or not unrepeatable. They won't be repeatable, I should have said, because they're tied to the acquisition. But if you don't mind, I'll let Ursula step through those quickly, particularly the LTI payment and the corporate development costs.

Sure. Thanks, Mick. James, if you look on Page 25, I'll just go through in that order. So first of all, the LTI share-based payment expense, with the acquisition of Decmil, rather than buy out all the shares or all the performance rights that were owing to the executive team, we made an agreement with the Board that they would cancel those Macmahon would issue them. And in doing so, we secured the Decmil management team for 2 years. Unfortunately, the accounting doesn't like to put that all to the purchase price, so it does go through your profit and loss. And that will be this year and next year because they have a 2-year retention period. That is the $4.6 million. The $8.3 million, that's the pure M&A cost to acquire Decmil, all the legal advisers, our due diligence, et cetera. The customer contracts of $2.3 million, as we highlighted, we did recognize Decmil back down to 1 July. You'll see there is an intangible that was put on the balance sheet for brand names as well as customer list. So that does get amortized from the 1 July. And also the brand runs over a 20-year amortization. The customer list similar to our previous acquisitions, that will amortize over the life of the various customers, which is anything from 6 months up until 18, 24 months. The last one is that SaaS customization costs. So we've previously highlighted that we've implemented a new system across the business with the exception of our roster time and attendance. That is the last process or systems that we're actually in place of replacing. And this was the commencement of that. You will still see the roster time and attendance going forward into the next -- definitely the next half and then a little bit into the after that. But once that's done, then all our systems have been updated and replaced.

And James, if I could just jump in, that whole ERP upgrade, it was done on a cloud-based system so that -- so the intention is that now it's updatable and will remain current. So we wanted to make sure the business was scalable and having an ERP that could stretch across the full bandwidth of the business was important.

Okay. All right. And just one last one, just on the tax there. I think if you go back to when you announced the Decmil acquisition, I think there was an expectation you'd get some tax credits that you'd recognize. But looking at your tax rate, that's not the case. So should we just assume 30% going forward? Is that a safer bet?

Correct. So just to highlight, so when we do recognize all of our deferred tax assets are recognized. So when you do that, your effective tax rate stays at 30%, 31%. But then when you go look at the tax paid though, James, and you go to the cash flow statement, you'll see the tax is a lot lower. And that's because up until now, Macmahon, we're not taxpaying. December last year, we went -- we went this year, we went into tax paying. So you will see that the tax for the first half in the cash section, not the profit and loss is still low, and that's because when we lodge our assessment now, we'll actually pay the full tax for FY '24 when we did turn to utilize all the capital -- the tax losses. and that will come through in the second half. The Decmil tax losses is recognized 100% as part of the acquisition accounting. So that's why it doesn't go through your P&L to make that 31% lower. It goes off against the goodwill. And yes, that is utilized on the fraction of time. When we do it on our equity value and Decmil equity value right when this transaction happened, it's roughly about a 12-year utilization. Of course, the more profits we make, the quicker we utilize it.

And James, if I could, if you don't mind, an important point there is the first half saw free cash flow of $50 million with increased earnings in the second half. One of the questions I've got this morning is, will that increase? But because of the tax that Ursula just spoke about for the next two halves where we paid '24 and we paid provisional for '25, it's going to be about flat for this year. But once we're through that, we'll start to see the numbers we're aspiring to. And if I could, I've got everyone on the line with that $50 million free cash flow, the $25 million from Dawson, and then when we say there is receipts, there was $25 million of outstanding receipts on the 31st of December, talking to clients, I think even if we take a position that 15 of those come back, we do have a level of confidence that we will end the year with the net debt where we started, and that does not include any sale of Homeground, and we haven't yet solved the VAT issue from Indonesia, albeit we've seen $11 million come in for that and what's going out is less. So the amount the government has reduced, but we haven't got that to zero we hope. So if we can resolve that, sell home ground and continue to perform, generating this free cash flow, we see a pathway clearly to that $100 million net debt in the near term that we're aiming for that 10% to 12% gearing.

Your next question comes from Tony Greco, a private investor.

A couple of questions here. You just mentioned Homeground. So -- and it's up for sale. Just I think you had the occupancy was about 30%. So at that rate, is it breaking even? Is it losing money? What's the situation?

No, no, definitely making money at that rate, Tony. It's between 8% and 12% where it's breakeven. So -- and that's situated in the other. So along with some unallocated overhead. So someone said to me this morning, did it make $3 million to $5 million in the first half. And that's -- I just said that's probably thereabouts.

All right. And just with the debt level, I mean, you've talked about that, and that's one of the things that sort of stood out a bit that it's jumped up quite a bit. So this without having to play your hand here or show your hand, there's probably not too much in the acquisition area for the next 6 months at least while you get the debt level down.

