Thank you for standing by, and welcome to the Acrow 1H FY24 results call. All participants are in a listen-only mode. There will be a presentation, followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Steven Boland, CEO. Please go ahead.
Thanks very much, and thanks, folks, for joining us this morning as we walk through our investor presentation for our first half 2024 results, joined by Andrew Crowther, CFO, and Matt Caporella, our COO, who will talk about their particular parts of the business via the presentation. So I think this last six months, again, another indication of the dramatic transformation the business has undertaken over the last five or six years. Really has accelerated, especially over the last couple of years. In this first half, probably the clear highlight was the acquisition of MI Scaffold in Mackay and Gladstone. I'll talk further about that little bit later on. Great organic growth initiatives generating significant improvements in states such as South Australia, Western Australia, and Victoria.
Our contracts, hire contracts won, continue to be going north, and I think more importantly for us now, really looking into the future is the strength of the pipeline. It's at unprecedented levels and especially off the back of our initiatives in jump form and screens. We're getting cracking with our product development work, and Matt will talk a fair bit about that later in the presentation. We're maintaining that return on equity of, you know, over 30%, which is obviously a great result, and we are pleased to be reiterating our FY 2024 earnings guidance, and I'll give a little bit more color about that, so that guidance towards the end of the presentation. The overview of the business. Competitive advantages have been in place for some time.
They remain very strong, and the thing that continues to drive the continued success of this business. We've now got a significant business in the industrial energy, pulp and paper mining, et cetera, to, you know, complement our civil infrastructure focus. And also, jump form and screens are clearly products that are primarily in the commercial, residential, high-rise markets, and we're seeing some really good green shoots in some of the markets for that particular market. And we now have 13 depots across the country. Yeah, those depots are all required for the volume of work that we're undertaking. In terms of the highlights, as I mentioned, for the first half, the MI Scaffold acquisition was the main highlight. Great business based in Mackay and Gladstone.
A leading provider of industrial services to, you know, most, mostly the sectors around Mackay, but, you know, they do go a fair way out of Mackay, and I'll talk about a couple of the contracts they won recently. So they've won recently. They've taken a bit away from Mackay, but they're a great business, great management and, very strong customer reputation. I'll mention again, the hire contracts and pipelines are up 18% in secured hire contracts in the first half year-over-year, and our pipeline's up 39%. We're making real inroads now, in the screens business. Jump form and screens, we're sort of putting these two things together because they're, they are products that are tendered together on most of the jobs we're looking at at the moment. We've won, you know, 10 recent Jumpform wins.
Seven of those include the screen contracts, including our first ever screens contracts in Western Australia. You know, I think in terms of the jump form market, you know, it's, it's, it's, it's really at the cusp of becoming something quite, quite lucrative for Acrow. And, talking to the guy that runs that part of our business last week, and he said that, "You know, we're fast becoming the number two provider, in the market nationally," which is pretty good considering we weren't in the business eighteen months ago. We did win, or, or secure the AUD 56 million minimum Snowy 2.0 contract, for provision of labor. That's, not at that level yet, so that's something over the next few years we'll see probably double on its current volume. We've also, just secured a very six...
Very lucrative and important formwork package on that project. I mentioned organic growth, and I'll talk more about WA in just so shortly. And I think in terms of the marquee civil infrastructure projects, fair to say we're going through a transition period there at the moment. Where a couple of the larger projects like Bruce Highway, Melbourne Metro, primarily those two, Cross River Rail in Brisbane, West Gate at the moment to a lesser degree, but they're sort of coming more to their conclusion. And very pleased to be able to say that we are securing some significant or very confident of securing some significant new packages on the projects that are coming in to replace it. Both myself and Matt will talk about that further. In terms of our safety results, again, you know, we've continued to improve here.
We had one lost time injury in the half. As I say all the time, it's one too many, but it is good to see that we are maintaining our position. It's not improving it there, considering we are now more heavily exposed to the industrial scaffold labor market. In terms of the key financial metrics, again, pleased to say everything's heading in the right direction. Revenue up 28%, EBITDA 53%. I think... Look, I'm actually in this set of results, I'm most pleased with the NPAT results, because there's a couple of factors there, and on the NPAT and the EPS results, because there's a couple of factors there that might, well, definitely were gonna make it difficult at some point.
You know, Andrew and I were looking at it, going, "Well, you know, I'm not sure we're actually gonna get growth in NPAT given that we're now paying full tote odds in tax." So there's about a AUD 5 million impact. Did I pick the right number, Andrew? It's about a AUD 5 million impact on tax half to half now that we are paying full, a full tax rate. And there was a significant expense for the acquisition of MI Scaffold, the one-off expenses in terms of legals and consultants, et cetera. That was, you know, a couple of million AUD-ish in that sort of area.
So, for us to be able to improve our underlying NPAT by 33%, a statutory NPAT by 17%, and the EPS by 24%, given, so given the tax factor, I think is a really, really, really good result. And very pleased to be announcing a dividend payment for the first half of AUD 0.0285 per share, which is the highest that we've ever paid and up 68% on the same time last year. Return on equity is maintaining, and that's great. If we can keep that over 30% over time, that's gonna be a phenomenal result. So I'm pleased to see that that's continuing the trend of the last financial year. I mentioned up 18% in hire contracts and 39% in pipeline.
