Hi, good morning, everybody. Thank you for taking the time to call in this morning. We're 18 months into the deployment of the Austin 2.0 strategy, and we can really see now how the strategy is playing out very strongly across the board and the financial effects that that's now having on the business. I'm really pleased about the performance that we've seen in the business so far, and it makes presentations like this that I'm gonna be making with David this morning, very easy to do.
I'll skip now through the financial highlights. David will go into a little bit more detail on the financial parts of the numbers. We'll finish off with an overview of where we're getting to on the strategic initiatives that I've talked about previously. Revenue is up 43% to AUD 114.1 million. I'm really pleased about the revenue performance. I remember saying to a number of you 18 months ago, I wasn't sure about the ability to grow market share and therefore revenue in this business. What we've actually found is that there is a great deal of headroom for us to do that.
We've been talking all year about the order book being strong, we can now see that playing out on the revenue side. There's really no signs of demand moderating. We continue to see strong demand across the board, across the product range and across the different geographic regions. We're seeing growth both in volume of product as well as in the pricing of product as well. I guess much of that won't surprise you given the strength and performance we're seeing out of the mining industry in general. EBITDA was up 22% compared to the prior corresponding period at AUD 12.2 million to a new record level. It's perhaps not quite as high as we had expected at the end of the first half.
As a result of that, we've also in the result indicated what the January performance has been. We added another AUD 6.2 million worth of EBITDA in January, which was indicative of a bit of some product that just flowed from the end of December into January. I'm very pleased with that performance, and it will allow us to retain and support our guidance to the end of the year. David will talk a little bit about the seasonality in our business. But typically, on an EBITDA level, seasonality is skewed about 30-70 to the first half of the period. EBITDA is well in line with that kind of performance. We're seeing no real impacts on profitability from inflation.
I've mentioned this before, but it's really a product of the nature of our business in that we have a fairly short order to delivery pipeline, and therefore, we're able to continuously adjust for inflationary impacts as we go through it. In fact, in our most important input cost, which is steel, we're actually seeing steel prices reduce quite dramatically across the board. In fact, whilst sort of CPI type numbers would tell you differently, inflation for us has actually been starting to move quite strongly in the opposite direction. I'm gonna move on to operating cash flow now. Let me just Go back. Sorry, just catching up with the slides. That's it. We're just gonna talk about operating cash flow now.
This is an area that I'm particularly delighted about. David will talk about the balance sheet in a bit more detail. We've seen very strong operating cash flow in the half of AUD 13.3 million. It's a result from a number of things, profitability of course, but also some effort we put into trading our changing our terms of trade some while ago, and we'll talk a little bit about that. I think we've managed to move to a position where we're managing profit and, sorry, managing cash and the balance sheet very well these days. That has, of course, translated into a net debt of AUD 4.6 million.
If you think about where we ended the last six months was a net debt of AUD 1.2 million. We added AUD 13 million of debt for the Mainetec acquisition, that would have been AUD 14.2. We've gone from AUD 14.2 to minus AUD 4.6 in the half. Really strong recovery where we've paid down most of that Mainetec debt in the first half of the year and I think is a real highlight for the performance of the business and not something we see as a one-off either. The result is that we're essentially operating the business now on zero net debt, zero net work in progress, I mean.
Again, David will talk about that in a second. Order books up 40%, and we've been talking about that all year, that order books have been up somewhere between about 40%-74% all year, ended at 40%. Again, very strong. Importantly, our second half budgeted revenue is now fully covered by 100% by orders. I think that's the first time that we've been in that position where we've had such a strong coverage for our second half profitability. Strategically, we have completed significant capacity expansions in Indonesia, Chile, and Australia in the first half.
The background to the result that you're looking at is that, irrespective of a lot of disruption that's gone on in those three sites in the first six months of the year, and, you know, adding significant capacity does that, creates a lot of distraction and a lot of disturbance, the businesses have continued to perform. I think more importantly, that means they're set up very strongly for the second half, both in capacity and capability. Last year, we talked a lot... Or last time we did one of these calls, we talked about the acquisition of Mainetec. That is going well.
