Well, I'll now hand it over to Rob.
Thank you, Ben. Good morning. Before we get into the numbers, just a quick overview for those newer to the LaserBond story. We're a leading surface engineering business, and what that means in practice is that we manufacture, repair, reclaim, and enhance the performance of capital-intensive machinery components. Our customers operate across a range of sectors, including mining, manufacturing, power generation, and fluid handling. Industries where component wear and failure are costly, and where our work directly extends asset life and reduces downtime. We operate across four segments: services, products, technology, and research and development. And as you may know, since March 2024, we've held—also held a 40% equity stake in the Gateway Group in Perth, in West Australia, which is a complementary business focused on maintenance and reclamation of heavy industrial equipment.
It's a strategic investment that's performing well, and I'll speak to that shortly. But let's get into the highlights of the H1. Now, the H1 of FY 2026 was a strong one for the company, and we've delivered growth across the business and continued to execute on our strategic priorities. Our revenue came in at AUD 23 million, which is up 13.4% on the prior corresponding period. And NPAT of AUD 2.2 million, which is up 117% on the PCP, reflecting the operational leverage in our business as we build scale. Three things stand out for me from this half. First, our products division continued the momentum we established in the H2 of FY 2025, with revenue growth of 34% on PCP.
Second, our services division delivered meaningful margin expansion, so gross margins improved from 50.8% to 58.3%. And third, we continue to make important progress on the technology commercialization, and a little bit more on that shortly. Looking forward, our order book as of the first of January this year is approximately 17% higher than it was twelve months earlier, which has given us a really great start to, you know, the H2. And this H2 for us is traditionally a stronger period, so we're well positioned to continue on that trend. With that said, I'll now hand over to Peter to walk through the financials in some more detail.
Thank you, Rob, and good morning, everybody. Look, let's talk about the LaserBond's key numbers. I think they're pretty good overall, in my opinion, as a CFO. But revenue came in at AUD 23 million, up 13% on the prior corresponding period. Also, gross profit of AUD 12.4 million represents a 22% increase, with a healthy group gross margin of 54%. EBITDA came in at AUD 5.2 million, up 58% on PCP, demonstrating again a strong underlying performance as the business scales. Net profit of AUD 3.3 million dollars was up 154% on PCP, with NPAT of AUD 2.2 million being up 117%, more than double for the prior corresponding period.
Also, earnings per share is at AUD 0.0188, up 116%, and the board of LBL, of LaserBond, sorry, are pleased to declare a fully franked dividend of AUD 0.008 per share. Cash for the period was at AUD 4 million. The movement from AUD 5.6 million from close of June 2025 was driven by an investment in inventory of AUD 1.8 million in tungsten carbide to secure supply, which reflects a deliberate and strategic decision, given the current environment. Looking at the results in more detail, I can say that revenue again remains strong, building on a solid H2 from 2025. So this isn't, you know, a one-off period spike, it's a continuation of positive performance.
Net profit before tax of AUD 3.3 million, while representing strong growth on PCP, coming slightly below our H2 FY 2025 numbers are AUD 3.7 million . A number of factors influenced this. December seasonal patterns, which are typical for our business, plant equipment replacement downtime, which we chose to absorb in the half, and ongoing strategic investments in R&D. None of these factors are unexpected. They're deliberate and are being managed. The NPAT comparison to H2 FY 2025 tells a similar story. With our historical pattern of stronger H2 performance, we expect this to continue. Looking at the balance sheet, our balance sheet remains strong. Total assets are AUD 62.9 million, flat on FY 2025, while total liabilities have fallen 16% to AUD 20.3 million, reducing financial liabilities and also we're paying down creditors.
Net assets are up 3.7% at AUD 42.6 million, again, which reflects a healthy balance sheet. Looking at working capital, it's strengthened by 7.3% to AUD 16.2 million. Again, reflecting better collections and improved debtor management. On cash, as I explained earlier, in the earlier slide, sorry, the AUD 1.6 million net reduction from June 2025 is explained by a single decision. We've invested AUD 1.8 million of free cash in building an inventory position in tungsten carbide . Given the geopolitical pressures on critical minerals supply, particularly from Chinese exports, this was a deliberate move to secure raw materials for uninterrupted operations. Operational cash flow of AUD 1.5 million remains solid.
