Thank you for standing by, and welcome to the Macmahon Holdings Limited FY twenty-four results. All participants are in a listen-only mode. There will be a presentation, followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Mick Finnegan, Managing Director and Chief Executive Officer. Please go ahead.
Welcome to the Macmahon Results presentation for financial year 2024. I'm Mick Finnegan, and with me is our Chief Financial Officer, Ursula Lomas. Thanks for joining us today during the busy ASX reporting period. As always, we appreciate your time and interest in Macmahon and the opportunity to run through today's presentation. I'll provide an overview of our results, and Ursula will then run through the financials in more detail. I'll then conclude with some comments around our strategic priorities and outlook, after which we will be happy to take questions. Let's begin with the financial highlights on Slide 2. I'm pleased to say we had a strong finish to the financial year, delivering record revenue underlying EBITDA and EBITA.
Importantly, a highlight is that we've improved our return on average capital employed, which was delivered by both increasing returns and reducing both gearing and net debt, all whilst we still increase cash dividends to shareholders. Reducing capital intensity in the business has been a focus for management, and we're seeing tangible results from these efforts now, and importantly, we expect to see them continue. As with recent years, the positive FY 2024 performance has been delivered in a period characterized by skilled labor shortages and volatility in some commodity prices. To assist in managing this, we have a diverse order book and client base, and we continue to closely monitor and manage costs and risks. We will continue to execute on our strategy to deliver value to both our clients and our shareholders.
Ursula will run through the financials in more detail, but there are a few key call-outs here. We achieved record revenue and EBITA for the company of AUD 2 billion and AUD 140 million, respectively. And we saw our margins consolidate in the second half with an EBITDA margin of 17.3% and an EBITA margin of 6.9% for the full year. We feel we have positioned the business for continued earnings growth in FY 2025, in line with our strategy. Underlying NPATA was up 36% to AUD 91.9 million, with statutory NPAT lower at AUD 53.2 million. The key reconciling item here is the impact of the Calidus receivership and associated full receivable impairment of AUD 31.8 million. However, we anticipate there is a pathway to recovery of the outstanding amount.
Operating cash flow remains steady at AUD 301 million, and free cash flow increased to a healthy AUD 74.5 million after funding around AUD 207 million of capital expenditure, which included tires. This strong cash flow generation supported a more robust balance sheet, and we've been able to further reduce our net debt and gearing, all while increasing our total dividend for the year to AUD 0.0105 per share, representing a payout ratio of 24% on underlying earnings per share. I mentioned our improving ROACE, and this was 17.2% for the year, progressing well towards our upgraded long-term target of 20%. It's worth noting it was 15.5% at the half.
Our order book as at 30 June was AUD 4.6 billion, with AUD 2 billion of work locked in for FY 2025. This includes Decmil secured work in hand and excludes short-term civil and underground churn work and future contract cost escalation recoveries as per our usual reporting practice. Additionally, we have about AUD 3.8 billion in tenders submitted. Slide 3 shows our historic performance relative to our guidance. It's a standout achievement that I can call out that we have met or exceeded our market guidance for the eighth consecutive year. During this period, we delivered a CAGR in revenue of 16% and 19% in EBITA. I've said before that the delivery of consistent and reliable performance in the business is important, and I would again like to thank the entire Macmahon team for achieving this.
Clearly, we will continue to work hard to maintain this into the future. There was a lot of activity across the business during the year, so on Slide 4, I'd like to cover off on some of the highlights. In surface mining, the Greenbushes project ramped up to reach steady state in April. We also achieved record gold production in King of the Hills, and Byerwen production has consistently been on target throughout the year. We signed a new mining contract at Dawson South, which included selling a substantial portion of the mobile equipment on site for AUD 44 million net cash to be collected over FY 2024 and 2025, which continues actively lowering capital intensity of our business. In the same vein, we also executed a strategic rental agreement with Emeco, which is positive for both of our businesses.
Underground continued to grow and now comprises 26% of the group revenue, and we continue to target growth of over 50% in the next two years. This is underpinned by a tender pipeline of around AUD 5.1 billion, with a focus on opportunities in both Australia and Indonesia. ... We secured a three-year, AUD 352 million contract extension of Boston Shaker, and successfully integrated Pit N Portal, adding more than 220 skilled people to our workforce. FY 2024 was a transformational year for our civil infrastructure business, with the post-year-end acquisition of ASX-listed Decmil to accelerate growth in the business. The transaction completed just last week, and the integration process has kicked off well. In May, we executed a bond facility to support Decmil in securing new work.
