Right, welcome everybody to the February 2025 first half year results for IMG Group. I hope those that got to see that enjoyed the video. That is a live feed video taken about a month ago, actually from one of our sites, of some guys turning up to try and rip off some trucks in the weekend who were escorted on the way out by our new video guarding service, which we will talk about a little bit today. Just skipping into the results overview, we have got a fairly full presentation today. Just to lay the ground rules, what we will do is we will go through the presentation. Jason will take us all through the financials. If you have questions, feel free to raise your hand during it, and Shenin will unmute you, and you can ask your question.
Happy to take questions on the way through, but it's probably a little bit clunky. At the end of the financial section, we will pause though and just take questions on the financials and then go through to the end and obviously happy to take questions. We are recording this, so if you need to drop off or you would like to watch it later, I'm sure we can organize getting a version of it for you. Really happy to be producing these results today. The underlying Adjusted EBITDA or Adjusted EBITDA of AUD 17.5 million has us in line with where we wanted to be to get us to the result which we're guiding to. We're filming today of a greater than AUD 38 million of like-for-like Adjusted EBITDA.
If you take into account the acquisitions we've made, particularly DVL and then now KOBE to come through, which we aim to settle, we'll settle tomorrow. Now that puts us above AUD 40 million target Adjusted EBITDA for the year. Really happy. Revenue growth across the business, obviously the acquisitions have added a lot of revenue and profitability, but actually what we're happier with is the underlying revenue growth, which will flush out a little bit in this presentation, and that flows through to adjusted cash flow being up 44%. Notable feature, of course, of this period is the refinancing, and I guess our debt ratio is hitting a level that we're happy with. The debt refi will kick off on March 17. We'll take you through that. Jason will take you through those details as well.
Ultimately leaving us with the business, which is, you know, we think performing, starting to perform very well. It's got a lot of prospects, but is also incredibly cheap, not just to the industry, but also to itself through parts of the journey. Just to go through us for those that aren't familiar with us now. We are the largest security monitoring service business in Australasia. We've got over 200,000, 210,000 customers. As I like to say to people, we are present from Cape York to Stewart Island in New Zealand. We've got a very stable part of our business, which is really the monitoring and recurring services business, but the monitoring business generates AUD 6.9 million a month of highly recurring revenue. We're getting larger. We've got nearly 600 people close in on after the settlement of KOBE across Australasia.
You know, good mix of people and got, you know, fabulous institutional support in the market from a couple of key shareholders and others that you also can't see on the register. A really solid group starting to take place. In terms of how that fits together, Intelligent Monitoring Group really is made up of three constituent parts. Essentially though, there's a New Zealand part and an Australian part. The New Zealand part is ADT. That's our only brand and presence and asset in New Zealand. It's about 31% of our group EBITDA, and we'll talk a bit about its performance on the slides today. In Australia, we're made up of really three principal operating identities or entities. There's the ADT Group. ADT Group is the business that has also got ACG and AAG, DVL, and now KOBE under it.
They present as ADT on one side of their shirts and their brand on the other side. They've been integrated somewhat by personality, but retained their own unique flavour. Signature Security Group, which is really our residential and SME focused direct business. Then we've got our wholesale business, which is essentially what I always call the foundation assets of IMG Group, the old threat protect business, which are our bureau rooms where we look after probably over 45% now of the rest of the industry, the independent security providers monitoring and do the monitoring for them. In terms of the history of the group, I like to keep adding to this because it reminds us all where we came.
Effectively, this was a turnaround business, 2016- 2019, entered into really a recovery phase, which is when I joined the board with a couple of other people, Peter Keenan, the chairman. A fair bit of work to do there to get the business right sized, to get a strategy, to start to get the financials into order. Now a really clear move to growth, which is taking us, you know, to the top probably in terms of player in the industry, but in still a very fragmented industry where we're only really now starting to bring forward, you know, almost globally leading technology. Now we're into a growth phase, you know, and up to a sort of AUD 40 million EBITDA business on a senior debt facility, you know, very, very sort of standard industrial type operation. We've got some core values.
Probably not worth overlapping today, but they are important to me, and I believe in them in terms of creating an organization. I spend time internally on this. You know, my belief is you need to be very transparent. You need to be able to work with a lot of people, and you need to aim to be very good at what you do if you want to generate a successful organization. Certainly, if you want to turn one around, which we have done in our journey, but also to now being in a strong organization that can go forward in an enduring fashion. They are important to us. I will now bring Jason in, and Jason, take your time and welcome the board and take everyone through the financials.
All right, thank you everyone. Thank you for joining us today. Welcome. Just try and keep this reasonably brief. It is a good news story though. Firstly, EBITDA, as we discussed in the foresee in our recent get together, is AUD 17.5 million for the half. It's up on the comparative period, and it's in line with our guidance for the full year. You can see that EBITDA margin at 22%. The revenue was up, as Dennis had mentioned, whilst largely through acquisition. It's promising that the underlying sort of like-for-like growth is about 6%-7% up on last year. The profit and loss, I am going to go a little bit all over the place just to give you guys a good spread of this. After some of the adjustments, some of the non-recurring costs and the impairment charge is up on last year, AUD 7.5 million profit after adjustments.
