Ladies and gentlemen, thank you for standing by and welcome to the Acrow first 1/2 financial year 2022 results conference call. At this time, all participants are in a Listen-Only Mode. There will be a presentation followed by a Question-And-Answer session. You may ask a question by pressing 0 followed by 1 on your telephone keypad.
I must advise that this conference is being recorded today, Thursday, the 10th of February 2022. I would now like to hand the conference over to your speakers today, Steven Boland, Chief Executive Officer, and Andrew Crowther, Chief Financial Officer. Thank you. Please go ahead.
Thank you, James. Thanks for joining us this morning, as we go through our investor presentation we released last night in relation to our first 1/2 FY 2022 financial results. Very pleased to present our unaudited interim results for the first 1/2 of FY 2022. I'm extremely proud of the team across all departments and all of the branches in the Acrow business.
The really strong growth we're experiencing is clearly a testament to their commitment to providing our customers with First-Class products and engineering services. Firstly, the key financial metrics. You know, clearly we're really happy that they're all going in the right direction. Strong revenue growth of 38% from prior corresponding period, up to AUD 69 million for the first 1/2.
EBITDA is up 51%, up to AUD 16.7 million. NPAT up 118% to AUD 18 million underlying NPAT. Again, very happy with our EPS growth of 3.28 cents per share for 1/2, up 24%. Also pleased to be declaring a 1.2-cent partially franked dividend for the first 1/2's results.
I'm especially pleased with our return on equity continually improving and going north, which is, you know, clear justification that the appropriateness of our capital investment program over the last few years is certainly showing dividends and paying, you know. The result clearly shows that the returns in the business are improving off the back of that capital investment program.
In terms of the key achievements for the first 1/2 of 2022, that key leading indicator that is so important to our business and also to our future forecasting and success of securing hire contracts. We had another very good result. We're up 33% Year-On-Year in secured hire contracts, AUD 23.4 million for the 1/2.
That's continued already in the second 1/2. We had an excellent result in January, where we were up another couple of million dollars on the previous January. That's all going well for us. Pleased to say that the improvement in the results this year is all off the back of organic growth, not the impact of acquisitions.
It's now over 2 years since we made the Uni-span acquisition and, you know, 3.5 years since we made the Natform acquisition. They're bedded in completely part of Acrow. This result is solely off the back of organic growth. We sort of declared this quite frequently about what we were expecting to see in industrial services over the last 6 months and going forward.
Revenue up 158% Year-On-Year. Sales contribution up 76%. I'll talk a bit further about what that's come off the back of and how important it is to provide, you know, some very strong balanced earnings in the business to complement our formwork earnings.
We have been flagging for some time that we would have significant growth in Queensland formwork, which has been our flagship formwork branch for a long period of time, and we are definitely seeing it. 80% growth in hire revenue compared to the same period last year. Again, I'll talk a bit further about what's been driving that.
The next point there about WA, SA, and Tas is probably one of the things I'm most pleased about in this 6 months. One of the real pushes in the business has been to get Uni-span/ULMA product into markets where we didn't previously have the opportunity to hire those products out. That's primarily Western Australia, South Australia, and Tasmania.
We've been really successful and continue to be successful in opening up new channels to revenue off the back of our wide product range. Between those 3 branches, revenue was up 62% and sales contribution was up 118%. That's a really important thing in terms of generating further growth in the business.
The last point around supply chain, it's a very challenging area, clearly globally at the moment. You know, we're not immune from that issue, but we've taken some really significant steps to minimize the impact. Our approach is let's try and turn this negative into a positive. I'll talk about that a little bit later.
Clearly in some very strong areas, we have actually turned this into a positive in terms of generating more revenue and more profit in the business. In terms of major transport infrastructure projects, not going into a sort of project by project that we may have rolled out in the past, but that's Boland's projected to be spending major transport infrastructure.
You can see we're not predicted to hit the peak of this until FY 2024, and we'll stay at the levels we are in FY 2022 for at least the next 5 years. We're talking transport infrastructure projects here. We don't include things, for example, like Snowy Hydro, which is, you know, the biggest infrastructure project in the country, probably be within the next 5 or ten years.
I'm very pleased that we are getting significant revenues out of pretty much every one of the major transport projects in the country. Our biggest revenue generating project of the year this year will be the Bruce Highway, Gympie to Curra in Queensland. We've won 2 very significant packages on that project, and we provide hire equipment.
We are selling consumables and also providing labor across that project, and that will generate over AUD 2 million of revenue in our business this year. Melbourne Metro Rail, we're pretty much batting almost a hundred at the moment on winning every new package that gets let on the Melbourne Metro Rail. It will generate more than AUD 5 million of revenue for us this year. Western Distributor has been going for some time and continues to operate for us with AUD 3 million this year.
