SRG Global Limited (SRG) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the SRG Global First Half FY '22 Investor Briefing. [Operator Instructions] I would now like to hand the conference over to Mr. David Macgeorge, Managing Director. Please go ahead.

Thanks, David, and welcome to the call this morning. I'm very conscious there's a lot of reporting happening this time of the year, so we might get stuck straight into it, but today is a really positive day. We're looking forward to the communication we're about to have. I always like to start a little bit about us, particularly for those newer investors. So if we start on Slide 2, so who are we? We're an engineering-led specialist asset services, mining services and construction group, and that's engineering and mining, certainly bringing everything that we do is part of our core DNA. What do we do? We solve complex problems across the entire asset life cycle of engineer, construct and sustain and have a real skill with complexity. And what we want to be? Our vision is the most sought after in our fields of expertise so that when customers have a problem, a challenge, an opportunity, the first people they think of are SRG Global. Before I get into the review, I really just want to pause for a moment and acknowledge our team, our business and our people. They continue to step up against what is a really challenging operating environment over the last couple of years. Culturally, we've really come together, and our people live and breathe what we stand for as a company, live for the challenge, smile together, never give up and have each other's backs. So I really want to knowledge our people rolling up their sleeves. I'm proud to be a part of this business, and I'm proud of the way that we've come together to keep achieving and delivering. So if we move to Slide 4, which is our executive summary. And I think what you see here is evidence of us continuing to deliver. If we look at the first few financials, revenue up 5%, EBITDA up 32%, and EBITA up 69%. But to meet the quality of the business and the quality of the revenue, in the first half last year we exited some noncore businesses. And what you're really seeing there is evidence of the translation of that into better-quality revenue and higher earnings. That translated into an NPAT of 102% uplift, which is terrific as well. If we move down the table to the margin area. This one, I'm particularly pleased with, EBITDA margin up 26% up to 9.1%. EBITA up 64% to 5.4% and NPATA up 10% to 3.4%. I mean, really, this is a really pleasing result in terms of the further evidence of the quality of the business, the earnings that we're now achieving and the margins that we're now making. And look, there's no doubt, we think there's further chance to optimize that as we move forward, but it's certainly moving in the right direction. And what that has allowed us to do is to increase our interim fully franked dividend to $0.015 per share, which is a 50% uplift on the first half last year. And it's something that really -- we are a growth stock, we're a dividend-paying stock, and we think you can bounce that. And you're seeing clear evidence of that. And that's really off the back of what I think is the key highlights of our first half result is the improvement in net cash of 432% to $28.2 million. This is a terrific achievement because we've continued to invest in the growth of our business, and we've continued to deliver dividends and yield to our shareholders. And it's something that's been a huge focus for us as a business and one that I'll touch on further in the presentation. We exceeded consensus for our first half EBITDA performance. We've got terrific high-quality work in hand of approximately $1 billion and a good opportunity pipeline of $6 billion plus. We're well funded for growth, and I'll touch on that further in the presentation. And I'm pleased today to communicate that our FY '22 EBITDA guidance is upgraded to a range of $54 million to $57 million, which really, I think, highlights the confidence that both myself and the Board have in the future direction of the business. But we're not here today to pat ourselves on the back, and we're not satisfied. In our view, we're just getting started in terms of where we plan to take this business moving forward into the future. It's really off the back, as we move to Slide 5, our performance of demonstration and evidence of us executing the growth phase of our strategy. We are doing everything we said we would do. We've had a very clear strategy in place for a very long time. And what you're seeing today is clear evidence of us delivering against that strategy. The whole growth phase is around transitioning the business mix towards annuity recurring earnings. And in that growth phase, you'll see a lot of evidence today of the tech in terms of step-change growth, in recurring asset services, innovation, selective growth in mining services, targeted growth in special civil infrastructure, construction and specialist services and products and building, construction with key repeat clients. And you'll see the evidence of us transitioning to 2/3, 1/3 in terms of annuity earnings versus project-based earnings. We move to Slide 6. And I really want to pause on this slide. It's a very important slide to really highlight the strategic transformation that we've made as a company in the past few years. In 2018, about 70% of our earnings were project-based earnings and 30% annuity. Where we are today is almost the complete reverse of that. Why is that important? It's important because what it brings, it brings certainty, predictability. It lowers the risk profile. It gives us a very balanced business. If you're a pure construction company, you can feel the need to keep feeding the beast. You've got to keep chasing more and more work all the time. Where the bounce business we've now transitioned to, we have a 2/3 underlying foundation. We can then be very targeted on the good construction projects side of the business that suit our skill set and our commercial framework. It's not easy to make this transition. There were certainly many skeptics when I communicated this strategy back in 2018 in terms of where we want to take this business. A lot of companies talk about we're going to go to annuity earnings, but what you're seeing today is the evidence of that transformation. And that's a transformation that's been done against a very, very difficult backdrop in the last couple of years. And I think it's a testament to our culture, but most importantly, a testament to our people, who have really come together as a team to keep driving this business forward, and have really bought into the vision about what we want to be as a company, both