Good afternoon, everyone. My name is Jim Walker, the Chair of Austin Engineering. It is my pleasure to welcome you to the company's 2026 Annual General Meeting. I would like to introduce you to your Directors and our Chief Operating Officer, Chief Financial Officer, and Company Secretary. Sybrandt van Dyk, who is our CEO and Managing Director, and Non-Executive Directors Chris Indermaur, David Singleton, Linda O'Farrell, and Ian Stone.
Also to our Company Secretary, Sarah Wilson, our Chief Operating Officer, Vince D'Rozario, our Chief Financial Officer, David Bonomini, our General Counsel, Kirsten Cadle, Tanya Whittle, Global HR, and Dean McGlynn, our Global HSE, who are all seated in the front seat. If you just excuse me today, I have woken up with a very, very funny throat, so if I have to go over there and get a glass of water, please understand, because I will be running out of power.
Representatives from the company's audit are here and will be available to answer questions on the financial statements in relation to the audit. The Company Secretary has informed me that we have a quorum. I therefore declare this Annual General Meeting of Austin Engineering Limited open. I am pleased to advise that the shareholders that are not able to attend physically are able to watch and listen to a live webcast of the meeting. The webcast will be an opportunity to view the proceedings and presentations at the AGM, and for the shareholders to submit online written questions during the meeting.
However, the webcast is provided for convenience only and does not replace a physical AGM. Shareholders will not be able to participate in the meeting or vote via the webcast facility. Given logistics and the fact that people watching over the webcast facility are not taken to be present at the meeting, we propose to address any questions that are sent through over the webcast at the end of the meeting and once the meeting formalities are concluded. I would like to explain the format of today's meeting. Firstly, I will give a Chair address, and then we will consider the resolutions outlined in the notice of meeting before I invite Sybrandt van Dyk to give his Managing Director's address and open the floor to general question- and- answers.
Before moving on to the form of today's meeting, I would like to take a few moments to reflect on Austin's performance during financial year 2026. Following several years of significant revenue growth, the financial year 2026 was a year of rebuilding Austin and returning to the fundamentals of the business. The focus was on strengthening operational discipline, improving efficiencies, right-sizing across regions, and addressing loss-making contracts. It was a challenging year that tested Austin's resilience. The decline in our share price over the past year has also been disappointing for the Board and for our shareholders, many of whom have been long-term investors in the company.
While the financial results were below our expectations, the Board has full confidence in the actions taken and Austin's ability to emerge as a stronger and more resilient business. Austin's financial year performance reflected operational headwinds in our North American and South American divisions. Notwithstanding the earnings result, strict working capital management delivered a meaningful improvement in operating cash flow compared with financial year 2025, demonstrating that operational discipline being embedded throughout the company is delivering value. The Board declared a fully franked interim dividend of AUD 0.003 per share paid in April 2026.
While no final dividend was declared for financial year 2026, the board determined that preserving capital to support the reset of the business was appropriate course of action. The year, management took decisive steps to strengthen Austin's foundations. This included improving management structures and production systems, enhancing workforce capability, right-sizing operations where required, and applying greater discipline to contracts. I am pleased to report that these initiatives are delivering positive results. Further benefits expected to flow through in this financial year and beyond.
In a short while, I will hand over to our Managing Director and CEO, Sy van Dyk, who will discuss the year in more detail, including turnaround underway in Chile and North America, the demand outlook in APAC, Asia- Pacific, and how the changes implemented during financial year 2026 are beginning to translate into improved performance. Financial year 2026 marks Sy's first year as Managing Director and CEO. His detailed knowledge of Austin, together with his operational experience, has been important to the company as it has worked through a period of significant change. Austin's competitive advantage is underpinned by our engineering design expertise.
A key highlight during the year was the completion of our first dipper bucket in partnership with U.S.-based Bierwith Forge, incorporating an innovative ground engaging tool that is commonly known in the business as GET Slick Lip system. We have now begun introducing this technology across our mining bucket range in Australia, with encouraging initial customer response. Our austIQ digital platform also continues to mature, providing real-time insights into equipment health for the growing number of customers' fleets and helping them extend tray life. Our people remain the most important asset, with safety a non-negotiable priority. During financial year 2026, Austin's lost time injury frequency rate decreased by 50.2% year- on- year to 2%.
