I would now like to hand the conference over to Michael Sainsbury, CEO. Please go ahead.
Thank you very much, and welcome everybody to our 2026 results call. If my voice sounds a little bit raspy this morning, I just want to apologize in advance. I was out at Parramatta Stadium last night cheering my beloved Roosters on. So a great result. Speaking of great results, we will move straight into the presentation deck. So I will go through the deck slide by slide. I will tell you when I am advancing, so for those of you who have got a presentation in front of you can keep up with it. With that, moving through to slide two, where we talk about the agenda. I will cover an overview. Obviously, I will hand over to Jason to be able to cover off the 2026 financial performance in a little bit more depth. I will come back to myself then.
I will then go into a market and business update, and then we will close off with strategy and outlook and an opportunity for questions and answers at the end. Obviously, I have got Jason Boschetti with me, and I will hand over to him at the appropriate time. Slide three is just a title slide about overview. Moving straight to slide four, which talks about the connected group. For those of you who are not intimately familiar with IPD Group as a company, the group is the parent company, and it consists of five different businesses, each diversified, but covering off across the key infrastructure markets. You have got IPD, which was the original founding part of our IPD Group business. It is very strong in electrical power control and automation solutions in a distribution model. CMI, one of our recent acquisitions, very strong in industrial cable and power connection solutions.
Platinum, which is our most recent acquisition, very strong in mining and resources and specialization in mining and resources cable solutions. EX Engineering, hazardous area specialist around solutions and product supply. Then last but certainly not least, Addelec Power Services, an electrical services and testing business. Each of them have strong synergies across the group and the ability to be able to leverage off relationships across that group. A well-connected group, and we work very hard to embrace the synergies across those different businesses. Moving forward to slide five is probably the most important slide in this deck, talking about the overview of our results, and I am really pleased to say that continued growth above the top end of our guidance. All of the boxes there showing positive momentum. I start with revenue there at AUD 414 million, which is up 16.8% on the prior comparative period.
EBITDA at AUD 55.4 million, up 19.4% on the prior period. EBITDA as a percentage at 13.4%, up 30 basis points from 13.1% of the prior comparative period. Organic EBITDA, and this is important because there has been some rhetoric out there in the market that all of our growth has come from inorganic activity. Pleased to say that organic EBITDA up 11% on the prior comparative period, really reinforcing the value we are getting out of the operating leverage across the business and a strong result there. If I talk about EBIT at AUD 47.2 million, up 20.4% on the prior comparative period. Our operating free cash flow at 46.8%, representing conversion of 84.4%. Net debt at AUD 16.4 million, down from AUD 24.4 million at December 31st. Data center revenue growing at 27%, up from the prior comparative period of AUD 56.5 million - AUD 71.5 million.
Really strong result around earnings per share at 29.7% and up 17.4%. That result really reflects a strong organic story, but inorganic story. I want to just take a quick second to delve in on that. When we talk about our M&A strategy, and that has certainly been a big contributor to us, I do want to reinforce that since listing in 2021, we have only raised AUD 60 million. That inorganic opportunity and the growth you are seeing in that earnings per share has come with us not having to go to market to raise significant capital to be able to support that. It is supported through our own cash generation largely. That earnings per share is something that we are really proud about. When I talk about dividends, it is AUD 0.147 , representing a dividend ratio of 50% payout, and that is obviously fully franked. Some good results.
Those blue arrows, I prefer to show them in green next time. It is a strong set of numbers across all of the key parameters for the business. Again, exceeding the top end of our guidance, which we are very proud of and excited about for the future. Slide six is a title slide there around financial performance, and if we move straight into slide seven, I will hand over to Jason Boschetti to cover off those numbers in more depth.
Fantastic. Thank you, Michael, and welcome everyone. We are onto the financial overview, the FY 2026 financial performance slide starting on slide seven. I am pleased to finally release our FY 2026 results, all exceeding the top end of our guidance range provided in May 2026. Group revenue increased 16.8% to a record AUD 414.3 million, with our data center revenue growing a strong 27% to AUD 71.5 million in FY 2026. EBITDA increased 19.4%, so again, another record AUD 55.4 million EBITDA result above the top end of the guidance range and reflecting clear operating leverage across the group. EBIT increased 20.4% to AUD 47.2 million, again, also above the top end of the guidance range. Our EBITDA, EBIT and NPAT margins have all expanded and EPS increased 17.4% to AUD 0.297 per share. Platinum Cables contributed six months of earnings from the 1st of January 2026 to the 30th of June 2026.
This complemented, as Michael mentioned, our strong organic growth revenue, but also contributed to the total group revenue with a total group revenue growth of 16.8% versus the PCP. Moving on to slide eight, sales and earnings growth. Revenue up 16.8%. IPD revenue increased 11%. CMI revenue increased 11%. EX Engineering revenue increased an incredible 35%, and our data center revenue increased 27% to AUD 71.5 million. Our group revenue has grown at a 28.5% CAGR over the past five financial years, as you can see on the graph to the right. This growth has been evenly split between organic growth and growth driven by our accretive acquisitions. Our underlying EBITDA is up 19.4% to AUD 55.4 million. Revenue mix contributed to a shift towards larger margin competitive projects.
