Monadelphous Group Limited (8MP.F) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to Monadelphous 2024 Half Year Results Presentation. [Operator Instructions] Please be advised that today's conference is being recorded. It is now my pleasure to hand you over to the Company Secretary, Ms. Kristy Glasgow. Please go ahead.

Hello, and welcome to the Monadelphous 2024 Half Year Results Investor and Analyst Briefing. Before we commence, I would like to acknowledge the traditional owners of the land on which we are joining you from today in Bibra Lake, Perth. We acknowledge the Whadjuk people of the Noongar nation and the traditional owners of country and pay respect to Elders, past, present and emerging, and extend that respect to all First Nations people. Presenting today are Monadelphous' Managing Director, Zoran Bebic; and Chief Financial Officer, Phil Trueman. We are joined in the room by our Chair, Rob Velletri. Throughout this presentation, the speakers will guide you on when to click through to the next slide. The structure of this morning's presentation will be similar to previous results presentations with some further detail provided as appendices. Copies of today's presentation and associated materials are available on our website at monadelphous.com.au. I will now hand over to our first presenter today, Zoran Bebic, who will start on Slide 3.

Thanks, Kristy, and welcome to our 2024 half year results briefing. Today, Phil and I will present our financial and operational performance for the half year ended 31st -- 31 December 2023 as well as the outlook. We will then answer any questions you may have. To our group performance and highlights on Slide 3. Monadelphous recorded revenue for the 6 months of $1.008 billion, in line with the guidance provided to the market, representing a 5.8% increase on the prior corresponding period. Record levels of maintenance services activity were experienced during the period, and we ended the half with a record cash balance of $263 million. In total, we secured more than $1.8 billion of new contracts and extensions. The Maintenance and Industrial Services division delivered revenue for the 6 months of $708 million, up 4.6% on the prior corresponding period. A number of major turnarounds were completed for key customers in the energy sector, and we also secured a couple of really material long-term contract extensions and variations. The division continues to experience high levels of demand for services and sustaining capital work, assisting customers to maintain assets and supporting production. The Engineering Construction division successfully secured approximately $750 million of significant new construction contracts following high levels of tendering activity over recent periods. The division reported revenue of $303 million for the 6 months, up 9.2% on the prior period with several recently awarded projects commencing site activities. Net profit after tax was $30.1 million, up 3.2% on the same time last year, delivering earnings per share of $0.312. The Board declared an interim dividend of $0.25 per share fully franked. Zenviron, our renewable energy joint venture, continued to build on its strong reputation for the delivery of balance of plant work for wind farms, successfully completing work at the Rye Park Wind Farm in New South Wales. It also entered the energy storage market with the award of its first EPC battery storage project. Zenviron is well placed to capitalize on the significant growth expected in the renewable energy sector over the coming years. During the half, we acquired Perth-based structural concrete business, Melchor Contracting. Melchor, which employs around 300 people and generates revenue of approximately $100 million per annum, offers full structural concrete capability in the resources, energy and infrastructure sectors. This strategic acquisition further broadens our multidisciplinary construction offering to now include civil capability. Moving to Slide 4. As I mentioned, we have secured approximately $1.8 billion of new contracts and contract extensions since 1 July 2023, with major contracts secured in the energy, lithium and iron ore sectors. In the energy sector, we were awarded significant long-term maintenance work with INPEX and Woodside, along with a further 3-year contract to continue providing sustaining capital and maintenance services for Santos in Papua New Guinea. More than $530 million of new construction work was secured in the lithium sector, including major contracts with Albemarle, Talison Lithium and Liontown Resources. In WA's iron ore sector, we extended our relationship with long-term customers BHP, Rio Tinto and Fortescue with the award of new work and contract extensions. Moving to Slide 5 now, people. Our total workforce, including subcontractors, comprised just over 7,400 people at half year-end. This was up around 20% on June -- on 30 June 2023 with the increase in construction activity as well as the acquisition of Melchor. Our steadfast commitment to continued engagement with our employees supported improved retention rates, which is particularly pleasing when industry-wide skilled labor shortages remain a challenge. We undertook a review of the effectiveness and design of our long-term leadership reward programs to ensure they continue to support key leader retention in a manner aligned to the creation of long-term shareholder wealth. The review resulted in the implementation of a performance reward plan for the senior leadership team, replacing the employee option plan as the primary employee equity vehicle. Early career development remained a priority for us with more than 200 people participating in our graduate, vacation, apprenticeship and traineeship programs over the 6 months. These programs focus on providing learning and development opportunities around a range of relevant career pathways with graduates currently engaged in construction management, engineering and accounting disciplines. Our registered training office -- organization at Bibra Lake delivered more than 700 training courses to over 3,600 trades people, including high-risk training accreditation and verification of competency. Looking at safety and wellbeing now, Slide 6. Our unwavering focus on health and safety, so our serious incident frequency rate, remained at low levels. We also continue to focus on identifying, reducing and eliminating fatal risk across our business through our Fatal Risk Control campaign. We were recognized for our commitment to innovation and