NRW Holdings Limited (NWH) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the NRW Holdings Half Year Results Conference Call. [Operator Instructions]. I would now like to hand the conference over to Jules Pemberton, Chief Executive Officer; and Richard Simons, Chief Financial Officer. Please go ahead.

Thank you very much, and good morning or good afternoon, everyone. Welcome to our half year presentation for FY '23 results. Look, I want to start by addressing what I think has been a bit of an issue in terms of pressure on selling of the stock and things little perverse to me that a company that has had some challenges, obviously, with weather and some other things, which we've noted in the presentation, but we have reaffirmed our guidance for the full year and have also been in line with the market expectations in terms of our earnings results. Now this will probably get addressed in the call, but I thought I've hit it upfront before I get through the presentation, which Richard will take you through, and it's causing me a little bit of agitation. So I will address the issue. Yesterday, a note was produced by one of our analysts, which referred to -- and I'll use the title here, flashing NRW Holdings risk of margin compression from delays to the Mount Holland project. Now some of the detail in there, in fact, pretty much all of the detail there is actually incorrect. Apart from that we expect the project to complete in line with our presentation in early second half FY '23. Now what I'll refer to the note actually refers to Reuters' note, which was taken from an official presentation from Wesfarmers and for reference, if you went to Page 36 of this announcement from Wesfarmers. The following statements are made, which are not reflected in this particular note. Firstly, the construction of the mine and concentrator at Mount Holland is well advanced, which is actually a part of the project that we're working on. Secondly, a key point. Delays in refinery engineering have impacted costs and timing expectations for the completion of the Kwinana Refinery to be very clear we are not involved in any way, shape or form in terms of the construction or delivery of the refinery. Further to that, there's a positive comment here. First, production of lithium hydroxide is obviously expected later in calendar '25. However, the impact of delay expected, partially offset by the sale of spodumene concentrate prior to commencement of the lithium hydroxide production. We are responsible for the concentrator construction and plant site construction, which obviously enables the early sale of spodumene concentrate. We expect crushing to commence in April and the project complete shortly thereafter. So in terms of our the commentary in this particular note. I just wanted to clarify those points, and I'm sure we'll come up with a question later on. One other thing that the note did pick up, which is also a positive again, if you looked at our group's involvement and our group performance to date. Wesfarmers also said the group was assessing options to expand capacity of the mine and concentrator, again, scope that we've been involved in with the client for over 2 years. And it was one of the driving forces for our reason to acquire the Primero business while its lithium exposure as the leader in its space across lithium industry globally. And those comments are all positive comments. So anyway, I've said it, we're probably within the Q&A, but it has been causing some constellation. So I wanted to deal with at the front. So if we go through the details of the results, maybe going to Page 3. Revenue was up 15% on PCP, EBITDA, 7.5% and NPAT, 3.9%. Cash balances was reduced, but this was also well flagged. It's quite typical of met style projects that are large EPCs that have very heavy procurement components is that upfront payment for the procurement that we pay. These things have unwound during this half as the projects get close to completion, perfectly normal expectation in terms of that cash movement. This capital -- the timing of capital, particularly for Karara, again, well flagged, we said we'd perhaps are buying $170 million worth of equipment. The timing of that was expected in the second half of '22. It's moved into first half '23. Again, those things explain the movement in our balance sheet. And there's also been some investment in inventory that Richard will cover off on that on the financial slides as well. So it's a climbing piece, which we expect obviously to improve as we go through the second half and into FY '24. The dividend. And again, Richard will comment on this, is unfranked because we have no franking credits remaining. However, we are making the most of the instant asset write-off given the purchases we've made across our capital business, particularly for these mobile assets, which is a much better outcome for shareholders in the long run. So unfortunately, yes, they are unfranked. But on a PCP basis, it's also a 9% increase. So again, a very positive note as part of the highlights of the results. Order book, better position than we were this time last year at $4.9 billion and submitted tenders at the moment moved slightly from the last report. We were unsuccessful on the lithium mining project. We won the Drill & Blast project for Greenbushes, but we didn't win the mining project went to Macmahon, which is really probably the difference in that movement that there's been other things that are coming in. So a very solid pipeline of submitted tenders, which again, we'd expect news flow in due course. And we've reaffirmed at the start. We've reaffirmed guidance despite the headwinds we've had in terms of some serious weather impacts, which are not 100-year events and over in 2 days, there constant rain events. Queensland experiencing at the moment and it has experienced even in January as well. So it is heavy persistent rain not flash flooding and it's all over in 2 days. So that is really -- has been an impact in the business. And obviously, we hope it goes back to normal very quickly. January was not great. So I'll hand over to Richard now and he'll take you through the earnings and balance sheet slides, and then I'll then talk you again shortly. Thank you.