We've completed much of the post-acquisition merger integration activities, we're now moving towards the phase where a number of key synergies are starting to show up in the results of Mainetec. We'll talk more about that in the future, I'm sure. One of the lowlights over the last sort of year or so that I've talked about on a number of occasions has been the Perth truck body business, which has had some difficulties. We're seeing a sustained and solid improvement in that performance. Again, David will show you a little bit on that as we go through, a little bit of evidence about that as we go through. The board has determined to suspend the interim dividend at this time.
It may be surprising given how strong the cash is, but that's been done in the light of potential acquisition opportunities that are currently being assessed by the group. The purchase of Mainetec has really demonstrated that the business can make highly accretive acquisitions that have very strong strategic market footprint benefit to the business. We continue to see this as a key process going forward. We do that in the belief that these opportunities can be funded from existing company cash and debt facilities without recourse to the equity markets.
I just wanna make that clear that we see the strength of the balance sheet, and the cash flows in the business, allow us to continue with acquisition type activity without having to go to the market for funding. We'll of course review this position on the dividend as we go through. Lastly, as I said before, confirming that we will meet our guidance to the end of the year, which was an EBITDA of... Sorry, an NPAT of AUD 24 million plus a contribution from Mainetec. Just quickly, a couple of charts. You can see that we continue to have moved the business into a new orbit. Last year was a record first half profit.
This year is another record half year, profit and significantly above the levels that we have seen in previous years. The EBITDA margin is down a little bit in this first half. It's still significantly higher than we've seen in previous years. A little bit backwards of where we were last year. Fundamentally, that's a story about the weakness that we've seen in the Perth truck body business, which we're now exiting. Exiting the problem I mean. Some of the disruption caused by the capacity expansions that we've done in the first half. All of that sets us up for a really strong second half. The return on capital employed continues to strengthen. This is something I'm particularly keen on.
It shows that we're using capital employed in the business in a really good way. And I think we'll just continue to see that through for that to get better as cash generation in the business continues to improve. I'm gonna hand over now to David Bonomini, who will take you through a bit more detail on the financial results.
Thank you, David, good morning, everyone. Before I take you through the financial slides, I wanted to say how excited I am to have joined Austin Engineering, and I'm really looking forward to assisting the business deliver their Austin 2.0 business strategy. Turning to slide 18, financial performance. The group's financial performance from continuing operations, when you look at the group's revenue, we're up 43% at AUD 114.1 million. We're also up 26% on a like-for-like basis. That includes higher sales in all regions, a wider product offering, and Mainetec revenue contribution of AUD 13.7 million. The group's normalized EBITDA is up 22% to AUD 12.2 million.
On a like-for-like basis, it's up 7%. Which is in line with the seasonal split that we're seeing within the business that I'll touch on later in the slides. With the exception of the WA Truck Tray business, EBITDA margin has improved across all areas of the group. D&A and net expense increase is all due really to the Mainetec acquisition, just the additional cost of them being added. The other area that you'll probably note is the group's effective tax rate across the group, which has gone, which is at 36%. This is really due to the WA operational performance. It's really an opportunity because we're expecting, and we'll show you that the expectation is that the WA business will improve in the second half.
This will then effectively allow us to basically utilize the tax losses, significant tax losses that we have on the balance sheet, both here in Australia and in Chile. Effectively, our tax rate is expected to come down as our profits improve across the business in the WA business. The group's normalized NPAT is up 3% at $5.4 million. Turning to slide 19. This slide is really just a deeper dive and to give you some color around how the WA business is performing. It's a six-month to seven-month snapshot of just historic performance. As you can see that the Truck Tray business graph illustrates a strong performance improvement trend. The improvement is really driven probably from three main areas.
We've got now a dedicated workshop for the Truck Tray production. With Mainetec coming on board, we've been able to consolidate the bucket business into one production line, and we've got the Perth production line focused on the Truck Tray. We're really gonna see probably that contribute and get some productivity and efficiency out of that delivery in the second half. The other area also is the investment in new equipment. Australia has invested in a new plasma cutter that the previous equipment was tired, it was old, it was breaking down. With the introduction of the new equipment, that's gonna improve the throughput of the production facility as well. We're seeing that these major equipments kind of coming in around April.