safety performance at the Queensland Work Well Awards and at the Queensland and Northern Territory Welding Excellence Awards. In addition, Melchor was recognized as a finalist in the WA Mental Health Awards. And in August, I presented the Managing Director's Safety Innovation trophy to our Gladstone Workshop team for developing a safer method to remove and refurbish heat exchanges. As a part of our ongoing commitment to the health and well-being of our employees, we offer general health checks, skin checks and a series of health-related information sessions as well as partnering with the Resilience Project to offer a resilience and well-being program for our employees and their families. We also commenced an independent review of psychosocial risk management systems to identify opportunities for continuous improvement in supporting the well-being of our people. Now to Slide 7. We continued our efforts in the important areas of diversity, community and environment. Our Stretch Reconciliation Action Plan, or RAP, facilitates the identification and creation of opportunities for First Nation peoples and businesses while fostering an internal culture of understanding and respect. Pleasingly, we continue to exceed our RAP targets for indigenous workforce participation. Our ongoing partnership with the Polly Farmer Foundation continued, hosting school visits at our Perth office and Bibra Lake Employee Development Centre as a key founder of the Polly Farmer - Follow the Dream program as well as supporting foundation alumni to pursue trades-related career pathways. We released our reinvigorated Cultural Learning Strategy, a key RAP initiative, incorporating new cultural awareness and cultural activities, and delivered learning opportunities from the knowledge of this program to support our employees to learn about delivering a meaningful and genuine Acknowledgment of Country. We progressed the initiatives under our Gender Diversity and Inclusion Plan, which included participation in events such as the Bright Futures STEM program and the Inspiring Girls Forum, aimed at encouraging girls and young women to select STEM subjects. We're also named a finalist in the Women in Resources Awards in recognition of our Crane Operations Pathway Traineeship, a 3-year program designed to prepare female and indigenous trainees to qualify as crane operators. Aligned with our commitment to giving back to our local communities, we supported approximately 70 community initiatives by contributing more than $170,000 in funding and almost 400 hours of voluntary work. We also continue to progress our emissions and energy reduction road map in line with our commitment to Net Zero, advancing emission reduction trials and implementing emissions data capture processes ahead of the base year reporting. We also developed a hybrid power solution proposal to reduce diesel emissions in operational compounds, supplementing our hybrid and electrical vehicle fleet. Turning to our Engineering Construction division now on Slide 8. The division reported revenue of $303.1 million for the half year, up 9.2% on the previous corresponding period. Following higher levels of tendering activity, a material number of significant new construction contracts were secured. In the lithium sector, we were awarded a major construction contract with Albemarle valued at approximately $200 million for the front-end pyromet works associated with 2 new lithium processing trains at the Kemerton expansion project. Late in the period, we also secured a further package of work for the utilities and reagent scope on the project. These awards follow the earlier successful construction of 2 processing trains by Monadelphous at the project and the award of long-term maintenance and sustaining capital works for Albemarle's Kemerton operations last financial year. Following a successful period of early contractor involvement, we secured a $160 million multidisciplinary contract at Talison Lithium's Greenbushes site. We also commenced construction of the wet plant at Liontown Resources' Kathleen Valley Lithium Project. The contract, which is valued at approximately $100 million, follows fabrication and supply contract awarded to Inteforge in the prior year. In the iron ore sector, we continued -- on the structural, mechanical and piping package for BHP's Car Dumper 3 Renewal Project at Nelson Point in Port Hedland, where the electrical and instrumentation scope was also secured. We're awarded a contract in the rare earth sector with Lynas Rare Earths for Stage 1 of the Mt Weld Expansion Project associated with the construction of the new concentrate processing facility along with the contract with Chevron Australia to support the installation and modification of electrical power and control facilities at the Jansz-Io Compression Project at Barrow Island. Moving now to our maintenance division. The maintenance division delivered another record half year revenue result of $708 million, up 4.6% on the prior period. Pleasingly, the division has been awarded over $1 billion in new contracts and extensions since the beginning of the 2024 financial year, including around $800 million of long-term maintenance work with INPEX and Woodside, which I mentioned earlier. High levels of demand were experienced for maintenance services across all sectors, but activity levels were particularly high in energy. The division completed a significant turnaround at Shell's Prelude FLNG facility as well as several shutdowns for Woodside's onshore and offshore facilities in Western Australia's Northwest. Decommissioning work also continued for Petrofac on the Northern Endeavour. A large volume of work was executed in the Western Australian iron ore sector under our long-term panel agreement with Fortescue. We secured a 1-year extension to our sustaining capital works agreement for services across Rio Tinto's Pilbara operations, along with an extension for the provision of general maintenance services to BHP. Contract extensions were also secured at BHP's Nickel West, Mt Arthur Coal and Olympic Dam operations as well as to our fixed plant shutdowns contract at Rio Tinto's Gove operations. We successfully integrated BMC, our specialist electrical and maintenance services business, following its acquisition in June last year. And during the period, it secured an outage contract at the Loy Yang B power station based in Traralgon, Victoria. I will now hand over to Phil, who will provide you with some more detail of our financial performance on Slide 10.