Thanks, Jules. Good morning, everyone. So as Jules noted, for the first half, our revenue was $1.3 billion and a 15% increase on the prior comparative period. And from that, we generated EBIT of $80.1 million, which again was 7.5% higher than the prior period. And what that really reflects is that a number of our contracts are moving into their full delivery phase. So with Karara, we've fully mobilized all of our people and equipment on site, and they're seeing that delivering now in terms of us actually producing more tonnage than we're contractually allocated to. And so that's a trend that we expect to see continuing into the remainder of the year. Similarly, on the Broadlea contract, Bunbury Outer Ring Road intelligence freeways and all of downs projects that we're executing in Golding, they're all moving into that full delivery phase, and that's going to see us produce a good return in the second half. With respect to the 2 large projects that Primero has on at the moment, the Strandline project and the Covalent Lithium project. They're both nearing completion. And we will see -- as they progress, we'll see the return from variations and revenue coming through as well in the second half. So whilst our profitability has been impacted in this first half, there are a number of factors which are going to drive a recovery as we move forward into the rest of the year. In terms of the impact that we have had to deal with, as Jules has noted, the weather impact in Queensland has been absolutely extraordinary, and we've included some data later on in the presentation in an appendix, which shows just the -- in long terms, the amount of rainfall that has affected our project areas. On a long-term basis, the rainfall experienced in the last 6 months. is nearly 80% more than the long-term average. And in the month of January alone, there was 328 millimeters of rain compared to 440-odd for the prior 6 months. So it really is quite an exceptional level of rainfall that our teams have had to deal with. Now we expect, and we hope that, that's going to improve as we get into the second half of the year, indeed, talking to our people last week, the rainfall was significantly lower, and they haven't lost as many hours as they have done previously. So hopefully, that trend will continue froth second half. We've also noted that there was a number of new work projects that we had expected to start earlier, which were delayed by clients and by decisions. And that's basically that we've had to carry teams longer before they were able to mobilize to size. And indeed, the other factor that also has affected us over the period is the tender cycles the clients are going through has also extended. And I think that's a factor of the uncertainty in the macro environment, the number of operators are talking about cost increases on their projects. And we certainly felt that through some of the extended durations that some of the tenders have gone through such as the tender as mentioned. And there's also a couple of other infrastructure tenders that have extended their term quite significantly. We also have this last 6 months and indeed the period prior have been investing in building capacity in Primero's operations in North America. As you will all be aware, there's a significant amount of demand that's coming forward in those markets as particularly the United States and Canada are looking to secure their own sovereign supplies and materials. And so we want to make sure that we're ahead of the curve that. So we've been investing in people and infrastructure to support those people. And we're currently working on around about USD 30 million of studies or some quite significant opportunities, which will hopefully convert as we go forward. As Jules indicated, there were earlier some tenders that we had lost as well over the period. And whilst it's obviously disappointing to lose the tender when the team put so much effort and work into producing a good outcome for the client. It's ultimately a byproduct of us remaining very clean in our approach to these opportunities. We're very cautious about how we invest our capital, and we're not going to go chasing tenders simply to boost revenue. And so particularly some of the bigger mining projects you would all be aware of haven't come our way. But ultimately, we're happy with the decision that we made, if not the outcome. The other thing that also is a feature in this year's, this half's results, is the nonrecurring transactions. So probably just worth touching on those. Principally, that relates to the position that we have on Gascoyne Resources as we flagged at the AGM, I think it was just the day prior to our AGM, Gascoyne suspended its trading and operations and announced to the fact that they were going to commence a recapitalization process. We understand that, that process is still underway. And apparently making progress, but as yet, we haven't seen it be formal from them. So we've taken a conservative view on our position on Gascoyne and we've written off the receivables, the equity and the production royalty loan grade that we have with them. Now we have entered into an agreement with Gascoyne subject to the successful outcome of the capital raising process. We will make a recovery of an element of our receivables probably a couple of million dollars in addition to also securing some new equity, which will allow us to partially recover the write-off that we've taken. And as I say, we need to see that process close out. All right. So I'm now just going to move forward to balance sheet and is on Page 5 of the presentation. So as Jules noted in the half, our cash balance has reduced from where we were at June. And you will recall at June, we had a very, very high level of cash conversion. So that has to unwind as we moved into this half. And it's advanced payments. It's also advanced billings that we've had on some of our projects. So particularly with Strandline and Covalent moving forward to completion that has unwound and what we will expect to see as we get closer to June is a recovery in cash as the receivables and final variations are collected along with completion. Prevalence is probably around about 85% complete for us at the moment. So -- and Strandline, we are fully demobilized off-site except for a couple of people helping with some of the production start-up. So yes, you can see that we're well on track there. In addition, we had some prepayments as well in the first half as advised by Jules. So our expectation is that cash by June will recover to sort of balances that we are accustomed to running in the business. The other factor for us has been a big change over the year -- over the first 6 months has been in relation to debt. And of course, that's really CapEx as Jules has alluded to. So we took on about $75 million of debt in this half, which was related to the investment in equipment for Karara and also the extended Kogan Creek contract. Together with about $34 million of debt repayments over the period. We had a nice increase in our net debt level to $172 million and corresponding an increase in the gearing percentage to about 28.5%. So that's really at the top end of the range that we would normally like to be within. And so we are planning that, that will reduce by the time we get to the full year to something that we are more accustomed to and you are more accustomed to seen in the business at June. There's no significant additional CapEx plan between now and June. It will just be regular sustaining levels of capital expenditure. Okay. Just touching on cash flow on Page 6. So you can see net cash flow from operating activities was $41 million. We had, as I mentioned, the unwind in working capital over that period, which has obviously been a big driver. And then the nonrecurring cash impact related to some of the rights that I mentioned. So that's going to -- that basically will normalize by June. CapEx, again, as I mentioned, touched on that, a big chunk going into Karara to support that and we'll see the return on that coming through from the second half. So nothing major in terms of CapEx in our second half, and we would expect sustaining CapEx to be very similar in the second half. Together with debt levels returning to a normal sort of level by second half. So 1 final point I'll just make just in relation to the dividends Jules touched on that. We will be paying an unfranked dividend of $0.085 per share compared to the $0.055 per share we paid in the prior period. So a 9% increase on a comparable franked basis. As Jules noted, we've made it an unfranked dividend because we don't have franking credits. And that really reflects the fact that we made very good use of the ATO's taxable full expensing program. As that continues into the second half and beyond, we don't expect to have to pay cash tax until late in calendar 2024, which is really the best outcome for the business and ultimately, shareholders. We thought it was going to be far better for shareholders to receive a higher unfranked dividend now rather than us forgo the opportunity that federal government has kind of alluded to us. Thanks, Jules.