from a financial perspective but more importantly from a cultural perspective. So I'm particularly pleased with where we've transformed to today. It's an outstanding result. And what's that translated to, as we move to Slide 7, is that strategy, that transformation is delivering continued earnings growth. You can see the positive trend on these graphs. We expect that trend to continue as we grow further into the future over the next 3 to 4 years. If you're wanting a bit of a feel for sort of first half/second half split, we're generally about 45% first half, 55% second half is what we generally are as a company. And we expect that earnings growth to continue into the second half and continue over the next 3 to 5 years organically with the same positive trends. But not only is the strategy delivering continued earnings growth, as we move to Slide 8, is delivering increased cash and dividends. And I think as I said early on in this presentation, the movement of cash has been a real standout performance of us. If you look at our history and transition from net debt to net cash over the last couple of years, that's a terrific result. And you see the $40 million swing in that period, and that's despite making the continued investment in the growth of our company, along with continuing to deliver dividends to shareholders, which is a really good segue to the second graph on that slide. It gives you the history and trajectory of our fully franked dividends. You can see the growth, the dividends are up 50% against the first half last year to $0.015. It's a really positive trend here. We are throwing off excellent yields. I think yield of circa 6% fully franked, higher if you gross it up. I mean these are terrific yields for a business that is a growth business as well. And we certainly plan to continue being that growth business and a good dividend-paying stock. I think for me, what we have strategically and as you can now see financially, really terrific platform and fundamentals in terms of taking the business into the next stage of our evolution and growth. As we move to Slide 9, it's also underpinned by a really strong foundation, both from a cultural perspective, but more importantly, from a people perspective. And it's our people that are driving this result. If you look to Slide 9, firstly, starting with our Zero Harm improvement. You show me a business that's improving from a safety perspective, and I know the financials will reflect that. And we've -- this business has continued to make really good strides for -- from a Zero Harm perspective. I always called the glass ball. I don't really like to celebrate. It's a glass ball that you can never afford to drop, and it's something that's an ongoing focus for us, but we are making really good strides forward. And that's despite having a growing workforce. Now this time 12 months ago, we had about 1,800 people. We've now got 2,300 people. So not only is it a terrific safety performance, but it's also a real testament that we are growing. From a workforce perspective, we're attracting really good talent, we're retaining really good talent, and we're -- in my mind, an employee value proposition that people are attracted to come to SRG. They can see the strategy, they can see the vision, they can see the culture, they can see the level of tenure we've gotten contracts moving forward, and they want to be a part of it. Labor is a really hot topic in the broader market. And whilst it's something in pockets we're managing, we're doing a really good job attracting and retaining key talent. Diversity comes in many forms. We've chosen to highlight gender diversity in this half. And you can see from a corporate perspective, quite an even split between male and female from a corporate perspective. Operationally, traditionally operate in sectors and industries that are far more male-dominated from a blue-collar perspective, and we're looking for new and innovative ways to attract more female employees into the blue collar workforce. And that's very much work in progress. We have made some good strides forward in terms of bringing, not only new skills, but further diversity onto both the Board and the executive in the last period and something that I know is a particular focus for the Board. From a community-engagement perspective, we do a lot of work with our local communities around training, development, traineeships, apprenticeships. I'm particularly proud of Bugarrba Indigenous Joint Venture, and I'll touch on that a little bit a little bit later. It's a scaffolding services joint venture, and it's the first of its kind in Australia. And I'll touch on that a little bit later on. But doing a lot of good work with our communities, not just from a sponsorship perspective, but really investing and developing and providing work opportunities. With geographic diversity perspective, I really want to highlight this. Just don't really highlight the -- I guess, the 30-plus years of global experience that we have. We have a very broad platform on which we play. In recent times, we really pared back the international focus given the pandemic. So this particular map really highlights where we have experience globally. And the way we're structured today is having that sort of engineering hub in Australia and New Zealand and really leapfrogging to different types of projects or contracts internationally. The reason I highlight this is that market will open up for us as we move into the future. Board is now opening up internationally, and more importantly, without being too controversial here in the west as well. So I think that's something with our geographic diversity really gives us that broad platform, and in some ways a natural hedge in terms of different economies and geography cycle. We've got a natural hedge on where we can play. Corporate governance effectiveness has been a huge focus for the Board. We've really looked at our governance and continue to focus on that. We've gone through a whole refresh of our policies, focusing on areas such as supply chain, sustainability, modern slavery, respect at SRG Global. And we've recently launched our first RAP, reconciliation action plan. And there's a lot of good stuff we're doing from a governance perspective, and that's a particular focus of the board. And I think what you can see on the strong foundation we have from a culture and people perspective is that not only is the strategy clear and solid, the financials are clear and solid, but the culture and people and the foundation is clear and solid. And why that's particularly important is we're about to embark on the next evolution and growth of our business. The foundations are there to really take this business moving forward. I