This resulted in some gross margin compression when looking at a year-on-year basis, and we've got a slide further in the deck to talk about the half-on-half year movements. However, margins have subsequently remained stable and improved 33.1% in the second half of 2025 to 33.4% in the second half of 2026. Our underlying operating expenses as a percentage of revenue has improved 140 basis points in the prior comparative period. A shift from 21.4% - 20% despite inflationary cost pressures, particularly around our inbound freight, and one-off costs, including opening our new Perth facility and our restructure of the Addelec business. The net impact was double-digit revenue growth accompanied by expanding EBITDA and EBIT margins. An incredible result. Moving on to slide nine, organic financial performance. These results are excluding Platinum, and this illustrates the strong organic growth across the core IPD Group.
Organic revenue growth of 9.7% and organic EBITDA growth of 11% across FY 2026. Both EBITDA and EBIT exceeded the top end of our respective guidance ranges. IPD revenue increased 11% on market share expansion and strong data center revenue momentum. Our CMI business delivered a record result, with revenue up 11% on an improved go-to-market and operating scale. Our CMI cable business actually grew 10% on FY 2025, and our second-half revenues accelerated on the first half of FY 2026. CMI Minto plugs were up 17% on the prior comparative period. This is predominantly led by our strong performance in export markets. EX Engineering revenue grew 35% as the business expanded and crossed key relationships and supply partnerships. This growth was partly driven by a key oil and gas cable supply contract. Excluding this contract, EX Engineering's revenue still increased by an incredible 23% on the prior comparative period.
Addelec revenue declined 7% when excluding the Kingsgrove Bus Depot project, as the business repositioned around core electrical infrastructure and service opportunities. During the year, Addelec undertook a business restructure with an increased focus on testing calibration services. The business enters next year with a more sustainable cost base to support improved profitability across FY 2027. While our core group revenues grew 10% and data centers grew 27% on the PCP, it's important to point out that IPD Group's diverse product and end markets grew 7% on the prior comparative period, even if you excluded our growth from data center revenue. IPD Group's strong track record of closing accretive acquisitions is not often transparent to see, with the strong organic growth profile across the group. As shown on the previous slide, IPD Group's total revenue has grown at a 28.5% CAGR over the past five financial years.
Organic revenue has now grown at 14.3% CAGR over the past five financial years. This really demonstrates the balanced organic and inorganic growth since our listing on the ASX. I will move forward on to slide 10, matured margin profile. Over the past four financial years, as shown in the graphs above, group revenue has grown 134%, while EBITDA has grown 173%. This demonstrates IPD Group's strong operating model scalability, enhanced operating leverage over a number of years. Following our acquisition of CMI Electrical in the second half of 2024, the group established a new gross margin profile, and you can see that halfway through the graph to the left. Whilst it is hard to see looking at year-on-year measures, gross profit margins have subsequently remained stable and actually improved from 33.1% in the second half of 2025 to 33.4% in the second half of 2026.
Despite this continued growth in larger margin competitive infrastructure and data center projects. This has contributed to our EBITDA margin expansion alongside scale, operating leverage and growing our revenue base. I really want to emphasize our margins are stable and our earnings are growing. Our growth has not been bought through lower pricing, through lower quality earnings or profit margin sacrifice. The business has become larger, diverse, our margin profile has changed and profitability has strengthened with profit margin expansion and an increase in our operating base, increasing our operating leverage. Just moving on to slide 11, our balance sheet. Our robust balance sheet provides significant strategic capacity. As of the 30th of June 2026, IPD Group has AUD 181.8 million of net assets on its balance sheet.
After securing AUD 37.5 million of new debt to fund the acquisition of Platinum Cables, the group's net debt position has improved to AUD 16.4 million, split between AUD 48.6 million of debt and AUD 32.2 million of cash. This strong de-leveraging has resulted in a conservative leverage at approximately 0.3 x net debt to underlying EBITDA. The IPD Group board of directors released its leverage policy back in 2024 and released a target to maintain net debt to EBITDA at less than 1x on a preceding 12-month basis, but up to a maximum of 1.5 x. Back to our current leverage of 0.3 x, IPD Group's balance sheet remains strongly placed to continue to support our strategic objectives. Moving through to slide 12, capital management. Our operating free cash flow before interest and tax outflows of AUD 46.8 million reflects a cash conversion of 84.4%.
Our inventory increased by AUD 13.2 million, and this reflects supporting the current project delivery and future growth opportunities along with the acquisition of Platinum Cables. As Michael went over previously, management and the board have demonstrated disciplined capital management over an extended period. Since listing on the ASX, IPD Group has only accessed equity markets once to fund the acquisition of CMI in 2024. This capital discipline, combined with strong cash conversion, robust balance sheet, supported sustained earnings growth and driven growth in our EPS since listing on the ASX. As you can see to the right there, our EPS has more than doubled since our first reported results on the ASX. Our consistent growth in shareholder distributions, and today the directors declared a final fully franked dividend of AUD 0.079 per share, payable on the 8th of October.
This brings the total FY 2026 dividends fully franked to AUD 0.147 per share. This is up 16.7% on FY 2025, representing a total payout of AUD 15.3 million and a payout ratio of 50% for FY 2026. Again, absolutely ecstatic to release another set of record financial results. Let me hand back to CEO Michael Sainsbury to take you through the business update section.
