SRG Global Limited (SRG) Earnings Call Transcript & Summary

Thank you for standing by and welcome to the SRG Global half year results investor briefing hosted by David Macgeorge, Managing Director; and Roger Lee, CFO. [Operator Instructions] I'd now like to hand the conference over to Mr. David Macgeorge, Managing Director. Please go ahead.

Thanks, Darcy, and welcome, everyone, to the call for our half year FY '26 results. Before I start, I'd really first like to acknowledge our people. I know there will be many of them listening to this call today. You've delivered an exceptional first half result, and you continue to stand up and live and breathe what we stand for as a company, live for the challenge, smarter together, never give up and have each other's backs, and I really want to thank you for all your efforts in delivering what has been an exceptional result for the company. As we move to slides, I always like to start with a bit about us, just particularly for those newer to the story and who we are, what we do and what our vision is. And who we are a diversified infrastructure services company, and what we do is bring an engineering mindset to deliver what are critical services for our clients. And when I talk about engineering mindset, I'm talking about being smart, technical, innovative specialists to deliver what are critical services for our clients, which makes us critical for them. And we have the ability to do that across the entire asset life cycle of engineers, construct and sustain. And our vision, what we want to be is the most sought after in what we do. Some might say #1, market leader and for us, when our clients have a challenge, a problem, an opportunity, the people I want them to think of when they pick up the phone is SRG Global. If we move to Slide 3, we are a diversified infrastructure services company with 2 core operating segments: Maintenance & Industrial Services, which is the largest part of the group; and Engineering & Construction. You can see that we play across a diverse range of sectors. We move to Slide 4. This is our profile play and you can see the continued transformation of the business. Now more than 5,000 people across more than 20 industries, revenues of roughly $1.6 billion and market cap of around the $2 billion mark. We are now on the ASX 300, and you kind of see the geographic split between East, West and New Zealand, and that sort of annuity earnings profile of 80-plus percent, so a very, very different business to what we've been historically. As we move to Slide 5, which is really the EP slide in the whole deck, and what you're really seeing today is evidence and more evidence of us doing what we said we would do. It's a record financial result with EBITDA of $71 million, which is up 20% on the first half last year and EBIT of $53.2 million, up to 6% on the first half of last year, an excellent result; terrific returns for shareholders with earnings per share of $0.055 per share, which is up 20% on the first half of last year. And we've increased dividends by 20% to $0.03 per share fully franked. And I think that's something we've done very well over our journey, is really balance that growth and dividend paying element of the business, which is a good segue to cash. And we have another excellent half of cash generation with EBITDA at a cash conversion of 97%, which really continues our long track record of delivering excellent cash. Our net debt has reduced to $21.2 million. And you can see we've significantly reduced debt, and we are now back close to a net cash position, which is an excellent performance post the TAMS acquisition. As we look to the future, we also made the acquisition of TAMS in half. We announced that in October, and it became effective from the 1st of November, a highly accretive acquisition and one that I'll touch on a bit more in the presentation, a terrific evidence of winning and executing work. We've got record work in hand of $4.2 billion, which is up 24% on this time last year; and 80% of the earnings recurring profile, which gives us that platform of visibility into the future. Most pleasingly today, we are updating guidance for FY '26 to an EBITDA range of $164 million to $168 million and $126 million to $130 million, which really continues the strong growth profile of the company. We are generally a 45-55 split in terms of first half, second half. So you can see the significant uplift in the second half, which is very much aligned to the profile we've had over a long, long period of time, so really good. In summary, performance, excellent financial performance, terrific returns for shareholders, excellent cash. The acquisition of TAMS is going exceptionally well, great work in hand and today, we're upgrading guidance, which really shows you the trajectory of the company as we move into the future. I'll now sort of move into some of the more detailed financial slides. We move over to Slide 7. You can really see the first half performance, very strong on every line. Particularly pleased with the continued margin percentage performance. You can really see that top line performance translating into bottom line margin performance, which is really part of the benefit of us becoming a much more capital-light business to where we were perhaps 6 to 7 years ago. It's a terrific result, EPS accretion of 20%, which I touched on in the summary, 20% uplift in dividends, and just the fundamentals of the business continue to strengthen. And I think that's something for me, in some ways, the numbers don't do justice just to the quality of the business that we have today and always link that back to strategy and us executing and doing everything that we said