Thanks, Zoran, and good morning, everybody. And this slide that we're looking at, at the moment shows the financial performance compared to that of the previous corresponding period. And as Zoran mentioned, we recorded revenue of just over $1 billion for the half year, which was up by 5.8% on the first half of FY '23. And earnings before interest, tax, depreciation and amortization, was $61.3 million, delivering an EBITDA margin of around 6.1% And this was similar to the prior corresponding period and slightly up on the 2023 financial year. Our net profit after tax was $30.1 million, which is an increase of 3.2% on this time last year, delivering earnings per share of $0.312. And the Board declared an interim dividend of $0.25 per share fully franked. The highlight of the result was obviously the record cash balance of $263.3 million, which was materially boosted by the significant advances we received during the period associated with the recently awarded construction contracts. Our cash flow from operations for the 6 months was an incredible $147.3 million, delivering an outstanding cash flow conversion rate of 260%. Our strong balance sheet remains a key enabler of operational performance and supports our markets and growth strategy. We substantially invested in our heavy lift crane fleet during the period to support the delivery of the recently awarded construction contract, expanding both the capacity and capability of our fleet as well as undertaking major maintenance activities to extend the useful life of our existing assets. Our heavy lift crane fleet provides a competitive advantage for our business, supporting our self-execution strategy and further diminishes our reliance on the external supply market. So I'll now hand you back to Zoran to provide you with an overview of the outlook for the business.

Thanks, Phil. Slide 11 shows relevant current and forecast Australian market conditions for our business. Pleasingly, as you can see, the sectors in which we operate continue to provide a positive outlook for capital investment and operating expenditure over the next few years. Moving now to our outlook slide. Longer-term demand forecast remains strong across most commodity markets with global economic uncertainty moderating more recently. The resources and energy sectors are providing a significant pipeline of prospects across a broad range of commodities with expenditure related to decarbonization representing an increasingly larger proportion of the investment activity. Production across most commodities is forecast to remain around the current high levels, supporting continued sustaining capital and maintenance spend. Some price volatility in specific commodities may lead to a decrease in production or deferral of capital investments as clients focus on reducing costs. Notwithstanding this, levels of mining and mineral processing development in the energy transition metal sector are forecast to remain high over the longer term, and investments to sustain iron ore production levels will continue over coming years. In the energy sector, there are several new gas construction projects currently in the development pipeline, and demand remains strong for maintenance services with decommissioning prospects expected to grow over the coming years. The hydrogen market continues to evolve and is expected to provide more significant opportunities through the second half of this decade. Sustained levels of maintenance activity in the resources sector are forecast as production remains high, and recent mining developments and expansions move into the operating phase. Accelerating decarbonization efforts in Australia's power sector are driving an expanding pipeline of renewable energy opportunities, including a large number of new wind farms and battery energy storage projects. Planning approvals and network constraints have impacted investment decisions over the past year. However, Zenviron remains well placed to capitalize on the significant growth expected in this sector over the coming years. As the shortage of skilled labor in Australia remains a challenge, we continue to focus on employee attraction, training and development initiatives to support retention. Following a solid first half and the momentum generated by construction awards in the period, full year revenue for FY '24 is expected to see an increase of around 10% on the previous year. With labor and supply chain capacity constrained, we will continue to leverage our strong position and take a strategic and targeted approach to new work, engaging and collaborating early with customers, focusing on earnings quality and maintaining an appropriate approach to the allocation of risk. Supported by a strong balance sheet, we will continue to assess potential acquisition opportunities to facilitate service expansion, market diversification and long-term sustainable growth. In conclusion, I take this opportunity to thank the talented team at Monadelphous for their loyalty and dedication to the company's continued growth and success. I would also like to extend my appreciation to our shareholders, customers and other stakeholders for their ongoing support. Thank you. I'll now hand over to the operator for questions. Thanks for your patience. We're just waiting for the operator to come online.