Thank you, Jason. Moving forward to slide 13, just a title slide about moving into the market and business update. We will move forward to slide 14. Slide 14 talks about the AI infrastructure investment from a market perspective, and the group remains very well-positioned to be able to support this infrastructure investment. When I talk about AI, it spans data, it spans power, and also the resources sector. When I talk specifically to data, the AI adoption is accelerating investment into data centers like we have never seen before. We will provide some more clarity around that, but also into connectivity, automation, and related electrical infrastructure. When we move away from data centers, though, and we look at more broader market, it also has a flow-on effect through to power.
With growing electricity demand and network constraints, that is driving investment into grid infrastructure, more electrification, energy management, and power quality, power reliability and quality solutions. Not just in data centers, in fact, in very, very diverse areas such as mining and water and wastewater as two specific areas. That drive takes us through to the next point there. When we talk about resources, growth in AI infrastructure is also increasing the demand for water, for minerals, and also for the electrical infrastructure spend required to be able to support both digital and energy systems. So the data center phenomenon is driven by AI investment, but there is a flow-on effect into parallel industries, which we are certainly seeing the benefit of. The group is, as I say, well positioned to benefit from that. Over 60% of our revenue is aligned to this AI investment adjacent markets.
When I talk mining, when I talk water or wastewater, and also into things like power utilities. Each of our businesses directly benefits from the long-term tailwinds created by this electrification, the upgrade of automation connectivity. So we are certainly well-placed from each of our businesses' perspective to capitalize. Our distribution capability, our engineering expertise, these give us a really value add for our customers to support complex mission-critical infrastructure projects for our customers. Our data center revenue, as mentioned a number of times, grew 27%, representing one of the fastest-growing end markets for our business. Moving forward to slide 15, giving some more context to our Australian data center investment. Obviously, what do we do in that space? We supply the electrical equipment, which provides the backbone for data center pipeline. Data centers are entering a period of large-scale expansion.
It is being driven by AI cloud, AI adoption, but also cloud computing and increased devices being connected. Currently, there are 162 facilities, which are colocation, enterprise, hyperscale, and edge, with a total capacity of 1.5 GW. The forecast from between now and 2030 is for that to grow to 3.2 gigawatts. If we look out a little bit further by 2035, to somewhere between 4.7 GW and 7.4 GW worth of requirements capacity. So a massive growth opportunity. There is AUD 140 billion worth of investment in the pipeline in this data center space between now and 2035. The data centers, they are fewer. There are fewer data centers going up, but they are much larger in capacity. This is a great reflection of that.
Currently, Sydney and Melbourne have been leading the hyperscale growth, but we are seeing diversity now into Tasmania and up into Queensland and other areas. At the moment, 47 of the 90 pipeline data centers exceed 100 MW versus only three of the 162 that operate today. This is validating the size and the scale of these data centers is increasing and increasing exponentially, and the power requirements to go into these data centers and the spend is increasing proportionately. It is forecasted that electricity that is consumed by data centers will represent somewhere between 8% and 11% of the total grid supply by 2035, which is up from 1% today. On top of the AUD 140 billion in data centers, there is also AUD 15 billion allocated to be invested into renewable and battery energy storage investment to support the rising data center electricity demand.
So overall, AUD 155 million spend directly in data centers and then on the peripherals with renewables and battery energy storage. Certainly a tailwind like we have not seen before, and we are unlikely to see again in the future. How does IPD Group benefit from data centers? I have been asked the question so many times, "Can you give me some context to what you are actually putting into this space?" This graph on the right hopes to give you a graphical representation of all of the products that we put into a data center. We are seeing the path from the grid connection down to the rack, including cables, connectors, switchboards, distribution, critical power, Busways, cabling, monitoring, and controls as well. As I said before, it is shifting to fewer and larger data centers, reinforces the position. Electrical content per project scales with the site density.
Smaller contract pool concentrates volume on distributors with a track record of quality and relationship engineering, which we have to be able to support our customers. Spec-driven projects favor suppliers with pre-sales engineering and full lifecycle delivery capability. Growth is concentrated in Sydney and Melbourne, which is IPD Group's largest markets. It really reinforces how well attached we are to this space. While these projects typically carry lower gross margins, as Jason had mentioned before, with a lumpier order profile, it certainly comes with lower working capital and cost to serve, which supports overall attractive economics. We are seeing that in improvement in our EBIT and EBITDA margins. We remain well-placed, and I still believe that the growth opportunities are in line, if not better than we have seen in previous years.
I will leave you to read over that or look over that graph to be able to get a better understanding of the product portfolios we are putting into that space. If we move on to slide 17, we talk about revenue by end market and product, and we have shown this regularly. The left there talks about revenue by end market. You can see there that commercial buildings at 29%, mining and resources at 27%, data centers now at 17%, certainly represent the biggest part. The first one there, I will talk to commercial and buildings. Again, it is a question we get asked regularly. What does that actually include? Part of it is commercial buildings, but not exclusively. It includes things like hospital, retail, government buildings, education, offices, entertainment, hospitality, and logistics facilities as well. We lump that into that one bucket.