They have been occurring throughout the course of the first half, but we'll see them fully come to fruition in the second half. The other thing also with the WA business was they're in the midst of securing a new major customer order. That's been secured, and that'll bring the facility back to a high utilization in the rest of the calendar. Turning to slide 20. What this, what we're seeing here is that there is a definitely a first half seasonality to our customer buying patterns from H1 to H2. The graph that you're looking at now, the revenue historically exhibits a seasonality of H1, H2 of about 40%-60%.
In comparison to the EBIT historical seasonality for H1, H2, we're seeing a 30%-70% differential with a greater profit conversion H2. That really fundamentally comes down to the fact that we've got a greater drop through. Through our gross margin, our overhead costs are fairly consistent and flat. As our business grows revenue-wise, as we convert that to profit, that drops down through to the bottom line. We're very confident that the seasonality trend will continue for H2. Turning to the next slide, 21, operating cash flow. As David mentioned, this is probably a real highlight for the group's performance, really the way the group's now starting to manage the cash flow. As David mentioned, AUD 13.3 million is a great result.
When you compare it to 12 months ago, you know, it's just been an improvement of over AUD 18 million over that period. It's great to see that group cash position strengthen to AUD 9.6 million. Even more pleasing is the fact that working capital improvement of AUD 3.4 million, really benefiting from improved trade terms from with our customers and our suppliers. The group also is continuing to invest in the business. As I mentioned in H1, the group invested AUD 2.4 in capital improvements. There's further forecast of capital investment to occur in the second half. The additional bank borrowings that we see that David touched on before was AUD 13 million was for Mainetec acquisition.
As David touched on, the group net debt is expected to significantly improve in the second half, you know, as the business profits are converted to cash. We're really seeing that second half probably potentially move to a net cash position. Turning to slide 22, balance sheet and other items. With revenue growth of 43%, it's really The group's working capital improvement of AUD 3.44 million is an excellent performance. That really indicates the ability of the group to grow without the constraints of cash. That's a fantastic result. Their improvement in working capital is being driven by the group's focus on trade with customers and suppliers.
What we're seeing is customer advanced deposits up to AUD 13 million to AUD 25.8 million, is now fully offsetting our work in progress inventory of AUD 25.2 million. There has also been a shift of customer trading terms to Ex Works, which has improved the receivable collection. The extended credit terms for steel means that the majority of our bulk steel buying are invoiced to customers before supply payments are due. If this is maintained, we will not, we won't need cash to grow our future revenue. Turning to slide 23. The other pleasing thing to note is our balance sheet's getting stronger. It's strengthening. Our total assets are up AUD 46 million. Obviously, there's cash in there of AUD 9.6 million.
We've got the inventory of about AUD 17 million, but we've also added significant assets in turn with Mainetec, with Mainetec being acquired. The net debt or our bank borrowing is at AUD 4.6 million compared to AUD 1.2 million last period. That's despite, as David mentioned earlier, the Mainetec acquisition of AUD 13 million. We are, really are moving to a low balance sheet leverage with debt-to-equity ratio of about 4.1%. We're very confident the business will move to a net cash in the second half. I'll now pass you back to David.
Okay. Thank you, David. Sound like you've been doing it for years. I'm gonna do a quick canter through the global strategy and where we're up to and therefore what we can expect going forward. A quick reminder to you that what we're seeking to do is get cost leadership in the cost base of our business to get manufacturing leadership, which is really important in a business of this type, of course. To couple that with product leadership.
My view is if we have a low cost base, if we're a very efficient manufacturer, more efficient than anybody else, and we've got better products than everybody, that puts us in a absolute winning position globally and a position that it's going to be hard for other people to compete with. I'll move to page 29 now. We've made a lot of progress with the cost base reduction, as many of you will have heard us before. We've got the overheads are now stabilized and we see further opportunities in sort of back office type elements. We've been reducing the cost base in Mainetec as well.
The story of course in WA, but also in Australia more broadly and in the United States, is that labor availability is a major constraint to growth for almost all businesses, and it would be for us absent of the facilities that we have in Indonesia, in Batam, in Indonesia, and the work that we have been doing silently behind the scenes to get that business able to support us. Our expansion has really come through tremendous growth that we've seen in Indonesia. Revenue in Indonesia was up 62% and PCP as a result of capacity expansion and moving more work out of labor-constrained areas like Australia and the United States into Indonesia. That part of our strategy is really working well.