Our first question comes from the line of James Wilson from Jarden Australia. Our next question comes from the line of Nicholas Rawlinson from Jefferies. [Operator Instructions] Okay. I show our first question comes from the line of James Wilson from Jarden Australia.

All right. We're on. Okay. Guys, perhaps as a first question, could you give us a little bit more color on how you're expecting the mix between construction and maintenance work to evolve heading into the second half of the year?

We've made the commentary that we secured a lot of construction work in the first half, and we've started -- well, we well and truly started site mobilization. So I'd expect that we will see a ramp-up in construction activity in the second half. Having said that, we did -- at the back end of the 6-month period, we did mobilize most of the contracts that were awarded. But we certainly will see a slight ramp-up in the second half in the construction side of the business.

I think it's also fair to point out, there was a couple of big turnarounds in the energy sector and the maintenance side of the business in the first half. We're not expecting to see that sort of level of turnaround activity in the second half, James.

And then just on that contract ramp-up, obviously, that sort of flattened the working capital balance that you guys reported for the first half. Are you able to talk about maybe -- talk us through the cadence of the unwind that you're expecting to see into the second half there?

Well, the advance -- we specifically talk about the construction contracts because the maintenance working capital is pretty consistent. We've got a fair amount of advances on those construction contracts. And I would expect that they would sort of roll off proportionately over the duration of those contracts. So yes, we probably see around half of those advances unwind between now and June.

Great. That's very helpful. And then just one final one for me, guys. Can you give us an update maybe on how you're seeing labor availability for, let's say, the incremental E&C contracts right now relative to your August result last year?

I think you -- we're seeing what others are seeing consistently. There's been a slight level of moderation. I wouldn't suggest it's improved materially, but it certainly hasn't got worse. But also understanding that the level of large-scale construction projects that are actually running at the moment is relatively low. So as we see this ramp-up, I'd expect the tightening to continue. So I think it's -- the way I'd describe it, it's settled, arguably moderated slightly, but we haven't seen a material improvement.

I show our next question comes from the line of Nicholas Rawlinson from Jefferies.

Firstly, could you just give us an update on the state of play in your big lithium contracts?

Okay. The state of play, I mean all of our work is still contracted. I would expect -- certainly in terms of Liontown and CGP 3 Talison, we're not seeing any change at this stage. I think Albemarle's changes are reasonably well documented. What we've seen there is we're expecting -- there's a focus on Train 3. So we'll expect to see a moderation in terms of the revenue profile on that contract, but we still expect to complete all contracted works. So the duration might push out a little.

Right. And the margin looked a little light given E&C work stepped up on the PCP. Was it just the ramp-up profile that was driving that? And should we expect to see some half-on-half margin expansion in the second half?

I wouldn't necessarily say that. Broader environment, it's still challenging from a margin perspective. There's a bit of volatility in some specific commodities, and there's still an issue. The challenge is in terms of the labor market getting access to labor and productivity outcomes. And supply chains, whilst supply chain constraints have moderated, there are still supply chain constraints that everyone is navigating through. So...

We're still at the early stages of these jobs, Nick.

Okay. That's helpful anyway. Just a last one for me. Could you sort of give us an indication on whether any of the iron ore projects or gas construction projects in the pipeline have progressed any further? Like are you starting to see any contractor involved on any of these?