Thanks, Richard. Moving on, I probably don't need to touch too much on the segment overview. Obviously you're aware of our delivery capability that spans everything from kind of concept to completion in terms of design, construction operating maintenance and everything in between. So let's move on to the next slide. So the civil business, revenue increased obviously, some key drivers on a PCP basis, mostly on some of these larger infrastructure projects, Bunbury Outer Ring Road intelligent freeways and also some Queensland activity, which in terms of our first half performance in Golding, it's been a lot stronger in terms of the work that we've had to the prior year. So that's given us a great footing in terms of the start to the year. Obviously, we need to win and deliver further projects in the second half and are building up to '24. The issue has been, obviously, some weather impacts not only impacting the mining business in Queensland, but also the Civil business in Queensland, causing some of those impacts on obviously, where we see our margin at the moment versus what we did specifically and even the second half of FY '22. We are very focused on -- and Richard touched on this as well in terms of pricing projects correctly. We're not here to build revenue and we're here to build improvement in our margins and deliver safely successfully these projects for our clients. The competitive landscape has certainly decided in terms of the number of bidders that we're bidding against that depends on who you're up against and the bid approach in terms of whether we need to feed the beast in a revenue sense and are not focused on returns. We're very disciplined in that effect and particularly given the pipeline that's coming at us, while some things have moved to the run-through delays or losses in terms of tenders we expected. The pipeline is enormous. And we're very confident of securing new works very soon that will set us up very well for FY '24, but ensuring that we're fully capturing the current environment in terms of productivity cost, et cetera, that we have to deliver into. We're doing quite a lot of ECI work for our clients at the moment. And a lot of that, again, is -- sometimes it's paid, sometime it's unpaid, but those additional big costs that we're seeing in the business at the moment. But again, as I said, the pipeline is very strong. We've got a current order book of $600 million in active tenders of $800 million. So we're in a pretty good step for contract wins in the near future. Moving on to mining. So mining increased year-on-year, that's driven by extra activity in Karara. It's also driven by the Karara project as well, which is now sort of fully operating at the full capacity, all the fleet and people are there. I think was doing that sort of towards the end of the second half of last year, but on a PCP basis, a big difference between where we were first half last year to first half this year. Again, that will help contribute to an improvement in margins looking forward and some of the impact just on a PCP basis, we had Boggabri, which was an equipment rental plus maintenance style contract, which was quite a high margin mix and then Stanmore as well, which was part of the portfolio at the time with a higher margin contributor at that particular point in times. But we do see things obviously improving from here. Whether big factor, but again, based on what we're seeing from sites at the moment that that's improving as well. A couple of good contract wins. The Drill & Blast business have won some work across the Queensland and obviously, in lithium as well. So they're very big contract award for Greenbushes in lithium. We didn't win the mining contracts, but Drill & Blast contract extends the relationship there for another 7 years plus to if we get the extension, and we've been there since 2010 or 2011. So we've been there for a very long time, know the area very well. And again, it's a fantastic opportunity for that part of the business. Going over the page, some of the new things that we have won, we had some equipment that we still had available on the East Coast, which is now deployed to Jellinbah, so anything that we've owned. And obviously, we supplemented with rental equipment in our mining business, but anything that we've owned is essentially deployed. We've got some spare capacity and equipment in WA, which we're in the process of bidding into a number of opportunities and should be deployed in soon, which will again in turn, improve returns for that business. But we do have a very