We're hopeful of closing some more near-term contract awards, given we provided the balance sheet support pre-completion. We are targeting large-scale civil engineering and rehabilitation projects across Australia, and are pursuing a highly filtered, combined civil tender pipeline of around AUD 11.6 billion. At the corporate level, our workforce has grown to over 9,670 people at year-end, including Pit N Portal, and will push to around 10,000 people, with the Decmil team now coming on board. This is significant, given the ongoing shortage of skilled labor in the mining industry in Australia. Improved earnings margins have been a feature in our recent results, despite the unfavorable cost environment, which is down to contract structures that provide protection against rising cost inputs such as labor, with sensible rise and fall contract mechanisms, and approximately one-third of the order book being alliance-style contracts.
Of course, we continue to focus on retaining strength in the balance sheet and ongoing improvement opportunities. Slide five is a recap of our key projects, and I won't go through the list now, but I will highlight our alliance-style contracts of Tropicana, Boungou, and Batu Hijau, and the addition of the Ulysses Underground project, where we commenced earlier this year for Genesis, and we have a great team in place. Gwalia, the other Genesis project, is also performing well. Slide six shows our revenue diversification. You may have noticed our key projects on the previous slide were well-represented by gold, and we continue to have a relatively large exposure to gold and copper at around 64% of revenue. The business does have diversity in commodity exposure, and particularly by client, and we continue to monitor and manage this in our tender pipeline.
We also continue to diversify our business mix into the lower capital-intensive businesses of underground and civil infrastructure, which I will talk more on later. Moving on to slide seven, on safety and people. Macmahon continues to invest in this area, both in the development of our people and in continued safety improvement. The safety and well-being of our people is our highest priority, with Macmahon promoting a culture of continuous improvement. Pleasingly, our safety performance continued to improve in FY 2024, with Total Recordable Injury Frequency Rate decreasing to 3.64 from 3.94 in FY 2023. We have implemented several new training and culture initiatives through the delivery of our Respect at Macmahon roadmap, and this encompasses psychosocial, sexual harassment, culture, and Winning at Macmahon, and included updating our critical risk standards.
We also rolled out the Macmahon Winning Way, which is a new leadership program to enhance the effective leadership of our people and promote psychosocially safe work environments, something that is crucial for the company's success. The development of our people continues to advance with ongoing investment in our Grow Our Own program, involving new to industry and skills upgrade programs. This saw us register 685 traineeships, with 236 successfully completing their programs during FY 2024. Our other development initiatives included the launch of a new industry program for Australian Defense Force veterans to transition them to skilled mining roles, operating equipment, or gaining a heavy diesel trade. As you well know, mental health is an important part of our safety and people program, and we continue to roll out our Strong Minds, Strong Mines wellness program across our growing workforce and broader communities.
This included implementing a new mental health Cert IV traineeship to support the program and training an additional 56 wellness champions across the business. Our commitment to workplace safety and well-being includes a commitment to continue building a safe, respectful, and inclusive workplace. Overall, female representation in the Australian-based workforce is 18% across all occupations, and First Nations people represent 4.4% of the Australian workforce. Slide eight, slide eight outlines some of our sustainability-related activities and metrics. Operating our business sustainably is a key objective for the company, and we continued to take important steps during the year to manage our environmental impact and embed sustainability principles in our business planning, operations, and culture. Notably, we established a sustainability framework and three-year roadmap, both of which are outlined in our standalone sustainability report.
This report further outlines our FY twenty-four emissions reporting and progress on various environmental, social, people, and governance initiatives, including land rehabilitation and recycling. I would encourage you to read our standalone sustainability report for FY twenty-four, which can be found on our website. The next slide outlines how expanding into lower capital-intensive services has been a key part of the Macmahon's growth strategy.... In FY eighteen, Macmahon was predominantly a surface contracting business. While the business had scale, strong competitive advantage, and tenure in surface, we needed to reduce capital intensity as we continued to grow the business. We've done this by expanding our underground mining and civil infrastructure businesses. This has been driven by some tactical acquisitions and the execution of our highly filtered tender pipeline. This will continue to be critical in progressing towards our long-term target of balanced revenue across the three sectors.
