SciDev Limited (SDV) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the SciDev Limited 2026 Investor Day. [Operator Instructions] I would now like to hand the conference over to Mr. Todd Scott, Chief Executive Officer. Please go ahead.

Thank you very much. Good morning to those in the room. Thank you for your time, and thank you very much for anyone joining on the webcast or even listening to the webcast later on. So for those who haven't met me, my name is Todd Scott. Up until 3 weeks ago, I was the CFO for SciDev. And as of 3 weeks ago, I'm now the CEO of SciDev. So a lot have changed, but thank you very much. I want to thank [indiscernible] board through that transition, I want to thank my management team, many of those are here today, including John Gardiner, my interim CFO; Jim Muhor, Head of Process Chemistry; Ronan Duffy, Head of Water Technologies. On the line, we have Chris Dartez, who's joining us from Houston. He's the head of our Energy Services business. We also have Lily Lewis, who's Head of Human Resources. I also want to actually thank Sean for the transition. He's been great in supporting me in getting up to speed in the new role, and I want to thank him for what he's -- great business he's left me with, and I want to take forward and be a good steward going forward. Before we begin, there's a few formalities to get through. Firstly, a disclaimer. So I'll take this largely as read. But I want to highlight that this presentation does contain forward-looking statements. These statements are no guarantees of future performance and should be read alongside the disclaimer and the continuous disclosure regulations on the ASX. Also a quick word on safety. We're here on level 2 of the Quay Quarter Tower. On this map here, you'll see where we are on the top left of the screen. If there is an emergency, you'll hear the alarms go off, please take the stairs, not the elevators, the stairs, the emergency exits are signified in the green dots there. We will be marshaling in the domain. We call the memory in the creation without end and probably anyone who's in Sydney is familiar with this and so it is straight up that way, I believe. So here's how we're going to be spending our time together today. It's going to be a pretty honest and raw presentation in parts. We're going to start with an honest look at our share price performance, our earnings performance and an assessment of where and why we've underdelivered. And then we will take you through the strategic review that we completed in the second half and the lessons we've drawn from it, and we're going to move to the significant opportunities we see in the market, how we intend to execute it and we'll walk you through in detail why we believe we're well positioned to actually execute on that strategy and have a right to win in those markets. Following this, we'll look at the financial framework, actually how are you going to fund this growth or how are you going to apply capital better and make better investment decisions. And then finally, we'll look at our outlook and the next steps. So again, thank you for your time today. The first thing we do need to talk about is, quite frankly, the share price underperformance. So these are not charts I like presenting. Looking at the share price on the left-hand side, give or take, a few percent, we're down 80% year-to-date. When you're down that much down to 2x -- 0.2x FY '26 revenues, it's hard to put a pin on that. Decline on that scale is -- really reflects a lost trust with investors, both current, past and really potential investors, too. Rebuilding that trust is going to take time. It's going to take hard work and consistent delivery to win that back. So everything I will say here going forward is informed by that knowledge, and it's an effort to win back that trust. How we got here is told by the chart on the right-hand side. Our deteriorating performance through the past year for a series of downgrades to our FY '26 revenue forecast. You can see the step downwards from June guidance to the February and then most recently, the April guidance. What you will see is that we have not changed the guidance to date, that remains from its Q3 trading update. These downgrades are principally due to our sales and energy services impacted by a sharp increase in competition for commoditized chemistry and scheduling movements relative to the timing of the Rum Jungle project. So we do expect -- still expect to have revenue between $82 million and $87 million for this fiscal year. And underlying EBITDA of around that $4 million number. So the -- I think we're stopping for a second and understanding, I could just sit up here and just read from the slide, hope you forget about it. But I'm a shareholder, too. I feel this pain. So what not a lot of people realize is I have actually spent more money buying SciDev shares out of my own pocket than have actually been paid by SciDev in the last 7 months, actually substantially lot more. I'm now 1.1% investor in SciDev. I'm aware of this. And I want to improve. I want to get even more exposure if I can to what I think is a better story going forward. And what you'll see from my team, from me is we're driving as hard as humanly possible to get better outcomes. I know that some of my management team here has bought shares as well and they're just as passionate. So before we get on to how we're going to improve, I just want to spend a little bit of time on what was driving the decline because the direction of the decline is not uniform across each of our businesses. So I already mentioned the revenue. What was seen in our Energy Services businesses, which what we saw was effectively tailwinds in the cycle turning into headwinds, that's clearly showing a bridge on the left-hand side. However, what's masked in the group aggregate number is actual growth that we saw at our water-focused businesses, if you aggregate that together between the domestic-focused process chemistry business and the water technology business. So when you combine those 2 together on the right-hand side, you've actually seen 16% CAGR growth since FY '23. So there's actually a great story of structural underlying growth in those businesses that is an important distinction because it's going to form a lot of the strategy that we're going to talk about in the slides to come. So again, drilling on the numbers, you know I'm a numbers guy, so I don't mind talking about numbers. This does explain why we need -- where we got to where we are and why we need to take action. So on the left-hand side, you see even after strong years of cyclical tailwinds in Energy Services, it did mask more mixed performance elsewhere in the group and a growing cost base. So -- and importantly, that cash that we were getting from Energy Services was funding growth in other areas, but not all of that was good growth. A lot of it was you can argue growth for growth's sake. So we pursue scale in high-risk actual markets at the expense of lower risk attractive markets closer to home, particularly in the domestic mining industry. We also expanded our corporate function line, I would say, arguably, prematurely before we did see the sustained growth in earnings. So when the energy cycle pulled back in this fiscal year, it exposed us to those issues, requiring significant actions to exit both loss-making overseas water operations and meaningfully reduce costs across the business, including corporate. So this is not only a revenue problem that we're seeing. There is growing evidence of inefficient capital allocation, which made the formal strategic review necessary that we did in the second half. So we completed that, and a lot of that's what we're going to go through today. So that review 2 part to 2 halves. We had an honest internal look at ourselves and then a structured, external look at where our markets are and where our shareholders where they're giving us feedback. Starting internally, we did an internal review. The core message to us was a broad-based lift in discipline, not just in 1 area, but across capital allocation, forecasting business development and the process we make decisions to grow. So I'll walk you through the 5 learnings on the left-hand side that we saw and what we're doing to change. Firstly, on capital allocation, we do need better ways to improve our business case development, consider alternatives to those business cases. And quite frankly, knowing when to make a hard decision to exit, it's found to be not an appropriate placement of capital. So to correct this, we're standardizing our business case templates, implementing consistent modeling and defined hurdle rates and proper filtering before capital is committed. So you have to know we don't have much capital. We have to be very judicious with how we apply and be more consistent and transparent internally with where that money is going. Secondly, we need to improve our forecasting clearly as the second half showed. In the past, we've placed too much confidence on lower visibility areas of the business and lower earnings visibility areas, and that's come through and potential over-optimism in terms of where our forecast has been. So now we're moving to a better risk-weighted forecast to align with how much visibility we have in the outlook and more practical balance between that ambition and realism. Certainly, we need to address customer concentration. In the first half, we had real issues with -- in the Energy