The Sydney Metro Rail, I think the important thing here is that whilst we've done AUD 2.5 million on the existing Metro Rail project, it's what we're looking forward to now with the next 2, the Inner West Metro and the new, the Sydney West Metro, that those projects are, you know, kicking off in the next sort of 12 months, is what we can what we think we'll be able to to generate looking forward, significantly more revenues than what we've done on Sydney Metro.
Cross River Rail is still pretty much in its infancy for us, but we will do AUD 2.5 million plus revenue on that project this year. Our formwork revenue by state, which is obviously one of the key drivers for us.
You can see the great growth in Queensland year on year from AUD 10 million to AUD 13 million. You can see Victoria has continued to hold from that dramatic growth that we experienced over, you know, 18 months ago. New South Wales, that number is a little bit, it's not really representing the true picture.
The New South Wales hire versus total revenue that we're showing here, but the New South Wales hire revenue has actually doubled over that period. In the 2021 year, New South Wales got the benefit of a lot of revenue from sales of ex-hire equipment as part of the rationalization of our fleet when we purchased the Uni-span business. That was all done. That was completed.
That contributed around about 2.5 to 3 million dollars into that, in that number in the first 1/2 of 2021. As I was saying, in actual pure hire revenue, the revenue has doubled. As we go into the second 1/2 of the 2022 year, the New South Wales business is really going to hit leaps and bounds and by year-end, you know, we'll see significant uplift in revenues coming out of Formwork New South Wales. Western Australia, as an example of those 3, what we call smaller states, you can see that Western Australia revenue's doubled between 2021 and 2022, and its profit is, you know, significantly higher.
You know, we continue to grow our Formwork revenues, and we are growing now in every single state, including New South Wales, as you can see when we get to the full year 2022 numbers. This is, you know, still the key profit engine of the business. Hire equipment wins, as we mentioned earlier, up 40% during work and a very strong picture in terms of what's in the pipeline going forward. Sorry, I just got a note to say the call's just cut out.
Hello? Can you hear me?
It's back on. Sorry. Apologize. I just got a text message from someone saying the call had just dropped out and just come back on. Talking now about our engineered systems and services. The absolute key to the change of focus and the results of the business over the last four years has been our focus on engineering.
Now 85% of our revenue, it comes from what we would classify as engineered systems, formwork and industrial, rather than the 43% four years ago. We really are focused on providing our customers with engineered solutions that save them time, crane time, labor time, all the things that are, you know, obviously very expensive items on projects and they're becoming more expensive.
You know, the cost of materials and labor and et cetera on construction projects is really going up. We have invested a lot of, I guess, effort into a strategic investment into people in our engineering capabilities over the last four years. We've doubled since listing the number of engineers working in Acrow, and that continues to this day.
It's a totally commercially focused team. The whole focus on engineering is led by Matthew Cantarella, who has been the National Engineering Manager for the last 2 or 3 years. He's recently been appointed now as the Chief Operating Officer in Acrow, and we've brought into the business as the National Engineering Manager working under Matthew, a gentleman by the name of Evan Feild, who is going to take us again to another level here.
Evan ran his own engineering consultancy business in Queensland for a number of years. Very successful, very well regarded by both our customers and actually some of our competitors. Evan is going to help drive a more broad approach to providing turnkey solutions to our customers across a range of all the products, not just the Acrow service offerings, but also providing advice about general engineering services to each of our customers.
This is the key. It is absolutely the key to the growth and turnaround in the business, you know, very proud and with the engineering team that we've got within Acrow. Mentioned earlier, we are on all these marquee civil projects. You can see we're on all the key projects in the country.
I also mentioned Snowy. I'll talk a bit more about Snowy in a second. I'm giving some examples of our engineering expertise and how they apply in the field. The first project, which is part of the Western Distributor—this example, it was a very unique formwork requirement, and it was clear that we weren't gonna be just able to utilize existing Acrow kit to provide the solution the customer wanted for this particular part of the project. We, you know, came up with a specific design and manufacturing equipment in a bespoke fashion just for this project, and we sold it onto the project. It, you know, working extremely well for the customer, it provided a very good return for us.
Again, it's an example of, you know, we're not just looking at solutions that use our own hire equipment. You know, we will come up with the solutions that require some manufactured equipment, and then we'll go ahead and manufacture the equipment and sell them onto the project. The second, which is, if any of you drive over the Anzac Bridge, you live in Sydney, you can't miss this now. The vent shafts on that project are standing out very high into the sky. I think this is almost like the opposite to the first project that we mentioned on the Western Distributor.
This required us to come up with a solution using existing Acrow equipment, so the customer didn't have to go and buy a whole range of manufactured product that would've added a lot of expense to this particular project with the vent shafts because of their quite unique design. So our engineering team came up with a solution using our own gear, adapting the services in such a fashion that again, we have a client here, which is, uncertain , on this part of the project, we're able to, not have to spend a lot of money on buying specialized equipment that would've just been used on this job. They instead had a, basically a hi-hire solution by adapting an Acrow fleet onto the job. The last example we give here is just what.