While our total recordable injury frequency decreased by 36.7%- 8.4%. This progress reflects the strengthened safety systems and reporting frameworks across our operations. Pardon me. While reinforcing the need for ongoing investment in our safety culture, systems, and controls. Developing our workforce is another important area of focus. Our welding school programs in Casper and Batam provide hands-on training and future employment pathways. In Australia, our partnership with Clontarf Foundation continues to support young Aboriginal and Torres Strait Islander men through education and employment opportunities.
Product innovation and reducing the environmental footprint of mining operations remain important priorities for Austin. Our High Performance and Premier tray ranges continue to deliver measurable benefits through the reduced steel usage, increased payload capacity, and lower fuel consumption. During financial year 2026, Austin global greenhouse emissions fell by 24%, driven by reductions in both scope one and scope two emissions. The board believes the work undertaken during financial 2026 was necessary and has positioned the company to operate and scale efficiently from such a stronger foundation.
Our priority now is to build on this work and deliver sustainable long-term value to our shareholders. On behalf of the Board, I thank our shareholders for your continued patience and support, and look forward to updating you on our progress. Just going to grab a quick water so I can get through the next part. This now brings us to the formal part of the meeting. The items of business to be considered at this meeting have been listed in the notice of meeting. The notice of meeting has been available to shareholders on September 30th, 2026, and I will take it as read.
Before we consider the items of business, there are a number of procedural items I wish to draw your attention to. In the interest of transparency and accordance with ASX requirements, I will call a poll on all meeting resolutions. I will discuss each of the resolutions in turn, and then conduct the poll after last resolution. Each resolution and proxy count for each resolution will be displayed on the screen when that resolution is being considered. I am holding undirected proxies in my capacity as Chair, and it is my intention to vote all such proxies in favor of all resolutions.
Any directed proxies that are not voted at the meeting will automatically default to me as Chair of the meeting, and I am required to vote for those proxies as directed. Casey Zanti from Computershare has agreed to act as Returning Officer. At the completion of the poll, Computershare staff will collect your voting cards and tally the votes. The persons entitled to vote on the poll are all shareholders, representatives, and attorneys of shareholders, and proxy holders who hold green admission cards. On the reverse of your admission card is your voting paper and instructions.
Yellow admission cards have been issued to non-voting shareholders who are entitled to speak at the meeting, but are not entitled to vote on the poll. White admission cards are issued to visitors who are not entitled to speak at the meeting or vote on the poll. If there is any person present who believes they are entitled to vote but has not registered to vote, please raise your hand and a representative from Computershare will now assist you. Everyone is all okay? Okay.
I shall now proceed with the business in order as it is listed in the notice of meeting. Questions on any item may be raised during the consideration of that item. Please state your name when asking. Financial report. The first item of business deals with the financial statements and reports. These have been released publicly and forwarded to the shareholders who requested them, and are now laid before the meeting. These financial statements and reports are for the financial year ended June 30th, 2026. This is not a resolution, and no vote is required.
On that note, I now invite questions or comments from shareholders in relation to the financial statements and reports, and more generally about the management of the company. As I have advised, representatives from the company's auditors are in attendance to answer any questions shareholders may wish to direct them to in relation to the conduct of the audit and in relation to the preparation of financial statements. No questions? As there are no questions, we will move to the second item of business.
You are safe, [inaudible] The next item of business asks shareholders to adopt the company's remuneration report for the year ended June 30th, 2026. Unless there is an objection, I will take the motion as being read and refer to the screen of the details of proxies received for this resolution. While this is a non-binding advisory vote of the shareholders, the views and comments of the shareholders will certainly be taken into account by Directors when further considering remuneration matters.
I note that a voting exclusion applies to this resolution as set out in the notice of meeting. The Board recommends that shareholders vote in favor of this resolution. As I mentioned earlier, voting of this resolution will be by way of poll and conducted after last resolution. Are there any questions on the remuneration report? As there are no questions, I will now move to resolution number two. This item of business is a re-election of Chris Indermaur. Chris has been a Non-Executive Director since July 1, 2016. Details of Chris' qualifications and experience are set out in the notice of meeting and the company's 2026 annual report.