Services business particularly around ex-flag and 1 large customer we had. And that's exposed us to problems in the past. We can't repeat that. So we need to broaden that customer base while aggressively protecting the high-value relationships that are critical to business growth and that we still have. Fourthly, when we look at our go-to-market strategy, it feels like we've been missing a few opportunities there. We currently have in many cases where we've got a Tier 1 client that's only buying 1 of our products, and we think will be buying several. So to maximize the value of our most valuable asset, which is these existing relationships, we're going to go through great integration and cross-selling, something that's Jamiel is going to take us through later on in the pack. If we -- yes, we have chased an inefficient expansion strategy and that lack of focus probably used our growth efforts into some small-scale pockets that is really hard just to defend and create a moat around. So the correction is to concentrate our efforts on our core markets where we can actually build scale and defense positions. So to that point, we have now exited from the overseas Water business, and we're going to put ourselves accountable to what we see in front of us. Next, our external review. So our external review took in the views of our customers, our suppliers, employees, investors and analysts, some of you in the room right now. It addresses our markets, our competitive position and our strategic options. From that, across our key stakeholders, we've seen that our customers do value the solutions we have, our chemistry and our service, our engineering. In addition, what they want is more data analytics capabilities from us. That's something we already have. But everywhere in this world of data and the world of AI, data is king, and everyone wants more of it. We've got to get more to them. Our suppliers across good services and capital are supportive of our growth. They're patient, which is a great thing to have, but a strong partnership as well. Our employees are motivated, but they want a clear strategic view of where they should be going, where should they be putting their efforts into. Our investors are clearly disappointed on the guidance misses, but they do see value in the business. And when we speak with recent investors, they do see that there is a business that has strength that we can build upon. They are also supportive of strategic simplification. Analysts and investors that we saw, analysts and advisers we have spoken to, have expressed conviction in the need for a solution to the water scarcity issue that data centers are creating and broadly being supportive around the outlook for mining, which we are highly exposed to. So looking at the market side on the right, we continue to see large scale opportunities more than $4 billion in core addressable markets that are near to us in our sort of our niche segments and home markets. These markets are growing at a strong rate. They need tailored engineering, chemistry and the services that we have that gives a competitive differentiation. So overall, the conclusion is that strategic review -- that there's a substantial market opportunity across both the solutions we have in water and energy services, where SciDev has a right to win. However, our growth must be disciplined where we do have a differentiated advantage. We do not have an advantage in commoditized services. We need to find our niches where we can extract value and the highest margin and deliver that with discipline. So we took a look at the water treatment sector. And what we found is a very large market that is, for the most part, nondiscretionary and is structurally inefficient. Firstly, when we look at chemistry, overdosing is rampant in the industry. And sometimes, Jamiel just told me, he came back from doing some testing work and dosing rates that were double digits, some large double digits over the required dosing rate for the flocculants for the mining customer that he was speaking with. To the point that -- Jamiel, if I get this right, that [indiscernible] testing because there's so much residual chemistry in the water you are testing as well monitoring and measuring across a range of factors are difficult. So in some case, in our mining client base, remote locations require manual grabs, which means going back to lab analysis, causing long delays and high cost. We're trying to get the data that you critically need. Also, the use of commodity and legacy chemistry is causing significant underperformance at mine sites in critical areas by separating solids from liquids, but it's also impacting water recovery and metals recovery. And most importantly, again, as Jamiel told me recently, sometimes that is with gold customers that we work with. We're seeing residual metals like gold in the waste streams that they clearly want to recover. So all of these inefficiencies caused significant waste in the water treatment industry. That waste is an opportunity for us to create more value and then, of course, to be sharing with ourselves and our clients. Solve these issues, we're building a platform, which you can see on the right-hand side. So in 3 of these core markets for solutions we have right now. So starting from the bottom, engineering, we do build quality engineering systems across what we do for D&C O&M and Boost Systems. We have high-value chemistry, both in our mining, our process chemistry business, but also what we do in Energy Services. We have data and sensing, data monitoring solutions right now. So Internet of Things, connectivity. And we have there, we also have -- they're called Hydra ITU and Optiflox. They are both solutions for groundwater sensing, but also sensing on plants. What we don't have, and we're building is this AI-driven optimization platform feel like that's something we're going to try to develop over the next year. It's going to be another great part of that stack as we build that full platform that we can integrate with our customers. As we scale, we can't attack all areas at once. So to increase our chance of success, we'll be focusing on the markets we already have strength in, as mining and even infrastructure. And over time, a new thing we'll be talking about a lot is data centers. So looking at Slide 14 here. You can see the opportunities in the market and the solutions as they come together for the company as a whole. We are building an integrated water solutions platform that combines our engineering, chemistry, data and optimization across our focus markets. Part of our advantage is that we already have an established customer base to begin cross-selling these solutions into. We don't have to win the customer twice. What we have is to deepen the relationships we already have. The market opportunity is large. We estimate in our current addressable market, about $4 billion per annum of value that these solutions could have, including energy services. Within this, we see about $1.1 billion in utilities and -- actually $1.1 billion in mining, about $1 billion again in utilities and infrastructure. And then data centers right now, which is in its very, very early growth stage, about $100 million or less in value right now. But the growth rate of that is poised to break out more data centers are built out in Australia and the consumption of water clearly necessitates the need for a solution. When we look at those markets individually, in mining, this is an established and growing market, driven by tightening regulations, discharge and water reuse mandates. Our advantage, of course, is that book of business that we have with existing clients and the embedded chemistry, which makes it more difficult to switch to other players than ourselves. In utilities and infrastructure, the market again is large, it's stable and has regulations driving growth. In data centers, the market is growing rapidly with massive water requirements that are growing, they need a solution and no entrenched incumbent at the moment. Part of our advantage that we have a team that's already done these solutions in Europe, which Ronnie can speak to more when he gets into his part of the presentation. So together, we see a market in Water Solutions that represents about $2.2 billion in a year, but that's expected to grow by over -- to over $6 billion by 2040, including a double-digit increases on -- in data centers. Showing some of those numbers, right -- on this slide, particularly on the right-hand side, you can see how that ramps up, particularly in the data center space. So before we get into our right to win in these markets, I'm going to take you through our revenue -- current revenue mix and then each market in turn Jamiel, Ronan and Chris on the line, will walk you through. So by market, the majority of our revenues right now come from mining followed by utilities and infrastructure at 28%. You'll see, we have no revenue from data centers right now. We should be honest about that. But we do see FY '27 being a transition year of first revenues and then potentially [indiscernible] for that in FY '28. Within the engineering solutions, you can see PFAS, something we talked about a lot in the past, remains a core part of our -- of the value and our differentiation that we're delivering to market. That's about 32% of that engineering space. So with that, I'll now hand over to Jamiel, who will walk us through aspects of our mining business. Thank you.