This is really a classic example of how the combination of Acrow, Natform, Uni-span into one business. This project, The Landmark project, started off as a screens job for us, and it was quite a complicated screens job that we needed to design specifically for the design of the building.
But off the back of the screens, we finished up providing basically the whole range of our commercial formwork products, timber and ply, like uncertain , CC4 formwork, as well as screens driven by a hydraulic unit, and also handrail systems.
This is a classic example of bringing those 3, what were 3 disparate businesses together now as one unit and providing, you know, complete solutions to customers such as this example. Supply chain management is clearly a challenge.
It's a well understood global issue, and it certainly has had a big form of challenges for us, but we're turning it into a positive for the business. In 3 particular areas, we've got clearly extended delivery times on new equipment due to logistics issues and also availability of raw material. It sort of pushed us to go and see whether we could find good quality second-hand material on the global market, especially in the CC4 category, which is a very strong formwork category for us. We found a supply of very good quality equipment in North America that we've been able to get our hands on at a significantly reduced price to the cost of new product, and it's basically almost as new.
That's given us both an advantage in terms of getting the gear here earlier than we otherwise would, and also in terms of the cost of the new capital coming into the business. There's clearly a well-understood shortage of shipping containers and a lot of increased freight costs across the globe. We've come up with a way by passing intermediaries and dealing directly with shipping lines to secure availability and competitive pricing. Our cost of containers has still gone up significantly, as everybody in the world has.
I've done some sort of benchmarking with some people I know who work in the logistics game about what we're paying for containers directly dealing with shipping lines, and we're paying less than a, well, what a lot of global logistics companies that are specifically paying shipping lines. The 1/3 area is really important to on supply and trading terms.
Clearly, you know, we've had working capital in costs off the back of increasing our sales, but also in terms of increasing costs of logistics. We've been able to actually minimize that impact by having strong negotiations with a lot of our suppliers on trading terms. And where did we turn this into a positive? Especially is coming out in the category of Timber and Ply sales.
Our Timber and Ply sales have gone up dramatically in the last 6 months, and especially in the last few months, and it's still going forward now into the second 1/2 of this financial year, both in volume and margin. That doesn't come without working capital impacts, but, you know, our margin on timber, which used to be lucky to be sort of 10, 12%, is now running around 30% on vastly increased volumes.
You know, we turned this global issue around supply of timber into a benefit into our business. In terms of the numbers, and breakdown in our segments, you can see Formwork, total Formwork revenue up AUD 4 million. Industrial Services, clearly the big generator of revenue growth, AUD 13 million, and Commercial Scaffolds was up AUD 850,000.
Contribution margins, as you can see, formwork margin up by AUD 5.8 million, and this is the big profit contributor off the back of the higher revenue growth. Industrial services, clearly AUD 3 million in 6 months is a great result, and a flat result in commercial scaffold. I'll talk a bit further about that later. When you grow the business to this degree, you are clearly gonna have increases in costs, both in, you know, your yard expenses and in labor, because we are employing more engineers and actually more salespeople.
65% of the sales contribution has passed through to COGS. I think that's a great result when you can grow at the level we are and still get, you know, 2-1/3s of the improvement in your sales contribution passed through to your bottom line.
Sales contribution bridge. This is what I want to see. I want to see that where we're investing in our capital is where we're getting the growth. We're investing our capital in formwork equipment. We're investing our capital in some industrial services equipment. We've had nearly AUD 6 million of formwork hire growth in this period.
That's basically all off the back of capital investment. We've had combined between industrial scaffold hire and industrial services labor hire, a AUD 2.2 million improvement in contribution over this period. We wouldn't have got that without the capital investment program that we've undertaken. In terms of the segments, again, you can see formwork hire, as I mentioned, is the big generator.
Product sales, while it shows as being flat, that is again because of a lot of the sales in the previous 6 months, previous financial year were generated out of fleet rationalization from ex-Uni-span sales off the back of the Uni-span acquisition. All that Acrow equipment that we didn't need, we were able to sell and rationalize our fleet.
That's been significantly offset by, as I said, primarily the timber revenue and margins that have increased so significantly over this period, and are continuing to do so today. Again, good growth in revenue, great growth in contribution, and very pleased to see the growth that we're getting out of Western Australia, South Australia, and Tasmania, as I mentioned earlier. Industrial services is obviously the story in terms of total revenue growth, AUD 13 million.
Clearly a lot of that revenue comes in labor hire, which it generates around about an 18%-19% margin for us, which is still very good. Very happy with that business. Product sales was and the margin has taken a bit of a tumble this year. Now the key to that, and you can see the number of AUD 8.4 million is a very high revenue in product sales.
We made a strategic decision to sell quite a lot of new equipment onto the Snowy Hydro project at lower margins that we would normally sell to. Now, we're still talking 15%-16% margins on very big sales, of which all we do effectively is place an order and then the gear gets shipped.