Abnormal items we'll cover off in a separate slide. The largest of that is the Signature impairment, which I'll talk to in the next slide. Depreciation and leases, we've separated out D&A again, which we'll talk through in an upcoming slide. Gross profit up on the same period, albeit affected by the change out of the capitalization of 3G in Australia, the 3G project and ADT-owned customer work in Australia. Overall, great results for the half in line with the expectations and, you know, still talk to the tax shield of just over AUD 23 million that will keep us in a good position for the next few years. This just walking through the adjustments to EBITDA. The reported EBITDA there of AUD 9.9 million, the impairment of receivables of AUD 1.3 million up on the same half last year.
This is largely the ADT-owned book, the ADT book and an alignment of bad debt provisioning across the business, taking into account the existing IMS rules and just changing that through. We're working through that. We see that, you know, shrinking over time. The impairment of assets, obviously, you know, that is the Signature business that has been impaired in the results. You'll see that when you read through the financial statements released today. That's come about from the auditor's review of the Signature business, obviously. The Signature business is fundamentally made up of the Adeva purchase, some of the assets of the original Mammoth Security business that was the direct business that was previously On Watch or VIP.
We added the ADT residential business through Project Funnel Web that we've talked about in the quarter one review and the quarter two review, where we have actually benefited as a business from getting the synergies out of that resi business. Now we have improved costs, but the actual business unit itself, as we've just been working through the costs and how we allocate them to the business, hasn't quite lined up with the expectations. That is where the auditors have seen us recommended or taken the impairment position. I mean, on the flip side, they didn't allow us to write up ADT for the benefit that ADT got from the cost change or reallocation, but it is what it is. We come down to sort of the more static abnormals, and I see it as a question here.
We might, I'll just cover off the abnormals piece, and then I'll just take that question that's there. The abnormals are in line with the conversation we had around the foresee at the half for quarter two. It's a cost of acquisition of the various acquisitions we've had in the half or just in the half. There's cost of refinancing, the cost of restructuring the business around Project Funnel Web . There was a large redundancy cost in the half, and we break that out again in a separate slide. Obviously we've just got a couple of little things there, share-based expense and interest income. We might take questions now, Shenin, if that is okay.
We've got a question from Tom in Q&A. Jason, do you want me to read that out or are you happy to?
Yep. It is just, it is a question about the DNA current run rate of CapEx, about five. We will talk about CapEx in a couple of slides' time, Tom, but yes, it will slow. That is right. We are still sort of thinking sort of AUD 9 million for the full year. The key one-off cash costs we are expecting in the second half. Yes, we also talk about that in a slide as well, because there are some cash costs, obviously of the refinancing, as well as some non-cash costs. We might just go through to the, we might just keep rolling on, Tom, if that is okay, because I think we actually have the answers just in a couple of slides' time. Okay. Depreciation amortization, obviously it is a, you know, it is a big number. It has grown versus last year's total number.
Just to sort of, I guess, break it out into something a little bit cleaner that makes a little bit more sense. We've sort of split it into four key pockets. Two depreciation pockets, one just being sort of standard business depreciation on, you know, plant and equipment, normal things that businesses buy and depreciate for the running of their business. Obviously our leases, you know, we have a lot of buildings around the group we utilize for ASB 16 standards there to run those leases. The biggest pool in that DNA space is amortization of both the subscriber assets, which is a lot of those pre-IMG acquisition of ADT costs and ADT care customer. A lot of that CapEx in New Zealand being written down now rather than being on the 12-year schedule that JCI ran their asset book on.
It's running at a five-year depreciation schedule, which is obviously more in line with sort of the global standards. The intangible amortization, which is sort of all of that acquired customers, acquired customers, brands, etc, as we've purchased over the years. Again, it's the same thing. It's that change in moving away from last year in the half. We were still under the provisional accounting standards pre the ADT business combination. We hadn't actually completed the entry calculations and finalized the business combination of ADT, which we did in the full year results as communicated. Also, the JCI amortization schedule was on 12 years.
You can see that as we recognized all of that goodwill and intangibles, as well as the ADT brand, the brands associated with the other acquisitions that we've bought, and then put them onto the five-year schedule, you'll see that that's the lift in the amortization year-over-year. That now should stabilize and write down to nothing. We can probably move on. We just talk about Australia versus New Zealand. You can see here that the underlying growth in Australia is 6% overall. A lot of that is in, sorry, acquisitions made up a lot of the revenue growth in Australia. The underlying growth is quite positive at 6% for the year. The Adjusted EBITDA margin at 19.7% in Australia is primarily due to the changing capitalization of subscriber assets and 3G project last year that's ceased.
You know, New Zealand is just performing, you know, as expected with good revenue growth, good profitability growth, and will continue to do so as the New Zealand economy starts to turn around. Balance sheet, you know, good story here, not a lot of noise, AUD 26.2 million cash at the end of December. There are some real cash costs coming in the next month or so, but cash is stable and growing, in fact, even. Gross debt AUD 83.7 million, net debt AUD 57.1 million, which gives us really good net debt to underlying EBITDA number and in line with our, and with guidance gives us net debt to EBITDA of about 1.4x currently. The good news in the balance sheet is the refinancing piece, which we will come back to after, which we will come back to. Sorry, Dennis.
No, sorry, Jason.
From a cash flow perspective, those of you who joined us on the call, what felt like only a couple of weeks ago, this is essentially the same slide that we walked you guys through. We had operating cash flows of AUD 1.9 million. We had non-recurring costs of AUD 2 million cash costs, of which half of that is the acquisition costs associated with ACG, AAG, DVL, even a small bit of ADT on the first couple of days of the year. The equity raise costs that we had for November, as well as the costs of the debt refinancing work that we've done so far. We had small and final JCI transition costs of about AUD 500,000. We saw through Project Funnel Web , one-off cost of redundancies and restructuring of about AUD 500,000.