we would do over a long, long period of time. And it's not just 1 year. We move to Slide 8. You can really see our track record of delivery over a long, long period of time. You can see the positive trend from EBITDA, from an earnings per share, from a dividend uplift, from a graphical perspective. And if you move to Slide 9, which is for those that are more, I guess, numerically minded, which is probably most people on this call, we can really see the track record of delivery. There's not a metric we haven't absolutely belted out of the park over a long, long period of time. You're really seeing further evidence of the transformation of the business, EPS growth of 150% over the last 4 years, that transition to 80% plus annuity recurring. The really good track record of winning and executing work over a long, long period of time, I think that's something we've managed very well as a company in terms of not just winning work and growing as a business but showing clear evidence of executing and improving margin as we continue our journey, really long-term track record of cash generation, which is funding both our growth and dividends and cash is a very -- always, say, safety is the glass ball in business. Cash is really the second ball. The rest of them are rubber and they'll bounce, but cash is something we focus on very heavily as a company. It's very much part of our DNA, and you're really seeing further evidence of today and evidence of us continuing to execute the SRG global strategy. I guess, you look at the cash generation, which I've already touched on. That's really funding our growth EBITDA to cash conversion, on Slide 10, of 97%, terrific high free cash flow. We've managed to pay down debt pretty quickly here, and it's really continuing that strong track record of delivery of cash funding growth while also increasing the dividends that we're paying to our shareholders. So we move to Slide 11. That really puts us in an extremely robust financial position, available liquidity of $273 million, nearly back to net cash position in a very, very quick period. So we've got exceptionally good funding to continue to grow the company, both organically and inorganically. You can see from our balance sheet, it's an extremely robust position but also gives us a lot of flexibility as we move into the future to keep driving the growth and returns to shareholders of the company. And I think most importantly, as we move to Slide 12, it's really underpinned by very, very strong foundation. All I say in a business, it's not the best widget or the smartest strategy that drives performance. It's culture, and it's really us living and breathing what we stand for as a business. Live for the challenge, smarter together, never give up and have each other's backs, that's our culture. That's what's driving our performance. I always say to shareholders, when you think about investing in SRG Global, that's what you're investing in, what we stand for as a business. So we move to Slide 13, which -- a bit around sort of ESG in action. And really, for us, it's about how we keep things real and how do we make a difference as a business. On Slide 13, we're very much focused on bringing some of this to life on what we're actually doing. From an environmental perspective, we've implemented the Workiva carbon platform, which will enable us to capture sort of and prepare ourselves for the climate reporting in FY '26. Atlassian is a great example of sort of working with our clients on smarter designs, to drive environmental performance. And you're seeing some further examples there of different types of materials, different ways, different types of facilities to really continue to drive the environmental footprint of SRG Global. And I think in really simplistic terms, it's about smarter designs, materials and facilities and really working with our clients to help make their business and their environmental footprint better. The reality is we operate on client sites and how do we help them and work with them. From a social perspective, I'm really proud of the continued great work we're doing with Bugarrba Aboriginal Joint Venture. It's continuing to really grow and deliver excellent outcomes. We've now progressed into the Innovate RAP from the Reflect RAP, which is really focusing more on the what and the how as we move into the future. You're seeing some good examples there in terms of different types of programs we've got in place in schools, also our graduate programs, our traineeship in terms of how we continue to sort of bring new people into the business as we keep growing into the future. And then there are some great examples of some of the social partnerships we've got. And really for us, from a community perspective, it's about being a really good local citizen in the local communities on which we operate. From a governance perspective, we have zero harm committees at Board, executive and business unit and site level to really drive the safety performance. I always call safety the glass ball in business. You juggle a lot of balls in business. They're all rubber. In reality, safety is the glass ball you can't afford to drop. Every day is a new day. It's probably something we don't celebrate because every day is a new day. In reality, our TRIFR's 2.2, which is really industry-leading from that perspective. But it's the glass ball and one that we continue to remain diligent and focused. From a risk management perspective, doing a lot of really good work. Particularly proud of the work we're doing in the psychosocial space, which is an issue not just the industry but also society as a whole. And for us, it's really how we equip our frontline leaders