It is quite a broad representation in its own right. If we move across to the right-hand side, we talk about revenue by product type, and you can see there that power distribution still remains the largest part of our portfolio at 37%, industrial control and motor control at 9%, automation and industrial comms at 8%. Obviously, the big one there on the left-hand side up the top in cable, because of our acquisition of Platinum and obviously CMI, that continues to grow. The hazardous area space at 12% now on the back of the growth coming from the EX business. Slide 18 talks about our product partners, and we talk about our technology offer, our vendors, our partnerships there we have with suppliers to be able to support the market. ABB continues to be a cornerstone supplier for us, and it is still representing 31% of our revenue.
One would think that with the acquisition of Platinum recently, we would have seen some dilution in that concentration. This is actually a really good story because we are quite open in the fact that in Australia, ABB only has sub 15% market share, where in every other geography in the world, it is somewhere between 30% and 40%. What this is actually saying is, despite the dilution which would have been created by the acquisition of Platinum, that is being supported by organic growth in ABB, bringing it back or closer to those global market shares. So we continue to grow the ABB portfolio and take market share in that space. It is continuing at 31%. We have onboarded a number of new partners to strengthen our portfolio to be able to attach to new revenue models and give us further diversification.
I talk about a company called Penguin Solutions, which operates in the automation space. Mennekes, which is a manufacturer, a global manufacturer in power connectors. Penguin Solutions will be an addition to the IPD portfolio. Mennekes will be an addition to the CMI portfolio. RP-Group will be an addition to the IPD portfolio. It is an emergency lighting portfolio manufactured out of Europe, a very strong offer, and it has been a gap that we have identified for a number of years. The IPD business has recently signed an agreement with a company called Circuitor, which is a very, very strong global player in the power quality space, and we will certainly see a revenue stream for that in coming years. CMI and EX Engineering have all signed up for new cable vendors to expand their capacity, their ability to be able to service the market as well.
We maintain certainly a balanced supplier base. We are reducing concentration risk while preserving those strong strategic relationships. Just on ABB, just as a reminder as well, we did sign a new agreement with ABB in December last year for another four years, so a continuation of the really close partnership we have with ABB. Moving forward to slide 19. Now I start to get into the individual businesses in here, and there is a lot of information. I will not go into it in great depth just in the interest of time. The major projects there, what it does show that IPD is very focused in data centers and in others, you are seeing hospitals, you are seeing renewables, you are seeing water, wastewater. So it does show the diversity in those major projects. On the left-hand side, the initiatives that we are embarking upon to support future growth in this business.
Obviously the continued expansion through the switchboard builder and electrical contractor channels, which are a key part of that IPD business and the products we are talking about there. Seeing strong growth is in the Techno modular switchboard systems, the ABB power protection, our Busway offer, and the Delta UPSs as well. We have rolled out a software tool, which is called ipd Build, which is an online configurator to be able to easily, quickly, and with no fuss, instantly get a price for a distribution board. It comes with a user experience benefit for our customers, but it also comes with efficiency savings where an estimating department no longer has to price this up. It is able to be done online with a configurator, so it comes with efficiencies from an organization as well.
We have deployed a number of AI and automation programs or projects across customer service, supply chain, increasing our productivity and improving customer experience as well. We have also established a smart buildings division, which is broadening our offer with some of those vendors that we spoke about in the previous slide. And we have opened a new facility in Perth in July 2026, bringing together IPD, CMI, and EX Engineering, but also giving us an expanded ability to be able to cover and hold more inventory. So a really strong and a fantastic year from the IPD business with the organic growth at 11%. CMI projects there, you can see predominantly mining and data centers, which is a strong focus. Mining is a big one for them in the Minto plugs.
Data centers is a space that they had not played on traditionally with cable, but because of the synergies and the relationships with IPD, they are leveraging off that, and they are certainly getting a foothold in that space. And also in infrastructure, buildings, and water environments. Some of the initiatives we have expanded, and we have created a project tendering and delivery coordination team, which is important when we move upstream into these Tier 1 projects. And that has been created and working very well. We have leveraged the group purchasing, so we have been able to get some efficiencies in the purchasing using the group logistics and procurement services for the CMI business. We have obviously, as mentioned, expanded new facilities in Perth, but also in Wetherill Park for the CMI business, giving us improved racking, more efficiency, portable cable cutting machines, and again, a lot of efficiency improvement there. We have expanded the cable offer.
We've got new partnerships with large-scale manufacturers across the world to be able to handle a larger capacity and also give us some margin realization opportunities with a lower commercial pricing model. We've signed distribution agreements with ABB high voltage department for their connectors, which is called separable connectors, which will be an addition to their portfolio. As mentioned before, the Mennekes plugs and sockets. Slide 21 talks to Platinum Cables. Very focused, very strong attachment into mining, certainly growing in transport, and certainly also working in that renewable section, and you can see the projects there. When we talk about initiatives and highlights, it's a continued expansion of that specialized cable for rail and transport customers. We've expanded engagement with several Tier 1 mining customers alongside strengthened supplier relationships.