U nless there is an objection, I will take the motion as being read and refer you to the screen for the details of proxies received for this resolution. The board recommends that, with Mr. Chris Indermaur abstaining, recommends that the shareholders vote in favor of this resolution. Voting of this resolution is by way of poll and conducted after last resolution. Are there any questions on this resolution? As there are no questions, I will now move to resolution three, participation of Sybrandt van Dyk's option plan.
This next item seeks approval to issue up to, pardon me, 1,951,693 unlisted options to Mr. van Dyk or his nominee under the company's performance rights plan. The Board, Mr. van Dyk abstaining, recommends that shareholders vote in favor of this resolution. Voting on this resolution will be by way of poll and conducted after our last resolution. Are there any questions on this resolution?
Hi, Richard Hyland, shareholder.
Richard, can you sit down?
Hi, everyone. Richard Hyland, shareholder. Question, well, question in two parts. Current performance, last year's performance, which forms the basis of the performance rights, I would consider as a low point in Austin's last five or seven years' performance. The EPS of 5% to get 50% of performance rights, hell, inflation's just under 5%. So that's a pretty average start point. TSR will follow. If the EPS is up over a number of years, TSR will follow. No arguments with TSR, but I just think it's a fairly lowball start point to get 50%. Thank you.
Linda, can I hand that one to you? Because there was a lot of work done on this with outside companies.
Yes, thank you, Richard. Obviously, when setting the EPS earnings, we did take account into what peers were doing around benchmark, and the 5%-10% EPS compound annual growth was the benchmark that we considered, and that's why we've set the benchmark at that point.
You didn't consider the start point?
We figured it's a point where
Okay. Yeah, we disagree.
Other questions? Thank you. As there are no more questions, we will now conduct the poll on resolutions one to three. Please now complete your voting cards and ensure you print your name and sign where indicated. When you have finished, please lodge in the ballot box being circulated by Computershare. Please let the Returning Officer or any other Computershare representatives present know if anyone has any queries or requires any assistance completing the voting cards. Thank you. It appears the voting process has concluded.
If there's any individual present who has not yet had their completed voting card collected from them from Computershare staff, would you please raise your hand? I now declare the poll closed. Thank you. As mentioned earlier, the results of the poll will be announced on the ASX, on the company's website later today. A recording of the website will also be available on Austin's website following the AGM.
Ladies and gentlemen, this concludes the formal part of the business meeting, and I declare the meeting closed. As mentioned earlier, I will now hand over to our CEO and Managing Director, Sy van Dyk, to provide an update on the activities and performance of the company in 2026 and their plans going forward. We will then open the floor up to questions, after which please join us for tea and coffee afterwards.
Good afternoon, everyone. I would like to welcome our shareholders, Directors, employees, and advisors here in the room, as well as those joining us via the webcast. As you all know, FY 2026 was a difficult year. We identified operational challenges across the business and launched a group-wide improvement plan to address them, and delivering that plan has been our priority. These challenges were internal to the business and within our control to resolve. We responded with stronger operating discipline, clear accountability, and decisive action across the group. While there is more work to do, these measures are beginning to deliver tangible results.
Today, I will begin with a brief overview of Austin before reviewing our financial year 2026 results. I will then discuss our operational improvement program, the early progress we are seeing in financial year 2027, and our priorities and outlook for the year ahead. We will then take questions. On the slide in front of you, before turning to the financial performance, it is worth reminding ourselves of the strength that sits behind Austin. This is a business with more than 50 years of engineering and manufacturing experience, more than 15,500 truck trays manufactured, six operating sites across four continents, and more than 1,300 employees and contractors.
Those numbers matter because the problem we experienced in financial year 2026 did not change the fundamental capability of this business. Austin continues to have a global footprint of established manufacturing capability and a substantial installed product base. Our job now is to translate these underlying strengths into more consistent financial performance. Turning now to what we do. Austin designs and manufactures customized mining equipment that helps customers improve productivity and lower their cost per ton.