disciplined approach, putting in an opportunity to Greenbushes. Tier 1 fantastic client, long-term opportunity, but it would have required a capital investment of $250 million. So when you look at those things, we need to make sure that we are getting an appropriate return for the level of capital that we're going to put into a project. And that's one of the key drivers around the discipline and maybe why we haven't won that project versus other things that are around. There are a lot of areas for us to be able to deploy capital to and really, we need to see better than average returns or average historical returns to justify an investment in CapEx. And particularly when we're just had a pretty significant investment in the Karara opportunity as well. So that's our view going forward. But the order book in mining in general, as you can see from that chart, we're very strong and also long term. So when we go on to net, as Richard also said, the 2 large EPC projects, one that I've dealt with the staff and Covalent coming to completion strand lines essentially finished now. And we're just working through the final contractual payments and variations. And then it's about helping them ramp up their productivity on site. Key thing with Primero again and the net business. We are the leader in terms of our global lithium knowledge, particularly on the concentrator side of things designed EPC. There is a huge amount of activity going on really as Richard said, across North America, Canada and in Australia as well, pretty much anyone who's building a project, talking to us about their projects. In recent award, get another positive Pilbara Minerals. We worked for Pilbara Minerals as miner as a civil constructor and also through Primero before we end it. And now whilst we're going Primero, we're also working for Pilbara Minerals. So again, opportunities are coming at us to help fill the order book and look forward to a very positive FY '24. business is also both very busy at the moment. A lot of opportunity across mobile crushing plants, various offers that we've built in the past for clients. So extraordinary amount of activity at the moment, very strong active tender pipeline. And we'd expect to see, again, news flow in the second half around our mets business going forward. So some of the things have been impacted. We do work on a lot of ECI studies. A lot of them have paid at times we do spend more than the amounts that clients have given us for those ECI studies. So there are some additional costs in the business at the moment, but they're all going into projects that will become real projects. And again, the future recovery of those additional overhead spend at this point in time we get it through once the projects been awarded and successful. But that's sort of caused some of that minor margin impact. And I think that's kind of all I wanted to say on that slide. So the active tenders, as I said, very, very positive. There's a billion in there at the moment. News flow expected this half. So if we look at our group pipeline, that probably hasn't moved much in the last couple of periods. Very strong pipeline, a lot of opportunities coming at us from -- if you look at '24, '25, '26 across infrastructure, across mining, across replacement iron ore across the lithium space, it is a very broad brush of opportunities. And there are very few contractors that have the capability that we have and that we've built through our acquisitions and the growth that we had, particularly in mets as well. So we are the go-to partner for these clients. And for me, obviously, there's a couple of projects that we've missed in civil but there is so much activity going on and they just are the contractors to be able to deliver for these clients, and I'm very, very positive about the outlook that we have gone into the remainder of this half and really into FY '24 and '25. Order book $4.9 billion. I mentioned that previously. We've got revenue locked in this year at the low end of our guidance range of $2.6 billion. So it's either an order book or it's in the sort of RCI repeat business, DIAB or Golding again. So basically, it's essentially contracted. As we've said, we have reaffirmed guidance for this full year, and we're paying a dividend that is unfranked but 9% better than we had in PCP. So all in all, very positive. I won't necessarily go through the slide we can just deal with in Q&A in terms of if anyone's got any comments around weather or anything else. So that concludes the presentation. I'm happy to go to questions now. Thanks very much.