We talked at the foresee session about the cash drag from the acquisitions and the, you know, buying the APAR books and some cash in those businesses. Their EBITDA versus their operating cash flow has created a timing drag of about AUD 3.6 million in cash compared to EBITDA. Obviously, CapEx in the half was AUD 5.2 million. AUD 2.8 million of that is New Zealand 3G. To answer Tom's question from before, we expect that we will be around AUD 9 million for the year. We still expect that that is a reasonable expectation for CapEx. That AUD 2.8 million in New Zealand is about halfway through the number that we expected for the 3G conversion project. There is no major capitalisation in the rest of the business for, you know, standard business operating PPE.
I think, I think Jason would be fair to say that nine's a high number, right? Like the reality is it's the New Zealand piece that really swings out in the second half. And then the underlying rest of the business CapEx should be relatively low. We don't, we don't have any major projects or things planned.
No, exactly. I'd suggest we'd be closer to eight, but yeah, certainly nine's what we've called out. We don't see us going over nine.
Yeah. Sorry.
No, you're up. Refinancing. This is, you know, this is a really exciting time for us moving out of the hold, moving out of the debt position and refinancing our overall debt facility will release cash back into the business, which is a great opportunity for the business. Obviously just reducing that finance cost substantially in the coming years by over half. You can see here that if we were to sort of rework that into the numbers, we had, we would expect to see a post refinancing effect on profit of about AUD 13.6 million and coincidentally about AUD 13.6 million positive impact on the cash flow for the half if we had already refinanced on the 1st of July. It is a great result. It is a huge uplift in underlying profit and cash flow just from the refinancing.
It is a great position for the business to be in. We settle that. We expect to settle that in the coming day. We expect to have cash flowing mid-March. There will, however, be some P&L impact of the refinancing. The two main pieces are cash impact of around AUD 2 million out for the facility establishment fee and the advisory fees for the team that have been helping us get this really great result from the NAB team. What we have been doing, as is spelt out in the notes in the financial statements, is we had been capitalizing the costs, borrowing costs and the warrants given to Tor and Longreach for the current facility. Because that has not gone to term, there is a balance of AUD 4.6 million in both unamortized borrowing costs and unamortized warrant costs. They will flush through the P&L. They are a non-cash impact.
But, you know, the good news there, we go from a finance cost forecast of about AUD 13.8 million in FY 2025 to a very real estimated finance cost of AUD 6.2 million for FY 2026. That is alone a significant benefit to the business, which we're really looking forward to working with NAB on that going forward. That's me done, which is good. We'll now open the floor to questions and we can probably just take them live, Shenin, if anyone has any questions. Of course, anyone can connect with me after and I'm happy to walk you through anything.
Okay. I'll just reiterate and if Jason and I are both available.
No, Nicholas, we won't. Sorry, Dennis, and I was just sorry to talk over you.
That's fine.
Yeah. No, Nicholas has just asked if we'll put any capitalized costs of the refinancing below the line. We will take the cash cost as a one-off, but we're not going to capitalize any of the new costs associated with the facility.
Yeah. Both that 2 million and that 4.6 million, our intention is to have them as essentially non-recurring charges in the second half. The prime reason for that is, again, subject to audit sign-off, we would like to have a really clean interest line moving forward. Everything we have been trying to do as we have had to pull out of the ADT accounting, the JCI accounting, is to get to a really clean business line so that it, you know, things flow straight through the business. You know, we will have to drop those through, which I know is annoying for people and that does create an abnormal sense to our business, but they are one-off charges that obviously bring significant benefit that we will take.
I think in that, in lines with that, just a comment about those other, the AUD 2.5 million adjustments around costs. Look, outside for that M&A, you know, we do not have, or we certainly do not have a forecast for any redundancies to come through, or we certainly do not have another project funnel type scenario necessarily in front of us at this time. You know, the advisory fees and the, and sorry, and the JCI transition, which we should also just note having ceased, is gone. Really, you know, the extent that that has been a feature of this journey that we have been on will really shrink down now. You know, if there are what we will call, you know, essentially non-recurring items, we will call them out. The magnitude effect should really start to fade into our past as we move forward.
Same with CapEx. To Tom's point, now we've ceased capitalisation in Australia, you know, fully. That business is very clean in New Zealand because we have the medical business, which is a lease business that does not go away completely, but it becomes again very small relative to the business. You know, we would expect those to go. Really, we are just focused on driving, you know, profitable growth, cash flow driven profitable growth through the business to build up the scale of what we do. We will come back to more any questions at the end and as I say, we can take offline. Look, I will just go through the rest of the Prezzo and then take questions at the end. Really just turning to strategy and forward.
I guess firstly you would just like to pull up, you know, our corporate strategy has been really clear for the last three years. It's been to, you know, improve the business. It was initially a turnaround that then bought a much larger turnaround in ADT and has now been buying quality businesses. Really the focus has been driving cash flow half on half underlying cash flow growth of 44%, you know, speaks to what we've done. I think the refinancing endorsed by NAB and all the work that went on there, which was substantial, you know, further endorses that. Reduced debt. I bear back and reflect that probably when I joined the board, there was negative cash flow and negative EBITDA. The debt ratios were well out of whack.