to keep managing what is a massive issue for society. We're not asking our frontline leaders to be psychologists, but it's really trading them up to sort of -- to look out and have each other's backs and help lead people as we move into the future. From a systems perspective, a lot of great work happening. We implemented Felix procurement software, which really drives our supply chain management and oversight. Our project evolved Microsoft D365 rollout, where we're standardizing our systems; is very, very well progressed. And the team has done an excellent job in executing that and very well supported and sponsored by our leaders in the business. So I think from an overall governance perspective, a really robust framework in place. And I think from an overall ESG perspective, you're really seeing how we are keeping it very real and how we're making a difference in some of the things that we're bringing to life as a company. So I think that's very much, I guess, the overarching summary of the company as a whole, extremely good performance but also underpinned by a very, very strong foundation. We'll probably switch gears now and go a little bit into the detail on the operating segments, and I'll now move forward a couple of slides to Slide 15. And you can really see from both segments really strong performance and really a great example of operational execution with very consistent margins across the board. Maintenance & Industrial Services very much is delivering step change growth, and you're seeing further evidence of that in the first half of FY '26. Engineering & Construction, very targeted and specific and really focused on clients that we do -- that we've dealt with for a long, long periods of time. Commercial framework's well established and really, really delivering consistent performance. A bit of a swing in E&C between the first half and second half from a timing perspective, it will be a little bit stronger in the second half than the first, but that's more just a timing issue of spend, particularly in the government space. We're moving on to Slide 16 on Maintenance & Industrial Services and for those that are newer to the story, a bit about what we do in our core services. There's probably a couple of key takeaways from Slide 16. It's just really the quality of the client base that we have, a very, very blue chip client base and really good evidence of the diversity of services that we offer and the diversity of sectors on which we play in from a Maintenance & Industrial Services perspective. Moving to Slide 17. So if you look at the first half, excellent performance and really further evidence of step change growth as a company. The number of new long-term contracts secured in the half with companies such as Wesfarmers, South32, VIDA Roads, Tianqi, Alcoa, Roy Hill and Rio Tinto, really good evidence of further spread geographically across a diverse range of industries, all across Australia and New Zealand. We've had the successful acquisition and our integration of TAMS into the business, and I'll touch on that a bit more in a moment. And what we're seeing is further really strong growth opportunities in a number of sectors that have got good tailwinds in front of them being water, transport, resources, ports and marine, and the energy space and really is great evidence of the excellent execution in the first half. From an Engineering & Construction perspective, now for those new to the story, you get a good sense there of what we do in our core services. Look, I think there's a couple of key takeaways here. It's, again, the quality of the client base that we have, very much government and private world in the blue chip space. And the fact that they're all repeat clients, well-established relationships, well-established commercial frameworks and clients that really value what we do over multi-decade relationships. As we move to Slide 19, a really strong performance in the first half, excellent execution of work, really good delivery of work, specialist work in the water infrastructure space between tanks and dam anchoring across Australia, winning terrific work in transport and defense in sort of government world and also renewables as well with the Bonney Downs Windfarm, with Fortescue. Facades continues to go from strength to strength, really winning repeat work across Australia and New Zealand health, education and data centers, and probably it will be a little bit stronger in the second half than the first half in terms of timing of spend. And I think as I've said at the start, a really robust commercial framework, which is absolutely key from an E&C perspective. Early contractor engagement's really our model, well-established long-term relationships with blue chip clients in transport, defense, water, resources, data centers, health and education. And for us, it's about being very, very targeted and specific and sticking to things that we're specialists in and really good at delivery against, and you're seeing further evidence of that in the first half. I'll sort of touch on the TAMS acquisition and I think overarchingly, absolutely on track. And to me, the most important thing is a really excellent start culturally, which is generally where these things succeed, will fail. Something we are focused on really exclusively in the first 6 to 12 months. It's ensuring that the cultural integration is strong in the first couple of months. It's been really, really strong. And I guess us embracing TAMS people and TAMS people embracing up -- embracing us and 1 plus 1 equaling 3. So we made the acquisition of TAMS, and we announced that in November. It became effective in the 1st of November 2025, now fully integrated