Thank you. Thanks, Todd. Yes, Jamiel Muhor is my name. I'm the Head of Process Chemistry for Science Developments. When we talk about mining, for our business, it's all about minerals processing. And we have an established client base that we've worked hard to build over the past 7 years since I first began with SciDev and as part of that, we have blue-chip miners and that are already buying both engineering and chemistry. And as Todd has highlighted, when we talk about Water Solutions, it's both our Water Technologies business and the process chemistry business with Alcoa being dominated by engineering through our Water Technologies business. But you can see the list of other key miners there, Iluka, Lomiko, Barrick, First Quantum, Peabody, Yancoal and Indo Mitsui, all buying our chemistry. We have a very solid reputation in solid liquid separation. So our MaxiFlox brand is very well recognized in particular here in Australia. However, we are expanding overseas as well. We have a solid footprint already in the Americas, in particular, in North America. But through our joint venture, we are actually looking to enter other regions such as Africa and South America. We have a secured supply chain. That's through our partner in Nuoer Group, who we established our first relationship with in 2019, becoming the exclusive distribution partner for them in Australia and Oceania. And we've now formed a joint venture company in Singapore and more recently, in Santiago, Chile, which I'll talk to shortly. We have a proven regulation and driven track record and again, through mine remediation and PFAS, in particular with Alcoa in the mining sector, which is growing and giving us an opportunity to further cross-sell. I guess 1 of our, yes, most valuable assets is our client base. And as you can see there, with the introduction of Barrick most recently and also a reestablishment of First Quantum Minerals, we can now establish ourselves as a global reach player, understanding the operations that they have globally. We have many customers that just use our chemistry and there's opportunity there to cross-sell. And that's where bringing together our Water Technologies business with our process chemistry, our Minerals Processing group. We can start looking at using the client relationships to expand our offering across their platforms. So talking about the joint venture. So why Nuoer Group? Nuoer Group is the second largest polyacrylamide manufacturer globally. They have a very strong footprint in the Chinese domestic market and are looking for an opportunity to expand globally, in particular, in the mining sector. And that's where SciDev plays a role. But through our joint venture entity, as I mentioned, which is headquartered in Singapore, which I'm actually the Managing Director of, we've also now created a Nuoer subsidiary of SDA in Santiago, Chile. Our developments are currently in North America, South America. We've also entered the Eastern European market as well as Southeast Asia. We're also having our first client trials in the African market in Zambia further showing the reach and our capability of our MaxiFlox joint venture. The Nuoer partnership gives us a strong strategic supplier access. We have excellent manufacturing capability with a diversified supply chain, supporting competitive and reliable market delivery. Our response is quick so we can turn development into revenue very quickly through the partnership of Nuoer. And we've got great technical and commercial integration as well. We combine our technical expertise, which is built through our Australian business with the global manufacturing capabilities of our partner in Nuoer. So we look at this as a partnership-led customer model, which is a long-term approach for our business. There is definitely an opportunity in the domestic market here in Australia to continue to grow. However, through this joint venture, we will expand our reach into other regions and continents. So this also gives us an ability to brand our MaxiFlox chemistry, which will also open up the opportunity here locally in the domestic market. Working with companies like Barrick, BHP also, in particular, in South America, we're very well recognized here in Australia as well as Anglo American, who we've also started developments with in South America, is going to establish us as a global player in the polyacrylamide and process chemistry market. But thank you. Moving on.