It's coupled with the fact that freight rates around the world have at least halved since we kicked off the Austin 2.0 strategy. You can see a graph on the left-hand side of your screen there just to show how index rates have moved on shipping around the world. Now, this is fundamentally important to us because what it does is it makes manufacture in Indonesia and shipping to other regions, Australia and the rest of the world, so much more effective than it was only sort of 12 months or so ago.
We're now in a position where for the East Coast of Australia, for instance, it's now cheaper for us to build Truck Trays, and these are the most expensive things that we deliver anywhere, Truck Trays in Indonesia and ship them into the East Coast of Australia. We can do that at a much more competitive cost than we can do building in Australia. The other thing that David talked about was the terms of trades improvement. This is something we kicked off about 12 months ago. We pushed very hard to move from a position where customers paid on receipt of goods to getting deposits up front, even for goods that delivered fairly quickly over two or three months. That's fundamentally changed the way we use cash in the business.
As David said, slightly negative work in progress. I think for me, I've been in this business for a long time in manufacturing. It's the first time that I have managed to successfully get a business to having a negative work in progress position. It's something I'm particularly pleased to see. Of course, the implication of that is, as we grow, we're not going to lose cash absorbed in work in progress and materials. Moving on to the manufacturing strategy, this is really the special source of everything that is going on at the moment.
18 months ago, we talked about a hub-and-spoke manufacturing strategy where Indonesia, low cost, high availability labor, Indonesia was going to be the hub of our manufacturing approach with Australian factories on the east and the west coast and the US as being spokes. That's exactly where we have moved towards, and that is having a real impact on the overall competitiveness of the business. As I said, we're now building complete truck trays in Indonesia and delivering into Australia. We're now developing and putting into place a dedicated mining bucket facility in Indonesia as well. The acquisition of Mainetec has been galvanizing really in terms of our win rate on mining buckets in Australia and starting in the US as well. We're now at capacity for building those.
We hardly built any at all two years ago, mining buckets. Very, very few. I remember the number I talked to. For those of you who've been following this, we built 16 buckets in a year, two years ago. We have more than that in one of our facilities now, and we've got two of those plus one in the U.S. We're having to advance capacity in Indonesia to cope with that. Next phase of this is to really bring the United States more into this orbit. Through this period, we've invested around about $10 million, I would say, in increasing manufacturing capacity, but also in replacing a lot of older manufacturing equipment.
What we found is as we've upped the revenue base of the business, it put more pressure on some of these key pieces of equipment. Failures have been going up, that's been disrupting the manufacturing process. We've gone through what I think I described in one of the documents as a sort of once in a decade replacement of major capital equipment. Not that expensive, frankly, but it needs to be done, and it is being done. Our capacity expansion in Indonesia, Chile, and Australia is done. That's finished, and we move into the second half of that done, and we'll finish off the new equipment installations around about early April of this year.
Then we really will be in a position where some of those things that have just caused us a few troubles in the first half, will be a thing of the past. The aggregation of steel orders around the world has been absolutely fundamental to the performance over the last several months. If I just explain that, we used to, when we won an order, we used to go out and buy materials from steel stockers to meet the requirements of that order. What we do now is we project forward six months, and we go out and we buy we compete five or six mills across the world, steel mills across the world for our steel requirements, and we buy six months of steel at once.
That means we buy steel, which we now know is significantly cheaper than almost all, if not all, of our major competitors in Chile, Indonesia, and Australia. This is a point of major differentiation because very few people buy steel of this type in the volumes that we do. We're seeing our steel price somewhere between 25% and 50% cheaper than our competition. The reason we know that is they buy steel from the same stockers that we used to buy steel from, and we know what those prices are. That gives us a tremendous competitive position. When you think about in Indonesia, 90% of the cost of product is steel.
If you can be somewhere between 25% and 50% cheaper on that steel, it gives you a tremendous opportunity for margin improvement. Lastly, we said, you know, we've not only gotta have a great manufacturing base, but we've gotta have great products as well. This has been successful. We launched the HPT Truck Tray. We've 120 of those committed already, and we can see quite strong demand for that across a number of other customers as well. The Austin Mainetec bucket offering now is broad and complete and sophisticated. As a result of that, we're winning new customers, not only for the Mainetec product, but also for the Austin product as well.