Thank you, and I'll hand back to Rob to cover LaserBond's operational performance. Rob, over to you.
Thanks, Peter. But we'll just take a look through now each of the operating segments. So the first one, services is our largest segment, and in this half, it delivered revenue growth on PCP and a significant improvement of margins. So as revenue grew, as you can see there, at 10% versus the PCP to AUD 14.3 million. More importantly, the gross margins expanded from that 50.8% to 58.3%, and this really reflects the work that we've done on sort of cost controls, better utilization of our equipment and machinery across the LaserBond network, through our workshops, and more effectively, our resource deployment. You know, it has, have really made a difference. So these are meaningful step forwards, steps forward in our profitability for this services segment.
I should also acknowledge that the service segment faced some headwinds from weakness in the mining sector during this half. Look, but our team managed that effectively, and the margin result kind of speaks for itself. Looking ahead for services, you know, we're well positioned for the recovery that we expect in the mining sector, you know, as capital expenditures start to normalize. Equipment replacement cycles also are showing signs of normalizing in that mining segment. And the machinery upgrades that we've made or completed in this half will give us a direct benefit in productivity in the H2. If we look now to our product segment, look, the products was a standout performer this half.
You know, revenue grew 34% on PCP to AUD 8.4 million, which really matched the strong result that we saw from the H2 of FY 2025. To me, it confirms that the growth trajectory in this segment is real, and it's sustainable. Strong orders have come from major customers, and export markets also represented a significant component of revenue, which is an important point, and underpins, you know, our international growth strategy and those aspirations. Gross margins or gross profit margins come in at 47.1%, which is slightly lower than recent periods, and this reflects the tungsten price volatility that's driven by that geopolitical challenges and the Chinese export controls on critical minerals. This is the same dynamic that led us to build our strategic inventory position that Peter just talked about.
But we're actively working through this, through our research and development program, developing alternative formulations to reduce the dependency on that constrained supply of tungsten wherever we can. Having said all that, the outlook for products is very positive. You know, we're expanding customer relationships. There's new components we've designed for the oil and gas sector that are gaining traction, and the international growth opportunities for this segment are really quite significant for us. If I think about, you know, our technology division, look, we believe we're building something really genuine, significant for the longer term, this technology segment. There is really something special here. You know, we've talked about the licensing deal that we secured with Komatsu, you know, of AUD 2.4 million.
We're busy building that sale right now in our workshops in Smeaton Grange in Sydney, and it's shaping up really well. So this commercialization of our proprietary LaserBond cladding technology is a real demonstration that the IP we have is real, and it's bankable with a strong commercial value. You know, we also delivered the first modular LaserBond system to the Gateway Group on arm's length commercial terms, you know, back in FY 2025. Laser cladding revenues have already commenced from that back in June 2025, and that's a significant milestone. You know, it's the beginning of a new revenue stream from that technology sector. If I look forward into the H2 this year, you know, the Komatsu licensing agreement remains on track for delivery.
You know, we're confident we'll deliver that, and it will run well. But importantly, this deal is a foundation for additional opportunities. You know, we have not only the Komatsu relationship, but other OEM deals are in advanced stages of negotiation. As we move closer to closing some of these, you know, the technology segment has real potential to become a meaningful contributor to, you know, our group's earnings. Research and development, look, it underpins everything that we do. You know, without it, we don't have a basis for the business. So of course, we increased our investment in innovation in this half, and that will continue, particularly across, you know, the sort of three priority areas here.
The first one has been developing those tungsten carbide alternatives, so these are new formulations that reduce our dependency on the Chinese-controlled supply chains. The second element is advancing projects in wind turbines and, to a lesser extent, agricultural applications. These are new markets that will support future revenue growth. And the third, investing in materials and process innovation to support the products division, where we are seeking to expand into new sectors, not just domestically, but in offshore markets as well. Look, putting it simply, that our research and development is a competitive mode for LaserBond, and it allows us to stay ahead technically, and it's, we've got to continue creating these proprietary solutions that we will do, and so that our customers and competitors can't easily replicate them.