And it's the jump form and screens, that's the big move up there. So, you know, we've got 90% of the pipeline is formwork. There's AUD 34 million worth of jump form work in that pipeline at the moment, and there's some very, very significant opportunities that are getting very close for us on delivering on in that space. And on page 12, but, you know, that's... We'll continue to show that because it just does give, you know, give our shareholders and the market guidance to a degree of, if you see us continue to win more high revenue contracts, you'll continue to see our high revenue in total increase over time, and this, these two set of, you know, numbers strongly indicate that.
I'll hand over to Matt now, who'll give an update on engineering before we go into more of the segmental breakdown.
Thanks, Steve. So with the engineering department and product development, as we've previously mentioned, the engineering team has definitely evolved over the last 5-6 years from primarily a drafting service into a really highly skilled engineering team. So there has been quite a bit of growth from 15 engineers in 2018, so we're up to 50 engineers now across the business in all the departments. And this is primarily now driven by Jumpforms, AcrowDeck, and the new product development. And also now we're also investing in cadet engineers and growing our talent internally as well. So we've got 5 cadet engineers in the business that are working at uni, still at uni and working in the business.
The next part of the evolution of the engineering team now really is embracing technology and upskilling the engineers into 3D drafting and engineering skills. So, in the next 12 months, we really plan on delivering most of our projects in 3D rather than 2D. And this is really gonna set us further apart from our competition and really differentiate our engineering services a lot more as well. Regarding the product development team, so, we've mentioned this before, but our product development team is a completely separate team that are industrial designers. They're not actually formwork engineers. So over the last 12 months, they've been working really hard, and these dividends are now paying off. So we've actually now got products in the market, and these have been really well received, received.
So the big one for us at the moment is AcrowDeck. So we now have confirmed AcrowDeck projects in South Australia, Victoria, New South Wales, and Queensland. So yeah, it's continuing now, and we're seeing the rewards of investing over the last 12 months in the product development. One of the really big things at the moment that we're doing is the synergies now across the product groups and the sales and engineering team, especially in the commercial formwork space, where we've got multiple systems that can go onto a project. So we've now added a graphic onto slide 16, where you can actually see a complete building and all the different systems that we can offer to formworkers and builders now, and basically be a one-stop shop.
The really good examples of this now is 70% of the Jumpform projects that we've won have had screen contracts with them as well. The 3 Jumpform projects that we've actually done in WA have had screen jobs on those, so that's a first for us. We haven't had screens in WA in the company history either. Every screen project now goes out with a Jumpform quote and vice versa. So our pipeline now, as Steve mentioned, is AUD 34 million up to December, with only really 7 active months of really quoting and spruiking the Jumpform system into the market.
We're now completing projects where we've got the sole formwork supplier, so we're delivering Jumpform, scaffold, orchestrating, falsework, AcrowDeck, and we're also supplying directly to some builders now, where they're transitioning away from relying primarily on a subcontractor to direct procurement. We're supplying directly to builders, and now we can offer them every, every product as well. Overall, though, the product development team now has a pretty clear roadmap, and they're filling in the gaps, basically, of existing products, but they're also working on new products. In the next 12 months, we'll probably bring out another couple of products. That's the plan. Still within the core competencies of where we are now, but yeah, it's, they're busy and working on a lot of stuff.
At the moment, they just cover some of our marketing civil projects and give an update of where a few of them are at the moment. So Snowy Hydro, the next stage of the tenders are really starting to flow through now, and work is really starting to ramp up. As Steve mentioned, we have secured a sale for AUD 1 million of some stuff in the powerhouse, which is really good for the engineering team, 'cause they offered a solution there. It was an all proprietary solution, where they were leaning towards originally a fabricated steel offer. So that's, that's really good, where the engineering team has come up with a proposal that basically offers them something straight off the shelf, and we continue with, as Steve said, with the labor contract there.
Melbourne Metro, it's probably our marquee civil project in the country at the moment. It is probably about 50% complete on the adits, so we're probably aiming. It is winding down a little bit with. We were saying probably mid-June, July at this point, but it's actually gonna extend out probably to the end of 2024 with some stuff at the moment. But yeah, it's continuing. But that's really flowing through to now, and especially our expectation on that project has been noticed and is now flowing through to North East Link . So we're working on a lot of projects on North East Link now. We're having weekly meetings across several opportunities, and we hope to announce something soon. Cross River Rail, so we had equipment on all four stations there providing solutions.
That's been really good, especially in Queensland, showcasing a lot of our systems. We still progress on Albert Street with our jump form, and that'll continue through to probably 2025 at this stage, with the jump form on Albert Street. Sydney Gateway is complete now, so anyone in Sydney, you can now access the domestic terminal from the new road. That's been a really good project and really showcased a lot of our systems in the Sydney market that haven't had that before. So our Powershore 30, Powershore 150, our panels, especially our soldiers on a very visible infrastructure project in Sydney. Flagship project in Sydney at the moment would be our M12 project. So that's going to the new Western Sydney Airport. We've got a lot of systems on that.