Capital light growth remains a key strategic objective, and today the business sources nearly 50% of group revenue outside of surface on a pro forma basis, including Decmil. As we have expanded our footprint in underground and civil, so too has our tender pipeline grown from 5.4 billion in FY 2018 to 13.8 billion in FY 2024, and 21.4 billion following the acquisition of Decmil. This is nearly a four-fold increase in our filtered growth opportunities in these targeted areas. Slide 11 breaks out revenue growth between FY 2017 and today, as we have executed our capital light strategy. Macmahon has demonstrated track record in delivering growth through both organic initiatives and acquisitions. We have used acquisitions to build presence and capability in target sectors and have leveraged those to deliver accelerated growth.
A key acquisition was GBF in 2019, when our annual underground revenue was only around AUD 50 million. It has been the foundation for our underground growth and has delivered a CAGR of 44% in revenue between FY18 and FY23, with revenue now exceeding AUD 500 million in FY24 or 26% of group revenue. Another is, of course, Decmil, which adds significant scale and capability to Macmahon's civil infrastructure offering. On a pro forma basis, Decmil accounts for 20% of Macmahon's revenue and provides a platform and enhanced tender pipeline for accelerated growth in this area. Slide 12 provides a bit more information on Decmil's strategic significance and recaps the key transaction details.
You can see from the map on the right that Decmil has a presence in key infrastructure regions across Australia, and this presence is highly complementary to Macmahon's already operating footprint. On the fifteenth of August, we paid AUD 104 million in cash for the 100% acquisition of Decmil and issued 22.4 million restricted shares to certain Decmil executives in consideration of them canceling their 2023 performance rights. In addition to obtaining the civil platform, we acquired approximately AUD 53.8 million in franking credits that can be used immediately, circa AUD 180 million in tax losses and the Homeground Village near Gladstone.
This acquisition is a key part of our strategy to accelerate growth in our civil infrastructure business, to improve free cash flow generation, and diversifying our business model to enhance the resilience of the business, especially at a time of forecast growth in resources, civil, renewable energy, and government infrastructure spending, where Decmil is well positioned. We can competitively tender for both resources and non-resources civil infrastructure contracts through the combined expertise of the Decmil and Macmahon teams. This includes government infrastructure work, where Decmil is licensed to carry out road and bridge projects nationwide, and renewables such as wind and solar farms.
When combined with Macmahon's extensive plant fleet, maintenance capabilities, and strong balance sheet, we will have a real competitive advantage in pursuing a combined civil tender pipeline of over AUD 11 billion, with nearly AUD 6 billion expected to be awarded in the next 6-12 months. I'll now hand over to Ursula to talk more to the financials, and we'll return to run through our strategic priorities and outlook for FY 2025.
Thanks, Mick. Good morning, everyone, and thank you again for joining us today. Further to Mick's earlier comments, I'm also pleased to report that Macmahon had a strong year in FY 2024, and I'll start off with some brief additional context on the financials. It's always nice to see charts with a consistent growth trajectory, and we see that here on slide 14, with revenue and underlying earnings all continuing to grow to record levels in FY 2024. Revenue increased with the commencement and ramp-up of Greenbushes, the acquisition of the key Pit N Portal contracts, and organic growth across the rest of our existing projects. We have also seen margin growth in FY 2024, which has improved with operational efficiencies, including more projects operating steady state with increased production levels.
This next slide looks at our cash generation and return on average capital employed track record, two key areas of focus for management. The business has maintained a healthy level of cash flow with a relatively high earnings cash conversion, albeit down when compared to the prior year. The decrease in cash conversion to 86% compared to FY 2023 was primarily due to the Calidus receivable of AUD 31.8 million being fully impaired at year-end, together with delayed receipts of approximately AUD 11 million from other clients received shortly after year-end. The chart on the right shows the return on average capital employed significantly improved in FY 2024, up to 17.2%.
This was in line with expectations and follows a past period of higher capital investment that has been dragging the returns down over the last few years. The result coincides with the lifting of our return on average capital employed target early in the year, which was increased from 15% to 20%. This aligns with our expectations of generating enhanced returns as the capital intensity of the business reduces, and positive earnings and margin growth continues. Slide 16 shows a summary of our profit and loss statement. Mick has covered off on a high level of the revenue and the earnings numbers, so I will touch on a few of the other figures. The lower levels of net debt helped keep the finance cost increases to a minimum.