Our core products include truck trays, water tanks, mining buckets, and tire handlers, with truck bodies accounting for approximately 62% of group revenue. Our design-led approach means we tailor each product to the operating condition at the customer site, helping improve productivity, efficiency, and overall operating performance. This also helps customers reduce their total cost of ownership over the life of the product. Our footprint gives Austin the ability to manufacture and support customers across the mining regions in which we operate. At year-end, our workforce totaled 1,314 employees and contractors across the group.
That compares to 1,616 in the prior year-end. Reducing the workforce was not something we undertook lightly, but aligning our capability and cost with the work available was necessary. What matters now is not simply the size of the workforce, but the productivity, capability, and discipline of the organization we have retained. Our objective is a business capable of responding to demand without rebuilding the cost and inefficiencies that affected our performance during financial year 2026. Turning now to our financial year 2026 financial results.
Unless otherwise stated, all figures are in Australian dollars, exclude foreign exchange movements, and relate to continuing operations. Financial year 2026 was a challenging and disappointing year for Austin. Operational challenges in North America, South America, and Indonesia weighed on earnings. During the year, we took action to address these issues, strengthen operating discipline, and position the business to improve performance. Group revenue declined 12.7% to AUD 329 million, reflecting softer tray volume demand in North America and APAC. This was partly offset by continued growth in Australian bucket and spare parts. Group EBITDA was AUD 20.4 million compared to AUD 43 million in financial year 2025.
The decline reflects a AUD 9.3 million loss in Chile, largely associated with a legacy OEM contract, as well as lower U.S. productivities, U.S. product mix, and higher U.S. outsourcing costs, and reduced tray volumes in APAC. Group EBIT was AUD 10.8 million. Despite the earnings decline, cash performance was a clear strength. Operating cash flow increased from AUD 24.1 million- AUD 26.7 million, supported by disciplined working capital management and a AUD 32.2 million inventory reduction. Net debt fell from AUD 12.8 million- AUD 5.8 million, providing greater financial flexibility as we execute our operational improvement plan.
Importantly, the cause of the earnings decline have been identified and are being addressed. Stronger cash generation, lower net debt, and early progress from our initiatives provide a firmer platform for financial year 2027. This slide places the financial year 2026 results on the five-year context. Revenue increased from AUD 203 million in financial year 2022 to AUD 377 million in financial year 2025, before declining to AUD 329 million in financial year 2026. at a regional level, APAC's revenue declined 15% to AUD 147 million, mainly due to the timing of major tray orders and a softer East Coast demand, and was partially offset by growth in Australian bucket sales.
North America revenue declined 13.5% to AUD 127 million, reflecting lower tray demand, customer replacement cycles, and product mix. South America revenue was down 3% to AUD 54.9 million, with the cap on the OEM production partly offset by an increase in service revenue. These factors were also reflected in the regional EBITDA figures. APAC EBITDA declined by AUD 8.3 million, North America by AUD 8.8 million, while South America's loss widened to AUD 9.3 million.
While full-year performance were weaker year-on-year, APAC remains the group's largest contributor and showed improvement in the second half. North America margins recovered throughout the year, while revised OEM terms and stronger operating controls in Chile provides a foundation for improved performance in financial year 2027. Turning now to cash flow, which was a clear positive for the year. Operating cash flow increased significantly from AUD 2.6 million- AUD 26.7 million, driven mainly by the release of working capital and a AUD 32.2 million reduction in inventory. EBITDA to free cash flow conversion improved materially to 99% for the full year.
Capital expenditure reduced from AUD 9.9 million- AUD 6.8 million, with investment focused on upgrades to our U.S. facilities and operational equipment. Free cash flow after interest, tax, and capital improved to AUD 19.9 million from AUD -6.5 million in financial year 2025. This stronger cash position enables us to fund AUD 7.1 million in dividends and a AUD 1.2 million share buyback, while also reducing net debt. This reflects the stronger working capital discipline and financial controls now embedded across the group.
This slide provides a good picture of the breadth and diversity of our revenue base. By commodity, copper and iron ore each represent 25% of revenue. Oil sands account for 18%, and met coal exposure increased from 9%- 15%, while gold came back from 15%- 8%. On the product side, truck trays remain our largest category at 62%. Pleasingly, buckets increased from 6%- 10%, while other products and parts grew from 8%- 10%, further diversifying our product mix. On the customer side, miners represent 83% of revenue, reflecting the depth of our relationship with major operators.