want to switch gears a little bit now and just go more into the financial overview. If we move to Slide 11. I've touched on quite a few of the financials in the summary, and Slide 11 really breaks it down more into the 3 operating segments of asset services, mining services and construction. What I really want to focus on this slide is the margin. You can see from an overall EBITDA margin perspective, it's up from 7.2% in the first half last year to 9.1%. And I think if Roger might correct me even, I think it was 8.3% in the second half of last year. So you can see the positive trajectory from a margin perspective. We think there's good opportunity to optimize that further as we move into the future. If I break down the different operating segments, firstly starting with Asset Services. EBITDA margins of 11.5%. I mean that's a really solid performance for what is a capital-light business. And I think it's one that -- and I've been asked questions, we won a lot of long-term contracts over the last 12 to 18 months, are we buying work? And I think what you're seeing here is clear that we're not buying work. We're winning it because we're a smart technical, engineering-led business, and we have a point of difference. From a mining services perspective, traditionally, margins have operated EBITDA -- from an EBITDA perspective in excess of 20%, and we're consistently delivering against that. And it's been a real standout performer for us again. On the construction side of the business, what you're seeing here is a good trend in margins improving as we're sort of focusing on more higher-quality work with key clients we've had a long-term history with, with skill sets where we're the most sought after. And we expect that margin percentage to continue to improve. From a corporate perspective, it's sort of circa 2.4% of revenue. And look, I will touch on this one for a moment. Well, we've really invested in this business in terms of really brought on a Board, executive management with experience of running much larger businesses. And I guess, for us, taking our business to where we wanted to be in the future, we've really invested in that. And what you're really seeing today is starting to get some leverage of that. But there is still a lot more opportunity to leverage that corporate overhead further, given the sort of experience and capability we have at those particular levels. A lot of good work happening from a systems perspective. And we're really reinvesting from a systems perspective, not for the company that we are today, but for the company that we want to be into the future. As we move to Slide 12, excellent cash generation. I've touched on this already, but I will keep repeating. And I know there's a lot of -- there'll be a lot of SRG people on this call and we always keep talking about cash so I'll never miss an opportunity. But what you're seeing here is an EBITDA and a cash conversion of 131%. I mean that's terrific. It's been a huge focus of the business. And it was probably one of the benefits of the pandemic in the early phases of it. Really heightened the awareness and importance of, not just profit but cash, and really drove that deep within the business. And I think it's now become very cultural for us in terms of the driving of the cash and cash performance. And this is a terrific achievement. I guess the waterfall here shows we keep investing in the growth in our business. We keep investing in shareholders from a dividend perspective. So that EBITDA to cash conversion is a terrific performance. And I'm really pleased with the sort of positive trends we have in the way we're generating our cash. And what that leads to on Slide 13 is a really robust financial position. We've really focused on this to ensure that we are bulletproof regardless of the situation we face ourselves. Really good available liquidity, with net cash of $28.2 million. We'll keep investing in growth. We want to be a net cash business. If you look at our debt, the lion's share of our debt is equipment finance debt. And what you can see there is we have plenty of capacity and funding perspective to grow this business into the future. I'll switch gears again and sort of we'll move into the operating segment, starting on Slide 15. And that's probably -- perhaps a little bit more exciting for those with more engineering mindset. I'll start with our Asset Services business on Slide 15, which is our Specialist Maintenance and Access Services business. If there's one key takeaway from Slide 15, it's the quality of the client base. I just want to read some names to you. Rio Tinto, Fortescue, South32, Alcoa, Roy Hill, Adelaide Brighton, Iluka, Liberty, Minara, Visy, Fonterra, Pilbara Ports, Yara, Todd Energy. None of these clients existed 3 years ago to asset services. 70% of these clients we didn't have 3 years ago. This has been a huge transformation for us as a company. It's clear evidence of the quality of the clients that are buying in the SRG story and what we can offer. The whole strategy around step-change growth in asset services, you're seeing clear evidence of that. But what this client base provides us is an enormous platform and opportunity to bring all aspects of SRG Global and add value to their business. If we move to Slide 16, the first half review. Good mobilization and operational delivery. I think if there's a key takeaway from this, you can see the clear evidence of us continuing to win long-term contracts with new clients. We've successfully expanded into the Gladstone region. We've got now more than 100 people in Gladstone. And what you're seeing now is a very broad Asset Services business with a key presence in Western Australia, South Australia Queensland and New Zealand, with a mattering in New South Wales and Victoria. And that's certainly a good opportunity to grow that and expand that business geographically. A really good pipeline of opportunities, but particularly what excites me the most is the expansion opportunities with existing clients, not only with winning new contracts with existing clients in this space, but by being on-site and having that presence, if something goes wrong, there's a lot of ad hoc work, which is generally higher margin because you've got a fixed cost base already paid for. So the [indiscernible] mine will be the same as we move into the future, but I would be worried by that. The platform we now have means a lot of the stuff we will win and the margin accretion we will gain will be by being there. And that's something that I know is a particular focus, too, for David Williamson and the team at asset services. We secured a 5-year contract for Bugarrba, our Aboriginal joint venture for scaffolding services with FMG, in the period, something