Yes. Look, I'd expect so, Tony. For us, the priority has to be get scale into civil, get scale into underground and there's some near-term opportunities in Indonesia, all of which bring cash and margin. And if we can do that, we get very close to those, those longer-term targets we set some time ago where $200 million EBITA or above $100 million net debt or lower. And we do get that right. It will result once we get through paying this catch-up -- not catch up, paying this tax of $130 million to $150 million free cash flow a year, which means good healthy dividends.

Okay. And just the last question, just a little bit more detail about that Cyprium metals. Is it that you're doing some in-kind work to sort of -- could you just give some detail about that?

Yes, for sure. Look, we think that's an exciting project. But after -- after Calidus, we're treading very, very carefully. So we're doing some work like we would in any ordinary tender. They're a great team. They've allowed us to have input into the potential scenarios, how they could start it up, how they could derisk. What we're doing at the moment is a typical tender and helping with care and maintenance largely with existing overheads. Any step beyond here will obviously involve confirming with them the plan, but also confirming an ability to service any costs that we incur or they incur, sorry, our cost and margin. So we're very, very cautious, but equally a big opportunity with the asset they've got there because it's not only Nifty, it's also Maroochydore. I think it's [ 40, 50 ks ] away, which -- and it's in a pretty prominent region now in terms of copper and copper gold.

So not really expanding to too much at the moment, providing some services but more yes, like you said, more just the care and maintenance and just more -- just to review the checking to see whether it's going to be worthwhile, et cetera. I'm not sure the terminology feasibility.

Yes. Look, sorry, I didn't mean to speak over you there, Tony. But we often request if we can, particularly with the right kind of partner if we can get involved earlier because we see a lot of the time we can provide opportunities and scenarios that might generate value for the project, which in turn could come to us. And we see this as a bit of an opportunity to do that. But obviously, one of our shareholders said if we have another Calidus, that will result in my job, and I understand that. So I don't intend to have another one.

Your next question comes from Gavin Allen with Euroz Hartleys.

Eventually got on the call. Apologies for that. Just a couple of things going on. So look, just a couple for me, guys, quickly. Just -- you touched on this briefly with the VAT refund. There's still a bit to go there. So I'm wondering if there's any flavor you've got on what's still perhaps to come on that one. The other is -- and you probably dealt with this, Mick and already, but just around home ground and at 30% occupancy, how to think about that in terms of occupancy over the second half, perhaps and just sort of what that means to you in terms of cash contribution. Maybe start there, and then I've just got another one after that.

Yes, for sure. Look, with the VAT, there's AUD 20 million to AUD 30 million. It takes about 12 months to return and it's accumulated over time. So it will drift out, Gavin every month, every couple of months. We had $11 million back in January and not as much going in. So it clawed its way back, but it's certainly not to zero, and we're hoping to come up with that sort of solution. We're still working on it. But yes, if that comes in, that's obviously an upside to what we're modeling, and we haven't included it in us getting back to about the same spot we started the year in terms of net debt. And you might have missed that the bridge was $50 million free cash flow or thereabout second half. The $25 million, the second installment from Dawson, which I understand arrived this morning and $25 million of outstanding receipts on 31 December. So even if you get $15 million of those come back, that gets us pretty close from the $237 million to the $150 million.

So does the Dawson included in your thinking around the $150 million to $170 million?

Yes, it was. The second was in that Homeground...

Yes, it is. Got you. Absolutely. And yes, so that's all good. And so just how -- I guess, how -- perhaps you covered this off. I apologize, how Homeground is traveling sort of at the moment?

No, no, that's right. We said it a moment ago. But in short, someone this morning said they did the math. And in the other, which is where Homeground is sitting along with unallocated overheads, they said, Mick, it seems to me it's $3 million to $5 million for the half, and I'd say that's a good estimate at 30%. And in terms of what the occupancy looks like for the second half, obviously, January, February are quieter periods as we move on in the year, we come into the shutdown on the historic occupancy. So I'm expecting something like the first half, but no one can tell the future. So we'll have to see. But we're also talking to -- there's some new activity there on top of the historic activity. It's yet to be formalized, but there are some discussions occurring as we speak, along with the assessment that we're doing on how to monetize it sensibly. So there's a fair bit going on there. And it's ringing in my ear, someone even said it this morning, someone said historically that the biggest mistake people have made in the past is not sell it when they could. So we're just trying to make sure we're having a can be comprised view of how to monetize it at the right time because it's not a core asset for us. It's a great asset, but it's not a core asset for us.

There are no further questions at this time. I'll now hand back to Mr. Mick Finnegan for closing remarks.

Look, Ashley, I just want to say thanks to everyone. I know it's incredibly busy day. We're over Sydney tomorrow, the next day. If you want to see us and you're not in the slot, please just give me a yell. I'd love to catch up. We're in Melbourne, Friday. And for anyone else, if you want to have a chat on the phone, please let us know. I know there's been some questions, so I may get to answer them if I can. So we appreciate everyone's time and no doubt speak to most of you soon.