[Operator Instructions] Your first question comes from William Park from Citi.

Firstly, I just wanted to touch on Covalent Lithium project. I think we share your comments around the refinery components, but would there be any miner delays to the concentrator project? That's first question. And secondly, what is all the additional potential costs that could be incurred if there's a miner delay?

Well, look, most of the -- so we don't expect a delay as you've reported in the note. Sorry, if I'm not coughing or letting. But obviously, there's a slight change in timing that might be weeks if anything else. But what people need to remember is this project, client-supplied items like the air strip for example, wasn't complete when it was originally expected to be complete. Then the CASA certification wasn't done for the air strip in time. So what happens is the plane goes out there, you've got low-level cloud, the plane can't land and it has to fly back to Perth and those guys have to bus out there. So those productivity impacts can be mitigated by an acceleration directed by the client to finish on time. But the consequence of that cost is not a cost to us. So we've had variations for the lane disruption. We've been paid them. So I think to get the context right of the style of contract is that, yes, we're responsible for delivering a project within a certain time frame, assuming the things that are in our control are being dealt with. These are clients control issues. If it's principal supplied equipment because there's been global procurement delays and shipping delays not our issue. This has been access to site issues, again, not our issues. So let's be clear. As I said at the outset the announcement is a positive 1 for us, not a negative one.

And I appreciate you clarifying that. We sort of move on to civil. You were talking about losses on the tenders that you've been bidding on. Can I just talk to sort of the competitive dynamics that you've touched on? Can you sort of expand on that from pricing point? Or are you seeing -- I mean, you talked about you're seeing more bidders in your procurement process. But is it just the number of competitors that you're coming up to an across the price? Or is it more on the pricing side that you're seeing from pressures from a competitive standpoint?

No, there's not more bidders. As I said about the comment on Golding. Golding is probably at the best start to a financial year for many years in terms of their order book, have a quite successful winning projects. It has historically been more competitive on the East Coast and in the West. But we're up really only against 1 or 2 other players on any of our bids at the moment in the West. What we're doing is being very disciplined around the real cost to those bids and making sure that we price it appropriately rather than again starting to stuck in a fight with a client over costs and other things because things always change on projects. And we do have all of our civil projects are generally have raised to full storing for or schedule of rates style. So the quantities change. Obviously, we get paid for that, but it's really making sure that the cost inputs because we have experienced, particularly in that remote construction work are right. So we believe we're pricing right. And the number of competitors we're on 2 large bids for a Tier 1 recently, and we've got 1 competitor on the bid list. Yes, if that competitor has to feed the B store other rationale around being the lowest price, as I've said to this particular client. We're here to make a fair return for our business. We are trying to improve our civil margins. We're trying to get them to a level where it's a strong, sustainable business, but we won't take risks on aggressive pricing. And if we lose a job, we'll lose a job. So I think, as I said, with the amount of work that's coming and we're bidding at the moment. It's not a real issue it can impact timing sometimes and it can impact the short term, but not necessarily the long term. So I'm more than comfortable with the decisions that we've made there.