that we're particularly proud of. And it's one that we think there's great scope to keep growing that business, not only in Fortescue, but with other clients as well. I won't talk too much about photos, but if you're a bit curious about the top one there, I can categorically tell you it's not a fighter jet. It's the nose of the wind farm, but that does look like a pretty cool photo. If we move to Slide 17, the Mining Services business, which is production drill and blast, and specialist geotech, and anything to do from a mining's production base under long-term contract. Again, you can see the quality of the client base. It's all production related, as I said. But I think if there's a key takeaway, it's the quality of the commodities in which we play. And we almost exclusively in gold and iron ore, good, stable commodities that are growing. We've got nothing in coal. And certainly, for us, our real focus is on quality clients and quality commodities. Moving to Slide 18, the first half in review. Look, really, again, a strong operational and financial performance and terrific asset utilization in excess of 90%. And we're not a company that speculatively buys equipment and puts it on the fence. It's very much around following clients, growing with them and really investing in key assets required for growth. A number of good contract wins and extensions in the period. And I've already mentioned our key commodity exposure. But I think if there's a key takeaway from this slide, it's really our innovation focus. And a lot of good, smart things we're doing around automation, but in particular, it's Orbix and proprietary data intelligence software, which is something we've invested a lot in. And I think it's one that -- and what Orbix is, it's predictive intelligence. It allows good decision-making, not only for ourselves, but also for our clients. And look, why that's particularly important is this makes us very sticky. Now obviously, integrating into our clients' system, it makes us very sticky. And it really keeps us ahead of the games being the most sought-after in sort of developing that in-house-type technology and systems. Look, we'll probably segue for a moment on that technology piece. So a lot of companies sort of talk about, we're not going to be a technology company, et cetera. For us, we see technology, and Orbix is clear evidence, as enablers for us to sort of maintain that most sought-after position and make us very sticky with our clients. And in all our businesses, there's great evidence of technology and systems and innovation that we bring to the table, be it visual mockups and facades, data monitoring technology in our Civil and Engineering business. Got virtual reality training in our Asset Services business. Some of the data systems were brought in Asset Services. We could easily call ourselves we're a technology company now, we've got a technology arm, but we just see this as an enabler. We like to keep things pretty real at SRG Global. It's that enabling piece that allows that engineering-led mindset of SRG to, not only keep us ahead of the pack, but to allow us to grow and be sticky with our clients as we move into the future. Sorry, I'll segued a bit on mining, but I do get a little bit passionate about that at times. I think from the Mining Services perspective, whilst we've had some really good recent wins, there is further growth we expect. I mean we're certainly seeing the quality of clients we have there, their growth plans. We will grow with them. Again, not necessarily announceable events, but the long-term contracts we have, we will naturally get growth with our clients. Because of that, and look, we'll be very disciplined in the way we invest our capital and very targeted, both from a client perspective and also from a commodity perspective. Our third operating segment is construction on Slide 19, which is our Civil and Engineering business. That's our dam, bridge and tank business and our specialist building business. We're a national leader from a curtain wall facade construction perspective and our structures business here in the West. Now from a client perspective, you can see there, very much government clients in that civil and engineering space, particularly in that water and transport infrastructure space. From a building perspective, very much key long-term partners, such as Multiplex, LendLease and Built. If we move into Slide 19, construction in review. Civil and engineering. Strong first half. Look, a really good pipeline of government opportunities in that dam, bridge and tank space. And I think what -- a lot of discussion around what's shovel-ready, and I think what we're now starting to see is more visibility and certainty in terms of what shovel-ready really is. And we think perhaps more of a second half of this calendar year will really start to kick-in in our fields of expertise. Really pleased to report we achieved a higher bridge and road accreditation in the period. And that will open up larger infrastructure opportunities for us in our own right, and particularly the more trend of alliance-style work really fits in the bread basket of what we do. Experienced high demand for SRG-engineered products with excellent growth opportunities globally. And I will touch on this for a moment. So we've got a developing business called SRG products. These are engineered products: nuts, screws or nuts or bolts. They're very much engineered products we've designed with smarts, either in-house or we've worked with global engineering products partners or technology partners to bring stuff into the Australian market. Why I like this business? And we see this over time as becoming the fourth operating arm of SRG Global. Now like products, you make it, you sell it, you get paid. It's very recurring. It's a lower-risk profile. And with the platform where we now have from geography, client and industry perspective, the whole engineering products angle will really feed into those sectors, clients and geographies. And it's one that we're particularly excited about, where we can take this arm of the business moving into the future and look in time in the leadership phase of our strategy will ultimately become the fourth operating segment of the group. From a specialist building, perspective, again, solely focused on key repeat clients, and I will touch on that because that is a really important point. These are key repeat clients who we've had long-term relationships with. That's important from an operational perspective, but more importantly, from a commercial relationship perspective, where a 25-plus-year relationship in terms of managing projects and managing commercials. And in some ways, we're almost agnostic as to the type of structure. If