We're the sole formwork supplier to the principal contractor. Got Powershore 150, GASS, Acrow 80, SuperCuplok. So yeah, a lot of our systems are out there now at the moment. And then the other big one at the moment in Queensland is Coomera Connector , which has taken on from the Bruce Highway Cooroy project for us. And that's a really complex project over water for a lot of it, and we've got our Powershore 150 system, Powershore 30, and it's really showcasing our engineering capabilities across a lot of these really complex infrastructure projects. Thanks, Steve.
Thank you, Matt. Okay, so I'll just walk through the various segment reports for the six months. So, page 19, the group results. So we cracked AUD 100 million of revenue, which is a bit of a milestone for a half. It's only just over three years ago, we weren't doing AUD 100 million per year. The main things that for me stand out in the overall result is that our contribution margin's gone to 63.5%, which is a strong indication of how much of the growth has come out of hire, which was AUD 14 million of the growth. Sorry, AUD 11 million of the growth was in hire. Sorry, so again, it's actually AUD 12 million of the growth is in hire.
But the two real standout points here is, again, the scale benefit. You know, we've spoken in the past that of our sales contribution dollar growth, we want to maintain about 2/3 of that rolling through to the EBITDA line. In this six months, it was actually 78%. So, you know, we have to continue to invest in additional yard expenses and in additional overheads in terms of staffing costs to cater for our growth. But to be able to pass through 78% is very good, and that contributes to a 34.8% EBITDA margin for the half. So overall, I mean, you can see growth in formwork, growth in industrial. I'm gonna talk in more detail about those. Sales contribution bridge, so sorry, that this AUD 12 million was the growth of higher revenue, six months to six months.
So that's 76% of the growth of sales contribution has come out of hire, which is also always the most important factor for us in terms of profitability. Okay, so going to the formwork division, AUD 61 million, up from AUD 47 million, so thirty percent increase in total revenue in the formwork division for this six months. With, you know, our expectations around both Jumpform and AcrowDeck, you know, we're heading towards a business that should be pushing in the next year or so towards AUD 150 million in formwork revenue. So, you know, clearly double 61 or 120, I think, you know, we've actually got some runway in the next 24 months to get that to AUD 150 million of formwork revenue.
The product sales figure, I want to just talk about quickly, about one particular point here, which does come up from time to time around our ex hire sales, 'cause it's frankly a very, very misunderstood part of our business. So there are two things that are driving the growth in ex hire sales. Number one is, we've got significant discipline in the business now around loss on hire. So some of these big marquee civil projects like Bruce Highway, Melbourne Metro, have a lot of gear on those jobs, and frankly, they don't have a lot of, in some cases, control over the gear being returned properly to us in a usable state. So we are very disciplined now at the...
We had a significant charge for the Bruce Highway project in the first six months for replacement of gear that they didn't return to us after the job concluded, and we're in significant negotiations now with Metro with some various Melbourne Metro packages, where again, they're either not gonna return the gear or they're gonna return it or it's gonna be returned in a state we can't use. So we're very disciplined on this. That's a significant part of what's called Ex Hire Sales, but it's actually replacement of equipment that's in our fleet that doesn't get returned to us when a project concludes.
The other thing that's significant now in this area is, as you know, Matt and his team are really cranking up their product development work and bringing new products into the market. We're taking every opportunity we can to sell second-hand, redundant equipment that will be replaced by our own equipment. Our own equipment is superior to the previous European suppliers that we were provided getting gear from, and if we can get that gear moved out of our fleet and replaced by our own equipment, that makes a lot of sense in the world. So there are a couple of the things that are going on in that particular space. We're not reducing our fleet. In some cases, there are some redundant product that doesn't get replaced.
By and large, we're taking the opportunity to replace second-hand equipment at a new equipment price and bringing in our own, our own equipment that we know is gonna last a lot longer and, and be well regarded in the market. Contribution margin of 72.7%, obviously strong. In terms of the pipeline, there's a few things going on here at the moment. So the, the first thing is, civil is probably, I would call it flattish, which is at a very high level, but it's probably flattish, but there is a transition going on between some of those major projects that Matt talked about previously being replaced by some others, and I'll go into a bit more detail about that shortly. The jump form market looks tremendous for us, and, and that is, is obviously a very strong part of our pipeline.
Queensland is interesting at the moment. So one of the barometers for us about future revenue opportunities really is what's going on in our winter hiring department? So about four or five months ago, our National Engineering Manager, Evan Third, was telling me that Queensland looked a little soft, right? And especially in the commercial area. And actually, our results over sort of the December, January, and into February period in Queensland Commercial, primarily, were a little soft. Right? But since we've come back after the Christmas break, he's telling me the complete reverse, that we've never, he's never seen so much work, and the pipeline of work, and the work being required to be done by engineers for projects that are gonna start sort of from April on, is at a level he's never seen before.
So I think Queensland is obviously a strong part of our business. Some of the formwork numbers right at this moment in Queensland have come off a bit, but as we go into that last quarter and into the new financial year, it looks like there's gonna be a significant surge in growth again in the Queensland market. Revenue by state. We've added South Australia for the first time, and as you can see, it's a pretty good picture about how we're able to grow that. So every state is going in the right direction. Whilst WA is flat, there will be substantial second half growth in WA as screens and jump form revenues start to kick in at a big level.