We've made the decision to take a lower margin to get a strategic footprint on that project. It's gonna be such a huge formwork project into the next few years, that for us to be such a strong supplier of equipment and labor onto that job already, you know, you weren't gonna be able to make 25% and 30% margins on that project selling your equipment.
We've made that strategic decision. We're batting in about 100 here on almost every contract. Every contract that's happening. The key project wins are busy. I've mentioned Snowy. Mount Piper, which we're just doing a shutdown now, that wasn't forecast to happen until the first 1/4 of the next financial year, has been brought forward. We've mobilized that in the space of about 3 weeks.
That shutdown's gonna generate about AUD 3 million of revenue and about AUD 800,000 of EBITDA that we didn't expect to have until the first 1/4 of next financial year. Great story, and that we're continuing to push here. It's certainly part of the Acrow story going forward. It's a very stable earnings platform, you know, complements what we do in our formwork business.
Commercial scaffold has been flat, which is not bad, but I think, look, one of the things I want to point out here is we have continued to do a number of reasonable scale projects. As you can see, the labor and cartage margin year-over-year has deteriorated. We've made a decision across the eastern seaboard states, Queensland, New South Wales, and Victoria.
We're just not going to bother tendering on large scale commercial scaffold projects in those states. It's not worth the effort, and we can get, you know, far better returns just focusing on dry hire and small scale projects. You know there'll be reductions in costs of moving gear around and also in labor internally by just focusing on small scale.
It's too competitive at the higher level. Again, recently, there was a large project in New South Wales that we were interested in. Competitor won it at a price of like 50% lower than we would have been at almost our break-even point. It's just not worth the effort. We'll still generate good profit and revenue out of dry hire and smaller projects. Key contract wins.
I won't go into these because you can read those at your leisure, but I think the main point that I'd make here is that it's across all sectors and geographies. Industrial services, formwork, commercial. There are some commercial scaffold projects in Queensland with Hutchinson Builders. Screens projects in New South Wales.
What I will mention on the second page, a very large screens project in South Australia, which will only be our second ever project of this nature in the South Australian market. Tasmanian projects. Again, we are winning good sized new contracts across all sectors and across all geographies. I'll now hand over to Andrew to run through the financials before I wrap up on our forecast and our outlook.
Great. Thanks, Steve. Thanks for joining us today. As Steve's already talked through, this period's been a pretty large growth period, as you can see from the results on the balance sheet, which we'll go through in a moment. What it's really showing is that the CapEx that we've spent, the elevated CapEx we've spent the past couple of years and in this 6 months, and also the pivot towards formwork and in particular the acquisition of Uni-span, which goes to the sale of industrial services business, is really starting to allow this business to hit scale. We'll go through that in the P&L. Steve's already gone through the EBITDA, so AUD 11.1 million up to AUD 16.7 million.
I mean, that's been brought around from the increase in contribution that Steve's already mentioned. Our actual operating costs reduced as part of contribution from 61% last year to 55%. We're keeping good control of costs there. When we move down, depreciation, it's basically gone up with our increase in property, plant, and equipment. That's been stable. Our net interest is relatively stable to last year, and last year's was a bit of an anomaly because we still had the 1/3 acquisition cost which had embedded interest in that. Our pre-tax profit increased from AUD 4.2 million to AUD 8.8 million, a 109% increase.
Tax expense, as you can see here, our actual tax effective tax rate has gone from 12.7% down to 8.9%. As we've discussed before, we do have quite a large amount of carry forward tax losses, around AUD 15 million of tax, which translates to about AUD 50 million of tax we've come against that. We obviously structure ourselves to make the most of that carry forward tax, so a relatively low effective tax rate, or very low effective tax rate. Personally, what we have, we get our NPAT underlying increased from AUD 3.4 million to AUD 8 million or 118% increase. Now then, the difference between NPAT underlying and NPAT reported, we have 2 significant items.
We had a bit of a holdover from some acquisition and some adjustments we had to make, some system changes and some advances we still had to go. That's basically the end of that part. We also had share-based payments. You can see last period we had an AUD 1.2 million expense. This period, we had just under AUD 400,000. Now that's a bit of an anomaly. There was quite a few long-term incentives that didn't vest last year, so we were able to make use of accounting standards. We're able to write back around AUD 400,000 of those LTIs into profit. That part is likely to be higher in the next 6 months, but still NPAT reported from AUD 1.7 million-AUD 7.4 million, almost a 300% increase.
This is where we're seeing scale both at a pre-tax profit and through tax and NPAT point of view. What that translates to is, as Steve already mentioned at the beginning, EPS has increased from 1.69 to 3.28 cents a share or a 9.8% increase. We have to take into account that also takes into account in the denominator, we issued 32.6 million shares this 6 months. That included both the AUD 10 million to AUD 10.45 million share issue we did, plus options and LTIs invested. That 3.28 is not just on the back of increased NPAT. It's also taking into account increase in the share base. That's very pleasing.