into SRG from a business, a systems and a process and review perspective, delivered a smidge above business case in the first couple of months with a really strong outlook for FY '26 and beyond. And I think as I touched on the start, that sort of cultural engagement and alignment and just such a natural fit between the 2 companies, it's very obvious and people are embracing each other. And look, there are a terrific pipeline of opportunities as we move into the future, which I'll touch on a bit more in a moment. For probably those newer to the story of TAMS, and why did we do it, as we move to Slide 22, the strategic rationale, it was a translational acquisition of a market leader in marine infrastructure services, an absolute clear strategic fit with very, very complementary self-perform delivery capability, very aligned to our model, gives us an instant market leadership position in highly attractive segments for critical infrastructure services. Again, I go back to that word, critical. That's pretty much our model. And TAMS is very much aligned with that in terrific segments, obviously, ports and marine being the one but resources, energy, transport, water and opportunities in defense brings a competitive advantage with a strategic footprint of shore bases, which are very, very difficult to replicate, creating a strategic moat. It really diversifies and enhances the cross-selling and growth opportunities of SRG, and it's a highly accretive acquisition with a high level of recurring revenues and a capital-light model with CapEx circa 2% to 3% of revenue. So we move to Slide 23, which just touch a bit on TAMS' service offering. And what you can see here is they play across the entire asset life cycle, everything from upfront asset inspection, early engagement, advisory, design engineering, construction, delivery and asset maintenance, which is really the core part of the business, complete self-perform capability across the asset life cycle, very much an early contractor partner of choice, a very much early contractor engagement model similar to our own, absolute industry-leading management team that all came across with the acquisition, a lot of in-house expertise and technical specialists from an engineering perspective as well. Move to Slide 24. Very complementary core capabilities and look, in really simplistic terms, our TAMS is very much coming from the sea to the shore from a Maintenance & Engineering Solution. SRG very much coming from the land to the shore, so very, very complementary on what we do. And as we move to Slide 25, it really strengthens our marine infrastructure offering. It's not a foreign sector or a new sector to us, SRG is seeing some examples there of what we've done historically in the bottom half of Slide 25. They're pretty much specialist sub-elements. What TAMS has done is really take us to a market-leading position with some of the examples we've shown at the top. As we kind of move to Slide 26, which really touches on -- I guess, brings it a little bit to life, is a case study on the asset maintenance side of the business, which is the core part of TAMS. This is the Port Hedland shore base. You're seeing some of the blue chip clients that we have, which are clients for SRG's core business as well, long-term relationships, long-term contracts and a full breadth of services, everything from subsea, asset maintenance, remediation and upgrades and specialist fleet services. And that is probably the largest shore base that we have across the group. Slide 27, which is more on the engineering construction side of TAMS. This is the Broome floating wharf. That's very much one of the first of its kind in Australia. It's state-of-the-art floating wharf infrastructure that basically now provides 24/7, 365-day a year access to the Broome port. TAMS has recently completed this project and really showcases the engineering specialist skills that TAMS have, full end-to-end, self-perform from early contractor engagement, engineering, construction and now ongoing maintenance. And given Australia is the largest island in the world, there will be more opportunities for this type of infrastructure moving forward, but it really does showcase the specialist engineering skills that TAMS has, which is probably a good segue into Slide 28, which is probably a bit on some of the key end markets for TAMS and some of the opportunities. And we think about marine infrastructure on Slide 28. It's critical sovereign infrastructure. It's critical for our trade, for our economy. And it's very capital intensive and aging in nature. And what that means, as we move to Slide 29, is we've had multi-decade levels of increases in output, particularly in the energy and resources space. And that's placed more demand on port infrastructure, requiring more upgrades, expansion and now ongoing increasing maintenance spend. That will only continue as we move into the future. Slide 29 -- Slide 30 is a bit more on, I guess, the sort of more engineering construction side. There are a significant number of projects coming up, both in the private and the public space. Probably one in particular, which is a very obvious opportunity is in the government space in defense as we move to Slide 31. The reality is TAMS don't play in defense today. That is something that we do. We do play in as SRG Global as a group. And when you think about the Australian Defence Force, they integrated investment program of $330 billion over the next 10 years. 