Net financing costs was up by AUD 2.5 million, primarily due to the effective borrowing cost rate increasing to 6.4% at the end of June 2024, compared to 5.7% at the end of June 2023. This reflected interest rate increases year-on-year, and some refinancing costs of our banking facilities. The Australian cash rate target has been stable at 4.35% since November, and while we can't rule out any further increases in Australia, the rate has appeared to be stabilized over the time being. The effective tax rate was 29%, consistent with the prior year, and also in line with the group's corporate tax rate. Underlying net profit after tax was up 36% to AUD 91.2 million.
This was before adjusting items of AUD 38 million, which included the Calidus receivable impairment of AUD 31.8 million. The other adjusting items included the corporate development costs, software as a solution, customization costs, and the LTI share-based costs. These all totaling AUD 6.9 million. Including these adjusting costs, the reported impact was at AUD 53.2 million. An outcome of our capital-light growth strategy and the continuing strong financial performance has been the ability to increase dividends to shareholders while also strengthening the balance sheet. The total dividend for FY 2024 was AUD 0.0105 per share, including an increase in the final dividend of AUD 0.006 per share, which is fully franked.
Total dividend was up 40% on FY 2023, and represents a payout ratio of 24%, consistent with the company's increased dividend policy payout range of 20%-35% of underlying earnings per share. Slide 17 sets out the major cash movements between the closing net debt of last year to this year, which reduced by AUD 55 million to AUD 146.6 million. Strong underlying operating cash flows before interest and tax of AUD 301 million dollars, was the main driver of our lower net debt position. Underlying EBITDA of AUD 352 million, was up significantly on the prior year with the inclusion of Greenbushes, the Key Pit Borlog projects, and the organic growth across the business.
EBITDA cash conversion of 85.9%, saw an improvement in the second half compared to December, but was down on the 99% achieved at the end of 2023. This was primarily driven by the Calidus impairments and the delayed payments from certain debtors to after year-end. Total capital expenditure for the year of AUD 207 million included sustaining capital of AUD 176 million. The growth capital of AUD 31 million was primarily from Martabe, Ulysses, and Greenbushes. We're targeting capital expenditure for FY 2025 of around AUD 233 million, which will include tires and growth capital of AUD 33 million. That's primarily for Greenbushes. Slide 18 shows the major movements on our balance sheet year on year.
The net debt reduced from AUD 202 million at the start of the year to AUD 146.6 million at the end of the year. The reduction in net debt, coupled with increase in earnings, has significantly improved our balance sheet metrics and highlights a strong discipline during high earnings growth delivery, and significant capacity to fund future growth while increasing shareholder returns. Net debt to EBITDA reduced to 0.42 times, compared to 0.65 times at June last year. This is well below our guardrail of 1 times. The gearing also reduced to 18.8%, down from 24.9% last year, and again, well below the guardrail of 30%.
At the 30th of June, 2024, our cash available to the banking facilities is AUD 280 million, and subsequent to year-end, we have increased our syndicate debt facility by a further AUD 80 million to provide increased liquidity after the acquisition of Decmil. Mick talked about the improved return on average capital employed, and I just want to reiterate that we are well positioned to continue increasing this as we work towards and bettering our target of 20%. Thank you for your attention, and I will now hand you back over to Mick before we open for questions.
Thanks, Ursula. I appreciate that the strategic slide and our priorities here may look familiar from previous presentations, but it has served us well with consistent execution of our strategy, driving performance and growth. It also frames our outlook for which I'll get to shortly. So please bear with me while I briefly recap our strategic themes and priorities. These include: improved margins and execution through continuous improvement in how we operate, manage contracts and tender. Invest in future relevance and competitive advantage, including our people, technology and sustainability. Undertake focused expansion in current markets, with particular attention on growing our underground business and diversifying through new business growth, where increasing scale and civil infrastructure is a core component. Turning to slide 21, as I've discussed, the Decmil acquisition is a significant part of our strategy execution, and we've set out here some areas of focus.