As a part of this, research and development, you know, we've talked about this new product called XClad. So we announced this in late 2025, in fact, at our AGM, and look, it's the next generation cladding technology, and it, and it's really designed for the most demanding environments. So XClad provides exceptional abrasion, wear, and corrosion resistance, especially in rotational wear applications. I've got to say, look, our team have done an outstanding job in developing this next generation product. The potential that we're seeing through the rigorous testing and the multiple, you know, advanced customer trials that are out in the field now are setting new benchmarks for performance for our customers in the most demanding of situations.
I know I am, and the rest of the team are really excited to launch this technology and open up new market opportunities, you know, towards the back end of this current financial year. This is a really exciting development for us, and just one that demonstrates we the continued innovation and then investment in R&D, you know, will pay dividends. If I just move on now to our Gateway Group. So this is our 40%-owned subsidiary. Look, Gateway's had a really strong half. So the revenue grew 24% versus PCP to AUD 24.7 million. Our equity accounted profit contribution from Gateway was AUD 373,000 for the period. Look, Gateway has really improved its capabilities and successfully attracted new mining customers, broadening its base beyond traditional segments, which was always the plan.
The market conditions also improving Gateway, strong gold prices, and improving other commodities have sort of driven increased maintenance spending, and supporting higher customer investment. So, you know, these are solid tailwinds for Gateway's core business. The team completed the successful transition to a larger facility in July. They're now building revenue through that expanded facility with the LaserBond licensing technology that's already there and diversifying, you know, Gateway's revenue base into additional industrial sectors. The collaboration with LaserBond continues to be well received by our major customers and OEMs who are seeking that national coverage, you know, which opens that cross-selling opportunity for both businesses.
The collaboration is Gateway and LaserBond in the field, looking to win and bring value or customers both to our respective facilities. Look, Gateway is well on track to continue contributing. And look, now I'll just look at our strategic priorities and sort of outlook for the H2. Our strategic priorities for FY 2026, they remain as, you know, operational excellence, that workforce development, supply chain security, and importantly, international growth. You know, on operational excellence, you know, we're driving productivity improvements each and every day. You know, we've completed some significant equipment upgrades that will, you know, largely remove the downtime we've experienced in that H1, and continuing cost efficiency initiatives that are sort of helping to expand that services margin.
On our workforce, you know, we've focused on skilled migration in critical roles, and importantly, in addition to that, we're welcoming or have welcomed a whole group of new apprentices to our business, so welcome to them. But it's an important part of us growing our own talent and supporting the communities where we operate. You know, having that stable, capable production capacity is fundamental to what we do. You know, on supply chain security, our tungsten carbide inventory build is a tangible example of where we've got, you know, strategy in action. So we've diversified the supplier base, and we've held additional inventories, and our R&D team, you know, they're busy working on our material alternatives for the medium term. And just lastly, on international growth, our products division is generating, you know, really solid export revenue.
The technology license model is actually proving itself, which is great to see, and we have to be frank, we see significant international market opportunity, expansion opportunities ahead. So we'll have more to say on that down the track, but that's really encouraging. If I think about our, you know, our growth drivers for the H2, you know, I just want to sort of be clear about sort of why we're confident in sort of the continued momentum. Look, our pipeline is healthy, and it extends well into 2026. And it gives us sort of real revenue visibility. The initiatives we've implemented already are contributing to margin expansion, and we see that sustainable.
The machinery that we've replaced or completed that replace in the H1, you know, again, will largely remove that downtime that we absorbed, you know, during the H1. So this will give us higher productivity in the H2 without the same sort of one-off costs. Our growth optionality is expanding. Our oil and gas components are gaining traction. As I said a moment ago, the international market opportunities, so we're actively exploring those. We've sourced, you know, new tungsten carbide supply options, and, you know, the products division, you know, is really going to be supported by that more robust tungsten carbide supply. And that Komatsu deal, you know, really demonstrates our ability to generate sort of the high-quality licensing revenue businesses with additional OEM deals in the pipeline.
So when we take those together, you know, the H2 of FY 2026 has a really strong foundation. The H2 is traditionally our stronger period. So we've got a pipeline capability and a really strong strategic positioning to deliver in the H2. And having said all that, I'll just hand back to Ben for the Q&A session.
Thank you, Rob and Peter. First question, we've got a couple of questions regarding how sustainable the services segment margins are. So could it potentially go higher from where it is today?