Just 1 last 1 from me. Revenue guidance. Given that you've secured $2.6 billion, which is the lower end of the guidance already. How should we sort of think about the guidance range? I mean, would it be fair to say you're taking a more conservative approach given some of the pressures that you've mentioned on the call?

Yes. I mean we have to call out the facts. And I mean it's very unusual for us. We've talked about weather events in the last result, but it's a different kind of impact because it's more -- it's a longer sustained kind of impact and it's disrupting operations on a more daily basis rather than 2 days and then you're clear for the rest of the month, it's been that kind of impact. So we have to call it out, which is what we did in the circumstance. Now there is risk that is still there. But obviously, for us to reaffirm guidance, we're comfortable enough that we can still manage the outcome that we've committed to.

Your next question comes from Nicholas Rawlinson from Jefferies.

Could you please quantify the EBITDA impact on weather in the first half and maybe overhead definitely to.

I don't think we would go into that level of detail because it's not something that we would typically do. I think big picture, there's probably been a circa $30 million to $40 million revenue impact from weather across the Queensland operations. And some of that will recover through revenue shifting to the right, but some of it we won't recover because it's mining contract volume related. So it's certainly not a consequential as we noted, it appears to be getting better over the last week or 2. There's still a lot of water on the ground. But obviously, that will begin to dissipate now as we move further into the summer months.

Great. And just on midcap and specifically the FEED studies for Primero. How many projects is that across? And is it right to assume that they are at very little or no margin?

Midcap order of magnitude, the FEED studies probably is across 10 to 15. It's engineering work and there's all a bit different. As Jules noted, some of them are fully reimbursed. Others are only a partial reimbursement, say, on an ECI, but for instance, the work that we're undertaking in North America is all a standard industry engineering margins, which tend to be well north of -- well north of 20% standard for engineering business. So that's good for us. And it's a much about what you make out of those studies now. It's about the opportunity and the positioning that it gains you to pick up the big money contract as those projects progress through to FID. So it's really strategic positioning, and it's securing a foothold now hopefully, not having to go to market and compete and entering into a negotiated contract with the client.

Yes. I just sort of thought that maybe those speed studies were holding back margins in the next division, but maybe I got that wrong, and -- but given they're all-in lithium allotment in North America. Are you expecting that there is a very good chance if that gets developed?

Absolutely. Absolutely. And I think just to answer that the FEED studies are paid. It's some of the ECI work or the level of work we need to do versus what we might have been paid by the client. They say, well, you're in a competitive process, we'll pay you x for the fee, but we've spent double on it, for example. Now that's our -- because of the opportunity, such a good opportunity and the way it's kind of that, we've ended up spending more money. That's not the norm because it does revolve around some pretty large opportunities. So it's just one of those things. But generally, most of the FEED studies are paid.

Great. That sounds pretty exciting. And just on mining, what should we think of as a sustainable EBITDA margin now as the contract mix has changed a bit?

Good question.

Look, I think there's a number of factors driving it. As we noted, we had some historically high margin contracts ending in terms of Strandline and Boggabri. We've had new contracts commenced in this period in terms of Jellinbah and we're hitting full strats on Karara. So there's quite a mix of events sort of going on there. What we are expecting to see over the second half is margins on returning to that sort of long-term norm in the mining business. I think that's going to be a steady state for us. It's just that we've been giving a bit of flux over the past 6 months as the portfolio mix has changed.

Okay. And just the last 1 from me on civil. I understand you asked to your customers' decisions, but can you elaborate on the ECI work you're doing and when you're expecting awards to flow, whether that elsewhere.

Look our news flow is quarter probably, I would have thought.