I expect that we will see sales of Mainetec product into the United States, potentially over the next six months. Lastly, we are beginning to roll out our digital solution for predicting bucket and Truck Tray wear. It's a first in the industry. We think it's going to help us be able to provide a better service to customers where they will be able to predict wear and life of products well ahead of what they've been able to do in the past. We think that's going to help with making customers stronger over a period of time and allow us to improve the retention level of customers. I'm going to skip In the essence of time, I think I'll just skip the Mainetec integration activities.
Just to say as a summary that integration of Mainetec is going very well. We've completed all of the kind of essential activities required as part of that integration. The first step in reducing their cost base substantially starts to really kick in from about March of this year when material from our global steel procurement program starts to hit the ground for Mainetec. That gives a substantial reduction to their input costs for their buckets. That will be followed by the beginning of bucket production in Indonesia later on in the year, and the planning for that is already underway. I'll move on to the last section now, which is the market guidance.
As I've already said, our impact guidance of AUD 24 million for the full year is maintained. We continue to see strong performance across the business, and particularly with the Australian business now performing much better than it was over the past sort of 12 months or so. That gives us some added confidence in how that guidance will be met for the rest of the year. I did say at the beginning, and we thought it was worth just giving you some information on how we've started the beginning of the new half. We had a very strong performance in January. Usually a soft month, frankly, January, with the Christmas period in Australia and in other places around the world.
We had revenue of AUD 28 million and EBITDA of AUD 6.2 million in January. An absolute first-class start to the year and of course, adds confidence. The company's order book stood at AUD 158 million. I think that is a record on a continuing basis. Also the pipeline remains strong. Now, my definition or our definition of the pipeline is those orders that we see in the future, which are not yet contracted. We track out 18 months all the opportunities going forward, and we've just seen that pipeline grow and grow. It's up about, I think about 60%, nearly double, 60%-70% from where it was a year ago in terms of the size of that pipeline.
That's an uncontracted pipeline at that time. Nonetheless, we're continuing to see that strength. When I said at the beginning that, you know, revenue has been strong, but we continue to see market strength, that's where that statement comes from, a very strong pipeline, opportunity of work going forward. Very notably, as a result of the strategy around steel and manufacturing in Indonesia, the embedded margin, order book margin that we're seeing in new orders is much stronger than we were seeing 12 months ago. What I mean by that is the when we are winning orders, the margin that we are seeing in those won orders is significantly higher to what we were seeing on average to what we achieved 12 months ago.
Okay, that brings the formal presentation to an end, and I think just a Q&A session now.
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. Your first question comes from Philip Pepe with Shaw and Partners. Please go ahead.
Thanks. Hi, David and David. Thanks for taking the question, well done on a strong result and outlook statement. Just on the guidance, given the contrary of some of the revenue falling from December to January, I mean, we've seen this often with Austin, it happens given the size of some of these contracts. Presumably, you've allowed some buffer in terms of your full year guidance should that happen again. It looks to me like conservatively, maybe there's a AUD 20 million revenue buffer, maybe AUD 4 million-AUD 5 million EBITDA buffer should things hit in July versus June 30. You could still hit the guidance and have a strong July. Is that about right?
Yes. I think you're reading that well, Philip. The outlook revenue is significantly higher than our budget at the beginning of the year, and that's fed by what's been a strong revenue in the first half, which is higher than we had expected. I think if you think about that as a buffer for the full year, that's right. Also, of course, strong momentum going into FY24.
Thanks. Thank you. You, you've answered my other question on the Mainetec synergies. The steel cost synergies should start to come through June quarter, and hopefully some bucket sales later this year, I think you said. Presumably that's from existing client base looking to add more, or are you targeting new clients for the U.S. sales?
As far as steel is concerned, Philip, of course, we've been able to borrow some material out of our global business to assist with the Mainetec business in the first part, but they generally use thicker sections. We've had to go and procure new material. When you buy from a mill, it can take anything up to anywhere between about five and 12 months for delivery of that material, which brings, of course, a level of complexity. Those orders have been placed, and we're expecting that material to arrive around the end of March. That will ratchet down their cost base dramatically.