Thanks, Jamiel. My name is Ronan Duffy. So I'm running the Water Tech business for SciDev. Just wanted to run through, I suppose, currently what our business model is like and then I'll move on to the next slide on the data Center. So I suppose what we currently have is like a 2-engine model. We have utilities and infrastructure and we have mining as well Water Tech, who are using our PFAS technology across mining and infrastructure and utilities. We are also introducing the chemistry side of the business of floc, et cetera, upfront part of pretreatment. And so what's good about this model is we have short-term revenue with larger margin on the BOO operations. And that's applicable to infrastructure utilities. Also there are mine sites where we can establish a BOO operation, which will go on for a number of years. With 1 particular piece of equipment on site and has done 3 gig of PFAS water treatment already, and it's going to stay on site for the next number of years. And on the back of what we've done on that site, in particular, is we've secured a design and construct project to replace the BOO operation. So it's a good entry into a larger-scale project, because we can prove the technology and its high margin for us. We are probably seen in the marketplace as a really strong player working into complex waters and we've already got a strong engineering team. and we have a large track record, 40-plus projects and strong relationships that can reference us within this market. On the other side of the [indiscernible] engine in the model we have utilities and municipal, which is a longer process, each project could be from we see it in 18 months, 24 months. But that is usually a BOO or can be design and construct model, short-term BOO and the design and construct possibly. We're proven in that PFAS treatment. So we have really good references. And we're strong, but that gives us a large recurring revenue, secured revenue over a large number of years. I suppose 1 good thing and Todd has alluded to it already, what we have designed in our BOO equipment is market leading, and we have quite a lot of automation, and we're seen as a really good high-end company to deliver long-term assets on the site, which we can remotely monitor and optimize and it is really cost effective for long-term customers. On the data center piece, basically, we have started this. My background has been in data centers for the last 10 years across Europe. And we can see an emerging problem here, which gives us a serious opportunity to deliver large design and construct projects within the data center space. We are seen as a really good option for end users as in the likes of the large data center companies because we can take on a project of 10% feasibility stage work with the team directly and then go 30%, 60%, 90% design and get paid throughout that engineering process with the practical solution. And then also, we have an offering of operational maintenance on the back end of those assets for long-term recurring revenue. We -- I'll show you the next slide. But what we're seeing here is anywhere we're going and promoting our HydraCool technology, the doors are open for us. There's no secured leader in this space. I think there will be a number of companies popping up, what we're seeing is a really good practical solution, good value, listening carefully to what the client requirements are and really help them even secure -- helping them secure planning permission and getting the development going. Next for us, it's a rapid use of water that's coming down the track, and we're really well placed and we've done a lot of work in the last 6 months to get us up to speed to have a product which we know works and it just shows the strength of our engineering team to go from 0 to where we are now within a really short time. So the model here that I'm showing here, this is what we present as a 1 slide deck for all the water that is available for data center truly. We're really looking at all water sources because what we're finding is data center development needs any type of water source to get the development up and running. And we have what they call is the final solution, which could be a Sydney water recycled plant. But that could take 10 years for that to happen enough water to become available. So the data center companies don't want to wait. And what we're seeing is there's a real interest in us providing them a really unique solution, which is a HydraCool solution trademarked by us. What we're doing here basically is we're looking at all the water sources, rain water harvesting, tertiary water, storm water, bore water and sewer mining. It's hot topic at the moment. The unique solution for us is we have PFAS also plugged in to our HydraCool solution because we're seeing PFAS trace in bore and sewer mining and also in the tertiary water side, and we have the process to remove that as part of our HydraCool process. The other unique piece that we're currently working on really hard and this is what I have come from over the last 10 years, this piece here and it's the recycled/reused piece. Generally, what's happened in the past within data centers, 1 use of water and straight to trade waste. What we're doing is we put in a system, design the system, which has proven we can recover 30% of the water that's getting used in the data center. And that has a lot of benefits. It's a lot of benefits, sustainability benefits, but also with really good for environmental control environment and secure plant information also. The good thing, too, the payback is really quick on the recycled/reused, we're looking at an ROI of 5 to 6 years compared to 11 years if you went just without any of these systems without the recycle/reuse. Also what's really interesting is on -- because we can sort of basically see 1/3 of the water usage on site, it takes the pressure off Sydney Water. Also what is really good, the CapEx is needed for any of the systems that remain on board is reduced by 1/3 because we don't need the same flow rate. So it's really smart use of our technology proven. We're not doing anything extraordinary, but we're providing a process that robustly works and the financial benefits, sustainability benefits is massive for that. So thank you.