Yes. I mean some of the ECI works for '24 and '25, but the buildup of just to use 1 Tier 1 as an example, is the project pipeline from FY '24 on. All of the projects that they're working through at the moment are probably 70% earthquakes component versus mechanical they're in new areas. Obviously, as replacement tonnes need to be found as grade needs to go through. So it's going through some pretty heavy countries. So a lot bigger projects than we've seen for some time, but they're probably not until '24, '25, but there are a lot of things that we're working on in the meantime. And as I said, with the number of competitors significantly reducing it, that's not so much the issue. It's a matter of if 1 competitor does very low on prices, but you've got 10 competitors there, but if 1 does something stupid, and it's really making sure that the client understands and the majors can -- they're aware of the lack of delivery capability and it's a matter of making sure that we then have that capacity to be secured for them to deliver future projects where we're going to get to name entry fee, if you like, rather than be in a competitive bid scenario, much of the way that Primero has been involved with Strandline, Covalent and then have been involved for 2 in a bit years. If you're involved at that point, through the whole project, they can't award it to anyone else. So it's very similar in the Civil business, particularly in WA resources where we have the expertise, we have the ultimate capability. Those conversations should develop in that sense.

Your next question comes from Jakob Cakarnis from Jarden Australia.

I just wanted to speak on the labor issue, if we could. I'm just wondering some of those deficits that you saw having labor stood up at nowhere to deploy them due to the weather. Were they tethered to particular contracts? So is that all water around? Or was that a kind of safety stock, if you like, of labor that you are looking to deploy on new works?

Sorry, you're talking about the labor that you've been impacted by the weather.

Correct, yes.

No. I mean they are on contracts. So generally, if they can't work, but sit in the crew, gets in home and they are payable. So we don't them, we don't lose people through that. So they're not read a global anywhere else. It's basically that whole sort of central clean area has had significant impact of the guys just paid and stay, they just don't go to work.

Okay. Cool. And then another thing that we've spoken about that you didn't really touch in this result lower availability generally across the board, you're seeing that improve. We're seeing some processing times for skill sets maybe catch up a little bit from where we were through the back end of fiscal '22. Do you want to just talk about that given the opportunity you're still seeing in the order book?

Look, I think it's no surprise that labor availability is still very tight and in certain skill sets, whether it's the fits, which have been an issue for many years in mobile mechanics. And I know the guys called that out and if they had a 200 put them to work to deliver equipment that's necessary for us, it's more project driven. But there is still high demand for people, but we have a very large following through our business in terms of the work that we do, the types of projects that we do. So we generally don't have a huge issue mobilizing. So we're large civil project at the moment we can find the people at the moment. But yes, certainly, the Visa processing, getting in offshore people has been slow, but improving.

Just 1 final 1 for Richard. You spoke about from the characteristics of why the cash flow might get better into the second half, which all are pretty plausible and it thinking that those improvements in cash would be used to steady out the debt balances. Is there any other way you guys would look to deploy that capital?

We wouldn't be -- so obviously, the big chunk of our debt is equipment finance debt, and that's all on scheduled repayments. So we wouldn't be looking to accelerate any of that. We will have a continuing balance of bank-related debt, which again, as you historically has been connected to some of the acquisitions. So we'll manage that and deploy that as we think best. I don't think there's any particular need for us to look to accelerate any of our -- certainly one of our scheduled debt repayments and none of our bank facility debt levels other they're all, I guess, at a very, very comfortable level for us. So we'll keep ourselves very liquid and therefore, able to respond to any opportunities that come out.

The next question comes from Gavin Allen from Euroz Hartleys.

Last and these things, I'm not sure why that is. So a lot of questions have sort of already been asked. But just thinking about Karara, so you see we had a full half here, and that has ramped up 2023. Is that -- should we think about that production profile as being steady or has it continued to increase over the second half of 2023, first one. And then secondly, you talked about $1 billion worth of net being tended and the outcomes expected hopefully in the next 6 months there. And then when on 1 other question, talk about serials and perhaps that's in the next quarter or so. In terms of sort of $2.3 billion you've got in mining to. How do you think about outcomes being revealed on that?