We're hitting the ground running and have commenced rolling out a thorough integration plan to new employees and projects coming on board. We're on track with this, and are confident the detailed plans in place will facilitate a smooth integration. A new Decmil office in New South Wales strengthens our East Coast presence on the ground there, and our plans to accelerate growth in a strong target market. This will include progressing opportunities with tier one and two civil contractors to secure work in large scale government infrastructure, and the senior team that's come on board over the last couple of years is committed to the long-term strategy with Macmahon, and have deep industry experience and strong relationships. With legacy project issues now largely settled, there is a keen eye on the future, with continued focus on disciplined tendering, more suitable contract structures, and robust risk management.
I can definitely say we're excited about the opportunities that lie ahead. We're also seeing increasingly strong levels of occupancy at Homeground over the last six months, and are assessing options for an orderly sale of that non-core asset. Before I talk about the outlook for FY 2025, I'll cover off on the order book and tender pipeline, which also includes Decmil secured work and opportunities. The current order book is robust and stands at AUD 4.6 billion. The run-off chart shows a high volume of secured work for FY 2025, at just under AUD 2 billion, and FY 2026 at AUD 1.1 billion.
While our order book doesn't include new work or extensions, we've shown on the graph to the left, both extension opportunities, where we have a higher level of confidence of successful award, and typical short-term churn work, which is usually between AUD 100 million and AUD 150 million per annum, putting us in a very good position for the years ahead. The tender pipeline has increased significantly also, to just over AUD 21 billion, and comprises strategically aligned and credible project opportunities. Importantly, AUD 3.8 billion of this pipeline have been tendered and are awaiting response. Notably, the inclusion of Decmil sees civil infrastructure opportunities step up to over half of the pipeline, and together with underground, represents around three quarters of the tender pipeline.
This is important as we see strong growth potential in these areas, and further improvement in cash flow and return on average capital employed, given their low capital intensity. Slide 23 provides a bit more color around the tender pipeline and shows the civil and underground opportunities relative to surface. The first thing to note is that we have a robust pipeline across all three areas, with some relatively advanced opportunities over the next couple of years, particularly in the civil and underground areas. Surface continues to be well represented in the pipeline, with some large project opportunities that are either replacing existing work that is running off or where there is a capital solution in place. Underground is also well positioned to maintain strong growth, and we have several opportunities to support this in the next one to three years.
On Civil, the key thing to note is not only the increased opportunities we are targeting, but their size. Civil offers significant scope of capital-light growth and cash-backed earnings, which we are much better positioned to pursue with Decmil now part of the group. That brings me to slide 24, where our guidance for FY 2025 confirms expectations for continued growth. Revenue and EBITDA are guided to be higher compared to FY 2024. Revenue is in the range of AUD 2.4-AUD 2.5 billion, and underlying EBITDA is in the range of AUD 160-AUD 175 million. This positive outlook is supported by the strong AUD 4.6 billion order book, and a high level of work already secured at AUD 2 billion for FY 2025.
The highly filtered tender pipeline also continues to support a positive demand outlook for us, including our objectives to grow in lower capital intensity segments. Levels of activity in the underground and civil infrastructure sectors, along with the broader mining sector, remain strong, and we have diversity in our order book, client base, mineral exposure, and our capabilities. I am confident we are focused on our priorities and well-positioned to continue our growth trajectory, with a view to increasing revenue, earnings, and free cash flow generation. Macmahon's capital allocation policy, summarized on Slide 25, continues to reflect the importance of balancing dividend payments to our shareholders and retaining financial flexibility to enable the continued execution of our strategy. In this regard, we increased our payout ratio range for FY 2024, in line with our focus on capital light growth, improving business performance and confidence in the outlook.
This has been achieved while maintaining focus on a resilient balance sheet and retaining flexibility to fund growth and acquisitions. We've successfully executed on those fronts and, at the same time, lowered our leverage and gearing well within guardrails. With a consistent track record of sustainably increasing dividend payments to shareholders, we expect this to continue alongside increasing free cash flow from the business. You can also see in the graphs at the bottom of the slide that Macmahon continued to deliver significant growth in revenue and earnings over the past six years, while our price-to-earnings ratio has significantly reduced over the same period. This is a point I made earlier this year, and I wanted to reiterate it here, given we're past the CapEx-heavy cycle, which pushed our gearing and leverage to the FY 2022 peak. I believe this divergence will correct in the coming years.