38% of that's in the maritime space, which clearly is an opportunity for SRG Global as a group and particularly TAMS as part of that. It's a very much a medium-term play. I'm not promising anything tomorrow, but clearly, we've got some strategic shore bases, which are close to these assets. We play in the space today. And with TAMs, we have now another further point of difference. And I think defense is 1 of probably 12 to 15 opportunities across the greater SRG Global Group in terms of how we can continue to drive performance. And certainly, it was in our thinking when we bought TAMS that this would open up opportunities further in defense in the medium term for us. So I think in a nutshell, TAMS, terrific start. We are really 2 months into the acquisition, really pleased with how it's come together culturally. Abe Faulkner and the team landed exceptionally well, and I'm really glad how we're embracing each other as a group and looking at there are some good opportunities on the horizon. I'm very much forecasting business case for the first 8 months in line with what I said at the time of the acquisition, and there are some really good opportunities to cross sell different parts of the business together, which is a great segue into the future and the way forward for us as a company. We move to perhaps Slide 33. In some ways, I feel boring. I've been presenting this slide for about 8 years now, and I think that's 1 of the strengths of SRG Global as a group. We've had a very, very clear strategy for a long period of time, and you're really seeing evidence of us continuing to execute against that strategy and maintaining a real strong discipline and focus in delivering against that. The growth horizon and the leadership horizon are very much morphing together as one. It's very much long-term step change growth in Maintenance & Industrial Services, very targeted from an Engineering & Construction perspective and wanting to be a zero harm and industry leader from an ESG and a place that people want to work. We continue to really leverage innovation and technology. There's a lot of software and technology in the group, but I very much see that as an enabler to give us the opportunity to execute work and provide us with a core competitive advantage. Now we'll keep looking at acquisitions that either complement our capability or our footprint. We've seen further evidence of that through the TAMS acquisition, keep delivering above-market shareholder returns and you're seeing further evidence of that and sort of that 80-20 split from an annuity recurring earnings profile. This is very much where the business is today, and that gives us that sort of platform, that visibility and that very steady opportunity and platform into the future to allow us to be very, very targeted and specific on that sort of more project-based win and do side of the business, which really provides us a great platform into the future as we move to Slide 34. The transformation we've been through is delivering sustainable growth, terrific work in hand, a terrific pipeline of opportunities across a broad range of sectors. We are upgrading guidance today from $264 million to $168 million, which is again another increase to consensus and that continues to drive the really strong momentum in the business as we move to Slide 35, where upgraded guidance, terrific work in hand, really good long-term sustainable growth in the next 3 to 5 years, positive exposure to a number of really good sectors that have got good growth thematics in front of them, such as water, energy, resources, transport, defense, health, education, data center, ports and marine. And the transformation that we've been through a diversified infrastructure services company will keep delivering consistent growth and really high-quality returns to our shareholders, which is really, I guess, as we move to Slide 36, the investment proposition of SRG Global, a complete end-to-end asset life cycle capability where we self-perform everything that we do. We play across diverse market sectors and geographies. I always say that gives us a natural edge that we're not relying on only 1 client, 1 sector, 1 geography but have a very, very broad platform in which to grow the business into the future. A highly scalable business model with experienced systems and structure and really seeing further evidence of that today; high-level annuity earnings, which makes us very predictable and investment -- and investable, a capital line investment profile with CapEx as a group revenue at circa 2% of revenue and a really good high growth stock and a good dividend paying stock and one that, I think, we've done very, very well over our journey over the years is of really bouncing, funding growth of the company but also increasing the dividends and returns to shareholders. I really want to thank shareholders for their support over the period. We are in an exceptionally strong position. And then there's probably a couple of people I really would like to acknowledge, which is Peter McMorrow and Michael Atkins, who are 2 of our very, very long-serving directors that are retiring today. They've been enormous support to Roger and I and the group and are going out on an absolute high on where the company is today. I really like to welcome Mark Foster and Alan Rule and really looking forward to working with both them and the rest of the Board as we keep driving the company into the future. And in closing, I want to once again thank our people. You keep stepping up. You keep living into the challenge. You keep being smarter together. You never give up, and you have each other's backs. I'm incredibly proud to be part of the team. I'm really looking forward to continuing to work with you over not just the next half, but in the next 3 to 5 years as we keep growing and building this company into the business that I know we can be. Thank you.