Not only are we strengthening on the supplier side, we're expanding our relationships on the customer side, and that's coming off leveraging from the group and the relationships throughout the group. New cable range to support coal. We've leveraged Platinum's engineering expertise, and we've grown that technical support capability, in that project's opportunity space and investment there to be able to capitalize on that for the future. Expanded customer engagement through complementary offers across the wider group portfolio with a view to cross-selling. Strong customer service and safety results in that organization underpin a really strong cadence in Platinum Cables as well. Very pleased. Six months under our ownership. The early signs are very good. The business is performing as expected and will be a strong contributor to the business for the long term.
EX Engineering, predominantly focusing in that engineering and resources sector, but not exclusively, also in grain and in electrical infrastructure and the projects nominated there. What have we done? What have we the initiatives to underpin future growth? We've expanded the Stahl distribution agreement now that EX are the national distributor for Stahl across the country, which is a very, very highly regarded and recognized hazardous area manufacturer. We've put on dedicated key account managers to strengthen our customer coverage in that grain and industrial and resources sector. To be able to strengthen our relationship and expand into new companies. We've increased the cross-selling opportunities across through those relationships in the group. The engagement, the increase in customer engagement has reflected in not just 35% revenue growth, but we've also seen an increase in quotation requests by 37%.
Strong increase in quotation requests as well, and the growth is showing good conversion. Then implemented operational improvements across the inventory, manufacturing process as well to support future growth. Then the last one there, Addelec, which we have repositioned around the core electrical infrastructure and services opportunities. The projects there, very, very strong focus and cadence moving forward around utilities and testing and calibration. You can see they're very strong in Victoria. In the e-mobility side, a couple of projects there, one in Sydney, one in Perth, and then across numerous sites around low and medium voltage upgrades. When I talk about the initiatives, as I say, Jason has touched on it, and I have as well, we've simplified the operating structure.
We've reduced the overheads to improve profitability and scalability, taking out AUD 3 million of annualized cost reductions. There's also AUD 300,000 in the financials here, which were redundancy costs, which won't be replicated as well. We've refocused the go-to-market on core electrical infrastructure, workshop repairs, testing, and a new partnership with ABB, where we are a value-added partner for their portfolios across a number of their products. We've strengthened relationships with key infrastructure utility customers, namely Sydney Airport. Star Group is a large contractor, which we're working in a subcontractor model. Grid Electrical is another one of those. Heyday is another one of those. Strong relationship with Powercor, Zinfra, and Downer in the utilities and test and calibration. We've expanded our capability with ABB, as I talk about being service partner in motion, electrification, and their EV charging offer as well.
We've increased utilization through a change in our work mantra and moving more to workshop staff, which is more repeatable and more forecastable. We're using a subcontractor model rather than having to flex up our staff to be able to accommodate increased activity. I expect to see a big improvement in the Addelec business over the coming 12 months. Our strategy for moving forward to slide 24, which is a title slide around strategy and outlook. Slide 25, you will have seen this slide before. You should take great comfort in that it looks exactly the same because when we're showing results like we have, it's clear what we're doing is working, and we're going to continue that into the future. It's business growth. It's organic growth.
It's using strategic solutions to get specification and drive demand. It's accelerating our growth by looking at strategic acquisitions, which there is a number of opportunities that we're working with at the moment. It's continuing to focus on operational efficiency, building scalable operations, and leveraging off the synergies. I'm pleased to say that our operating cost as a percentage of revenue had a substantial reduction, as spoken to in a previous slide. So showing some real momentum in that operational efficiency. In sustainability, we'll continue to focus on reducing our environmental footprint impact through a number of different opportunities, and some of them are mentioned there. It's also making a lasting social impact by supporting charities, industry initiatives, and education programs to support the industry.
As importantly as all of those, if not more, because at the end of the day, people are the key to our success. Our success depends on building a strong, engaged, and diverse workforce. We're focusing on employee well-being and development, an extensive training program for a lot of our staff, both soft skills and hard skills, to be able to support them and build career with our organization. Really, really strong focus on talent attraction, new people, but as importantly, if not more, retention. We've seen a significant reduction in our churn in the last 12 months, which means we're holding onto our people and our expertise and our skills. So strategy remains the same, and it's obviously a strategy that's working, and we're going to continue to build on that. What you've all been waiting for, I'm sure, is our outlook.
Obviously, we have very, very diversified market exposure. We are across a whole wide range of different attachments in terms of verticals, and we have got a disciplined execution to support continued growth. We enter FY 2027 with a very positive momentum following the results. It is underpinned by that diversified portfolio, but also exposure to growing sectors benefiting from long-term structural tailwind and ongoing investment. We as a management team remain focused on executing the strategy, maximizing shareholder value through the operational excellence, disciplined capital allocation, strategic acquisitions, you can tell it is getting close to the end of the presentation, and investment in growth opportunities for the future. The board looks forward to providing a further update on our 2025, 2027 performance at the company's AGM on the 24th of November. I would like to thank everybody for your time. I would like to thank everybody for your support.
For those of you who are invested in the company, thank you, and I hope you are as pleased as we are in the results. I will now hand over in case there are any questions, with a view to providing clarity around those answers for you.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you are on a speakerphone, please pick up the handset to ask your question. The first question comes from Philip Pepe with Shaw and Partners. Please go ahead.