Effectively, you know, we've tracked those from 5.5x net debt to EBITDA down to we're forecasting around 1.4x-1.5x . I guess point being we've taken them down to sort of what we thought were sensible debt levels for an industrial business that can reinvest and grow and ultimately pay dividends. Noting, of course, we've got these tax losses. I think they will still be a feature of our any capital management or strategies moving forward. The final bit is in our strategies being to improve growth.
I think that thing for me personally today is looking at the underlying organic movements that are starting to come through the business now is what actually really excites us because the end of this journey was always to be to create a great enduring business, you know, that can go on and become a market leader. You know, we absolutely feel like we're in the zone for that. I feel like we're in the early days of being there, but there's a big long journey in front of us. Seeing that come through and looking forward to talking about that at the 2025 result. I guess the point being the numbers in the second half that we're expecting to give will also set us up for a really, really strong FY 2026. It is about, you know, improving the trajectory and accelerating from here.
The three growth areas we've talked about, you know, the first drive has always been to get the commercial enterprise business back up and running essentially from ADT back towards being the leader there in that space again. We are probably not quite the leader there yet, but we aren't far away either. We certainly would be in the top five biggest players in Australasia now. Second is monitoring. Two major pieces to the monitoring strategy and growth. One was to reduce the actual upfront cost of security monitoring by bringing new product, which we've done. The second is to actually improve the service itself, which is around the guarding service, which we'll talk about.
The third is a longer dated piece, which we are working on, but will take time around ADT care, which is really around aging in place and using technology in an aging world and environment around sensor technology. Turning to the commercial piece, I think this is really instructive and ultimately what has been driving that growth in Australia. This, when we took over ADT, it had done AUD 2 million of recurring of sort of service and installation commercial revenue the year before we took it over. Now, bearing in mind in 2016, it produced AUD 134 million of revenue. JCI had run that business, had turned that business off, had actually exited that business. By June of 11 months into our ownership and by June of our first year or 11 months, we got that business back to a run rate of AUD 1 million organically.
No acquisitions and that just re-engaging with customers for an AUD 10 million sort of number for FY 2024 for the total year, which, you know, was 11 months of our ownership. You can see we have broken down the FY 2025 result into the ADT piece. The like-for-like piece, no acquisition impact, produced AUD 8.2 million. So, you know, effectively AUD 16 million continuing that growth story underlying. We have also shown the effect of the AAG and ACG business on top. To bring it up to speed, if you include all of the, I guess, the pieces that make up our ADT commercial business now being AAG, ACG, DVL, and then shortly KOBE, we are now run rating a business that has a revenue of about AUD 5.5 million a month. We are really encouraged by what we are seeing in this business.
The conversations we're having, the deepening and widening is absolutely proving up the strategy that we had, which is to become the national provider of choice again to enterprise security customers. To give you a feel for that, these are the type of customers that we look after. You know, to be fair, really a lot of our growth hasn't come to this point through more than just engaging with our customers again and actually them increasing the amount of work they do with us. Essentially taking share from others with existing customers as they're looking to develop. You'll notice some names like NEXTDC, which are clearly growing very quickly.
All of our customers, by and large, have work pending as they look to use the latest technology systems to actually improve, you know, security, but also workflow processes and a whole raft of things within their business, primarily around access control as the base. Looking at the video guarding piece, so that's our commercial business. I'll just play a quick video, another one here, which I enjoy, and then I'll talk.
In a world where safety is paramount, every action counts. With the power of video monitoring, we are actively monitoring 58 live sites, keeping a vigilant eye on potential threats and ensuring the safety of our customers. Thanks to video monitoring, 11 confirmed arrests have been made. Swift, efficient, and effective. Police respond faster to verified events, equipped with critical video evidence. It does not stop there. Video monitoring helped prevent two attempted burglaries, stopping crime before it could happen, saving our customers thousands in damages and asset loss.
The good news with this guarding business, and I think the notable thing here is we really turned this on at the start of this year. Currently, with our full guarding service, we only have 58 active sites. Per that discussion, we've actually confirmed 11 arrests from events that happened on those sites. We also scared off per the video at the start of this. These are all live, or these are all pictures taken from real events to which we have been involved since the start of the year with the service. It's hard in a way for me to overemphasize how much of a change this is for the security monitoring industry, what we do, the effectiveness of what we do, and the impact that it actually has in our account, the positive impact and delivery that it actually has in our customers.
In a world.
How does it actually work? Just to spell it out, you know, quite simply, you know, effectively our video guarding service or our guarding service, which we refer to as ADT Guard, Signature Guard, effectively we use cameras and detection systems to detect an event live, real time. In fact, in situations we are now judging whether we can assess or believe an event might occur. For instance, people are loitering around a premise and look like they may do something. Those signals, camera footage, go live using very clever sort of AI-based systems into our monitoring rooms, which I have nicknamed. We have now internally renamed Bat Caves because that is where we are actually fighting crime and processing these things. We see the signals, we see the events. Because we are seeing them live, we and we are in an A1 graded room.
I think that's a really important thing to say. There's not something, even if you bought the technology together that we have, there's very few people to which when we call the police with a live event, the police will respond. I would note that first video, if you did see it at the start of this presentation where the couple of people ran onto the site to try and rip off some cars, we detected that event. We called it out live to them. We ultimately scared them off. Nothing actually happened. It was recorded as an event, but it wasn't, it was just a deterrence. The really interesting thing is we also did call the police and they were there within 12 minutes.