it's a hospital or school, commercial development, a hotel, a car park, a shopping center, almost agnostic. It's more following our deep key clients, such as Multiplex and Lendlease. Really good performance nationally in facades in the period and structures in the west. Probably, Facades had a little bit of an impact of COVID, particularly in New South Wales and Victoria in the period. But that's something that we're certainly now starting to turn around. Really good work in hand, terrific pipeline of opportunity. I'm really pleased that we've now entered the defense sector for this particular business. It's a new market for SRG. It really further diversifies our sectors and opportunities. And a lot of investment coming up in that space. It can be quite difficult to get in, but once you're in, it really opens up good opportunities. And whilst I said I wouldn't talk too much about photos in slides, I will just touch on for a moment Elizabeth Quay. It's something that we're particularly proud of. There's not a structure there that we haven't been involved in building and developing. There's a number of structures we're developing there in that precinct to date, and there's more slated for that particular precinct. And I think by time Elizabeth Quay has concluded in about 4- to 5-years' time, there won't be anything that we weren't -- have been involved in, in that particular precinct. And what it does give us is really clear visibility for our structures business in the West and our facades business in the West work over the next 3-, 4-, 5-year period. And I think if there's 1 or 2 key takeaways from construction, it's world-class value engineering and what we do, but we're going to be very targeted on the way we play. I always like to link back to strategy in terms of where we've taking the business moving forward. And then we move to Slide 22. It's about building the most sought-after business in what we do. And we are very much in the growth phase of that strategy, what is a very clear strategy. Now we'll keep doing what we said we will do into the future. Over time, that growth phase will morph into the leadership phase. And with the strategy and almost become one. And look, probably the key elements of the leadership phase to highlight is certainly the growth domestically and internationally in engineered products, which I touched on earlier. There will be selective, strategic acquisitions to complement either our capability or our footprint. And probably the key areas of focus are asset services, particularly on the East Coast of Australia and potentially internationally, along with our Engineered Products business as well. And probably the other point I will highlight in the leadership phase, as you can see that we will continue to further transition towards annuity-based earnings to sort of that sort of 80%, 20% range. We move to Slide 23. We're not stopping here. We have a really good, strong platform for continued growth. Terrific work in hand, which I mentioned earlier in the presentation. A great pipeline of opportunities. And I think we're really big with history and track record of conversion, which you've seen. But what I probably will say, I touched on this a little bit earlier, is the opportunity for us is leveraging existing contracts, cross-selling other parts of the SRG business and really getting that ad hoc work as well. And what we've seen in the industry is they very much want to deal with less players that do more, and that means the SRG value proposition is a strong one. And you're seeing clear evidence of that in the growth in our client base but the quality of those clients as well, which is a good segue into our outlook, which is a positive one. From an operating perspective, Asset Services delivering step change growth in diverse sectors with blue-chip clients, and you'll see evidence of that. Mining Services operating in high-demand, high-quality growth commodities. You're seeing evidence of that. Construction being positively linked to government infrastructure stimulus programs. You're seeing evidence of that. And our Engineered Products business is gaining momentum, both domestically and internationally. And whilst I don't split it out, our Engineering Products business for FY '22 is almost at the full year number for FY '21 in terms of the growth and the momentum that it's building. For an overall business outlook perspective, I'm pleased. As I mentioned earlier, we are upgrading guidance to $54 million to $57 million, which will give our shareholders confidence on where we think the business is headed. We have a really robust financial position, which I've touched on earlier. We'll keep transitioning this business further towards annuity earnings, which I touched on. And we'll keep doing what we said we're going to do in terms of executing what is a very clear strategy, which sets us up for long-term, sustainable growth. We've got significant organic growth opportunity in front of us over the next 3 to 4 years and multiple organic levers to grow this business into the future. Which is why we're a good investment proposition, which is -- while we're on this call on Slide 25. We have end-to-end, asset life cycle capability as being the most sought-after in our fields of expertise. We play in diverse market sectors and geographies. It gives us that natural hedge as different sectors, economies or geography cycle, but also a very broad platform on which to apply our skills. A high level of annuity earnings, which, in time, will attract much higher multiples. We're a highly scalable business with multiple organic levers to grow this business, but that's underpinned by an executive management, Board and systems experienced and ready to be a much larger business than we are today. We have a capital-light investment profile, which I think is particularly important to note because that allows us to be both a growth stock, but also a good dividend-paying stock trailing off good yields. Again, really want to acknowledge our people. I'm really proud to be a part of this group. Proud to be a part of the SRG family. The work that they've done, not only in this period, but over the last couple of years, has been terrific. And I think it's a really exciting time ahead. I think also I want to acknowledge our shareholders for their support as we stick through and deliver against this strategy. I think it's also an exciting time for shareholders as well. I'm not a financial adviser. There's no better time to invest in SRG Global in terms of where we're going as we think we're just getting started on where we want to be. And there's real momentum in this business, and we're well underway to becoming the company that I know we can be. Thank you.