This dividend has been announced last night of AUD 0.012, which is 20% franked. Now that's. If you think last interim was AUD 0.0075 and last final was AUD 0.0115, but because of the profits we've delivered, that's even more than our last one. Moving over to the balance sheet. So from a. With the growth in our profit and growth with capital going at the moment, our net debt increased from AUD 22.4 million to AUD 28.9 million. Now, the net debt is up. We've had AUD 13 million of CapEx, and we've made the last payment of the purchase consideration for Uni-span of around AUD 3.5 million.
That's sort of the main difference in the net debt. One of the things you'll remember from June, we had quite a large current deficit, about just over AUD 8 million. At December, it's now flat. This period has been a massive strengthening of our balance sheet, which is really gonna set us up for the next 6 months and future. Steve's already mentioned it. One of the things we're going through at the moment, we all know it, we're going through a worldwide pandemic, supply chain issues, we've got delays in receipts and costs have gone up. That's obviously impacting us and our working capital.
Just to go into parts of that working capital, our receivables have gone up by AUD 1.2 million. Now that's only a 5% increase compared to the 38% increase in sales. We've really contained what could have happened with receivables. Our debtors days have remained stable at 56 days, which is very pleasing. We're not seeing any deterioration in that. However, when we look at the inventory amount, our inventory's gone up by AUD 3.5 million.
Now that's quite a large increase, about 39%. Really, that's pretty consistent with the increase in sales. However, if you look at our prepayments, up by almost AUD 3 million. Prepayments are very. Most of that is prepaid inventory in stock that we basically haven't received yet.
Creditors have gone down by AUD 1.7 million. Those 2 combined, just under AUD 4 million, that's really because of these logistics and supply chain issues. This could have been much worse if our procurement team hadn't bettered our supply terms and basically our freight. This is actually not a very good outcome compared to what it could be. Saying that, there has been a very large working capital increase in the 6 months because of the supply chain issue and also because of the increase of our just with our results. The only other thing worth mentioning in the balance sheet is obviously our property, plant and equipment has increased by almost AUD 10 million.
That's on the back of AUD 13 million of capital expenditure and obviously depreciation and some sales mix higher. We'll move over to our cash flow. Along with our increase in contribution and EBITDA. Our capital, the way we define cash operating profit is our pre-AASB 16 EBITDA, less maintenance CapEx and tax. As you can see, our cash operating profit has increased from 5.5 last first 1/2 of 2021 to AUD 10.186 million this period, so an 84% increase. And that's basically how we pay dividends between 30% and 50% of cash operating profit. Our interim dividend is just below that 30%, but we see us getting within that range of like on the climb. Below is our net debt bridge.
This just shows you how we get from AUD 22.5 million net debt through to June, through to AUD 29 million in December. Now, our cash flow from operations of around AUD 7.4 million was actually down by AUD 3.3 million from the previous period. Now, as I've said, as we've gone through with the logistics and just our increasing working capital, that reduction of AUD 3.3 million, we've got to compare that to the fact that our working capital inflows on inventory, prepayments and creditors has gone up by AUD 8 million. That AUD 3.3 million compared to an AUD 8 million inflow is a pretty good outcome.
Now, the only other thing to mention here is you can see our CapEx further to the right of that diagram is we've got AUD 13 million of CapEx and deferred consideration of AUD 3.5 million. In the next 6 months, we don't see CapEx being that high whatsoever, and we obviously won't have any more deferred considerations. They're all gone. You can actually see that this business will start spinning off a lot of cash if we reduce CapEx, and we don't have the investment like we did. Now, moving over to the capital expenditure in the next page.
As you can see, there's been quite elevated capital expenditure in this period, and that's to take into account both this year's and what we're seeing coming up in the next year's operations. AUD 13.1 million of CapEx in the period, of which just under AUD 10 million was growth. We've got the list of the main sort of growth items on the right side.
The reality is most of this gear is going towards the industrial services business and the formwork business. This is providing us all the growth. We're still just we comment on this every result period, but we are very strong on the 40% return requirement for any growth CapEx, but we are actually getting way above that.
You've got to remember, this growth CapEx has a lag. When you buy growth CapEx in every period, we're only getting about 1/2 of that return in that period because obviously it's got to go over the full amount of the period. Now, we did some analysis of this, and the returns we're seeing based on the growth CapEx we've done from last year and this year, we're getting about 52% return on EBITDA on this growth CapEx. But from a contribution point of view, it's about 70%. We're definitely getting the return on the growth CapEx.
In fact, as I was saying, 40% is our benchmark, but the reality is we really are aiming more towards the 50% for this, at this point in time. I think, I will hand back over to Steven.
Thanks, Andrew. Just to wrap up this piece, our strategy remains unchanged. It's consistent, and the consistency in our strategy is one of the, and the success in delivering is one of the strong attributes of the business. You can see those points. It's about we are the number one formwork hire supplier in the country. We guard that now jealously. We've grown it out of the Queensland model and, you know, continue to drive up. We're making great inroads through the industrials, industrial scaffolding, industrial services. We focus continually on bringing in high-quality people and, you know, promoting within high-quality people in the business.