Hi, guys. Thanks for taking the question. Yeah, Mick, Jason, congratulations on a very strong result, and yeah, hat tip to your investor relations guy for putting forward a great comprehensive presentation as well, apart from the blue versus green. Just on the tailwinds, obviously, data centers, well articulated in your report. Your new facility in Perth, very impressive. Can you tell us more about the tailwinds in the Western Australia market, probably less data center, more resources focused? What are the tailwinds you are on?
Yeah, that's a really good segue for me, Phil. You're right, IPD Group obviously grew at its top line, and data centers grew at 27%. But if we exclude data centers from that growth result, it's still 7% growth across all other areas. WA is a key focus for that when we talk about mining. We have invested into a new facility, as mentioned, and it's significant in scale. The cost we negotiated well, and the efficiencies we're getting by bringing all of the businesses together. But leveraging off that site now is a big focus for us in the near future. There's a big investment into mining over there, in renewables, but also in the need to be able to mine raw materials to support all of the tailwinds that I spoke about before.
For me, WA is our second biggest state, and with the growth opportunities there, I expect it to solidify that position and put pressure on New South Wales in the future for that number one spot. But it's a great point and something that we're keen to see grow. We have all of the pieces of the puzzle in place. It's now executing, but it's a great point to talk about. We're not just a data center play, and that WA market has obviously not seen any of the data centers' growth but still has grown strongly for us. But I think there's better to come in the future, Philip. For me, double-digit growth will be an expectation in that west.
Excellent. Thank you. If I could sneak in another one. Just on the working capital, how much of it was Platinum Cables and how much was forward orders for the next, sorry, six months?
Yeah, the increase in working capital was split between the two, Phil. A fair chunk of those you expect with the new acquisition has come through from Platinum Cables, with the balance coming through for future growth. We're expanding that and obviously with future growth expectations, continuing to invest into our networking capital for the year ahead. We'll definitely see some investment back into inventory. We've seen a little bit of optimization, some challenges with inbound freight and timing. However, we'll see that normalize over the next little while with increased ordering, and flow through to networking capital in the year ahead.
Excellent. Congratulations again. Thanks for taking the questions.
Thanks, Phil.
Thanks for your support, Phil.
Thank you. Your next question comes from Joseph House with Bell Potter. Please go ahead.
Yeah. Hi, Michael, Jason. Thanks very much for the presentation and congrats on a good result. Mick, I hope you had a couple of sips of water after that presentation.
I did, mate. Thank you.
On Platinum Cables, it looks like if we look at the first six months of ownership, your run rating for revenue-wise, ahead of FY 2025 levels. Just keen to get a better understanding of what is driving that revenue run rate growth. Is it early wins in tendering? Are you starting to see some revenue synergies come through with CMI? Just an extension to that question, just how you are seeing tender orders heading into FY 2027.
Yeah. Thank you. Good question. For me, first thing I will say there with Platinum, the first six months has been really good. The interaction, the collaboration, the spirit, they have certainly come on board and come on board with enthusiasm. What is positive, what has been going well there is certainly a strong mining attachment there with that business, and there is some really good quotation activity, which will underpin future growth in that mining space, and particularly in the renewables area in mining. That is good, but there is also a diversification moving into rail and the likes and communication cables rather than just being power cables, and they come with very strong gross margin realization. It is not just a play around mining. While it is very strong in mining and the activity there is good and the future looks positive, it is also diversifying into rail, it is diversifying into traffic.
We are helping the business invest into those key areas with dedicated people to look after that for the future. For me, your question around sales synergies. With only six months under our hat, I will not say there is a great deal of sales synergies coming through, but the interaction between the businesses is very strong, which will certainly flow through to revenue and profit synergies in the future. At this stage, probably too early to say we are capitalizing on too many of those, but the interaction is very, very good. So, I am very excited, very pleased with how it has gone in the first six months, in line with expectations, but even more excited about the future there with that Platinum business.
Excellent. Thank you. Just moving over to CMI, it is good to see the revenue growth re-accelerate for this business. I would just like to get a better understanding of what is driving that re-acceleration in revenue growth. Is it more market-driven or, I understand you have also done a fair bit of work on the ground with this business in terms of introducing new clients into the mix of Tier 1s and Tier 2s. Is that also playing into that revenue growth as well?
The first answer to that, and that is a great opportunity for me to highlight, that CMI is record revenue year. In the history of CMI, this is the highest revenue period or year they have had in their history. Everything that we have told the market in the last 18 months about turning that business around and investing and it is certainly paying dividends, and we are seeing a remarkable result at 11% growth at a top line, but both Minto and the cable growing strongly. To answer your question, what is it coming from? You could say that it has come from market, and you would be partly right in saying that, because certainly data centers is having an impact on that. But I would say to you that historically, CMI has not dealt with the customers that have been playing in that space.
More the growth is coming off the relationships that we are providing, that we are leveraging off across particularly the IPD business, the ability to be able to offer a package solution into a data center across multiple offers. We are certainly seeing some successes already for CMI in the data center space and some significant quotations for cable into that space for the future, not only in cable, I mentioned there Mennekes plugs, which goes strongly into the data center space and the ABB medium voltage plugs will be attachment to all of the medium voltage switchgear. Positive momentum, great. We go into FY 2027 with a really strong pipeline, with a great order book, and I think another very strong year for CMI ahead, mate.
Yeah.
Some really strong management in that business too, Joseph and really excited about what they can do in the year ahead.