Great. Thank you, David. So I guess we'll throw the questions now, and I'll try to be as good a moderator as I can do in this. And there's a few questions that have come through. So I think there's -- some of these we might have covered off before, but they're probably around the usual suspects of labor, border restrictions and cost escalations. And the question was more around, I guess, how you're managing those elements given a lot of commentary still exist in the market.

I think in probably some ways the results sort of show the diversity of the business. So certainly, there are pockets where there's a lot heightened -- a more heightened challenge, but the diversity of the business certainly helps. And I think to me, we've really largely weathered the storm and shown in the last couple of years we can really manage, not only labor but COVID as well. And it's one that -- particularly now the Western Australian borders are opening up, that's going to really help us. And whilst I think Omicron is going to come into WA, I almost think it's going to be a nil-sum game in terms of Omicron coming in versus the benefit of the border of being open. We'll probably net each other out. And probably, yes, particularly in areas like New South Wales and Victoria, we've largely experienced that already. And I think I mentioned earlier, we've already shown that we're an attractive employer proposition and are getting good talent in. And from a cost perspective, all our contracts have rise-and-fall mechanisms in them. The lion's share of them are actually linked to the site and the contract, which gives us that sort of protection against rising costs or inflation, which is becoming a bit more of a topic than today. And probably the only other comment I'll make around COVID is -- I mean, the type of sectors we operate in are very disciplined, so the kind of -- how regimented the approach is it's quite consistent with sort of how those disciplined sectors operate already today. And so look, it's largely -- it's something that -- I wouldn't say it's been an easy period in the last couple of years, and for me, we've done an exceptionally good job against a difficult backdrop, but I'm certain that as the world becomes more normalized, our results will only improve just off the back of it being an easier operating environment than it has been in the last couple of years.