The organic growth that we're generating across the other states now, other than Queensland, off the back of the range of products that we've got is clearly paying benefits. We are continuing to be open to acquisition opportunities. We're looking at the moment for, you know, things that might be of interest to us in the industrial services area. Nothing specific at the moment, but we've certainly still got an eye on opportunities that make sense.
The people and culture in this business, well, the people are key. It's absolutely vital. We've got incredibly strong depth in the business now. I'm so proud of the people at all levels of Acrow in all states or branches. Our focus on succession planning and attracting the best talent in the industry. There's some examples here.
Just in the last, you know, 6 months, a new General Manager in Victoria, Brad Craven, a new General Manager in New South Wales, Peter Fehrenbach, both doing tremendous jobs in the business. Peter Belcher, who came on board just at the time we really were looking at expansion in industrial services as National Operations Manager. I mentioned Evan Field earlier, who started in January as the new National Engineering Manager.
Robert Parovel, who also started only in the last couple of months as our General Manager of People and Culture. These are incredibly experienced industry people, who are adding great depth to the business. But just as importantly, you know, the internal promotions of people like Matthew Caporella as the Chief Operating Officer, Jurie Roets to the National General Manager of Industrial Services, and Jason Jarman as National General Manager of Natform.
Now, these are all very capable young people, that, you know, are providing great depth and will be the future leaders of Acrow. No doubt about it. Culturally, this is a safety first business. It's about customers, and it's about providing solutions to customers. We wanna be the employer of choice, and I think we're certainly becoming that, if we're not definitely that in our industry. Bypassing industry standards, not just setting them, but taking them to a whole new level.
The culture within the business is very open and honest, probably brutally honest, but remains constructive and Non-political, and very much a one team attitude. In terms of the short term to medium term, moving into our forecast for the rest of this year, we will continue to grow industrial services and expand the revenue base, pushing hard in the South Australia and Western Australia market. We're having some success in South Australia, serving a couple of good contracts in Olympic Dam. New South Wales formwork, you will see by the end of year results, you will see a significant turnaround in the numbers coming out of the New South Wales formwork business.
We are growing market share, and we're specifically focusing on these, you know, these large projects, Snowy and the Sydney Metro, Western and Inner West rail projects that are just about to kick off. We'll continue to capitalize on the project pipeline in Queensland. We will continue to push the organic growth of formwork products into the other states outside of Queensland.
The integrated engineering service I mentioned, I think there's gonna be quite a development here in the way we approach the market with Evan Field coming into the business with his experience as running an engineering consultancy company. Natform, interestingly, we've actually had a pretty quiet 6 months in Natform in New South Wales.
In terms of COVID impact, probably been the only part of our business that's had any impact due to a number of projects being delayed, but that's all turning around now. Our forward order book for Natform and what we're seeing for the next 6 months is better than we've ever seen in the business.
You know, I wouldn't comment on des-- you know, despite you know, the significant improvement in EBITDA we've had across the whole of Acrow, the Natform New South Wales business has actually had a soft 6 months because of the project delays. The second 6 months, and it's already starting now, you'll see an incredible increase in revenues out of that business.
As I said, in terms of the work won in the forward order book, never been as strong as it is today. That takes us to our outlook. We're very pleased to provide upgraded guidance. We're extremely comfortable with the guidance that we're giving today for the rest of the FY 2022 year. You can see we've upgraded our revenue forecast to a AUD 140-AUD 145 range, compared to the previous AUD 130-AUD 135. We're now forecasting EBITDA to be between AUD 33.5 million and AUD 34.5 million, so effectively a AUD 2 million increase from what our previous guidance was.
Similarly with NPAT now, up to sort of 15.5-16.5, again, circa AUD 2 million upgrade to previous, and EPS in the range now of 6.2-6.5. As I said, you know, we're extremely comfortable with that guidance. We give it because of a couple of reasons. Firstly, we're already through January, and we're 1/2way through February, so we've got a very good idea of what those results already look like, and we're pretty happy. Our secure higher revenue contracts been up for 7 months now to January, up 43% on the same period last year. You know, the CapEx is gonna be ordered off the back of the capital raise. Actually haven't seen any of that gear arrive yet.
Despite, you know, we've spent a lot of money on capital in the first 1/2, but that was already planned. The capital raise was to give us that second impetus, I guess, for what we are now. We've now ordered gear that won't be arriving till the last 1/4 of this financial year. We will be getting, as Andrew said, minimum 40%, and our results show better than 50% on that gear when it arrives, April, May, June. You will see some impact of that in the last 1/4. The major impact of that will be in FY 2023. A lot of that equipment is destined for markets outside of Queensland, and we'll continue that organic growth push.