South Australia is important because there's a very large civil infrastructure project not too far away in South Australia, I'll talk about in a second, and we've got a very strong market position in South Australia, and that becomes a great opportunity for us to further grow that South Australian business. So overall, you can see, you know, we've doubled our national formwork revenue over a 3-year period. And actually, at the moment, you can see every state is showing significant growth. With WA, I'm sure you will see in the second half, a significant growth. Industrial services, clearly, the MI Scaffold acquisition is very important to us. So, the first thing that I want to, I guess, highlight there is revenue growth of AUD 9 million. About six of that nine is two months' worth of MI.
So, out of that, irrespective of MI, we still had really good growth in our core industrial business. And then the contribution, the improvement of AUD 2.7 million, around about AUD 1 million of that, or slightly over AUD 1 million of that, is MI. So again, you can see our existing business grew irrespective of the acquisition of MI. We're run rating now on a yearly basis to somewhere up towards AUD 80 million-AUD 90 million of revenue per year. You won't see that in this year, because you're only gonna have 8 months of MI versus 12 months, and there's a significant pipeline of work that we've now won in our, in the old Acrow Industrial Services business, that starts to kick in towards the end of this financial year. We're heading up towards around about AUD 90 million.
My formwork, my aspiration is to have a AUD 150 million industrial services business within the next 24 months. Now, that will require M&A activity as well as organic growth, and I'll talk about that as we go forward. But, you know, we definitely are seeing... We like this business. We're making good margins. 37.6% contribution margin on this. If you measure this up against other businesses that are in this kind of industry, our margin is extremely good in industrial services. MI Scaffold, you know, we presented this a fair bit before. It is an excellent business.
It's extremely well managed, blue-chip customers, and it really is providing a really good springboard for us into future growth opportunities, in all of this small little country, but we're really, at the moment, focused on some opportunities in North Queensland. So we can use this as a springboard into further growth opportunities in that part of the world, where, you know, the industrial sector is, you know, clearly probably only behind Western Australia in terms of its, in terms of its growth opportunities and its, its strength. Markets served. Again, we presented this when we bought the business. Marine and Ports really important. The biggest contract is with BHP at their coal loading facility in Mackay, in Marine and Ports. Infrastructure, energy resources, resources, industrial. There's been fundamentally no surprises since we bought this business.
We're very pleased with the way it's rolling. Commercial Scaffold continues to go far better than it has in the past. Rates are good and not showing any sign of tailing off, especially in New South Wales. We're actually doing very, very well at the moment in the dry hire market in New South Wales, in commercial scaffold. People and culture. So, you know, a lot of this is stuff we've talked about each time we do a presentation, but our people are, you know, it's a diverse and inclusive workforce. You know, we really focus on employee development. I'll talk about that in a second. One team, one brand. You know, I'm very proud of the people in Acrow because it's the people who actually are making a difference.
They're very customer-oriented. We really are trying to do everything we can to become the employer of choice in this, in our particular industries and raising the bar in general for industry standards. We did rebrand Acrow in September 2023, as you see the new Acrow, which is now also the public company name, has transitioned now to Acrow Limited from Acrow Formwork and Construction Services. The whole basis around the brand is that, you know, we're an Australian company, so we're this, we aspire to be the absolute key Australian formwork and industrial services business, in a market that it does have a lot of international competition. But probably the most important thing in this page for me is the learning and development part.
Matt talked about the graduate program, which is now not only for engineers, it's also for administration and accounting personnel. Basically, the whole senior management team, of which again, I've spoken many times, is without doubt the best team I've ever worked with over 30 years, have a professional development program that they're undertaking, and succession management and performance management is an absolutely embedded part of the business. So it's absolute priority that we... You know, we, we're not just looking outside, but we're growing our own, both, you know, staff and engineering and administration staff, but we're growing our managers, and we seem to be able to move them to senior roles. Over to you, Andrew.
Great. Thanks, Steve, and thank you everyone for joining us. So Steve's already been through the EBITDA, so we go down to the NPAT, underlying earnings by 33% in the year, in the six months, from AUD 12.2 million in the first half of 2023, to AUD 16.2 million. Now, there's obviously a bit of movement between those. So firstly, depreciation increased by 33%, but that includes the impact of the 2 months of MI, and also the AUD 17.3 million of CapEx we did in the six months, and obviously the previous six months on that. So depreciation up. Net interest increased by 24%. Now, that was both a volume and a rate related.
The average debt from the previous corresponding period was AUD 37 million, up to AUD 52.8 million in this six months. The interest, the average interest was approximately 5.5%-7%. We're actually seeing interest starting to come down now, which is pleasing, right now. So that gets us down to pre-tax profit, 13.4 million up to 22.5. Now, obviously, the other major difference in this year, in this year's or six months' result is the tax. As Steve already mentioned, in the first six months of last year, we still had our tax losses off balance sheet, which we put on at the 13th of June 2023.