... Yeah, so there, there's no doubt that tungsten is a concern for us in terms of supply, and we've underpinned the supply with alternate sources. That pricing volatility, as you saw a moment ago, has softened some of those margins. Having said that, tungsten is not the only issue. We have got a lot of things that we're doing in the background in terms of the efficiencies I spoke of. Yeah, having equipment reliability that offset or eat any of that volatility. So, you know, I think we've come through the tough of it, the tough part of it, and we, the margins that we've seen, we expect to see those sustained. Of course, we're always going to be looking to improve those or to grow those.
But I think it's the offsets and the work that we're doing largely behind the scenes to underpin that productivity and efficiency that will make the difference. Peter, is there anything you wanted to add to that?
No, look, as you said, Rob, I think, despite some of the tungsten challenges, I think, you know, I feel confident that, we're going to maintain.
All right, thank you. Our next question: Does the strengthening Aussie dollar against the U.S. dollar and the current U.S. demand pattern bring forward the board's interest in expanding into the U.S.?
Yeah, look, currency is always a factor that we have to contemplate, you know, when we've got an export business, and sometimes you, you know, it's a little challenging to navigate. I think the focus for us at the moment, our products are absolutely pitched at the premium end of the market. So whilst we always are conscious of cost and being competitive in the market, you know, we've got that ability to sort of move a little. I think, longer term, a presence in the U.S., you know, an indigenous presence where we have some sort of business or some sort of way to operate there to sort of remove that volatility is absolutely where we need to be in the longer term.
We don't have anything to announce on that today, but certainly we have, as I mentioned a moment ago, active work on what that could look like and generating options into the future.
Well, thank you, Rob. Regarding the Komatsu licensing deal, is this a one-off deal, and is there any ongoing licensing payments with that OEM?
Look, I'd love to be able to share with you all the details of that, but there's a lot that's commercial in confidence. Komatsu have stated that they are putting laser capability in various operations around the globe. We've been successful in getting this first deal, and we're the first one outside of Japan to actually supply into that Komatsu business. So there is a tremendous opportunity. We're going to nail this opportunity, get it absolutely first-class and functioning when we deploy it in a few months' time in their Perth facility. And we're going to be quick, smart, busy negotiating for systems beyond that. But it depends on our performance. You know, we know we've got form on doing these well, as we evidenced by the Gateway facility.
We're going to get this one right and work hard at getting some more of those orders.
All right, thank you. What percentage of revenue within the products division comes from offshore?
Sorry, could you just repeat that question, Ben? Ben, we've lost you there.
Rob, the question was, what percentage of revenue within the products division comes from offshore?
I don't have those numbers to hand. So, all I can say is that it's a material part for our products division. You know, it's an important part, and without jumping into sort of the detail of it, I think that that's going to... Whilst it has improved in this sort of current half, as we've seen more stability, particularly in the U.S. market, I think our customers in the U.S. have got confidence around the tariff environment. So that's given them confidence to sort of purchase more from us. So I expect that to be a sustained area, but sorry, I don't have to hand that percentage.
Yeah, we'll take that one on notice and get back to that person. In terms of Gateway margin, it declined despite strong revenue growth. Was that due to temporary impact from moving the factory?
So generally, Gateway, the customer mix and the type of work that they do has a lower margin. It's a, you know, if we're talking about the 50s, you know, that business is kind of in the 20s-30s. Now, over time, with the introduction of that Gateway laser cell, you'll introduce a higher margin mix into that business. So it is just by the nature, it's a different margin business, but it's improving over time. As to anything detailed in their, you know, their investments, Peter, I'm not sure if you've had anything to add on that.
Now, look, I mean, they are project-based, and from discussions with Gateway and the leadership team there, you know, from what I can understand, the H2 has been strong. They've got a stronger order book, and they're building. So, for LaserBond and our investment, all I can see is basically a really good H1, and I think it's going to continue from a Gateway perspective in the H2. So I'm encouraged about what's coming through, what their order book's doing, and also how what they're converting... significantly above budget.
Thank you. I had a couple of questions about the order book. As was stated in the announcements today, 70% increase in the order book January 1 this year, compared to 12 months earlier. Can you quantify the number? So which segments and from current or new customers?