I use that word dramatically advisedly. It will be a dramatic reduction in their cost base. As far as the buckets are concerned, I think there's a confidence in the market that with Austin behind Mainetec, you know, there's a balance sheet strength there, which is helping. Also one of our targets was to start to sell big dipper buckets in the Americas, where Mainetec has done extremely well in Australia. There's a market that's more than 10 times that size in the Americas.
We're bidding over in the Americas now, and I have a degree of quiet confidence that we'll be able to convert at least one of those over the next few months. Now, that's not fundamentally important to the revenue base of the business, but it's fundamentally important to the developing strategy of the business, which says that we can actually project these products overseas because of the strong representation we've got in the United States and South America.
Excellent. Thank you. Thank you. Once again, if you wish to ask a question, please press star one. Your next question comes from James Lennon with Petra Capital. Please go ahead.
Good day, guys. Great update. Two questions, if I could. First one's on your target for margins. I think you said 18%-20% is where you expect EBITDA margins to sort of trend to. Just keen to know what sort of timeframe over which you think that will happen and sort of what the levers are for that, whether it's price increases you're not passing on or product mix or cost reductions or operating leverage, whatever it would be?
All the components for getting to that target 18%-20% are in place. The one thing that's really dragged us back in the first half has been the performance of the Truck Tray business in Australia. That's brought down, if you look at the Asia Pacific segment margin, that's brought that down. Pretty well all of the other businesses are performing against that. Chile, for instance, which was below trend in the early part of the year, a lot of breakdowns and some capacity issues in Chile, have averaged 23% EBITDA margin over the three months ending the end of January. We're seeing the elements of the business, Indonesia, the United States and Chile now moving well into that 18%-20% type range.
Once we get the Perth business fully running at speed we want it to, and as we've said, we're well on the way to that, we should start to see the group levels move to that level. I think all the underlying issues about getting the cost base down, whether that's overhead, whether that's steel, whether that's average cost of labor, they're all in place, and we'll just continue to contribute. Margins embedded in the order book are there. We just need to get, you know, some of that first half disruption that we've had, as I've described, once that gets sorted out, then we'll see that start to come through. I'm increasingly confident about the predictions we've made on that.
Great. Thanks. Just the second and last question, just on the dividend. You know, it makes sense that you've held that back. Is there a timeframe over which you'd expect that, you know, maybe dividends will return if you don't find anything to acquire, or are you gonna let, you know, your sort of net cash build to a certain level and then you'll continue M&A but also add dividends back into the framework, or how should we be looking at that?
Yeah. It's not really about trying to build up a cash buffer. It's really about, you know, those opportunities that are reasonably immediate. If these are always a bit unpredictable, of course, and if they don't come through, then I'm sure the board will review the dividend policy in the second half and would look favorably to it for the full year. Let's just see how that works out over the next few months. The desire for dividends is very strong in the board. This was a matter that was discussed at great length at the last board meeting, but felt that, you know, from an investor's point of view, this was the best way of deploying capital.
As I said in one of those graphs, you know, we use capital well in this business. The ROCE is very strong. And because of the way that the balance sheet is set up now, you know, we should be able to fund some of these things from our own cash flow, rather than recourse to the market, which is a great position for us to be in.
Thanks, David. That's great.
Thank you. There are no further questions at this time. I'll now hand back to Mr. Singleton for closing remarks.
Thank you for taking the time to come in this morning. The good representation we can see on the board. I'm very pleased about that. I think the thing that excites us, and certainly it excites me, is that we've seen the strategy roll out. We've seen how the strategy is delivering really significant and fundamental cost advantage to the business. We've been able to deliver that. You can't see all this yet, but I can 'cause I see it in a different way. We can see how that's contributing strongly to the margins in the business, from what we had, you know, only a year ago.
I think the business is set up, very well now, well for the second half and also, very well for FY24, both from the point of view of margins, but also from the point of view of how efficiently and effectively we use cash in this business and will continue to use cash in this business going forward. Thank you for your time, and I'm sure I'm gonna see many of you over the next week.