It's probably not dissimilar to the commentary we made in December. If you look at -- yes, in August. If you look at the large greenfield projects, they're still -- I mean, they're still further out. So when you talk about Brockman Syncline, Rhodes Ridge, they're pushing out. But what we are seeing, there are definitely -- there's a high level of engagement around putting the category of material brownfield projects across all 3 of the major iron ore plays. So it's still a sustaining capital portfolio profile, I think, for the next 12 to 18 months before you see some of these larger-scale or large-scale greenfield projects come to fruition.

And I show our next question comes from the line of Nathan Reilly from UBS.

I just was curious to get an update on just tendering conditions in general. Maybe you could just walk us through, I guess, the key end market exposures across energy, iron ore and I guess, 3 materials now. Just give us a sense of how tendering conditions have evolved, I would say, the last 6 to 12 months.

We're seeing 5 levels of tendering activity across the business consistent with 6 months ago. Our focus -- we've got a strong order book. So our focus is now looking a little further out, and we need to build on the FY '25 order book. But across market, there are opportunities in energy. There are opportunities -- the pipeline is pretty strong, as I spoke about in terms of the iron ore market, sustaining capital opportunities across all customers as well as other commodity markets. So I think the pipeline -- if I look at the pipeline and compare it to 6 months ago, it's not dissimilar. It's very strong.

And what's the level of exposure to nickel you've got in your maintenance order book?

Yes. So our nickel exposure is very, very low. It's centered or concentrated around -- it would really be around our Kalgoorlie operation. So I mean it's -- not only is it not material. It's very low. If I put a number to it, I'd say, less than $20 million on an annualized basis. Yes, that's very low.

And I show our next question comes from the line of John Purtell from Macquarie.

So just to pick up on that pipeline comment versus 6 months ago, not dissimilar. I know you've sort of been awarded 1 or 2 of the lithium jobs but still some to go. So essentially, is what happened you've been awarded that lithium work now, but has that been refilled or backfilled, if you like, by other end markets to keep flat pipeline?

Yes. I think that's fair to say, and that's just the timing issue around where that lithium work fell last year. There were a lot of opportunities in that window. Having said that, there still are opportunities in the lithium market, but they're not as significant as the period we saw 12 months ago. And you're right. I mean the broader pipeline in terms of other markets fill -- backfills that.

And Zoran, the timing of some of these sustained business opportunities across iron ore, is it sort of over the next sort of 6 to 12 months, you would expect we see that BHP has approved the Western Ridge Crusher Project there, so that's USD 900 million investment? I mean is that an example of that, an opportunity for you there?

Yes. That's an example on the larger side. There are other opportunities with other customers and materially larger number of a smaller value. But that is an example.

And obviously, I appreciate you've got to get through '24 first, but -- and I suppose it depends how the pipeline sort of moves. But do you see -- still see there's good potential to grow Engineering Construction revenue in fiscal '25?

I mean I think the pipeline is there. We need to secure the right opportunities. I think growth potential is there, yes. And probably highlighting the Melchor acquisition helps within the EC business in terms of -- we talked about extending our multidisciplinary capability. So having that concreting capability, detailed earthworks helps expand our reach and opens up other opportunities.

Got it. Just a couple of final questions, if I can. Just, Phil, the tax rate was a bit higher in the first half. Look to be around maybe the equity-accounted profit reducing just in terms of full year tax rate expectations and just around that cash flow comment before. So it sounds like you're still expecting -- I mean it was a really strong cash flow. It sounds like you're still expecting some of that will moderate, but you're still expecting positive operating cash flow in the second half?

Yes. I mean -- so on the first one, John, I mean, sort of the underlying tax rate for the business is at 30%. We did a bit of work in Mongolia in the 6 months, and there's a dividend withholding tax you have to pay over there. So once you strip that out, it's about the 30% underlying rate. In terms of cash, I mean, we always try to maximize and optimize our cash flows in the business regardless. It does -- it's very reliant on how you collect -- or how your customers actually pay you at year-end or half year-end. But I'm thinking about it along the lines of sort of 100% cash flow conversion rate. And then as I mentioned a couple of questions back, sort of some of those advances that we've received, by the time we get to the end of the year, probably it'd be half of them left is what I'm expecting. So I think simply about sort of 100% cash flow conversion rate with a little bit extra from the advances that remain.

And I show our next question comes from the line of Roy Harrison from Bank of America.

Just on CapEx, I mean, it was a pretty significant step-up in the first half. Is that something we should look out to be kind of a run rate going forward in the second half of '24 and maybe '25 as well?