With that, I'll take questions.
... Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from James Wilson with Jarden Australia. Please go ahead.
Morning, guys. Thanks for taking my questions. Just firstly, on your guidance for FY twenty-five, obviously that includes the contribution from Decmil earnings. Are you able to talk to us maybe about your expectations for the base business pre-Decmil and what's implied for the base business in your guidance numbers?
Yeah, definitely, James. Thanks for the question. I mean, the way we've looked at it is, we would expect to finish hopefully two-thirds of the way up that guidance range. What we've done is, as we've done in previous years, you know, contemplated the potential risks and put a risk allowance there at the bottom end. So if you take that position, bring base business across at 140, then you think the Decmil is 20 to 25, which already has growth on last year. Whatever you've got left is growth in the underlying business. And clearly, if I digress for a second, at 6.97%, this year, we do still stand by eventually getting to 8% in the underlying business. So part of that could be margin enhancement, part of it could be growth.
But then also, if you overlay the pipeline that we've put up there, that's pretty busy over the next couple of years. So, you know, if we do convert some of those opportunities as we hope to, that would be putting pressure on the top end of guidance, assuming there's no external risks. But given that we've hit guidance for eight years, we don't want to try and be too bullish too quick, and then maybe have something go wrong that we haven't contemplated. So we've been a little bit cautious, but, you know, hopefully, as we progress through the year, that can build.
Understood. And just another one from me, guys, on the CapEx profile. I understand that you've got a step-up built in there for Greenbushes, coming online. But going forward, given that you've got quite a lot of projects in the pipeline, are we right to extrapolate CapEx to sort of continue growing at similar rates into the future? Or are we really looking at a peak CapEx period before a step back down in CapEx, say, from 2026 onwards?
Yeah, we've said that all throughout last year, and it really still stands at the spending goal for CapEx. Can you jump in there, Ursula? Somewhere between 170 and 190 million, typically. And the whole intent of the strategy around, you know, bringing on surface civil infrastructure and some surface work, where we're either using that sustaining to replace existing work or new work and incremental work that has a capital solution, was to try and retain that sustaining CapEx at that level, so the additional earnings turns into free cash flow.
Right. So the read-through of that then is that CapEx effectively steps down?
I would use the starting as $1.70-$1.90. And guys, and sorry, Ursula just corrected me rightly. We did put out an announcement when we won Greenbushes. If we start Greenbushes on the current model, there's incremental CapEx there for the next two to three years.
Great. Thanks for taking my questions, guys. I'll hand over the mic.
Thanks, James.
Thank you. Your next question comes from James Lennon with Petra Capital. Please go ahead.
Oh, hello. Yep, well done on the results. A couple of questions. Firstly, just on slide five there, you sort of itemize the order book. Just keen to know, you've got a couple of contracts that are due to renew this year, the sort of next twelve months. What are the prospects there for doing what you did at Dawson South? Is that something you're gonna be trying to do across those contracts? And what does that sort of mean for margins? Is there potential upside to margins along some of those contracts?
Yeah, for sure. Look, there's obviously Byerwen at the end of the year, that if we extended that, which we're hopeful to, would stay under the current model. There's Daisy and Deflector, which are coming up over the next few years, which again, they form part of the Pit N Portal. Well, Daisy form part of the Pit N Portal model, and given that was rental, that diluted margins a bit, but the royalty was high, so we'd retain that model. There's one or two potential scenarios, James, where we could maybe, what's the word? Release maybe some capital capacity on the balance sheet, that we're looking at, but that'd be too premature to mention that.
But rest assured, it's a big focus for us as a team to, where we can sensibly use that balance sheet and pull back what we can for the shareholders.
Right. Okay. Just also on the Calidus, you mentioned there that there's still some recoveries that you think you might be able to get. Can you just elaborate on that a bit more?
Yeah. So when we look at that, and obviously, it was the basis for some of the decision-making at the time, that was cash flow positive previously. You know, if the hedge and the debt are gone, it even looks more cash flow positive. So with that in mind, we understand this party's going through a process. We're hopeful, given that it's cash flow positive, that you know, that should keep operating, especially if it's got exposure to the current gold price. So, you know, we anticipate there's a pathway to recovery if that occurs, and we understand that could be a potential outcome.