Excellent. Great to hear, guys. Just lastly, just want to get a better understanding around the margins for the data center business. So, I see there is some gross margin compression, as you deliver more greater volume of data center orders. But I understand that this is a low cost to serve business. So just trying to understand that if you can provide more color around the movements in gross margin, but also OpEx as a percentage of revenue and how that plays into the EBITDA margin contribution of that business to the group.
Yeah. Perfect, Joseph. Thanks for that. I think slide 10 for us was really trying to break that down. When looking at our margin result year-on-year, it's circuited down, sort of compressed around 80 basis points. That's only when you're looking at it on a year-on-year basis. What we've tried to show in slide 10 is the gradual movement in our, not just gross profit margins, but our EBIT and EBITDA margins over that same time period. We've actually seen an uplift in our gross margin, well, contributing also from the growth in data centers at 27%. We've seen gross margin improvement. We've gone from 33.1% at the second half of 2025 to 33.4%. We've also seen gross EBITDA margin expansion from that 12.9% - 13.5%.
Yes, whilst these large competitive projects, not just isolated to data centers, but data centers are a good example of large projects and competitive projects for us. They come with some gross profit margin compression, but they come with a significant lower cost to serve. There's a lot of efficiencies and operating cost leverage that we can get across the core group in servicing that type of revenue. We're definitely seeing that flow through, not just half on half, but you can see that in the full year results where we've got expanding EBIT, EBITDA and NPAT margin. I guess the message we want to get across is that margins are stable, and we have grown over the last two years, 30% data center growth last year, 27% this year, and we're seeing gross margins remain stable and EBIT and EBITDA margins expand.
We can manage our cost base. Lower cost to serve means that we're confident that, despite the gross profit compression, we're going to see some strong EBIT and EBITDA margin realization.
Nice work, guys. I'll leave it there and congrats again.
Thanks, Joseph.
Appreciate it, mate.
Thank you. Your next question comes from Matthew Chen with Moelis. Please go ahead.
Morning, guys. You've spoken about the potential large project in the pipeline for Platinum business in the past. I was just wondering if you could give us an update on the status of that, please.
Yeah. Thank you, mate. Hope you are well. We are talking with Platinum, we are talking about a project in a strategic mining company over there in Perth FMG . There is certainly a large quotation pipeline attached to that project, and that is around AUD 100 million in quantum. At the moment, around 10% of that project has been let. I am pleased to say that we have roughly 40% of that order pipeline, and that has been given to Platinum. That is in line with our expectations, and we expect that they will give a bit of diversity around that, not create some concentration around one vendor. Yeah, two orders been let, 10% of the project been let, and we are being successful in about 40% of that. We remain strongly connected to that customer, both at a relationship perspective, value add, the technology offer that we have.
I think that is certainly one of the growth expectations for the future and one of the exciting opportunities in that business for the future, mate.
Great. Thank you. Just follow on, one for you, Jason, maybe, but just on Addelec, that AUD 300,000 of cost, that was not stripped out, was it? As far as I could see, it was just the acquisition costs that were stripped out for the purposes of the underlying. Is that right?
Correct. Our underlying result is just talking about the acquisition-related costs to Platinum Cables. No, we have taken that as a normal course of business in those reports.
Yes. Great. Just kind of stepping out, I think you've called out AUD 3 million of annualized costs that kind of looking to save in Addelec. The expectations are that business can turn around this year.
Yeah, very much so from my perspective, mate. We were caught in a bit of a cat and mouse situation where on the Kingsgrove project, we had a number of resources that we needed to hold on to be able to deliver and complete the design part of that project. Pleased to say that we're on the back of that, as such, as soon as we got through that phase of this project, we've used that as an opportunity to reduce the cost base. It's effectively around headcount that won't be required moving forward because we're not going to do those scale of projects or those size projects in the future. There was no longer a requirement for them to be part of the cost base to support Kingsgrove. So we've taken them out.
Our utilization has improved of our resources, of our techs has improved dramatically, and we've embraced a subcontractor model there. We had a civil team there, which did a lot of the preparation for cable laying and that sort of thing, and we had two teams there. We've reduced that down to one team, and if we need any overflow there, we'll use subcontractor models. So very comfortable. Cost base that we've put in place is proportionate to the business moving forward. The management team are very confident that we'll move this back into profit in the next 12 months.
Thanks, guys. Congrats on the result.
Thanks, buddy.
Thank you. Your next question comes from Adam Dellaverde with Blue Ocean Equities. Please go ahead.
Morning, gentlemen. Am I audible here?
Yes, mate, you are audible. Yep.
We hear you loud and clear.
Great. Well done. Amazing tailwinds in some areas, but certainly not an easy market is my sense. Just wondering if you can talk through maybe the puts and takes on price. My sense is copper's up, a lot of the metals are up, freight is up. Just the pricing environment from your end. I got the vibes in last quarter, a lot of people were able to push price up, and I'm wondering if you've been able to kind of get price up in your channels or if that's something that you're having to contend with and intending as well if you're kind of locked in and if that's a factor.