In that case, we probably maybe shouldn't have called on the police because we don't want to overuse the police, but the police will respond very quickly to a verified event. Now, probably, for the first time, there's value in having monitoring and security monitoring. It is actually live, it's real, and it can be proactive. It's really the solution that people have always wanted or thought they were getting when they would get a monitored system. The million-odd customers in Australia that have already got monitoring, but as reactive monitoring, a first port of call to now go back through and sell this video guarding service. We're very excited about what it can mean. What does it allow you to do? You know, the key things are, you know, essentially what you're doing with video guarding.
If you think about it, if anybody is familiar with a home security system, and the home isn't necessarily, by the way, our target market, we really want to get, you know, around commercial Australia first because we have scarce resources and it's a very big opportunity. Effectively what you're doing with our video guarding services, you're setting an alarm like you would set a traditional home alarm. You know, if you're in an office environment, you set that alarm and the cameras are effectively being activated at night. All of the events and everything's being recorded in the cloud and allows us to keep it up there for long periods of time as well.
In the event of an event, so somebody comes onto site, our cameras detect them, they wake up, detect them, goes to our rooms, and our rooms are able to make an assessment. They're able to react in a number of ways. Depends a little bit on the client instruction. One of the things we can do is we can actually talk down through the cameras live. The feedback from the customer base so far is that's the most powerful feature because it actually is a very active deterrent for someone who comes on site and actually realizes somebody is actually watching them and that the police have actually been called. They tend to skedaddle pretty quickly has been our experience. It's very, very proactive.
One of the interesting things about our system too, though, is it does not necessarily require you putting in an all-new system. We are actually able to connect our technology to existing camera sets, provided the camera sets are good enough. That actually means it also is not necessarily a huge upgrade cost depending on, you know, what the nature of your current security system is. Why use it? Primarily, I think it is because of the rapid response. Now we have cut out the need to call out a guard or to verify an event or have someone attend site to make sure something has happened before the police will respond. Now we are in the game of actually catching people live. That is the game the police are in. That is the game they prefer.
You know, if you're a police person, you know, you love nothing better than actually catching someone. It saves an awful lot of paperwork and hassle and actually gives you some job satisfaction. They are our key partner. It is very scalable. I think that's the key here is, you know, we've actually need this to be scalable. It is scalable in our setup. We can do this in lots of places and be effective. It really does provide protection in a way that is very much akin to having a guard sitting outside your property 24 hours a day. By the way, a guard that doesn't get sick, doesn't take toilet breaks, doesn't, you know, disappear on you. I think in that context, therefore, it's incredibly cost-effective.
You know, if you are a customer that does have a guard at the moment, you know, we can make a case now that perhaps that is actually an investment you don't need to make. A full-time, you know, 24-hour security guard a year for a site will cost you AUD 300,000-AUD 400,000. The opportunity for us to do that for less than that is very, very large. The other two big growth areas for us, commercial, as you've seen coming through, and then the monitoring. In terms of inorganic, because we are still looking to build out our footprint, we just put up our historic base here. We've updated it now to include DVL and KOBE. You know, just to reflect on the journeys. In the early days of building the business, we were really buying customer bases, old customer bases.
I mean old in that they were old sort of signal alarm bases. Now, as we're looking to accelerate, build our footprint, and then be able to deploy this new technology, we've been more focused on, you know, buying full-service businesses and working with the staff to enable us to be able to look after bigger and more complex customers. You know, we would note, you know, we haven't paid more than it's 3.7x there. I think that would probably be a little bit generous on the upside. We are certainly very focused on where we do these. We've been increasingly buying quality and we've been able to hold the multiples. When we look forward on our roadmap, we still have a lot of opportunities.
I've been very clear that though that we only will exercise or do what is strategically sensible for us and at a time that it is sensible. You know, we asked the question at the capital raise last year to be allowed to have a capital base such that we can execute, you know, when we feel the business is in the right place and when we get the right deals. We're thankful to be in that position. Our real priorities, though, are to continue to grow our geographical coverage. We really want, you know, direct wage technicians and a skilled workforce. The overall workforce in this industry is probably flat to potentially even declining with baby boomers.
One of the core skills and enabling features of us, and one of the reasons for us to be big and to get bigger, is to be able to actually re-educate and create this back to being a profession. Security services and around the technical security services was a profession, and then it fragmented with no real leadership. It is our goal to reawaken and redo that and use our scale to do that. The other thing that we are open to is just vertical customer bases to accelerate our growth. Whilst we touch lots of industries, you know, there are certain industries and areas that, you know, we could accelerate that could be highly accretive and beneficial to us and also diversify us that we will look at. The criteria, though, as I say to people that we do engage with, is very clear.
People can see what we've been paying, and we have no intention of paying more than that. It makes the conversations around value fairly straightforward. To sum up, we've pushed time here. We are really happy with this result. I think when you reflect on it, it marks a period where we finished getting off JCI systems fully. That can't be underestimated as to the amount of work that has took in the first 12 months off JCI. We've got our debt refinanced to NAB. We were pretty consistent in saying that that was going to be in our future. I would say I was very happy with the turnout from the commercial banks. It was really, really encouraging. That being said, I was a bit surprised that people were so surprised about it.