As a very rough rule of thumb, Roy, we sort of ran at about 2% on average of our revenue on an annual basis. Certainly, for -- as we've mentioned for a few periods in a row now, we've seen this work in construction coming. We've now secured that work. But we've had to -- we've taken the opportunity to invest in our -- especially our heavy lift crane fleet, which is a real key competitive advantage. For our business, I would expect that just this year, CapEx would probably be maybe somewhere in there, up at 3% to 4% range is what we're thinking at the moment.

I think the comment around the broader pipeline and the outlook in the business has been growing over the last 18 months also supports the confidence in investment in CapEx.

Yes. Okay. And then just on -- there was a pretty significant step-up in the proportion of subbies used in your total headcount. Is that going to weigh on margins heading to the second half and FY '25 as well?

No, I wouldn't expect there's a direct margin-cost correlation. Sorry, I'm assuming you're referring to the 1,000 differential between direct employed versus the total numbers.

Yes.

For example, there are some -- that's been impacted by -- it's been impacted probably most materially by our work in Mongolia. So a reasonable proportion of that workforce is not directly employed. So under our control and supervision but not directly employed by us.

And I show our next question comes from the line of Julian Mulcahy from E&P.

Just a couple for me. Firstly, with the joint venture, the revenue results were down quite sharply as, I suppose, the wind farms completed. When do you think that's going to ramp up again?

I think the -- just for everybody's benefit, that's primarily the Zenviron. Zenviron did have a bit of a lull during the 6 months. We did see some delays in terms of the approvals on the projects that they're hopefully going to be working on, but I think the outlook for -- no surprise, the outlook for renewable energy projects within Australia, especially, is very strong, and they've got a good pipeline of opportunities. It's got to be dependent on some of the easing of these issues that developers are having in terms of approvals, but I've got no doubt that the future for renewable energy and specifically for Zenviron is very good.

I think we -- go ahead.

No, I was just going to make the comment. Zenviron came off a very high base last year. So the Rye Park Wind project, most of that work was materially completed within the 12-month window.

The question, Julian, is back on timing again. It's just dependent on the timing and the -- of the award of new work. But as I said, there's a lot of opportunities that are coming through.

Probably not similar results second half.

It was -- yes, something like that. We think it's a '25.

Yes, '25 story.

Yes. And with the labor market, you think it's still going to tighten up again. What do you think that means for margins, particularly in the construction business, which typically does very well on the up cycle? Do you think you're going to see expansion there?

That's hard to comment on because -- I mean, that's not the only factor that impacts margin. I mean absolutely, we'd like to see the margin tick up, yes. We have a price where we can execute well. We work well to see improvement in margin. And there are -- the macro is [ a little more constrained ] that make it pretty challenging.

Cool. And just anything to sort of say on the sort of competitive landscape in [indiscernible] over the last few years? How is that sort of [ teed below ] in risk of pushing up into your markets?

I mean that risk is always there. But one of the conversations we've been having internally, we've seen a lot of consolidation and issues and changes in the competitive landscape over the last 5 years, but we're actually making a comment a couple of weeks ago that the last 12 months, it feels like they've settled down. So we haven't seen too much change in terms of that space over the last 6-month period.

And I show our next question comes from the line of Richard Amland from CLSA.

A couple of questions from me. Can you -- are you able to confirm what revenue contribution Buildtek gave into the first half '23 result? Just trying to make sure I account for that not contributing to the first half '24.

Yes. Buildtek has no revenue contribution. It ceased operations in the second of the previous financial year.

Last year.

From last year. The full amount of revenue for the 9 months was about $80 million, I think.

Sorry, I missed that. Can you say that again?

AUD 80 million for the 9 or 10 months that has generated revenue during FY '23.

Okay. Can I clarify Melchor's revenue contributed into the construction segment in this first half '24?

Yes. Melchor, we owned from the 1st November, about $25 million.

Yes. And that all went into construction rather than maintenance?

All went into construction.

I'm not as familiar with you guys as some of the other analysts. It'll feel like covering ground again a bit. But in the construction business, you reported 44% of your revenue came from energy transition materials. Yes, that seems like a heavy exposure to be carrying in going forward on the basis that some of those commodities are really facing some challenges. I guess what -- apart from the construction contracts you already have that are on foot, what's the outlook past the next 6 months in terms of activity levels in lithium and some of those related commodities?