Chris, are you with us on the line?

Yes, sir. All right. Thank you, Ronan, and good morning, everyone. So regarding the energy side of our business, SciDev has a proven differentiated chemistry solutions that directly increases oil and gas production and ultimately lowers costs. We've been able to validate at scale in the field. As we continue to prove on a day-to-day basis, CatChek is not theoretical, has been validated across well sets of more than 3,000 wells with -- that has also been independently verified with results. This gives us a rare advantage in oil and gas chemistry. So real-world repeatable performance data that our customers can justify and can also recognize. We consistently deliver high production outcomes, including 13% of BOE or barrel of oil equivalent an uplift in oil wells and up to 78% uplift in wet gas environments. We don't just [Audio Gap] up to 41%, leading the lower -- leading to lower handling and disposal costs and equipment life. As our experienced field support teams supported by differentiated chemistry, we prove every day in our ability to perform. CatChek simultaneously addresses 2 of the major oil and gas challenges and that is increasing hydrocarbon recovery and reducing flowback wastewater. The dual impact makes our technology highly valuable. SciDev's advantage is built on proprietary chemistry, field-proven results at scale and technical support and customer operations. Slide 24 confirms that we have a product that works. Now as we transition to Slide 25, we'll demonstrate our room for growth. SciDev has a proven product in higher-value niche of the oil and gas market, creating upside potential. We are currently targeting an accessible market of about $800 million in high-risk shale formations, which has been a premium segment where performance matters. Our focus continues to be developing consistent relationships with operators and service companies to penetrate the market. Today, we currently hold about 2% market share, leaving considerable room for growth as we target high-value shale basins. Our growth will be driven by expanding across existing basins increasing operator penetration and partnering with more active service companies. The basins we're currently concentrating in are the Permian and Eagle Ford where the market size is large, we have growing opportunity. We have proven performance and credibility, allowing us for efficient scaling. SciDev is also advancing discussions and emerging plays like Beetaloo Basin in Northern Territory of Australia. Closing the gap from 2% market share requires systematic business development with operators and a deeper partnership with oilfield service providers. The Energy Services team has created a combination of proven technology with measurable ROI. [Audio Gap]

Chris, are you there?

Yes, I'm sorry. Todd, I'll hand the presentation back to you.