I think we'd been pretty straight in flagging that's where we were going and that that potential was there. It's nice to see that come through. Hopefully, you know, it's a nice tick for people. We've settled our acquisitions in. Really just delighted with the businesses that we've bought in the last 18 months. Every one of them is continuing to perform, to grow, to embrace being part of a group, to be with us as we bring them in, as we learn about, you know, bringing them in and cultures. You know, it's really what gets us excited, you know, to be part of. It really is the quality. It's nice to see disparate businesses with really high-quality people actually coming together and realizing that there are other businesses like that too, and then forming that into something bigger.
We did create the Signature Security business, which, notwithstanding the point about the impairment, was actually very successful in actually helping us focus up the organization and essentially bring together the end-to-end residential business from technicians through to sales, which had been lacking under the ADT group that we had bought. We raised equity, acquired DVL. We completed through this period the DD on KOBE, which again, we are looking to settle tomorrow. We also completed the 3G upgrade program in Australia, which cannot be underestimated in terms of the effort and hours for many, many people that went into that to get our now customer base fully on 4G plus systems in Australia. Of course, this ADT Guard and Signature Guard, which I really strongly believe is one of the two, you know, significant parts of our future.
It just changes our business, what we do, the industry, and also the addressable market. The second half of this year is just going to be focused on consolidating. We've got the platform. We've had the platform for a bit now, and we're looking forward to just working hard on it. We're looking forward to organic growth, which again, if you take the second half numbers that we're expecting to deliver through and then roll them into FY 2026, you should expect to see a very, you know, very good FY 2026 in front of us. To finalize it off, I always like to do this just simply because it's a marker, I guess, for me as much as anything.
Essentially, when I took over the job, or at least prior to the ADT transaction, you know, this is just a way of sort of showing how far we've come. You know, we started with a geared business effectively. At that point, we had actually turned it around to the extent that it was producing some cash and a positive EBITDA. You know, we've taken that business, we've scaled it up. Ironically, it's both the safest it's ever been from a gearing point of view. It's the most stable it's ever been. It's the most diverse it's ever been. It's actually probably, you know, not the cheapest it's ever been, but it's certainly not expensive by its historic metric and/or industry multiples. I think that's probably the key point here. We'd like to build an enduringly great Australasian business.
To do that, you know, we're going to have to continue to do the work and deliver the results. Hopefully, you know, we'll benefit from that in a global multiple sense. I'll call time there. I'm happy to take any more questions people might have, and we can work through them, and then we'll come back. Jason
I've got a few of them in the Q&A section. We've got questions coming in there. Yep. Yep. I'll start from the...
You go, Shenin.
I'll say start from the oldest question. That was from Tom. Right. Tom just wants to know the customer interest uptake for video guarding, our sales pipeline, and obviously the product revenue uplift versus the traditional monitoring.
Yeah. Effectively, a guard customer is worth about 5x more than a traditional alarm customer. That's probably the best metric I can give you. In terms of the pipeline, the growth, all we have done so far is started to engage with our existing customer base and offer it to them outside of any specific commercial discussions we're having. We are having commercial discussions. We've had some very successful commercial discussions. In a semi-public forum that this is, you know, I'm happy to talk about a few, but, you know, encourage it not to go too wide. Sinai Schools up here in Queensland is a good example. Jewish School Network that had actually picked up on the solution prior to the, you know, the difficulties that the Jewish community is going through in Australia at the moment, but now looking to ramp that further. Hastings Deering and a number. We haven't aggressively gone to the market with it yet.
We've actually been working hard on the back end of it all to make sure that we're going to be positioned to be able to scale it well. I think the comment I make about guarding is it works incredibly well. It's incredibly effective as long as you do it properly. You know, we now, I analogize internally a little bit externally. We're in the airline industry world now. You know, the planes have to stay in the air 24 hours a day, and nothing can go wrong. We're just making sure our processes, our people, our alignment is there whilst we build up the sales book. We're now progressively going to widen it. One of the challenges we have, I think, is our success rate on selling it is incredibly high.
Like I'll go as far as to say when we actually get the chance to sit down and explain what it does relative to traditional offer, it's 100%. Our conversion rate on a sale, when we explain it, is incredibly high. The challenge with that is if we actually took that out to our entire base and/or the entire industry and/or the people that could use it, there is no scenario we could deliver that. All that would happen is we'd have massive lead blowout times. We are looking to learn more about that over this next six months and start to ramp up the sales volumes as we go forward. I think our confidence comes, one, because it works and we know internally what that means. Two, we've seen a bit of success overseas with some other players that have done it where it's emerging as well.
Three is just in our own conversations with customers. Like we know that when somebody understands what this does, the proposition around it, it's incredibly compelling. Now we're in the phase of taking all of those lessons together and actually applying them and growing them forward. Yep. We'll publish the recording of this. We'll try to, I'm not entirely sure of the technology, actually, to be really honest. This is just a question around publishing this recording. We'll do our best, but please interact with us, and we can probably get you a copy of it. It may be easier than us, say, publishing it totally. Which other competitors own A1 graded security rooms? Look, most of the majors, so Chubb, you know, Sapio, Seacom. I think that there's, I think there's something like 50 A1 rooms in Australia, and then there's a bunch of lesser graded rooms.