Our OEM channel held steady at 8% and continues to be an area of ongoing opportunity for the business. The key takeaway is that Austin Engineering has diversified revenue, a base across commodities, products, and customer type. The growing contribution from mining buckets, other products, and parts further strengthens that diversification, providing greater resilience and multiple avenues for growth.
Turning now to our regions, starting with APAC. APAC was our largest revenue-generating region, contributing 44.7% of group revenue, and continues to be the cornerstone of group profitability. Revenue was AUD 147.1 million, and EBITDA was AUD 24.9 million, representing a 16.9% margin. The Australian mining buckets business was a standout, delivering a AUD 17.4 million revenue uplift and growing from 10%- 20% of APAC's product revenue. We also broadened our customer revenue mix, with 51% of work now secured outside single customer relationships.
Encouraging profitability improved in the second half, with margins increasing from 15% in the first half to 18.7% in the second half, reflecting operational improvements and disciplined execution. The order book strengthened throughout the year, and together with continued mining bucket growth and broader customer exposure, this gives us confidence in APAC's outlook for financial year 2027. APAC therefore illustrates what we want to see more consistently across Austin Engineering, stronger product diversification combined with disciplined operational performance. Our objective in financial year 2027 is to build on the second-half momentum.
Turning now to North America. North America contributed 38.6% of group revenue. Revenue declined 13.5% to AUD 127 million, reflecting customer replacement cycles, order delays, and product mix. EBITDA was AUD 9.5 million. Our operational improvement plan is focused on improving workshop productivity and production flow, while reducing our reliance on external contractors. We have introduced better planning, lean manufacturing practices, and workstation KPIs, invested in new welding technology, and focused on reducing supplier costs.
Our weld school is also helping us build on our own permanent workforce. We are starting to see the benefits of these initiatives. Productivity improved from 62%- 80%, whilst our reliance on outsourcing reduced materially. Outsourcing assembly fell from 33 units in financial year 2025 to just in the second half of financial year 2026, whilst margin increased from 5.8% in the first half to 9.5% in the second half. There is more to do to improve product margins and order conversions, but these are measurable signs that the operational changes are taking effect. The stronger operating base positions the region to convert future demand into higher margins and earnings.
Now looking at South America, revenue was AUD 54.9 million, broadly in line with financial year 2025, but the regional result was significantly impacted by the legacy OEM contract. The contract generated AUD 21 million in revenue, but delivered a AUD 5.7 million EBITDA loss, representing - 27% margin. The region recorded an EBITDA loss of AUD 9.3 million compared to a loss of AUD 1.7 million in financial year 2025. At last year's AGM, I said we would not accept new orders under the agreement until the terms improved. In March 2026, we renegotiated the commercial arrangements, securing better pricing and payment terms.
Deliveries under this new revised terms commenced in late June. We also appointed a new management team, supported by our North American colleagues, and are applying operating practices that have proven successful in Casper. We have improved controls of our steel yard and steel utilization, right-sized the workforce, and strengthened production governance. Chile is on a path to recovery. The order book is robust, extending to the end of the current calendar year, while further demand is expected.
There is more work to do, but the revised commercial terms, new regional leadership, and tighter operating controls position the business for a stronger foundation in financial year 2027. Turning now to our strategy on a page. Our strategy remains simple and focused on margin recovery, customer growth, and product differentiation, supported by three operating pillars: manufacturing leadership, product leadership, and customer focus. Under manufacturing leadership, we are introducing common operating systems across the business, standardizing work practices, and disciplined KPI management.
On the product leadership, we continue to design customized products to improve mining efficiency while growing bucket sales and advancing austIQ and our broader digital capability. Lastly, under customer focus, we have invested in our sales teams, increased our marketing and trade show presence, and expanded customer support across Australia and Chile. I will now turn to the outlook for financial year 2027. This is a key slide showing that we are seeing early traction from our operational improvement plans.