Thank you very much, Chris. Appreciate that. Thank you, Chris, but also Jamiel and Ronan. So Strategy is great, but it has to be profitable. Over the next few slides, [indiscernible] how are we going to be thinking about this capital allocation and [indiscernible] going forward. Firstly, just a few comments on our P&L and balance sheet as we stand right now. So on the table on the left, you've seen that earlier in the deck. But it is worth highlighting when you look at these numbers, particularly FY '26, you do see a more balanced revenue and earnings profile across the Water Solutions and Energy businesses. As well, it's really important to highlight that those negative impacts you're seeing from the international water business will not be going forward in FY '27. We have fully exited that business now with no operating cash cost going forward. Additionally, we have taken out a meaningful amount of cost in that corporate line. We expect that to be -- to stand going forward. On the right-hand side, net cash did improve from what we reported at the Q3 trading update up to $1.4 million now at the end of May. And total liquidity, when you add in our debt facilities, we have liquidity of $6.9 million. That's more than enough room for us to fund operations. Within this movement on net cash since December. The decline is really largely reflected in the working capital demands for Rum Jungle project. So that's hitting its peak position right now. And we expect our working capital to normalize over the next few months as we pass through this period, which has large capital items flowing through the balance sheet and a lot of spending when that clears to the system. We should see that working capital that net cash position normalize. So we've been talking more about recurring revenue lately and for a good reason. We started talking about this at the first half results, but it's critical to create less volatility in our earnings base and more reliable growth. Over the past few years, we've seen even that as revenue has declined at a group level, the quality of that revenue has improved. So we've seen -- we expect recurring revenue to reach 38% in the total revenue in FY '26. That's up from 3% last year. And in [indiscernible] 5% uplift in absolute dollar terms. We define this -- importantly, we define it as long-term BOO and O&M contracts in our engineering business, plus multiyear chemistry contracts. One change I should point out here is we did present this number for the first time in the first half results. In that number, we included CatChek, we've moved that out in this period. Just noting that CatChek sales are not, I would say, long term in nature, they're more short-term in nature. Even though we do tend to see more resiliency in those revenues, just for more comparison, we take that out. However, if we did keep that in, that will be 59% of total revenues. So for those of you who don't know already in an earlier life in my career, I was a sell-side equity analyst. In addition to having CPA, I have the CFA. So I think I can be rightfully called the numbers nerd. I love it, and I love getting into the details due to the pain of all my management team. So you might expect me to say, I think this is a really important slide. There are many KPIs to look at to judge our performance, but there's 4 here for me to highlight that I think are often most critical. So firstly, gross margin. For a business like us, this shows how we're progressing our transition to high-value chemistry and data service is. Again, we're not a high-volume commodity business. We're more of a technical services, high-value chemistry business. And so we want to see the gross margin growth coming from that. IRR really relates to our capital allocation decision-making tool. We use our hurdle rate of 15%, [indiscernible] a minimum, really just to cover your cost of capital and then some -- ideally we want to get IRR that are well above 15%, again, with that limited growth of capital that we currently have. Return on capital employed, ROCE, we target a minimum of 20% across each businesses. Now this is a metric I find very interesting because it puts both profitability and capital efficiency together in 1 metric. So that helps everybody focus on both the profitability that they're getting and then the efficiency of the efficiency of that production and profit. It actually helps a lot of people think more broadly about working capital and how you're actually moving that denominator. And of course, most importantly, a net profit at the bottom. We need to grow profitably and consistently. When we look to the right-hand side, we've laid out a model for capital allocation. Capital primarily come from operating cash flows and capital recycling, where it's available, supplemented by debt or equity, but the opportunities have to be significantly attractive to support that. We're very mindful of the sins of equity raises and the dilution that, that can cause. So that's not something we'll pursue just for any sake and certainly not something that's on the agenda. Capital will be allocated to the highest risk-adjusted returning strategically core uses within this organic investment into growing with that solution set that we talked about before. That's the first priority. M&A only if it's strategically aligned and makes clear sense and creates fair values for shareholders. Again, nothing in the pipeline right now. But at some point, we would like to consider that if it makes value and if it makes sense. Again, we are not chasing growth for growth's sake. We're focused on profitable, consistent growth. So bringing this all together in the outlook and next steps. So our priority actions for FY '27 are focused and it's deliberately focused. In mining, we're going to build out our sales function to cross-sell across that platform engineering, chemistry and then bring more data services into our installed base. In energy, we want to expand CatChek's reach, leveraging our most efficient sales points through Tier 1 service providers, which we have relationships with now and deepen the direct relationships we have with the E&P clients but in the high-demand basins, not everywhere. We can't be everywhere by focusing on the Permian and the Eagle Ford, where it makes most sense. In data centers, FY '27 will be a year of effectively starting slowly establishing that reference work with operators, engineering firms anchored on the value proposition of water recycling and reuse. And then data in optimization, we do have existing platforms with Hydra ITU and Optiflox, we want to start commercializing these more. They are being commercialized now, they want to commercialize those more and try to bring together the aggregation of those data sets that we have. We have a lot of data in our system right now, but we need to apply analytics on top of that, start promoting next-generation of solutions and optimization. So being honest with ourselves, the plot on the right-hand side, you can see the development stage and its current revenue stage. And the reality is, when we look at data centers, it's an incredibly high potential market. Are we making a lot of revenue from it right now? No. Do we need to grow a skill set in there to be able to become a clear leader in that space? Yes. But I think we've got a clear path to do that. I believe Ronan is really just leading that through his experience. When we look at where we are good, of course, is chemistry, mining in that we need to [indiscernible]. Our job is, of course, to move all of those dots to the right and upwards. Looking across our near-term visibility for earnings. We bucketed this into 2 categories. One is the contract order book with $39 million that's sitting at. So what is that? That's that recurring revenue base I talked about before, plus contracted work that we have in [indiscernible] Rum Jungle, which is work out still into FY '27. So I would look at that [indiscernible] base. We're going to build off of that, and that's where the right-hand side comes in. This is our open tenders and risk assessed proposals. We are constantly building business off of it, we are constantly engaging in customers to try to win work. We will -- it is highly unlikely that we will win all $115 million in that pipeline, in that open tenders. However, we will win some as much as we can, we'll try to increase our win rate. But this is a very fluid number. This is, of course, one will go in addition to the order book that you see. But we were confident filling this pipeline [indiscernible] loss and new tenders are submitted. So let me summarize the whole of this in 5 points. One, we've done a clear diagnosis of -- in that strategic review of where we sit. The earnings -- the energy services cyclicality did expose the structural weakness in revenue quality and forecasting and capital allocation. Two, we've had a strategic refocus on the markets where we really believe we've got a right to win. We're ready to do that. Customer solutions for mining, utilities, infrastructure, data centers, where better relationships, chemistry and engineering create defensibility. Three, we're building an integrated water platform, transforming a full stack of offerings through energy chemistry, data and optimization embedded through, enabled through cross-selling and higher margins than a focus on recurring revenue growth. Four, we know we need to execute better, both in the delivery of our business cases, delivery in terms of everything we try to achieve and allocation of that capital needs to be disciplined, [indiscernible] decision-making. It delivers a shift from growth for [indiscernible] to returns-driven growth. And 5, touching upon that visibility of earnings. I just believe going forward, we are doing our best to improve that and making sure the durability of our earnings, sustainability of our earnings improves as strong as possible. So this is a good and sound strategy. We stand behind this strategy, our management team, the Board stands behind the strategy. But success does not come from ideas [indiscernible] a lot of ideas just by doing an AI business. The success of the strategy comes from doing and executing the strategy. We're committed to doing that. We're committed to focus. We're committed to using those lessons learned from the strategic review and actually applying that how we're going forward with this focus every day. So I do thank you again for your time today, again those who are in the room, on the call. I know myself, my team and everyone at SciDev is working hard to make sure that your investment is worthwhile. So thank you very much for your time. And we'll be happy to answer any questions you have. I think we've got some through the webcast and then anyone from the room if you have any questions, please, the team is here. If there's none from the room, is there a -- yes.

[indiscernible] then webcast.

Let's go to the room first.