Some people call themselves A1, and they're not actually technically, they use a different standard. I think that the point about the A1 room is, to me, they've made no sense spending the money on being A1 graded until now. You know, A1 grading did get you essentially a slightly better relationship with the police, but it still very much was entailed around you having to verify events. I think now that we verify ourselves and then can go straight, there's value. I make the point ultimately with video, I think the successful players, because I'm assuming others will follow here and come along as well, but, you know, they don't have the brand we have. They don't have the scale we have. They don't have the start we have at the moment. It is ours to take.
Ultimately, though, the long-term success is going to be our relationship with the police and the way we handle events and that it works. When I look at the other competitors, you know, and certainly the intensity to which the team have embraced this and the way they're going about it, you know, I feel good that we'll be able to craft a really, really strong branded position here that will both be hard to replicate from a physical point of view with the A1 rooms, but also to, I think, having it, you need to play, you'll need an A1 room, but that's not sufficient. You actually need to understand the linkages of the technology and actually bringing it together. I think that will be hard. The question here about the organic growth pipeline, how it'll be tracked. Look, there's the two parts of the business.
There's the commercial business and the residential business. I think with the residential business, I mean, to be clear, we're expecting to go through a bit of a mixed change here. We're coming off the back of the 3G upgrades. We did have some customers. We had above-average customer attrition last year. An average residential customer will stay with you for about seven years. You either resell them because they move house and stay with you, or they do not. As we go through that, you know, we're now prioritizing guarding, which is much higher value. Our first proposition is guarding, and then we will sell down to the traditional alarm systems. You know, we have a good feel of that. As we get into that process, we'll start to be able to provide more color around that.
In the commercial business, look, we're really tracking forward pipeline and discussion of the building pipeline. We will probably, I'd say at the full year results, start to put forward a pipeline type number for the market to track. We obviously have a sense of what it is. It's obviously pretty attractive at the moment, given we're growing and the conversations we are having and expecting to have. I'm just wanting, I guess, myself some time to understand them a little bit better so that we give, you know, proper driver information to you. We're on a journey here, and disclosure will get better. Really, it's pipeline for commercial and net customer. Well, it's actually gross customer addition, which is the driver for residential. The churn itself is largely just industry, you know, as I say, people moving houses. It tends to be your key driver.
Then it's really about gross ads. Our gross ads are positive, obviously. We have hundreds of inbound leads every month. What we're focused on at the moment is getting the whole point of bringing the Signature business together was to speed up the leads and the installation process to customers so that we would have less, you know, lag or losing people in the sales process. Now it's focused on actually, you know, selling the guarding, which is 5x more valuable than that. Look, we will grow that information as we feel more comfortable about it and how to use it properly as a driver. Question from Nick. Just the AUD 38 million EBITDA pre-acquisitions, the confidence can grow a bit. Look, a lot of the second half is growth.
I mean, in our forecast, just to be clear for the second half is around a little bit to the prior point, pipeline growth and our budget and expectations for the second half. We're pretty confident about that. I mean, it is really being driven by that commercial business at this stage. You know, I don't expect that guarding business to really pull us at a group level probably for another six to maybe 12 months. I think that engine will really kick in and go at a level that will really pull the group along. You know, yes, we're confident. Yes, it's from work that we are in discussions on that we can see coming. The only risk in that, I guess, in our view, would be timing. At this stage, we're comfortable with that.
We're also comfortable, though, that, you know, that pipeline continues to grow. It's not just a one-year thing. These customers that we're doing work on have a lot of work, and they've got continuous work. You know, again, I'll just, without over-laboring the point, you know, reflect on NEXTDC's journey where, you know, they're consistently upgrading and building and expanding and using new technology. You know, I'd be very surprised if NEXTDC needs us less next year than they do this year. That would be a core, would be a reasonably, you know, good part of our growth expectation in the second half amongst a number of others. It's not reliant on anyone in particular. Sorry, I'll just keep working through. Yeah. Question here from Richard. Thanks, Richard. Just on the acquisitions.
All of the acquisitions trading, well, they're certainly trading in line with our expectations. I will say virtually all of them are trading with growth. You know, to make the point without, again, over-laboring it, you know, that NEXTDC relationship actually came via ACG. By virtue of that pipeline, that growth and that particular customer amongst others, again, you know, they are growing, as is ADT, as we've shown in this chart. It's really across the board. We certainly wanted to settle them. Our attitude in the first period of ownership has always been, you know, the key KPI for me is not to lose good people. Like we're buying these businesses for a reason, for the talent to retain the customers they have and then to engage and work and open them up.
Most of the acquisitions we've bought have been effectively got to a point of the owners being happy. That's code for, in a way, capping growth and not being prepared to go much further with their businesses through being happy. What we bring to the table is a re, we'd like to think of sort of a re-enthusiasm in the business to be able to do more and to actually grow those businesses. I don't have a clear like-for-like view. We'll try and do that for the full year result to just show that the acquisitions have been successful, as we think they have. Then what they mean. Going to your second point about the guidance. Yeah, look, margins, unfortunately, we've got this issue with the prior back history of the 3G.
In terms of the 25%-22%, that's really the effect of the capitalization coming out. 22 is a pretty good base, I think. I still am focused on the idea that we can generate a 25%-30% margin, EBITDA margin business over time. It will take a little bit of time. I certainly wouldn't, I'm not expecting it to go down from here. I think the only reason that it would would be just mix and an acquisition. Just the effect of essentially acquired earnings or margins in a different business. By and large, all the businesses that we've looked at, again, they're quality, you know, long-standing, you know, robust, sustainable businesses tend to have pretty similar margins. I doubt that there'll be a big pull one way or another. Personally, I think this is a good base to sit at.