Clearly now industrial services, you know, we're now forecasting revenues to be circa AUD 43 million in industrial services in FY 2022. All of that picture together gives us the confidence to give the updated guidance that we have. That's it for the presentation at the moment. James, I can hand back to you, and we're happy to answer any questions or take any comments from any of the participants.
Thank you very much. Ladies and gentlemen, we will now begin the question and answer session. You may register a question by pressing zero one on your telephone keypad and wait for your name to be announced. There may be a slight delay while participants register and names are collated. Please stand by. Our first question is from Alexander Lu. Alex, your line is open.
Alex, we are, and it's working in our favor. If you think about what we do, I mean, we hire equipment. If we've got jobs that are going and we've got equipment on jobs that are experiencing some delay, we just keep charging. Right? The one area that has been affected was Natform, because there's a number of new projects won that didn't commence when they were expected to in that first 1/2. I say again, the results that we've produced are despite actually having a relatively soft 6 months for that business. That's all changing now. We're seeing serious upward trend.
I think the interesting thing too is, and this is post, obviously, the 1/2 year results, we all know that, you know, Australia's had its greatest COVID impact through January. Well, we're through January. We're extremely happy with the result we produced in January. It was far better than we expected it to be.
And you know, I would say, you know, and we, you know, we had obviously, well, as you'd expect, a number of our staff infected with COVID over that January period, the Christmas and the January period. Didn't interrupt our operations at all. You know, Despite having, you know, quite a degree of absenteeism, we got through very well, and people applied sort of extremely well. You know, I said I'm...
I can't see anything but, I guess, upside for us through this situation because, you know, and I'll say too, in terms of our labor for, you know, the major shutdown works. Again, the guys have done a remarkable job in making sure that we've got enough staff despite COVID issues to be able to provide all the requirements for all of our major industrial shutdowns, you know, Snowy, Mount Piper, et cetera. You know, so again for us as a hirer of equipment primarily, not a bad situation.
No, thanks for that, Steve. Maybe if I just ask about industrial services, please. You know, that business has been strong, you know, through FY 2021, expecting another very strong result in FY 2022. You know, you've been very successful in expanding that outside of the Queensland market. Could you maybe just talk about, you know, some of the things that are, I guess, you know, setting you guys apart from your competitors and, you know, why you're winning, you know, the work?
Yeah. I think I've spoken about this in the past, Alex. We've had a very strong track record of being a service provider for that market in Queensland. We were strongly encouraged by our customers in Queensland, who also had operations in New South Wales, to look at the New South Wales market because I think the service provision they were getting out of Queensland was superior to what they were experiencing in New South Wales.
You know, that coupled with bringing on someone like Peter Belcher, who's had 40-odd years experience of running these sorts of contracts across the country, he's probably the best at what he does, to already complement the staff and strong staff that we had. We've made investments.
We invested in new equipment that again is setting us apart. Some of the work that we mentioned before, but some of the work we do in some of the power stations inside furnaces that requires absolutely specialist equipment that we were prepared to invest into. All that stuff is setting us apart. You know what? It's seriously at the moment, there's basically not a lot of contracts that we've targeted in New South Wales that we haven't won in the last four months.
Okay, great. Last one from me, just from a risk perspective, you know, I guess you've obviously got guidance out there. You're very confident with that guidance, but maybe just talk about some of the risks that you see in the second 1/2 and going into FY 2023, please, Steve.
I'm thinking. COVID. You know, what... Does COVID continue to play a role? None of us expected, you know, Omicron, I guess, in December. I can remember in my December management meeting saying to all the guys in the room, "It'll be all on Zoom. It'll be great to meet face-to-face in a meeting in February," and that's all changed.
Yeah, I think that continues to be the issue. I think, look, we, you know, clearly we're facing challenges with working capital. We're really fortunate. We've got a great banking partner in Westpac who have been incredibly supportive with, you know, helping us through working capital issues, making sure we've got absolutely more headroom than we need for facing any of those issues.
As Andrew mentioned earlier, you know, going into next year, you know, we expect to be reducing our capital expenditure by upwards of AUD 10 million into next year on what we will see again, we believe an improved EBITDA result again into next year. The cash generation in this business is going to improve significantly. Mate, I don't see any. The only risk I'm seeing is probably this COVID project delay related.
Probably some macro stuff. There's stuff going on in Europe, as we all know.
Yeah.
That could impact some of our timber and
Supply chain.
Obviously supply chain stuff. That stuff's out of our control, obviously.
Okay, great. Thanks very much, guys.
Thank you. Once again, ladies and gentlemen, if you wish to queue for a question, please press zero one on your telephone keypad and wait for your name to be announced. Our next question is from Raju Ahmed with CCZ Equities. Your line is now open.
Hi, Steven and Andrew. Hope you guys are well. Couple of questions from me. The first one, if we concentrate just on December of 2021, from what I can gather, industry contacts and whatnot, the month has been affected, generally speaking, due to wet weather and obviously COVID absenteeism. I would hazard a guess that your labor hire revenue probably was maybe below budget or something along those lines. The question for you is, do you see a catch-up on that front in the second 1/2 of the financial year, so that obviously bolsters the revenue on that front and the earnings? What's your view there?