Just 1 thing I'll finish here for a little while. One thing I notice is Australia, we don't seem to get our minerals out there as much to the market. It's always something, but it's a long time between wins and that to be creative if you get more information as to the market outlook shows we're doing well as a company and we've got these new contracts or whatever. I mean we had the one in Sweden a couple of years ago and things like that, I don't know whether that's in progress and things like that. And your website can sort of update things more regularly as an announcement or we see now what's going on.

Incredible. A very good point. I'll take the second part first and then address the releases. So we'll be updating the website holistically. Firstly, I think we can improve in terms of information [indiscernible] right now, not only if you are a potential customer beside us, but also if you're investors, there's a lot of things there that's hard to grab at. So we're going to be building that in the next few months, hopefully well before the end of the year. Secondly, in terms of updating the market for our commercial wins and what we're doing, it's critically important. I think in the past, we've waited to aggregate several announcements to have 1 big lump. We don't need to do that. So will you be getting as more of a flow of announcements now. So we're not waiting for a $10 million announcement. That might be a $3 million announcement. This you can see how we are going on those tenders that we're winning. So I completely take your point.

Just 1 other thing too is I don't know if you saw in the news recently at the Telegraph. There was something about PFAS and it was a big front page news. In Newcastle, [indiscernible] supply stuff up there and [indiscernible] up there. I don't know if we look at those opportunities or things like that. It's just something -- we have product that we can use for those, right?

Yes, absolutely. There's a thing that Ronan looks at very much so all the time.

We have a really good business development. [indiscernible] We're constantly building relationships [indiscernible]. So, yes. It's really important for me. [indiscernible] For example, [indiscernible].

Aggregate [indiscernible].

So I focus on the business development side to ensure that we're more visible in the market is, but also consistently for example, every week, we're doing business development meetings internally and that's what's driven our data center piece. We work in this market, [indiscernible].

And James?

James [indiscernible]. [indiscernible].

Yes. So you're right. It does not include energy. We're being, I think, obviously being quite conservative with that. So it implies that there's no sales for energy next year. That's clearly not the case. But what you'll see is the majority of the risk-assessed proposals is from the energy segment. So that's where you see most of that fall in. The outlook for the Energy segment, clearly, you'll see the second half has been difficult for the energy business. Part of that is, as we've alluded to, the segment has come down. We figure [indiscernible] odd to the oil price, but it has been a constrained cycle rolling off, I guess, historically low prices coming into this calendar year has had more competition. So going forward, our success will be driven by 2 things: number one, the strategy we laid out, making sure we're targeting the right basins and the right customers to drive that business development pipeline. Truth is 2, if oil prices hold where they are, we should hopefully see a tailwind from the cycle. Now you can't set your watch on that, and that's not how you operate the business, but that would certainly help the outlook for the second half of '27.

And just with that $39 million, how does that enter over time?

Well, that's -- because it links quite well to the recurring pipeline that we were just talking about in we see there. It is improving over time. So that aggregate number, those are the same basis. Anything on top of that in terms of the order book would be D&C project wins that we would have locked in the future year. So I would say relative to past years, that would be a stronger number than we would have seen in the past.

[indiscernible]. First one, tell us a bit more about energy [indiscernible]. What are the main drivers to success by the winning [indiscernible]?

It's a great question. We have -- and I'll have a first crack and I'll let Chris answer as well. So we've got a great team that knows our product. It's really blending the sales team skills of being able to get in front of our customer base and preparing that with our data sets as we built over time, like we talked about with the well performance and the sort of product and then getting someone who's got a very good technical skill set, but it's not a salesperson per se to be able to have those technical conversations with the right people at the right levels. So Chris, if you don't mind, perhaps do you want to add any color on that?

So pairing the technical applications and the benefits that we are currently seeing with our current clients and producing that into a successful result with a potential client is what we've been pairing our team with and as we continue to grow, that's the need for that technical support as we go forward. And that's truly what makes us a technical leader in the market today.

Thank you, Chris. Is there further question?

Couple more. [indiscernible].

Okay. Again, I'll have a stab at each 1 and then Chris, you will truly tell me where I'm wrong. So first, I believe it was a question around the forward-looking outlook for sales. So we're clearly in a tough market. I think we can't hide from that. The visibility, though -- there is always limited visibility. We do have strong customer relationships though. The people who use particularly CatChek are -- remain strong customers. I think there's something I would say, which is really important to point out is the durability of what we've seen in the CatChek sales. So when we look at total sales for Energy Services in the first half of fiscal '26, CatChek was 35% of [indiscernible]. When we look at the second half, it's over 80% of total sales. So when you're getting there, it tells 2 stories within that. One is, of course, a shift to higher margin sales, which is certainly always helpful. The second part of it is, it does speak to the durability of those CatChek sales. They're not -- they're still subject to the macro, but they are certainly much more durable than what we get from commodity sales, which has been the biggest quantity grade chemical sales, which has been the biggest driver of the revenue decline. So we look forward, that gives us support to those revenues, but we certainly need to build on that in terms of our business development pipeline. The second one, I think, is the third part that -- so you're talking about the E&P outlook, what we're hearing from our E&P clients. Again, what's happening in the market is generally the large E&P clients, particularly, they set their annual schedules. They set them annual to calendar year for the most part. That's what's created this rigidity in the well site spending, which impacts our revenues. They have not yet reset their CapEx budgets for calendar year '27 yet. There has been -- you can see in the frac spread's, there has been some elevation in those numbers that has been starting to pull through well sites and well activity had to a lesser debt come through, but not to the extent that you would have expected from 40% or more $100 a barrel oil prices. They have not risen to that extent. So there's been a delay in terms of that E&P activity. And the third [indiscernible] was around what's happening in the Middle East. I'm guessing it's in relation to the Energy Services business. Well, the reality is higher oil prices to drive more profitable outcomes in the Energy Services business. We have not seen that flow through yet. As I said, higher oil prices have not necessarily led to significant increased spending in the E&P and oilfield sector. Chris, is there anything you want to add to that?