Yeah, great. And just lastly on Decmil, on two fronts. You mentioned that your Homeground, you're potentially looking to sell that. Occupancy rates have been going up. Have you got a sort of feel for you know, the timing of that? Or, you know, whether you might get book value or above, what sort of numbers are being sort of discussed?
Yeah, look, it's definitely not along with our strategy. It's definitely a non-core asset, but equally, it's a good asset, particularly at current occupancy levels, and indications are it's increasing. So the focus for us is. And it's the truth. We don't want anyone out there to think that it's a fire sale. It's an orderly sell down. We're obligated to get the best result we can for shareholders. We've had approaches, but we just we'll make sure we get the right price. I mean, I would hope for book price or more, to be honest with you, James, given the occupancy we're seeing and what that means in terms of earning, and more importantly, the outlook for the area.
So that's where we're gonna optimize the situation and get the best, the best price we can for our shareholders.
Great. Just on the base business for Decmil, I mean, the guidance that was sort of given when you announced the acquisition. It suggested again that the profile of the business was improving in terms of profitability. Is 6% EBIT margin something that you think is attainable for that business? Or what are you sort of looking at in terms of your sort of medium to near to the medium-term target for margins for that civil business?
Yeah, look, I think that number you quoted is about right. And if, you know, you've followed us for a while, James, you've heard us say that, you know, once we get all three business sectors to scale, you know, we'd expect 8% EBIT on the surface after corporate overhead, more in underground, less in civil infrastructure. So that fits with what you said, what you've said. That requires us to get them to scale, but that's what we intend to do. And look, it's tracking towards it. And I'll extend the answer a little bit, not really what you asked, but by providing that bonding facility in May, we did that 'cause we didn't wanna lose momentum in some of their potential opportunities in front of them.
So we're hopeful that we can announce a couple of those shortly, now that the transaction's concluded, and if we can, it should give confidence to what I've just said.
Yep. Sounds good. Thank you very much.
Thank you. Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. Your next question comes from Gavin Allen with Euroz Hartleys. Please go ahead.
Hi, guys. Yeah, terrific results. Just a quick one from me. Just fleshing out, I think, Mick, what you just were sort of talking about, really. The AUD 3.8 billion you've talked about that is tendered, I think you mentioned the call that half of it is, or something like half of it is with, with Decmil. Just a sense of, you know, timing on some of that work. And secondly, you know, how just sort of what does it mean in terms of the bonding facilities you've put in place and your balance sheet more broadly, in terms of the, the, you know, the opportunities they've been able to, to access?
Yeah, so look, in Decmil, it almost feels like, and I've got no... This isn't objective or I don't have evidence to support. But given the transaction and you know, maybe a little bit of uncertainty on it concluding, it's felt like a few things that were in their pipeline have been waiting for that transaction to close. I could be proven wrong, but that's how it feels. Given that, and then the bonding, now that transaction's closed and the bonding facility was provided, I feel that we should see a number of awards there. I'm hopeful.
On top of that, you know, we did mention in the presentation that, you know, we're not only trying to get more work like we have at the same size, we're trying to graduate to slightly bigger projects along the journey, and you can see that in the bubble chart. But it really does excite me the next couple of years, even less, the next eighteen months in that civil area, to start to build that to where it should be. I have a level of confidence we'll be able to get that to where we want over that period of time, so I'm confident there. Surface, in terms of the impact that'll have on the balance sheet, as I've said, a lot of that is further out. And typically-
Yeah
... the dates that you'll see in that bubble chart could push out, with permitting and approvals, and the same with underground. But the civil projects really do have a hard end, so I expect them to stay true to the dates that you've seen in that chart.
Very good. Thanks, team. Well done.
Thank you. There are no further questions at this time. I'll now hand back to Mr. Finnegan for closing remarks.
Yeah, look, I'd just like to thank everyone. I know it's a very busy time. I know there's a couple of results presentations on today, but we're in Sydney the next few days, and we're back in Melbourne the following week. But please, if anyone has any questions, please reach out. We appreciate everyone's support over the years and the team is laser focused on achieving the key metrics that we discussed here. So thank you for your support, and hopefully, we'll see a lot of you in the coming weeks.
That does conclude our conference for today. Thank you for participating. You may now disconnect.