So this six months, we've got a full, not the accounting tax rate, essentially is 30%. We don't have the accounting benefit of tax losses. We still have, at the beginning of the year, had 5.5 million of tax losses on balance sheet that we will use against tax payment and cash, but from an accounting point of view, we're now fully taxed. So the tax, the effect-
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Significantly higher if we had like for like. In fact, probably would have been more like 68%, but, you know, ongoing, it's gonna be a 30% tax rate. Now, if we go down to the earnings per share, earnings per share up by 24% from 4.72- 5.87, and that includes the, the 8.8% to 28%, tax impact of that. So that's, that's a pretty good outcome. Now, NPAT reported. NPAT, as Steve said before, we, we were a little bit concerned the NPAT reported would, would be relatively flat, but we still had a 17% increase, and that also included the, the significant items related to the acquisition of MI, which was considerable, and also there was a lot of cost around the rebranding.
But the cost of that rebranding, going forward, will be, will be worth its weight in gold. Move over to the balance sheet. So from a balance sheet point of view, we had quite a large movement in assets, AUD 60 million. A lot of that was obviously the MI Scaffold acquisition of AUD 26 million... or over AUD 26 million. We also had the AUD 17.3 million of capital expenditure. Now, our gross debt moved from 51.7 or 19 million dollars. Net debt went up by AUD 17 million. Now, we'll just go on that for a moment. So net debt went up by AUD 17 million.
If you think about it, we got a AUD 15 million debt to acquire MI, the other 50% came from equity, and we had AUD 17 million of CapEx in the six months. So our debt went up by AUD 17 million, which basically means that it recycled itself down. So that's a pretty good outcome from a debt perspective. Importantly, from a gearing and net debt perspective, our gearing went up, our net gearing went up by 2.7 from 31 point... For the right opportunity to get up towards, say, 1.5.
Now, this increase in the debt metrics, even though they're still very good, this is because we did do that acquisition of MI right towards the end of the six months, and we didn't get much EBITDA from it. So what our forecast is showing at the moment is that net debt to EBITDA will be well below one by June, depending on anything else that happens. And our gearing will come back down towards where it was in June as well. Now, from a cash flow from operations, we had AUD 28 million cash flow from operations. That includes both, if you look at the cash flow statement, the normal cash flow from operations, plus the sales of ex-hire.
So from a conversion rate, EBITDA was 80%. So that was a little bit lower than the previous year, which was 84%. Now, that was a one-off. There was a one-off within receivables of some deferred sales we've done. That will then come. We're seeing that will come back up to conversion rate that was sort of after around 85%, by the time we get to June. From a working capital perspective as well, we had, the working capital during the period went up by AUD 1 million, which is not unreasonable, given the growth in our sales and so forth. So it still stands around 23% sales revenue. We're still trying to get that. Our ideal would be to get that down to 20%.
From a cash flow perspective, you can see our net debt at the beginning of the period was AUD 46.4 million. It finished AUD 63.4 million. Now, the big, obviously, adjustment to this cash flow, there was a little bit of a mistake, I apologize. We had CapEx of AUD 17.3 million, of which, over 13 million was growth. So that's up to- That's our decision to do that, and AUD 26.5 million on the acquisition of MI. So there's two- When you put those together, there was almost 26 million dollars of growth- sorry, AUD 46 million of growth initiatives within that increase. So that is all in our decision. We did some analysis, just what would happen if we cut that growth CapEx off?
If we cut that growth CapEx off and still did the stay in business CapEx, and we had the reduction in EBITDA that would come from that, we'd basically be down to a net debt to EBITDA of zero by the end of 2026. So we'd still have a lot of cash coming through to pay dividends. We'd still be relatively profitable. We won't grow, but we'd be basically down to a very small debt number by the end of 2026. Oh, and I might mention as well, from a debtor's point of view on the balance sheet, our debtors days increased by one day, our net debtors day, from 57 to 58.
Our bad debts during the period is that we had a AUD 1 million expense, and that's, that's about 1% of, of sale. So that's actually come down considerably from last year, which was 1.8%. If you remember, we had one big bad debt last year. So we're seeing the book improve, which there, there's obviously some disruptions in the, in the industry, but at this stage, the book is under control. Now, under the capital expenditure, we did seventeen point three million dollars of CapEx in the period. AUD 13.9 million was growth. Of that, 10.5 was essentially formwork and civil, and the majority of that was the new Jumpform and AcrowDeck.
Now, it's worth pointing out that most of that AcrowDeck and Jumpform, which was about AUD 8.7 million for it, we didn't really get much income from that in the six months. That was brought in and a lot of it towards the end of the six months for the future growth. So that's the majority of that. Our estimated CapEx expense for the full six months is AUD 26 million, so we're seeing another AUD 8.7 million in the second six months. So very much the CapEx was front-ended. And I think it's worth pointing out, we're still getting very good returns on investment. So we're getting around AUD 0.58 returns.
If you look at that from a payback perspective, on that growth, we're essentially getting that growth paid back in 1.75 years. So basically, after 1.75 years, we're getting economic cash back in. Moving over to funding and liquidity. Look, I won't stay on this for too long, but after we acquired MI this year, we did some restructuring of our debt. We combined all of our bank loans into one loan, and you can see that on the right side. There's AUD 40.5 million in essentially bank loan. This is an amortizing but revolving facility, so we can pay down debt and get excess cash, and then draw it back out down to an advancing level.