We actually had a cracking December and a cracking January, far better than what our budget was for those months. We also expect to be trading well ahead of our budgets for the next 5 months. No. Look, we didn't. I don't think that is relevant to us, Raj. I don't think we had lower revenues in December that will be caught up because of delays in projects. We simply had a very good December. We had an extremely good January. Our forward forecasts are very strong. I don't think that's a relevant issue for our business.
Okay. No, that's good to hear. So in terms of wet weather, and so on, the main risk on that front, if any, is the ability to get labor on site should there be those sorts of issues. Would that be it? Is that the only risk to consider?
Yes. Sorry. We did have about a 1-week impact on the Carmila to Clara project because, you know, there's a lot of flooding in central Queensland around that early Christmas, early January period. We had about a 1-week delay. That's all it was. It was 1 week. Look, again, to go back to sort of the point that I made to Alex earlier, if it's a wet weather issue, while it might affect if we've got labor on a job, it might affect that. If it delays the job and we've got hire equipment out there, then happy days for us.
Okay, fantastic. The second one around the engineers that you've got, you sort of, highlighted, that the actual professional engineers count in the business has doubled, over the years. Is there, a correlation or something of any better nature you can give us whereby one engineering FTE equals AUD X in revenue? Can we sort of, from a analyst investor perspective, make that sort of, connection?
I've never done that comparative, Raj. You could do it. I mean, if you look at the business, you know, when we listed, we were turning over AUD 60 million. We're now turning over AUD 140 million say, right? We've doubled our engineering team. There might be some correlation in that. Look, yeah, I'll Andrew, we might take that offline.
Yeah.
We can maybe have a chat to you about that one, Raj.
Okay. No, what I was trying to get to was the benefit of the audience, you know, including myself, is, are you planning to add further heads into that part of the business?
Oh, I think.
How do we think about the revenue profile there?
Yeah, I just think we just need to. We will judge that as we develop. You know, we'll judge that over the course of the next 12-18 months as we get closer to the peak of the infrastructure boom. You know, we're not at the peak yet. We're gearing up to that. Look, I think planning in this area, we're actually opportunistic, Raj. You know, we've found. You know, I wanted to promote Matthew Caporella to the Chief Operating Officer role because the role was needed in the business that we were missing in terms of complete equipment management across the whole of the country, and Matt has filled that.
It was just great that we were able to find somebody. Well, not quite. I mean, Matt had a strong relationship with Evan Field. But to have someone of his caliber willing to effectively wrap up his business and come and join us as our national engineering manager was quite an industry coup. Yeah, look. But yeah, let's just have a look how this next couple of years of this peak goes. It may still require more engineering resources for the business going on.
Okay. The last one, around the supply chain management, I mean, it's clear that you guys did a fantastic job on that front. I like the way you've sort of, you guys have extrapolated the issues and the remediation. I'm referring to slide 15 here. Where you talked about you renegotiated the trading terms with suppliers, and then you sort of bypassed intermediaries and so on.
Is that now set in stone, such that, even when, let's say, the world normalizes with all these shipping challenges, you're still gonna continue with the benefits that you've been able to extract in the last couple of months so that as you grow as a business more and more, you get further procurement and scale efficiencies kicking in? Is that the right way to think about this?
Well, I think again, you've got to adapt to the circumstances that are presented to you. We had to, because we were finding it hard to get containers out of, you know, the logistics companies. Our guys went directly to talk to the shipping lines, and that worked really well. I think you've got to be able to adapt to what's presented to you. You know, we saw a working capital situation in the business presenting itself that could have been far more difficult to deal with than what it is actually now. We saw that starting to develop, and we jumped on it really quickly.
One of the major things about supply, I mean, negotiating better terms with suppliers, I mean, we were paying for material, in some cases, up to 5 months before it was arriving in the country. We've, you know, renegotiated a lot of that. Look, I think you've just got to be nimble. You know, you've got to adapt and you've got to be nimble to the circumstances that are in front of you. You know, we're fortunate that we've got some very capable people in this area who do exactly that.
I reckon, Raju, there's actually upside when the world normalizes in the next year or so because there are still plans we're making that are very tight. So I actually think there's more upside than downside.
Okay. Well, that's helpful. I might leave it there, so thank you for your time.
Thanks, Raj.
We appear to have no further questions queued at this time. I'll hand the call back to you.
Okay. Thank you, James. Thanks everybody for taking the time to hear our presentation this morning. You know, we look forward to the next few months, and we look forward to talking to you again, come August with the full year results. You know, very confident in, you know, what this next period will do for the business. You know, thank you again for your time. Cheers.
Ladies and gentlemen, that does conclude today's conference. Thank you all for attending, and you may disconnect your lines.