Well, the -- we won over $500 million worth of lithium contracts during the period and may -- it's probably due for completion somewhere over the next 12 to 18 months. I mean I think really, Richard, to answer your question, we are very fortunate that our construction business, we are able to point it to where -- to the commodities and the sectors of the resource -- segments of the resources sector where the activity is. And as we have said, outside of lithium, which is certainly nickel, which we -- I can't remember the last time we did a job in nickel. But outside of lithium, the pipeline of opportunities is very strong. So certainly, iron ore has always been -- and just purely by its size, is a very, very, very strong sector or segment of the market for us. That is where we see probably the next range of projects coming from. I think Zoran spoke about some of the opportunities that are available to us in the energy sector as well. Renewables is strong. So really, it's all of the sectors that we have got experience and what we believe to be a good, strong competitive advantage and offer a very good pipeline of opportunity. And once these lithium projects are completed, then we will be working on opportunities in those other segments. And if you have a look over many -- well, over the entire time that I've been in Monadelphous, the proportion of a particular commodity that -- sorry, proportion of a particular commodity makes up of the revenue pie in construction can change quite a lot from period to period.

I mean I think our broader exposure in terms of the energy transition though is circa 20% of total revenue. So I wouldn't say there's a concentration risk there. And understanding that we -- historically, we've had periods where you'd argue we had a concentration risk with the level of iron ore activity we have.

Okay. The -- just in reference to the FY '24 guidance, the way that I've calculated it, it seems that the expectation is for revenue to be flat half-on-half, first half, second half. And it sounds like construction revenue will be up half-on-half, and that implies maintenance will just drop back just modestly. Is that the way -- is that consistent with sort of what you guys are trying to project?

Yes, that's -- you've got it.

And I show our next question comes from the line of William Park from Citi.

I think majority of my questions have already been answered, but just a couple, if I may. Firstly, just on the E&C side, has there been any more sort of, I guess, conversations that you have with your clients around the pricing arrangement? Has there been any changes or trends that we should be aware of, like particularly with respect to fixed price work?

I'm sorry, Will, question around pricing, did you say?

Yes. So I mean, just to be clear, just around whether if you've seen any changes around the proportion of your work in hand in the E&C part of the business that is a big surprise under fixed price.

We haven't seen a material change or a material change in the conversation since the full year. Back then, we said that we thought that in the EC business, we probably had -- I think we said something like 60% fixed price and 40% other compensation arrangements with customers. That hasn't changed. Not only has that not changed, we probably haven't seen too many changes in dialogue or conversations with customers either in terms of existing work or certainly the pipeline.

And just one last one. Safety performance over the last 6 months. Could you just comment on that?

Safety performance. Yes. Okay. So I mean we have a suite of safety perform -- KPIs that we measure against, some leading indicators, some lagging indicators. Our 2 key lagging indicators are serious incident frequency rate. And we made a comment that that's sitting at below 0.7, which is close to -- or around historical -- historically low levels. They're certainly the incidents that can result in serious injury or fatality. So we're pretty pleased with that. In terms of our other key lagging indicator, our total recordable injury frequency rate. That has ticked up from June. We said that it's sitting at 3.82. So we've got some work to do in that area, and we've had and continue to see, I'll say, worst possible outcomes attached to simple line of fire injuries and a lot of hand- and finger-related injuries in terms of -- yes, hand and finger injuries.

And I show our last question comes from the line of Nicholas Rawlinson from Jefferies.

Just a quick follow-up. Phil, you mentioned no material oil and gas turnarounds in the second half. I understand that you guys have pretty good foresight into these. So could you just give us an indication of what the turnaround schedule is like in FY '25 for the oil and gas projects?

Well, yes, Nick, I'm just drawing on the conversations I've had with the energy team. And I think the -- I don't think there are -- there certainly are an abnormal number of turnarounds next period, but I think they're weighted between the -- evenly weighted between first half and second half in FY '25. This first half of FY '24, we had an abnormal number of turnarounds as well as the size of the turnarounds were significant and more specifically, Shell Prelude FLNG that was a very large turnaround as the first major.

Thank you. That concludes the Q&A session. At this time, I'd like to turn the call back over to Kristy Glasgow for closing remarks. Please go ahead.

Thank you. That now concludes our briefing. Thank you all for your participation today.

Thanks, everyone.

Thank you.

This concludes today's conference call. You may all disconnect.