Awesome. Right. Thanks, David. It's Roger Lee here, CFO. So I will take over the question side of things, and we'll do -- I'll moderate the questions. So thank you for the submission of questions so far, and if you have any more questions as well, please keep them coming. So a couple of ones to start off with. E&C earnings flat year-on-year, but my understanding is tanks business is set to pick up quite substantially in FY '26. Any offsets there? What's your view on tanks in the second half?

Well, look tanks is part of the sort of water space. I mean, I think I mentioned sort of in the presentation sort of water infrastructure really strong, particularly in the tank and again the dam anchoring space. E&C will be stronger in the second half than the first which is probably a timing period for spend. Particularly in the government world, it tends to be more flexed to the second half than the first, so really more a timing piece.

Yes, and while we're on E&C, couple of questions around the margins at E&C. Looks like it's at around 7%. And for us, we've always talked about the margins in the E&C between 7% and 8%. For us, it's a mixed thing and sits well within the range, and we see it continuing to be in that range, in fact improving from 7% mark going forward. Base maintenance growth ex TAMS and extra 2 months at Diona was very strong. Can you talk to the key growth drivers?

I think, ultimately, it's very much the strategy for maintenance-adjusted services to be the key growth engine of the group and you've seen further evidence of that in the first half. And we continue to pick up good contracts across a diverse range of sectors and really leveraging the footprint. And in the market for probably 4 or 5 years now, it's very much morphed to want to deal with a lot less -- with less players that can do more for them. We are very diverse in what we do and what we can offer, and that's very valued for our clients. And it's opening up more and more opportunities for us. So I think you're just really seeing the evidence of that occurring.

Yes. Question on TAMS. How is the integration of TAMS going versus the regional expectations and your view on further synergies?

Yes. I think the first 2 months, very much in line with business case, probably just a smidge above from a run rate perspective. Yes, it's very much delivering the expectation it will deliver the business case in the first 8 months. And look, from a synergy perspective, it's really more around the revenue synergies, was not a cost synergy play, but a really good business, performed the business case in the first 2 months, and it will continue to do so in the back half of this year. And I think most importantly for me is culturally really, really strong from an integration perspective and also from a client perspective, just the sort of feedback on what that adds to the group and the diversity of what we can now offer. But really, that takes time from revenue synergy to really sort of realize that. And I always like to sort of give businesses breathing space to sort of keep a good business, really delivered a business case in the first 12 months and really set it up for the long term and enhance the focus on the cultural piece. But it's had a terrific start, and we expect that to continue.

Couple of questions here around the organic growth of the business, excluding Diona and TAMS. What's your view on that, David?

Look, I think organic growth was strong in the first half. I think from a sort of revenue and EBIT perspective around that $0.08 mark. I think they're probably -- perhaps a little bit stronger again in the second half of this year just in terms of timing of spend between the first and second half. We are very much generally at 45-55 split first half, second half company. And look, we're really probably seeing, particularly in government, we'll all probably more spend flowing to the second half than the first. And then I think also in E&C and it's just a timing piece in terms of what's coming down the pipe and what will sort of execute more in the second half than the first half. But it's very much around -- from a profile of 45-55, it's very much in line with where we've been over a long period of time.

Yes. And clearly, our view on FY '26 is strong given the upgraded guidance.

Yes, we can say that first half EBITDA of $71 million and guidance of $164 million to $168 million clearly implies a really strong second half, which has been consistent with what we've done historically.

Yes. Question on TAMS. TAMS contingent consideration implying EBITDA of greater than $50 million in year 1, is that a correct interpretation? And what's driving the uplift, potential uplift against the pro forma number of $35 million. And look, I think for us, just a couple of points to make there. Yes, clearly, we've formed a view on the contingent consideration of TAMS. That's 2 months into the business, extremely positive to what David's point was before on TAMS. And look, it's a 12-month period to assess it, but as you can see with our initial assessment, it's a very positive one. TAMS' results will be reported over 3 financial years, as you all would be aware of. But our view on TAMS is positive, I think, what would be the overarching commentary.

Yes.

It's great to see the base M&I business segment delivering strong year-on-year growth. Can you please provide some color on year-end -- on end markets, sorry, supporting the growth and things that may not be going to -- may be weaker in terms of market segments?

Look, it's really strong across the board. Resource is very strong from a sort of maintenance perspective, water very strong, energy strong, particularly from an asset inspection perspective, which has had a strong first half for us as a company, good work in the transport space as well. And clearly, there are some terrific opportunities in the marine space from a maintenance perspective moving into the future. So strong growth thematics across the board in Maintenance & Industrial Services and really us leveraging clients that we're already doing business with today and so adding more services and contracts to them. And look, it's kind of a mystery. I mean, SRG has been around for more than 60 years, but I still think we're scratching the surface in terms of just the diversity of what we can offer clients and then building an understanding of us and what we can offer.

Yes, Not sure we covered some of this. I'll go through it anyway. Any major construction work opportunities coming up in the pipeline for TAMS since acquisition, TAMS outlook underpinned by investment case of recurring maintenance streams only?