Yes. I think the 1 -- well said, Todd, the 1 thing that I will add is that, [Audio Gap]. So proving the return on investment for products like CatChek has been increasingly important as we drive forward. It's just a further complement to not commoditizing our business as we go forward. I do think that as things continue to roll back around capital budgets begin to reset in a calendar year, we will start to continue to see a level of activity, at least from our purview at this point that will continue to drive forward into FY '27. I think that initial production will likely be on the horizon, and the U.S. will be a strong part of that. So therefore, ultimately, our hope and what we can see at this line of sight of the market is that it will continue to stay relatively strong at a pace we are today. What we don't see is that initial investment in basins that weren't driving a higher rate of return. So we're seeing a lot of clients and E&P focus, merging to more basins like the Eagle Ford and the Permian and then all even to Haynesville to supply the LNG ports that are now going in throughout ports within Texas and Louisiana. So that will be a strong movement as we continue to go forward for certainly the foreseeable future, maybe as much the next 2- to 3- or even 5-year outlook at this point. So yes, we feel that things will continue to grow or at a minimum, stay very steady as we go forward.

Thanks, Chris. Yes. Yes, Jamiel.

Jamiel from Process Chemistry here. I just wanted to talk sort of around a couple of those questions around tenders and commodity chemistry versus specialty chemistry, et cetera. Obviously, Chris references CatChek. One thing that we need to also reassure our investors is that we do have a commodity product line. So when it comes to tenders, typically, our clients are tendering for commodity type chemistry. So strategically, from a business model perspective for us to participate in that tender, and conforming tender, we need to actually have that portfolio available, and we do. So we will participate in that tender based on a commoditized type chemistry. However, to get that foot in the door and to get that win gives us an opportunity to then bring in our specialty chemistry. So we don't want to miss that tender opportunity by trying to bid with our specialty chemistry when the clients are not asking for it. So that's typically what happens in any tender type situation as well. And we see that with all our blue chip clients as well. So strategically, we're set up on both fronts, which gives us an opportunity to have 2 bites at of cherry with, obviously, in our business, the process chemistry business, we've got a really advanced flocculant chemistry that Todd referenced delivers metal recovery and enhanced water recovery. That's our focus. That's where we deliver the value for our clients. However, sometimes to get there, we've got to bring in commodity chemistry and a low price and a lower margin. I just wanted to make that clear. And it's a similar case for Chris and the Energy business with CatChek as well. So that's all.

Thanks, Jamiel.

The last question back here is related to pipeline. Please tell us a bit more about pipeline dynamics and if you can sort of conversion rates and trends to conversion from pipeline to contract.

Yes. Obviously, a critical question because everyone is looking at that $115 million right now -- number right now and trying to figure out how much of that should put into their forecast. I will disappoint you and I can't give you a clear number. The dynamics of each of these are different in terms of what you're looking at for energy, even in the mining space. So I can tell you in that mining slice right there, there is 1 $10 million contract sitting there, I think $10.8 million. Now that contract actually has a reasonably higher percentage chance of winning because it's a single source to design work for them. We think we've got a reasonable chance to win that. The rest of the pie probably isn't as strong. So there's -- it's lumpy within that. So I can't give you a hard and fast number. But I can tell you that we're doing everything we can for our business development team to increase that win rate. It's something we look at constantly about how are we getting the right people and from the right people with the right product to increase that conversion rate.

We talk about our client and our high-value clients, and we have a [indiscernible] company, but I never think mentioned in -- when we I know asked that before. Previously, we signed a high-value client, and we don't mention [indiscernible] -- or is it often, is that [indiscernible].

Often it is, that case, they ask not to. So -- and then sometimes it over time, if you think about it this way, when we have the contract in hand, it's a period where there is a change in the relationship with the incumbent and ourselves. And that is -- becomes a very diplomatic challenge because we want to tell the market as possible. I have to tell the market as soon as possible, but they have to manage a relationship with the incumbent that's coming off the job. So that means we can't necessarily say immediately. But when we become the incumbent over time, it gets into a presentation [indiscernible]. Is that a fair assessment?

Yes. I think it's really good question. I'd love to be able announcing that we do have, particularly in the process chemistry business. But when you look at the [indiscernible] site operations, they've got multiple operations around the world. And we're not necessarily winning the business at all of them. So our competitors are still on some of the other sites. So we've got to manage it quite [indiscernible] as well. And so they as well, but yes, we're more than happy to let people know that the Barrick [indiscernible]. Yes. So but we are announcing confidently today that we're working very closely with a number of their operations as well. But yes, it's a difficult one. And the difficult 1 for my team as well as trying to go and ask the permission as well. It's never an easy conversation. But we'll get better at it.

Thank you. If there's no further questions, thanks again to everyone's time. And operator, we can now close the call.

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