At September 30, 2026, the group order book was AUD 139 million, up 18% from AUD 118 million at the same time last year. October has also started really well, with month-to-date order intake of AUD 39.7 million. In APAC, the order book is up 52%. Our Batam facility is operating at full capacity. East Coast tray orders have been secured following sustained sales investment, and we continue to diversify our customer base and expand internationally. We have started to manufacture a large dipper bucket for an OEM, and the opportunity is significant, with the potential to grow to approximately 10 units a year.
In South America, the order book is up 33%. Pleasingly, Chile delivered a positive, unaudited year-to-date EBITDA contribution before corporate overheads, compared to a loss in the same period last year. This was achieved despite flooding at the facility in August and is encouraging evidence that the operational reset is taking hold. We have added specialized manufacturing expertise and remain focused on productivity and cost control. In North America, we expect a softer first half, followed by a stronger second half.
The order book is down 43% at end September, reflecting lower regional activity rather than a loss of market share. I want to actually stress that. It's not a loss of market share. This is lower regional activity. In early October, we right-sized the cost base, including furloughs, retaining the skills required to meet the demand we expect in the second half of financial year 2027 and into financial year 2028. Historically, October, November, and February are key ordering months, and October order secured to date has been AUD 35.3 million, which is great for us into the second half of this year.
Across the group, the operational and productivity measures we have implemented are contributing to margin recovery and building a stronger foundation for financial year 2027. Turning now to our final slide. Austin's strategic fundamentals remain strong. Our global footprint, diversified commodity exposure, and design-led product positions us to help customers increase productivity and efficiency. The actions we have taken provide clear drivers for earnings improvement in financial year 2027. In South America, these include the OEM contract reset, new management, and tighter operating controls.
In North America, the focus is on productivity gains, lower outsourcing, and increasing order conversion. While in APAC, the priorities are bucket growth, customer diversification, and margin discipline. At a group level, cost control, working capital discipline, and our embedded operating KPIs will support cash generation and financial flexibility. We reconfirm our financial year 2027 guidance of underlying EBIT from continuing operations, excluding foreign exchange movements of AUD 17 million- AUD 21 million. We enter financial year 2027 as a leaner and more disciplined business, with stronger cash generation, lower net debt, and clearer operational foundations.
Our focus now is on translating this progress into stronger earnings and sustainable long-term growth. Before I finish, I would like to thank our people. Financial year 2026 was a demanding year, with significant changes across each of our regions. Our teams in Australia, Indonesia, the United States, and Chile have responded with commitment and a clear focus on execution, and we are beginning to see the benefits of that work.
I would also like to thank our customers and partners for their contribution, trust, and my fellow directors for their support, and you, our shareholders, for your patience and ongoing support. We have more work ahead of us, but we enter financial year 2027 with a stronger operational foundation and a clear focus on delivering improved results. Thank you. And back to Jim.
Thanks, Sy. We will now open up the floor to questions. If you would like to ask a question, please raise your hand, and once you have the microphone, please state your name first.
John Samuel, shareholder. In your comments on the coming year or the present year, you talk about lower regional activity in North America. Could you expand on that a little bit? What are the reasons for that, do you think, and do you see some change in the situation in coming months?
I'll let Sy answer it, but if you listen to Andrew Forrest, it's Trump. Sorry, Sybrandt?
Is this on?
Yep.
I think it's multiple factors at play. One is cyclical, there's no doubt about it, but if you look at some of the bigger miners that we supply into North America, especially into the oil sands, they have gone through a major expansion program. Our largest client there ordered AUD 510 million of product from OEMs, Caterpillar, Komatsu, and so forth. What that meant is that that organization decided to direct all their available capital to that replacement, and therefore put on hold new or tray replacements. That impacted us. It's not as if they don't have that need, and that's going to be a pent-up demand at some stage that they're going to have to sort out.
As I said, in North America, the big order intake months for us is October, November, and February, and the main reason for that, it aligns to their budgeting years. They actually budget in North America mostly on calendar year basis, and once their budgets get approved and they can actually then put in capital requests for replacements, we see those orders come through. That's why, if you look at October, said we've just done over AUD 35 million of orders intake in North America alone, and that's only the beginning.