Now, from an equipment finance point of view, we went from 14.9 up to 21.5. So our equipment finance is almost filled as of December, but as I said, this was very much a front-loaded CapEx year, so that'll start becoming... We'll get some headroom in that going forward. So at the end of the year, we had AUD 15.4 million of debt capacity. We also had AUD 1.4 million of cash, so we had total headroom at December of AUD 16.8 million. This gives us a lot of flexibility for the future. Next slide. Okay, so just wrapping up with our obviously, the biggest opportunities and outlook statements for the next period of time.
So firstly, you know, construction activity forecasts on page 35, they are all going north, and by, in every state, and actually in every sector, they're going north. And importantly for us, in our major states of New South Wales, Queensland, and Victoria, they are significantly going north over the next decade. You know, now we're seeing this, I mentioned earlier, Queensland Commercial as an example of it, where, you know, it was very strong, probably 18 months to 12 months ago.
It is softish at the minute, but by April, May, June and into the next financial year, and if you, if you throw in, you know, the Olympic Games developments, plus the hospital program in Queensland, which is actually going to be very important for us, there's a couple of very large hospital projects that we're close to securing significant contracts on, we think that's gonna have a significant uptick in that market as an example. In the civil infrastructure space, a couple of important ones to point out there. So you can see that we've highlighted seven. Out of those seven, I wanna highlight two primarily. So North East Link , you know, is a massive road project that, for us, was extremely important as the successor to both West Gate and to Metro Rail.
You know, we're highly confident of winning at the moment, upwards of AUD 6 odd million worth of packages that we've actually tendered for, and we think we're in a very good position to secure. That will be revenue maybe towards the end of this financial year, but primarily into the next financial year. And, you know, judging by our previous efforts in this space, if we get onto a project at that level and we do our job properly, we'll be very hard to dislodge on future packages going forward. So that was critical for us, and our guys have done a fantastic job on those first two significant projects. The other one is the Torrens to Darlington . It's a AUD 15.4 billion road project. It's almost as big as North East Link .
It's the biggest project of its nature in South Australia. Now, again, given our market presence in South Australia, we've got a very good opportunity to secure significant revenue on that project as it kicks in. It's a while away yet, but it's the type of project that should be right in our bailiwick. So I think, you know, as we go forward, you'll be seeing some good news coming out of that. Industrial services, clearly, you know, revenues, recurring revenue streams, long-term contracts, relationships, recurring work. The M&A activity, we mentioned the MI, obviously, the MI Scaffold. We're targeting other acquisitions. We're very active in this space at the moment, for North Queensland, Western Australia, primarily and, at the moment.
Expanding into all states now, so we're in, we've got work now in Queensland, New South Wales, Western Australia, South Australia, and Tasmania in industrial.
... Recent contract wins with obviously the Snowy contract, but also the Kidston Pumped Hydro Project, which is MI. It's an AUD 500 million project that they've won. And recently in the Acrow business, we won the Ampol Lytton redevelopment contract that's slated to be AUD 6 million, but could be significantly more than that. And importantly, even though it's relatively small, winning that first project with hire only at the Kemerton Lithium plant in Western Australia is strategically really, really important for the business to have won that contract and get ourselves moving in WA. In terms of organic growth, I mean, we've just provided a chart there that Matt's put together to show that we've brought new products into these two markets over the last couple of years, but there's a bunch of other products that can still go in.
I wanna highlight a couple, and this is especially relevant to the road project, the Torrens project in South Australia. The Universal Soldier System and the bridge brackets we don't have in Adelaide at the moment, are absolutely the products that have gone with that project. So they're the sorts of new products that will add to the fleet in South Australia. So there's still significant opportunities to further organic growth just in those two states. Internal product development, yeah, Matt spoke a lot about this. I mean, this is the future of the business. I want to talk about Acrow there for a second here. So, it's...
Yeah, there's a lot of work required to take a new product to market and to get the market to accept that product in, in a, in a market that has got a lot of competition about it. So we've got about 11,000 square meters of AcrowDeck in Australia at the moment. Probably six weeks ago, you know, I was sort of shaking my head and talking to Matt and the other management team, going, "You know, we need to get some of this stuff moving" because it was quite slow. In the space of that period, we've now probably got... Well, I think we do have, Matt. We've got projects that we have won that will almost 100% utilize that 11,000 square meters.
And the biggest one of those is in New South Wales, where we have upwards of 6,000 square meters on one project alone. So that's really good news for the business, and that we get that product out and working for us. And then the next one, I think, that we're really important is the Universal Soldier System that Matt and the team is developing, because it's a key product for significant infrastructure projects like North East Link and like the West Torrens as we go forward. Screens and jump forms going hand in hand. We are the market leader in screens. We've now got projects in every state. We bought the Premium Screens off Heinrichs about 10 months ago.
With Queensland Commercial being a little bit soft-ish for a period, that revenue has also been a bit soft for the last couple of months, but we are very close to securing the biggest screens project we've ever won in the company- in our company's history in Queensland, and I'll be hoping that that will happen sometime in the next few weeks using Premium Screens. In terms of jump form, you know, 10 projects secured, seven also have screens with them. We're still on track for that AUD 20 million of revenue within a couple of year period.