Look, I think from -- it's very early days. And the Broome project, which I touched on in the presentation, was very much what they focused on over the last period. The base business case is really more focused on the maintenance side of TAMS. Yes, there are some good medium-term opportunities in the engineering and construction space, and that will play out over time. But really, my message to the market isn't -- I'm focused on delivering business case in the first 12 months.

Yes. With the combination of TAMS and SRG's construction capability, what's the ability to leverage this into multidisciplinary construction contracts and also to broaden the defense sector?

Look, it's a very, very clear opportunity from the construction side of things in terms of offering. When you think about the -- I guess, in layman's terms, I talk about TAMS from the sea to the land and SRG from the land to the sea. There are some good complementary opportunities coming up that will take a little bit of time because we are very, very targeted and specific on what we will or won't do. But there will be some good opportunities to cross sell the businesses together. Defense is, again, I said a medium-term play. And look, my sort of view on defense is probably not that dissimilar to some of the other government that tends to push to the right a bit. And for me in defense, it's a very long-term play for us. I'm sort of thinking a 10- to 20-year horizon in terms of where we can play, and that will take a little bit of time.

Yes. Just while we're in TAMS, can you talk to the construction pipeline of TAMS? I think we've covered enough already.

I mean, I never really liked to talk about individual projects from the commercial sensitivity perspective. There are some good opportunities, but they take time.

M&I segment looks like strong revenue growth ex TAMS but slightly lower margins year-on-year. Can you provide some commentary on the drivers for this segment during the half year and expectations for the rest of the year?

I think we're going around the edges there. We're talking, what, [ 0.2 of 1% ] or something, so very much consistent margins with what we've added. If I'm getting after [ 0.2 of 1% ] and I'm probably -- I think the reality is margin's very, very consistent with where it's been historically, and that will be the case in the second half as well.

Yes. Excellent. Thanks, David. So what capabilities are you seeking in future acquisitions? It seems like you have most areas well covered and built out already.

Look, I think for us, we're very much focusing on delivering the organic side of the business, integrating TAMS. Well, we've shown a really good track record over a long period of time inorganically of buying well and executing and integrating well. Also, probably for us to be more in that maintenance and industrial services space, if the right thing presented, perhaps some further mechanical capability, which we've got today but we could possibly bolster that. I mean if they're sort of specialist sub elements that are complementary to what we're doing today, we would look at it. And I think the key thing for us is that we're nearly back to a net cash position. TAMS is well integrated. And it's about being ready but not needing to do anything. And I think, for us, you've really seen that over a long period of time that we can be nimble and quick. We don't like participating in processes. We are very focused and think about things over long, long periods of time and track them over long periods of time. So that's probably the extent I'll go to on that today.

Yes. Question on lease payments and where they appear in the cash flow statement, I'll cover that one, David. So the cash -- the lease payments appear in the repayment of borrowing section in the cash flow statement, and clearly within that cash flow chart, it shows a separate line for lease payments in there. Yes, question on -- today's EBITDA print of $71 million implies $95 million in the second half to hit the midpoint of guidance. This would imply a 43-57 first half, second half split. Is that correct? And could you talk a little bit about why you are so confident in the second half?

Well, I mean, clearly, we've gone through and delivered guidance today. We've got very, very long-term visibility in terms of long term -- long-term contracts are always sort of roughly that 45-55 split and with the sort of forward visibility of what we've got locked in. Clearly, if I'm providing guidance today, there's a high level of confidence. And I'd like to think our track record over a very, very long period of time shows us delivering against that. So it's the kind of metrics that are in line with where we've always been with seasonality and more government spend in -- generally in the second half than the first half.

Yes. Excellent. Question on decarbonization. What does it look like across the business and our view on that. So I think for us, we've always said that decarbonization was always going to be a practical view. I think, David, you covered off on the ESG side of things quite well that whatever we do, it's going to be practical. It's going to be executable. And I think for us, we're servicing our clients in terms of being there, offering service provider in their decarbonization journey, and we'll continue to keep it real in every aspect of that.

Yes. The only thing in really simplistic terms, it's win the clients, smarter designs, looking at different types of materials, looking at different types of facilities, and we'll keep doing that in a very practical and pragmatic way. And I think you're seeing really good evidence of that in what we presented today.

Yes. And I think that's the end of our questions.

Yes. Well, look, I think in closing, just really want to thank everyone for joining the call today and looking forward to continuing to drive the company to keep building what is a very, very special business. So thank you.

Yes. Thank you, everyone.