Yeah, so the 70% is a sort of an outcome of the work that we've been doing to get better data from our customers about demand forecasting and getting those into our systems earlier, so that we can more effectively map out production. It's generally across all parts of our business. So it's a sort of a capability lift and sort of better data, so we can see into that. So that 70% was as of first of January. There was a couple of elements here. One, towards the end of December, we were really just struggling with production to get every last dollar through, so we ended up with a good start.
But equally, that demand forecasting and those orders on the customers gave us a nice bump, and that set us up really well for, you know, the January period for the start. So otherwise, we might have had a slower start. I don't want people to be misled to think that it's going to be 70% higher through the whole half. That's not what it is, but it's just representing a really strong start. Sorry, Ben, there's another part of the question I think I've just missed.
No, no, fine. So, yeah, it's another question regarding the order book. So does the order book include the Komatsu licensing order? That's AUD 2.3 million. That's another follow-up question from another attendee.
Yeah, so we've always known that contract was there, and that was already locked in. So when we refer to the second set includes, obviously, everything, but a big chunk of that is not the business coming from the products and the other servicing business.
All right, thank you. Is tungsten used much in the services division?
So it's less. I mean, I guess, to break it down a little bit further, tungsten is the premium material that we use in our premium products. So in the products division, it's tungsten heavy. In the services division, we've got products that use no tungsten all the way through to heavy amounts, and that's the area where we're looking to, well, both areas, but we're looking at that one. So how can we substitute alternate materials in some applications while not compromising on performance? And that's where we're making some really good progress, particularly with XClad. So yeah, tungsten is used across the business, more skewed to the products, but the services one, so we still do use it, but not as, not as much.
All right, thank you. Can you explain the structure of the Komatsu deal? So pointing to revenue recognition, gross margin, et cetera. You, anybody?
Yeah, look, I don't want to go into too much detail here because it's, to be honest, it's commercial in confidence with Komatsu. Other than to say that for the AUD 2.4 million, we will deliver a system, turnkey ready, trained to produce results from day one. We'll deliver that in this H2, and we'll be invoiced, you know, once we've commissioned that. There is, of course, a licensing arrangement with that, that's ongoing, that provides, you know, technical support, supply of other components and ongoing technology and updates. Look, I'm not going to go into the commercial in confidence elements to that, other than to say that, you know, Komatsu have picked us.
Where that, why they've picked us, one of the reasons they picked us is that licensing arrangement, that ongoing technical support, and they could see the evidence through other customers where we've deployed that. They value that. So yes, that's absolutely a real revenue opportunity for it, but the commercials, I'm just not going to go into that level of detail.
Thank you, Rob. Can you provide more color on the CapEx? And can you give an indication on what its ratio will be in the full year, compared to operating cash flows? I'd say the last part we can't provide, but so can you provide more color on the CapEx?
Peter, are you okay to grab that one?
Yeah, look, I mean, we have been investing heavily in upgrades. Laser One is at the moment, you know, we're going to replace that, and that'll happen over the next year. We're also getting ready for a horizontal borer in our Smeaton Grange facility, and it's really ongoing investment in our equipment, as well as our people and our systems, just to make sure that, you know, we're ready for any future growth and we're scalable. So, you know, the organization over the last few years has been investing and reinvesting in, especially in equipment. So I think that will continue, for sure.
All right. Thank you.
Yeah, those two... Sorry.
No, you go, Rob.
Yeah, I was going to say those two main items that Peter just pointed to will break the back of the major investments, certainly for Smeaton Grange, you know, in the next sort of 12 months. As Peter touched on, the investment in capability, you know, and processes and that sort of stuff will be sort of the next thing. So not a bigger cash draw, but certainly that capability so we can scale the business, particularly as we think about, you know, what investment in the North American market might look like.
All right. Thank you. Another question, well, this is directed at Peter: Will you be reporting segment-level profitability in the future, i.e., services, product, tech? Can you also comment about the high goodwill and how you'd handle Gateway moving ahead?
Sure. Let me take the segment reporting question first. We do that already as part of our reporting, but we are working on restructuring our system to be able to actually track that on a more regular basis, and also to do that, and that'll be probably be done over the next six months. Sorry, Ben, the second part of the question was? Hello?
Ben's just on mute. Hello, Ben.
Apologies.
Yep.
Yeah, sorry. So can you also comment about the high goodwill and how you'd handle Gateway moving ahead?