As I mentioned earlier, we're gaining momentum and, you know, the guy who runs the business says, "We're, we're fast gonna become number two in the country in this space." In terms of the guidance, we have reiterated our guidance at this, at this stage, but I wanna make a couple of points strongly in relation to, to that. So the first, the first thing in relation to that guidance is that, you know, if you look at the combination between MI and Acrow, we're forecasting at the moment, at the midpoint of our guidance, about AUD 1 million improvement in EBITDA in the existing Acrow business, half on half. So, you know, we're not- we're certainly not looking at the, our business going backwards six months to six months.
We're looking at about AUD 1 million improvement half to half, but it is strongly slanted towards the last quarter. I think the last quarter will definitely be our most profitable quarter, which then takes us into the new financial year, with, you know, quite a lot of wind behind our sails. So, you know, this obviously, we're up 38% in the EBITDA and 31% of revenue. They're very strong numbers. But primarily, the Jumpform and AcrowDeck equipment that we've purchased in the first half, we are getting decent revenue coming out of Jumpform at the moment, but the big kick will come into that last quarter, which will then take us into 2024.
So, you know, the guidance level at the moment, at the midpoint, does have its basis on about AUD 1 million improvement in the core Acrow business, six months to six months, plus the full six months impact of MI Scaffold versus two months impact. That's pretty much it at the moment. I'm happy now to hand over to any questions that the participants might have.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Pause a moment for questions to register. Your first question comes from Rupesh Karai, a private investor. Please go ahead.
Hi, my name is Rupesh. I just got a quick question regarding the dividends. I did raise this at the last time. Acrow is doing brilliant, and I'm, I'm proud of what it's doing, but I still think that, in terms of the dividends and raising equity doesn't make sense, otherwise, the company is doing great. 'Cause I noticed you've got AUD 7 million in the bank, and you're gonna pay out roughly AUD 6 million in dividends, that will leave you only AUD 1 million. So where is the growth gonna come from if you are to do any acquisitions?
Well, I'll let Andrew... Thank you for the question, and I'll let Andrew sort of talk more detail. But I think one of the major points around that is that how much we front-ended our capital expenditure. So, you know, Andrew's current cash flow forecast at 30 June, with that dividend being paid, with the capital expenditure program that we've got for the second six months, shows a significant uplift in cash at hand and debt reduction by that period. That's why, you know, we're talking about our debt to EBITDA, which is 1.2 with the half, going to probably under 1, Andrew, by-
Yeah.
go back to sort of 0.8, 0.9-ish by 30 June. So and that's by paying the dividend. I mean, I've said many times before, I like – I think dividend payments are a discipline. You know, you've got to be able to reward your shareholders as you're growing your business along the way. And that is the view of our board, not just yourself, our board in general. Andrew, you have any other comments?
Yeah, I think from a-- that's a good point about the equity raise, but that equity raise is specifically-
Yeah.
in relation to strategic investments. So we don't, we don't link that into, to the payment or so forth. That was to buy the CMI business. And in relation to cash, I'm sorry. We don't, we don't really look at cash as a number. We look at the net debt number. Because if we have excess cash, which can try and pay down part of the debt, having a lot of cash for us is just dragging extra interest expense.
Thank you. Once again, to ask a question, please press star one. Your next question comes from Tina Wilson, from AME Capital. Please go ahead.
Well, thanks for taking my questions. So my first one is actually on the secured hire revenue. I appreciate that it's up 18% PCP, but if my numbers are correct, looks like you've actually gone a little bit backwards from the last half, which is about, I think, AUD 37.8 million. Just wondered if you could comment on that. Am I missing something there?
No, that's... You're right. Thank you for the question again. But that's, you know, there is a different level of activity half on half each year. I mean, if you have a look at the, you know, every year that we've run, we've gone up every six months. Now, we're already tracking into February, ahead of where we were for the January and February periods of that last six months. And as we start to win, as we expect to win, some very significant jump form contracts, so they're big. You know... In terms of a contributor to the number, you can win a formwork package that's worth AUD 100,000 or AUD 200,000. You win a jump form contract that's worth AUD 800,000.
So we expect to see a lot more Jumpform wins in the second half than the first half. So, now you are right to point that out, but there is definitely a movement on, you know, as you go through each financial year in terms of the second half securing more contracts than the first half.
Sure. Great. Thank you. And my second question is actually on the pipeline. So I think you mentioned kind of like Jumpform is really where a lot of the opportunity is coming from. So if I'm looking at my numbers, it looks like the increase in pipeline from the last half is about AUD 8.6 million, of which AUD 8 million from Jumpform. So is it fair to sort of assume that, I think you mentioned that the actual other core businesses is a little bit flat?
Yeah. No, I think at the moment that the overall formwork market in general for us, when you call it flat, it's flat at a good level, right? It's at a level that's-
Sure.
Pretty bloody amazing, really, but it's flat. But we expect to see that, as I talked about Queensland Commercial as a prime example of that. Also, what's gonna go on with North East Link and a couple of other civil infrastructure projects. But we've said for me. And that, and that's also sort of representative of our capital expenditure profile. We've said, and we said it again today, and we've said in the last couple of presentations, that we're spending less money now on gear for the civil infrastructure market, because we're not seeing. We think we've got enough. We think we've pretty much got enough gear to cater for that market at the moment. That's at a really, really good level.
That's why we're focusing so much on Jumpform and also Acrow, which are new products, new channels for revenue, new opportunities to grow another revenue stream that doesn't rely on the civil infrastructure market.