I start with mining. Good question or the last question the first. Mining the larger chunkier parts decisions probably within the next few months, but not commenting on site, given equipment lead times for the say 12 months, thereafter. So chunky enhancement there, but there's also some smaller opportunities, which would use equipment that we have in the West as an example, which we've either deployed to large several projects or to smaller mining projects. So those sort of things come up that would be smaller potentially better margin opportunities, but that new lower is likely to be sooner than the large end of mining. In terms of civil, some of the things that have obviously happened have been projects moving to the right, whether that's approvals or whether that's other things that are delayed in our cost profile, that delay clients' decisions. So some of that merger right. But again, we're in the midst we've submitted tenders at the moment, and we expect decisions on that pretty quickly, and we'll be then mobilizing within months and seeing increased activity in the final quarter of this financial year. So that's kind of a civil sets. A couple of very large opportunities and a whole bunch of smaller ones. So again, timing, as we understand it is all really over the next few months in terms of the current pipeline. But it's -- we're seeing new opportunities every single day across that business as well really across all the businesses.

And then your final question -- sorry, your first question, Gavin, is really about Karara. So at Karara, our ability to deliver tonnage is obviously constrained by the client's physical infrastructure and the size of their plant. So we are now delivering tonnage to the plant, which is pretty much at the plant capacity. So more than we're contracted to do, but the client is very happy for us to overperform at this time. So that's going to be a good contributor for us through to June and beyond.

Your next question comes from Evan Karatzas from UBS.

One of my questions have been asked. Maybe just a couple of quick ones. That $30 million to $40 million of revenue that you lost in -- due to weather in Queensland. Is there any chance you could split that out between that's what's work lost in mining and what's sort of being pushed to the right, if you can, please?

Not in precise detail, but I'll tell you, Evan, that probably something like about 1/5 of it would be civil related that will slip to the lot.

Okay. Great. I mean, that's helpful. And maybe just a final one. I mean, you mentioned CapEx normalizing through the second half. Can you give us just a rough number what we should be expecting for the full year in FY '23 for CapEx, please?

Look, I think in the second half, if you look at our run to sustaining CapEx, and you'll see something similar in the second half. We don't have any growth CapEx on material growth CapEx plans in the second half and we've delivered into all of the -- deliver into all of the operating contracts. So it's really just sustaining CapEx that you'll see repeated in the second half.

Okay. So around that $40 million level, is that right?

There or thereabouts in the second half.

[Operator Instructions] Your next question comes from Matthew Chen from Moelis.

Just after a bit of color in terms of the, I guess, time or where the order book kind of falls in fiscal '24 and '25 like further out, if that's possible.

So probably with limited exception, virtually everything that is in the order book. Well, in fact, I guess I'll refer you to the slides first. We do provide a bar chart there for each of the segments and the key projects showing how they deliver over their remaining term out to 2024 in civil and we'll be on that in mining. With the opportunities that we're tendering at the moment, the active tenders, a good chunk of those will also be multiyear opportunities, 2- to 3-year opportunities. So as they land, the level of visibility that we have on the future revenue is excellent and something that is a real strength in the business.

But if you look at today, the majority of the sort of $25 million, for example, would be mining-related activity. plus things like Bar, which is a multiyear civil contracts. So this is not year civil contracts. It's really going to be mining FY '25 on. But as Richard said, the opportunities we're bidding at the moment would be multiyear opportunities.

Right. And just to clarify, half and half, I think the order book is kind of some of come off I think you called out a specific contract, but I just missed it at the beginning. If you just give a bit of color around that, please?

The order book -- no, I don't know the order books down slightly because obviously that replenished with new awards when -- we didn't win the Talison Mining contract, which would have add another $1.3 billion or something to the order book, but we weren't successful in winning it. But obviously, we don't control the news flow. And at the end of the day, that we're bidding $4.1 billion worth is actually submitted tenders. So if those decisions are made, that obviously then improves our order book as soon as we're able to announce we're successful if we are successful on those opportunities.

There are no further questions at this time. I will now hand back to Mr. Pemberton for closing remarks.

Okay. Thanks very much for your time, everybody. I look forward to seeing you all on the road show around in coming weeks. Thanks very much.

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