Yeah. Good question, Adam. When I talk about five different businesses, IPD is the only one that has a published price list for our customers. And generically and historically, we've only done one price increase per year, and it's sort of been a CPI inflation-related price increase. For all of the reasons you quite rightly pointed out, Adam, in the last six months, we've pushed through two price increases there, which circa represent around about 10% of. I think one was 6% and one was 4%, so about a 10% price increase across that six-month period to be able to cover off raw materials inflation, to be able to cover off increased transport costs and just CPI-related costs. So that IPD business has managed pricing and managed it well. We have complete autonomy around pricing. While we represent global manufacturers, we have complete autonomy in pricing.
The good part is actually when they put a price increase on us, because of our inventory holdings having up to sort of three to four months worth of inventory on the floor and generally another couple of months on the water, we don't see the impact of those price increases for five to six months. But generically, when we get them, we pass them on, and it actually could be one of the reasons it's giving us a gross margin benefit in the results we're putting out to you there. So managed and managed well. Other businesses, when I talk CMI, when I talk Platinum, they're quoting cable on a day-to-day basis, and they're indexing those quotes to the current copper price. And a lot of the time, we're actually only holding those quote valid for 24 hours because of the volatility in those copper prices.
They are well protected by the fact that every time. They do not publish a price list. Pricing is done on a day-by-day basis, and it is indexed against copper and also against foreign currency. We are very well hedged in the Platinum and CMI business. EX is obviously a project solution, building up a complete solution. A lot of it is no price increase. It is a quotation-based offer. We have the ability of being able to price that accordingly as well. Addelec being predominantly selling arms and legs. The summary of that, mate, the businesses that are attached to those cost models where we have seen increases have managed it and managed it well. The other ones, it is a day-to-day fluctuation, and we index against all of those indices, mate.
We are well protected, and I think it is potentially a positive for us for the future, if anything.
Does that mean I should be thinking 12 months from now, just same business, working capital goes up 10% to match, I guess, what you are feeling in a lot of the inputs, and then you have got working capital put on top of that as you grow?
Yeah. There will naturally be a cost realignment with that cost base over time, Adam. Obviously, with the amount of stock that we hold in our stock turns, it takes a while for that to flush through. Yes, there will be a natural uplift, particularly with obviously our immense cable inventory that we have got to support the market. That is a really good example of that. We have started to see that in the June results. We have already seen some of that c ost base realigned, but there will be a little bit more in FY 2027, and then we will have working capital growth above that for FY 2027 opportunities.
Okay.
I am not sure if 10% is the right number, though.
No. Yeah. Sorry.
Yeah.
No, no. That was a red herring. You were meant to say that.
That's right. Yeah.
Just finally, if I remember, I'm thinking back 18 months ago, even 12 months ago, you led off these calls talking about the difficult commercial construction market, maybe wholesale partners were talking about sales flat or down in some regions. What's your sense of wholesale day-to-day baseline growth at the moment, maybe with price and ex price, so volume terms and price?
I would say to you that no change there, mate. Materially, the wholesalers are so heavily attached to residential, and obviously we all know the challenges there around interest rates and consumer confidence and auction sell rates and new builds. I would say to you that, and having good relationships with all those customers and the feedback we're getting from them, is that they would probably be still flat. Obviously we're attached to a different dynamic. Only less than 1% of our revenue comes from that residential space. Even in the wholesalers, while we do, in the IPD business, we do upwards of AUD 60 million in wholesale. Most of that is in MRO, in the industrial space. It's not attached to resi, it's more attached to high-end industrial and a different space.
The summary answer, I think they're probably flat and obviously, in a bit of a challenging market to a large extent, but we've got diversity and giving us the ability to be able to deliver strong results like we have today, despite the commercial and residential being challenged.
Bravo. Thank you.
Thanks, Adam.
Thanks, mate.
Thank you. Your next question comes from Tony Shields, private investor. Please go ahead.
G'day. Yeah, thanks for the good result as a shareholder. I just wanted, you mentioned that you've decreased your employee churn rates, which is great. What is it sitting at around about now, then?
You have put me on the spot, mate. Across the group, I think it is around 20%. Is that right, Jason?
Yeah. It is probably around that at the moment.
20% churn, I think maybe even a little bit less than that with improvement into the teens now. We have put a concerted focus in that space. Next month, we will do a survey on all of our staff, and when we are at the AGM, we will give you an input into churn as well as employee net promoter score, showing engagement and the culture and the sentiment from our people. We will provide more clarity on that at our AGM later in the year. There has certainly been a reduction in that churn, mate. What is important to remember, we are in a space where skilled resources are a very tradable commodity at the moment.
Holding onto skilled resources is certainly a challenge, and the fact we have been able to improve in that space, while the number I still like to be south of that, the improvement shows that we are doing some good things and we are holding on to people, which is important.
Okay. Thanks.
Thank you. There are no further questions at this time. I will now hand back to Michael Sainsbury for any closing remarks.
Thanks very much. Thanks for the questions. Thanks for the engagement. Thanks for the support of everybody online today. I am really pleased, proud to be able to report the record results we are today. However, if I look forwards and not backwards, I am as excited, if not more excited about the future. For me, the business is in good shape. Our market that we are attached to is in good shape. Our skills continue to get better. Our portfolio continues to expand. For me, I really look forward to catching up with all of you again at the AGM in November and talking about a trading performance. But thanks for your support and I look forward to presenting for you again in November.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.