Yep. Okay, great. Thank you. The other thing is, you usually comment on your sort of success rate on major projects. Just, it was missing in this presentation. I was just wondering if you could comment on that?
On major marquee projects?
As in higher wins. Normally, you kind of, you said you're more than 50%, winning-
Yeah.
-tenders.
We are certainly not going down in formwork secured contracts as a percentage of what we tender. It's still in the 60%-70% range.
Yep, okay.
which is up well from where it used to be.
Yeah. Great. And sorry, just last question. I'm very happy with the some more color that you provided on the product sale when major tenders come to the end. I was just wondering if, say, someone does sort of, you know, doesn't return your machines or they trash the machines and you need to bring in new machines, is there sort of a bit of a lag in terms of, you know, you need to purchase new machines and whether there's any sort of time down in terms of replacing new machines when major contracts-
10, 10 weeks?
10 weeks is the maximum.
10 weeks maximum.
10 weeks maximum. Okay.
Yep.
Great. That's all my questions. Thank you so much.
Thank you.
Thank you. Your next question comes from Rochelle Povey, from Ord Minnett. Please go ahead.
Good morning, Steve, Andrew, and Matt. Thanks for taking my questions. Can I just quickly start on the formwork market? I noted that you did say that, or in your disclosures, that Acrow is still winning market share in both Victoria and New South Wales, which has been underrepresented in the past. I'm just keen to understand if you're seeing much of a competitive response now that you have been consistently winning market share for quite a while now. So, yeah, if you, if you're able to comment on that.
No. That North East Link in Melbourne was a good barometer for that, Rochelle, because, you know, clearly we had such a presence on Melbourne Metro and West Gate. Now, Matt, correct me if I'm wrong, guys we worked with on that project have moved to North Queensland?
Correct.
Right. Okay. And that was a strong factor, Rochelle, that they, you know, they knew what we delivered on the previous project they worked on, and they were keen to work with us again. Look, I'm not seeing any movement at all. I mean, there's actually some sort of fascinating stuff going on. I probably shouldn't go into detail, but our previous equipment supplier, as an example, trying to get back into the Australian market and not having any success that we can really see anywhere. But no, look, we don't get complacent about this stuff, and that's why the product development work is so important. You know, we've really got to make sure that we maintain the highest quality in what we do.
I think, yeah, look, I think the general answer is we don't see it. I mean, so Queensland, you know, I mentioned because Queensland commercial has been soft for a few months, so prices in Queensland commercial have come off a bit. But again, we expect that to go the complete other direction by sort of the April, May, June period.
Okay, fantastic. Thank you. And just one last question, just on industrial services. Are you able to provide a bit of an outlook in regard to the margin for the, the contribution margin, that is, for industrial services looking forward, just given, just taking into account the MI acquisition and bigger labor component?
It definitely will reduce as a percentage margin. It will reduce. So MI, as a business, runs at about 20%. But that's, so that's 20% EBITDA margin. Contribution margin for those guys, Andrew, is probably just under 30%, I think.
Yeah.
The first couple of months we've seen.
Yeah.
So now it will come, it will come off, Rochelle. They have a bigger predominance of labor in their industrial services revenue than we do. We've got more hire, and we've also got product sales. They don't have any product sales. But look, they're making, they're making 20-odd% margin on their labor-
Mm.
which is phenomenal, really. If you look at the size of the contracts they've got, for them to be able to make 20% margin... I look at competitors, and they're making 8% or 9%, and they're making 20%.
Okay, great. No, understood. Thank you very much for that. That's it from me.
Thank you. You have a follow-up question from Rupesh Karai, a private investor. Please go ahead.
Sorry, I didn't know I was, I was allowed to ask multiple questions at the same time. So my question is just regarding kind of directors giving some signal in terms of the strength of the company. I noticed I'm not seeing hardly anything from directors making purchases rather than, you know, just getting performance rights and so on. Is there any possibility in the future to see that signal? Because I keep hearing, and you're doing brilliant here in terms of the returns. I wish I put all my money in your company. But I think is there any reason why you're not putting extra money out of your personal into the business?
Well, we've actually been in blackout consistently from basically November through to now, so.
Yeah, that's the reporting window when you're not allowed to trade, but there are other times I think it will be really good support, so that way you know, it's not just doing the talk, but you're actually working at the same time.
I think I could maybe answer a little bit of that. So, the chairman did actually buy some shares just around the time we raised capital, so there was that. But we're also, you've also got to take into account the quantum of what some of these directors, including Steve and Peter, actually own at the moment. They've got a massive amount of the... Well, I call them a massive amount of the shares in the company. So you do have to balance that side as well.
Oh, okay.
But, yeah-
Yeah.
I think that shows moral support.
Thank you. There are no further questions at this time. I'll now hand back to Mr. Boland for closing remarks.
Okay. Thank you, and thank you, everybody, for your questions. And thank you for your attendance in the meeting and your continued support of our business. So we hope we continue to have happy shareholders, and, you know, we'll be certainly doing everything we can to continue to improve our profitability every day, every six months, every twelve months. So thank you again for your attendance, and we look forward to talking to you again next time.
That does conclude our conference for today. Thank you for participating. You may now disconnect.