We will look to grow that margin as we grow over time. Again, I think the 25% in the first instance is my target. Working capital requirements. Yeah, we're now getting into a more normalized environment. I think that's probably a key point from this half result, just to say these numbers, whether it's in the balance sheet, the P&L, you know, if you accept the couple of abnormals and things that you need to now, you know, still adjust for, gives you a firm foundation, we believe, to build forward on. Working capital requirements, not great for the business. You know, there obviously is a receivables and payables cycle, but it's not something that I suspect to drag on our cash flow going forward. We are still, Jason made the point about the receivables.
Yes, as we go through that ADT book, you know, it is still chucking up things that will fade over time, but there is also opportunity to pull cash forward in parts of our businesses as we are improving it. You know, I'd think working capital will cease to be a particular feature. I think the only reason it's over-featured here recently is just, again, because of those acquisitions where there was that timing lag between EBITDA and cash flow on acquisition that washes out as you move forward. Those businesses, you know, the EBITDA and the cash flow starts to line up. Just having a look now, there's a comment from Jared just around the acquisitions effectively. Yeah, look, there are other acquisition targets. We did mention in the raise that there are acquisitions.
I think one thing we did not verbally say on this call, but as in the presentation, is we now have with NAB, not just an awesome interest rate and a great funding partner and a secured facility that is going to bring, you know, a lot of benefit to the group. Further than that, they really want to back us and see us grow and continue to move forward. We have a AUD 35 million acquisition facility. You know, to be blunt about it, that facility was really a crafted number. What I mean by that is, you know, if we really wanted it, it probably could have been more. There was an offer that could have been more. Likewise, you know, it could have been less too. What that number was really pitched around was the trade-off between the cost of the facility.
There is a cost of having the facility that is all in the numbers. And, you know, trying to target the scale and size of what's in front of us. What that allowed us to do is effectively, you'll note that a number of the transactions of recent times have been $7 million- $15 million-$16 million, but, you know, typically more like a $7 million-$9 million acquisition. I think having this facility just allows us to effectively widen the lens a little bit and say, like, actually, you know, there's probably another category of acquisition that may or may not be apparent. Now, I'm not saying it will be, but it just allows us to open our scope a little bit.
The only thing we would need to raise money for as we are today, and I think this is the wider point about the debt, is we have no need nor expectation to raise equity anytime really in the foreseeable future, except for what I'd call a large transaction, of which there are probably two to three that I could see that could be potentials. They would be, you know, substantial, you know, I won't call them company transformative acquisitions, but they certainly would be significantly scaling. Are they likely? I'd say they're possible. Are they about to happen anytime soon? No, they're not. They're sort of long-dated conversations that I had, but there's no certainty or likelihood that they would ever happen.
It leaves us in a position of being very, very well funded, being able to focus on the pipeline as we put forward, which has continued to grow, which will allow us to then, you know, build our business out in a managed fashion through time. I think I've been also pretty clear. Like I believe that there is value, given we are trying to create an industry-leading sort of effectively professional services business, given our customers are, you know, high, often tier one, you know, grade A type customers too, I believe there's a halo A from being listed and being increasingly successful. I think that's one of the reasons we've been surprised at the inbound calls and conversations, pleasantly surprised on the commercial and enterprise book, as people have seen us come along and that strategy has been validated by people calling us.
I think being an ASX 300- sized company would still improve that further. You know, whilst it's not something we're going to do for the sake of it, I think, you know, we're very much keen and focused on the idea of moving the business through over time, over the next couple of years to get to an ASX 300 company. As we find things that make sense, as they add value, as they add to our portfolio, and if they help bulk us out, I think that all makes good sense. We're in the good position now of not having to really, you know, work hard for the capital. We're very thankful to everybody for putting us in the position of being able to now, you know, diligently work through.
The answer to your question is yes, there is DD taking place on a number of acquisitions, but none of which, you know, we would look to do until such time as, you know, we feel comfortable with KOBE, for instance, and that everybody and everything is performing as we would like to be. I think somebody once said a little bit about us and probably me more pointedly, the chances that we will do nothing, if you know the back history of this business, are incredibly low. I'll pause there. Sorry for rambling a little bit. I'll just check if there was anything else I've missed. Nope. Look, I'll go to close here. Obviously, our numbers and details are all available and public. My mobile number is out there for those that don't have it. You know, just give me an email, dhandling@domg.com.au.
Happy to take questions. We are really happy with this. You know, we are in the best shape we've ever been. You know, we're soundly financed. We are seeing cash build in the business now month on month. Our financing rates are going to fall dramatically. Our reputation in the industry is now back, and I'd say at all-time high, certainly in the IMG way. We're attracting independent security companies to our businesses, bureau dealer customers. We're in meaningful, you know, really strong discussions with vendors and product suppliers because they see what we're doing and they see the position that we're taking in the industry. We have commercial customers calling us, asking to engage.
I think our biggest challenge is really making sure we have the people trained, looked after, and, you know, and more and more of them to be able to unlock the opportunity that sits in front of us. That is certainly what we are going to spend the next six months focused on, including, you know, doing all the other things we want to do to keep this being a successful investment company and place to work for everybody. I will call time there, say thank you, and look forward to seeing some of you around the traps as we get around over the next couple of weeks.