Look, we actually talked about that with our auditors yesterday, and that's something that we're contemplating. And it is something that we'll address as part of the FY 2027 reporting period, but it's something that I'm definitely looking at in terms of how we recognize that and what the carrying value of the goodwill will be when we actually switch to 51%. At the moment, we're at 40%, and there's a number of things that we need to do around valuations, et cetera. So it's in hand, it's being discussed, and definitely talk more about that when the time is right.
Thank you, Peter. So regarding Gateway. So beyond moving to 51% of Gateway ownership, is there a pathway to 100% ownership over time?
Well, I mean, It's a conversation that we are starting now with Gateway, you know, as to what respective aspirations are. I've got to say, you know, what informs that discussion from LaserBond's perspective is, it's a quality business with really top-notch management. It's in a market that's got a lot of headroom. That laser technology put in there is going to take it into other markets and grow it. So that business is very attractive to us. And as we've seen from the results, you know, they're exceeding their own internal budget. So I'm the sort of person naturally to say, "Well, we should have, we should go to a bigger stake beyond the 51." But to be honest, that's a conversation that we're having.
The 51, we've got that right to go to 51, to exercise that in April next year, March or April next year, 2027. Beyond that, there are options for either party at that pre-agreed multiple of 4.5x EBITDA. So it's an active conversation we'll progress this year. When we've got something to announce, we'll announce it, but certainly from my point of view, it's an attractive business that's in a good market, and there's a lot to like about how that's shaping up into the future years.
Thank you, Rob. Just regarding XClad. So you launched it to target extreme wear and erosion resistance and more competitive pricing.
Yep.
Does this mean you're competing on price in a commoditized segment? And is there a pivot or reposition to your margin profile in order to push products and services more aggressively?
Interesting point. I mean, it reminds me of, you know, context is crucial, isn't it? So when you think about our products, you know, the tungsten heavy products, they're premium prices. When you compare to, say, legacy products or legacy technologies, say, chrome plating and other things, they're at the sort of more cost competitive price. With XClad, we're not talking about going down and competing with the chromes. What we're saying is that we've got a formulation that has the premium quality and characteristics. It allows us to be more competitive at that upper end of the segment. So no, it's not a race to the bottom as such, but it will bring us at a slightly more competitive cost point.
What it will do is not only allowing for either margin expansion or retaining competitive position. I think it certainly will give us the opportunity to break into some markets for people who might have been using legacy technologies and move over to laser. So it is absolutely targeted at how we grow that market for laser technologies. But yeah, it's not a price leader, race-to-the-bottom type product.
Thank you, Rob. Just another follow-up on XClad. It seems you don't need to set up facilities in close proximity to the customer, and can rely on OEM partners. Can you comment if this is likely how you'd scale?
It depends, I guess. It's a really deep question. We could probably spend way more time we've got on it. There are some customers who will say to us, "Here's a component. I've got longer lead time. Just fix it where you put it in your network." You know, if you move it to Adelaide or Perth or wherever, they don't mind. There are other customers who might have a breakdown or need response times quicker, so that's why having that broader network is crucial. So it does depends. There is no doubt. So it's a more of a customer-centric answer to the question. We succeed in the US or the export markets because those markets are used to having specialty premium products, although us having longer lead times.
As the market moves ahead or matures, whether you're in the U.S. or whether you're in Australia, proximity to your customers will become more important, but not the only driver, if that makes sense. I know that's a bit of a 50 cents each way type answer, but it really does depend on the particular customer and the segment.
Thank you, Rob. That concludes the Q&A segment of this webinar. I'll now hand it back to Rob for closing remarks.
Thanks, Ben. Look, thanks, everybody, for attending today. I know reporting season is busy, but really, look, just in summary, you know, our H1 of 2026, you know, we delivered, you know, really solid financial performance. You know, our advanced technology, commercialization, and strength and sort of strategic foundation of the business are, have really delivered for us. Yeah, revenue up 13.4%. NPAT, you know, has more than doubled. The order book is actually very strong, and it gives us confidence, you know, so we're entering that H2, you know, with really solid momentum. Look, our team have done a terrific job. I'd like to thank them as well, but also thank you, everybody else, for attending today. Appreciate your support for LaserBond.
Look forward to updating you with our progress as we move ahead in the future. Have a great day.