Hopefully that continues into November and into February. The team in North America are obviously very confident that those orders are going to come through based on their discussions with clients. Nothing is baked until we have those orders, as they have to go through their own approval process of clients, but we are a lot more confident about activity levels into North America at the second half of this year and into financial year 2028.
Thank you.
Richard Hyland, shareholder. Can I ask for a little bit of clarification on the renegotiation of the Chilean OEM contract in March? That is six months ago. I assume that the pricing you would not have accepted anything less than a positive margin on full cost. Are you able to tell us what sort of margin the contract was renegotiated to?
I will let Sybrandt handle it, but margins are confidential with OEMs. I will let Sybrandt handle it.
Yeah, I mean, I will not say the exact margin, but we actually did price it that we will be making margin. I will be frank with you, we need to increase our efficiencies and effectiveness in Chile. We are still not where we need to be, and we are not where we need to be benchmarked. I would like to see 80%. So there are two things, being productive, people being productive, allocating 80% of their time to work orders, and the other one is actually saying that if we price a body to take, say, actually 1,500 hours, then we actually can do it in 1,500, not in 1,700 hours.
So both of those are work in progress. We have upped our skillsets in the manufacturing area. An actual fact, we have been fortunate enough to bring back people that have worked for us in different eras that have been willing to come back to us after the work we have done there. Now, the Chile reports into Max, that is based in Casper, by Chilean himself. We have been fortunate enough to bring those people in.
Therefore, if we get our efficiencies correct, we will be delivering a targeted margin. That contract has been priced at what I would call targeted margins, right? Without telling you exactly what that contract is, we are targeting anywhere north of 15% EBITDA margins. I am not saying we always get that because of inefficiency, but that is what we are targeting.
Alan Austin, shareholder. I would like to, first of all, thank you for your comments, and there are signs of progress and improvement. However, I hope it is not too little too late. I understand you are carrying franking credits, quite a few million dollars, and these arrangements where you stop, start, and go with your dividends to shareholders, I think is sending a wrong message. Regardless of the amount, I would like to think that we are at least having a consistent approach, and I acknowledge the fact you are doing share buybacks.
Yeah.
You are reducing your debt. We can still accommodate all that without throwing the shareholders to the bin, without some sort of consistency in this process being a token. Because it is the message it is sending to the market, as well as retaining the shareholders' interest and retaining our shares.
You are talking to most probably everyone on this table here who want to pay dividends. This last one, we made a very, very conscious decision, because we also have a responsibility from a financial point of view to make sure where we are with our covenants and things like that we do not breach them. Hence the reason why this year, it was a long discussion. I can assure you, a very, very long discussion. Hence the reason why we did not. As soon as we can get back in there, we will do. Sorry, Brent, you might like to add a little bit more there too as well. No? All good? We definitely want to get back there.
Don Bell. I have just got a query. The equivalent number for the EBIT, which forecasts AUD 17 million-AUD 21 million, is that around AUD 10 million? That is for the 2026 year.
Yeah, correct. So we delivered AUD 10.8 million statutory. We are forecasting AUD 17 million to AUD 21 million underlying. Yep. So, we did not have significant, or we will not have significant one-off costs.
All right. The South American loss was AUD 9 million, I understand. So if you add back the AUD 9 million, because you have eliminated that loss, you have managed to be, from being very recently in that area, in terms of profit and accounts.
I mean, your maths is correct. So, obviously, we indicated that North America is going through a very soft period right now, and that will definitely impact us in this year. We expect North America, and as we said there, North America will be soft first half, a lot stronger the second half. And probably, if I am going to be direct in saying, we had three downgrades last year. That erodes trust in the marketplace. It erodes trust in shareholders, institutional investors, and I do not want to be in that position. So, once we have a stronger foundation and feel a lot more confident, we will relook at what you just mentioned.
Okay, thank you.
Okay, do we have any questions online? No? Okay, that is the first time. Okay. Thank you, everyone. On behalf of the Board, I would like to thank you for your attendance today and your interest in the company, and we look forward to your continued support. There is a cup of tea or coffee, and also perhaps a bit more relaxed time where you can talk to the directors and have a chat as well. Thank you, and thank you everyone for coming. Thank you for all the people who put this together today, because it does not happen that easily, I can assure you. Thank you.