Okay. Thanks, David. And I think this other one, you kind of covered off in the presentation about contract wins coming up. But the question around the recent wins and whether there's -- whether you see that there's option for us to win more.

I think we've announced nearly $0.5 billion of work in the last few months, and we plan to continue to grow. So there will be further contract wins as we move into the future. And I think the great thing about our business, there will be further wins. There will be new contracts with existing clients but also build that ad hoc work that we can leverage by being on-site on a number of -- a lot more sites already. So it will come from all those four buckets, along with getting sort of that overhead leverage that I touched on earlier in the presentation.

Yes. Okay. So here's a few more here. I'll try to go through them as quick as I can. M&A? View on M&A?

Look, certainly, we plan to grow the business organically. There's a lot of good organic growth over the next 3 to 4 years, but we will overlay that with inorganic opportunities that make sense for our business and makes sense for shareholders. And I think I touched on it a bit earlier in the presentation, sort of the asset services area is one. There's potentially skills around perhaps more mechanical skills, maybe more development on the East Coast of Australia and possibly certain jurisdictions internationally. And certainly, Engineered Products is the other one, where [ we'd build them ] in-house, but I think the right product -- or around product sort of partners, we may look at in that area as well. So it will be a combination of both.

Yes, yes. International work. I think you touched on the options in products as well internationally, but just generally, internationally?

Well, it's something that probably, over the last couple of years, we really pared back given the pandemic, and I now more really see that as a medium-term play. Also, I don't foresee anything meaningful internationally in the next -- in the second half of this year. But it's certainly a medium-term plan in FY '23, '24 as the borders opened up again and those opportunities present themselves to us. Fondly enough in the period, I mean, we are selling products into the U.K., products into New Zealand. And there's other things we're looking at from a product perspective in broader jurisdictions. And that, so whilst we're probably, from a services side, we've pared back, the other products probably gone the other way a bit. So yes, that's something that it's certainly part of our medium-term plan. That's one thing I like about our business is that there's just multiple, multiple organic levers in terms of how we're going to grow this business into the future.

Yes. There's one here around the dividends. And the comment was around, it's pleasing to see there's been an increase in dividends. Is there a set dividend policy in SRG?

Well, it's not a set policy. We're probably traditionally around the 50% to 60% range. I think the first half is a smidge higher than that. And given our really strong cash performance and our sort of our outlook on the second half and beyond, we -- both the Board and I felt the confidence to increase dividends. And I think 50%, 60% is a pretty good proxy for how to think about it without there being a set policy.

Yes. So I think there's one here around the swing factors in second half of FY '22 to the guidance, and how do we think that translates to FY '23?

Yes. I mean, it's a reasonably tight range, $54 million to $57 million. I think probably, there's some factoring in there in terms of whether there's -- what sort of impact COVID plays in the second half, and we sort of think of it's a more meaningful impact. It's probably at the lower end of the range. And if it's not, then it's probably at the higher end of the range. And I think that is probably the biggest swing factor of that.

Yes. A couple of comments around cash. Good result in cash contribution to the capital reduction prepayments. Does that assist in the business and Australian business margins? So I'll cover the first part, I think.

Hold on a bit. [indiscernible]

Yes. Thanks, David.

No free lunches.

Yes. So no, it has been already mentioned. Not only that David's talked about it a number of times in the presentation, but there certainly hasn't been any prepayments by way of contribution. And that has really been a real concerted effort from the team to work through our contracts and terms with our clients and work collaboratively with them to ensure that we do get our payment milestones tightened up and making sure that we don't have big carrying amounts and with -- on our books and to ensure that -- that constant working through with our clients happens on a constant basis. And as we all know how cash evolves to become payments is that you need to work through your plans, through your certifications, through to your payment regime on a very regular basis. So I think, to David's point, we have, as a business, I feel, really enhanced not just our understanding of how cash flows but just in terms of just that working relationship with our clients in cash as well. So that's been good. You're going to touch on the margin perspective?

Yes, on questions around driving increased margin in construction and confidence in Australia to continue, I think to me, when I touched on this at the start of the presentation we exited some noncore businesses in the first half of last year in the construction space, the construction in Victoria and the Middle East. And really what you're seeing here is us really sticking to the things that we're good at with key repeat clients. And we think that, that will continue to grow. Probably been I think in some ways, particularly in civil engineering, maybe a little bit conservative in terms of just wanting to sort of keep out, to really be quite targeted and focused. And one thing that we -- one of our key parts of our DNA is the engineering skill set that we have and the sort of shovel-ready nature of the East Coast infrastructure has probably been a little bit slower. And I think COVID's had some impact of that. So we probably carried some engineering costs through this phase, and I think we'll be leveraged as we -- further as we move into FY '23.

All right. Thanks, David. Question on Engineered Products. Give more detail around that, please, as a potential fourth business segment. And do you have an idea of what the real opportunity size is for us in there?

Something -- I mean, today was really just introducing Engineered Products as a business that we've been developing. It's certainly a part of our strategy. I'm not going to spend too much time on it today. It's one that's equally -- already become a fourth operating segment. Over time, I'm not talking about that. That's going to be in the next 12 to 18 months. We'll keep building that business line. From a revenue perspective, it's less than that's the 5% of the current business. We're really getting great traction with the government clients in that major infrastructure space, so bridges, dams, wind farms. Certainly in the building construction space with all the key Multiplex, Lendlease and the like. And certainly also in the mining space as well. So it's quite a broad platform for us. And it's one that really good-quality clients and really good sectors that we've got established relationships in. And for clients, we've got established relationships with as well. And probably the difference for products is we can go to any client, whereas probably have a look and say, construction, for example, where you're trying to win the project yourself. It's kind of you win or you lose, whereas products are really -- you're speaking for the entire market. So look, I won't spend any more time than that today. Our products business is a generally higher-margin businesses, and that attracts very different multiples. And that's one that we'll keep building over time. And I'll keep communicating with the market over the next period just to sort of continue to build that awareness about where we're taking that business. But really, today was just a sort of a little bit of an on-trade to sort of take us into the next phase. Because one thing that we've really focused on as a company is to ensure that our business is really easy to understand. I think we've done a terrific job in terms of becoming quite a simple business to understand. Seeing we're technical and smart, but have a very clear strategy that's clear and easy to understand. And the reason why I'm raising products now is as we move into the next evolution of our strategy, it's well understood well ahead of time in terms of where we're going. So that's probably the extent of it.

Terrific. A really hard one and an all easy one to finish off on multiples. I know you hate it, but someone's asked the question again. Sorry, David. So where do you think we carry value from an EBITDA or EBIT multiple perspective? And where do you think -- what upside do you think we've got?

Well, now that's an ugly baby, I know so. So I think from a multiple perspective, I mean, where -- from an EBIT, EBITDA, we're cheekier today than we've nearly ever been in my time in the business. And if you look at the balance sheet, we have the growth trajectory on -- and where we're going. We've increased guidance. It shows that costs. We've got multiple organic levers to grow the business. And I think as a market understanding builds and just in terms of how we've transformed this company to the company that we are today, it will drive a re-rate. But I think at the end of the day, and I've said this internally many times, we've got a lot of employees invested in the company, which I think is a real plus for shareholders. The best thing we can do is focus on what we can control. And that's being a really good business, delivering good cash, delivering good prop, and delivering to our clients and growing. And what we are is that. We are a business that is absolutely delivering. And the investment market will catch up in time. And then, that's the business I want to be. We want to be humble. We want to keep delivering. And over time, the market will realize that, and they will reward us for it.

Yes. And I think there's just one last one that's [indiscernible]. So just in Asset Services, just can you give us a sense of just how big this business can potentially get?

It's going to grow both organically and inorganically. So certainly, where it is today is not where it will be into the future. So we expect that when I talk about step-change growth in asset services, that will continue. And it will continue in steps, not in terms of some smaller increments over time. I mean it's going to be a big part of our business. And look, I'm probably planning to give a further perhaps update on our more broader strategy over the coming period, and I'll make it quite clear in terms of where the different businesses are. But Asset Services is one that -- it'll grow both on revenue, but also just the opportunity to optimize margins further is there as we grow as well, so...

It's good to see that, David, as you called out the new clients that we've had built up over the last 2 years or so. So that's pretty significant.

Yes.

So okay. I think that's it for us. Thank you, everyone, for joining the call.

Yes. I really appreciate the support from our shareholders and our people, who I know will be on this call. And it's exciting time ahead, and we'll get back to work now. And we'll aim to deliver a really good second half and -- which will set us up really well for what I think is going to be very exciting FY '23 as well. So thank you.