Good morning, ladies and gentlemen. Welcome to MLG's First Half FY'24 Financial Results. I guess just to kick the meeting off and get everyone a high-level overview, if we look to the half, what we saw out of the business was some continued strong delivery from the underlying business, which was, I guess from our perspective, exactly what we expected. What we did see across the half was some challenges around project ramp-up and timing, and we've spoken to that in some of our previous presentations. At a high level, what we did see is top-line growth from a revenue perspective of AUD 268 million. We saw slight growth in our EBITDA and NPAT half on half, and that NTA has continued to grow.
We will talk to it in more detail throughout the slide pack, but I just want to highlight the fact that from our perspective, we did land exactly where we expected, and we are very encouraged by the fact that the underlying business has continued to perform and being able to sort of weather some of those challenges that have come from a project commencement and timing of those projects starting and having to wait and hold assets and people across the half. If we look to the highlights, guys, at a high level, as I said, revenue was up some 20.3%, and that really came in the back end of the half.
We'll talk to that in a little more detail as we get through the slide pack, but we did sort of brief the market and flag the fact that we were carrying some costs across the first part of the half, and that was predominantly related with fleet and people waiting for project commencement. What we saw in the back end of the half was that sort of start to be deployed. That allowed us to, I guess, hold our employee position with consistent numbers and flex with the requirement of contractors across that period. More importantly, as we came out of the back end of the half, we really started to see that contribute, which was a sensational result for the business. We did see that capital equipment continue to flow through with circa AUD 29 million spent across the half.
We do expect that to taper off now as that fleet's gone to work, and we've now gotten ahead of the curve from a capital and fleet management perspective. The second half, we expect to see a reduction in that number. Across the half, we did choose to purchase an accommodation facility located in Kalgoorlie to give us that sort of competitive advantage. The accommodation market's very constrained in that neck of the woods at the moment, and having access to accommodation allows you to be able to leverage your position, and we are doing that today. More importantly, that NTA is up to AUD 1.02, which is an 8.5% rise compared to the prior corresponding period.
Just sort of touching on those employee numbers, as we spoke to earlier, or as I spoke to earlier, we did hold our numbers across the half, and that was a conscious decision based around the fact that we're holding some fleet and some people in preparation for project commencement. We will lean back into that now and continue to grow. The reality of it is, as we got into the back end of the half, we did see some of those projects that had some timing-related issues through project approvals and just principal decisions proceed sort of start to kick in, and the revenue start to flow through in the back end of the half.
We're now in a situation whereby our NTI programs and our employee pathways are delivering for the business on an as-required basis, and we expect to see those numbers grow as we push into the second half and start to maximise those opportunities when we redeployed our fleet too. Staff retention continues to be a challenge across the wider industry, and we're very focused on ensuring that we can improve our numbers. We have seen an improvement across the half materially in terms of our turnover rate dropping, but we are still continuing to maintain focus as the level of activity, particularly across the gold and still the iron ore space, remains high.
In terms of compound annual growth, I guess just to highlight, guys, we've spoken about our CAGR in detail across previous result reporting periods, and this half has been no different in that we continue to grow. We did see a large amount of that ramp-up come in the back end of the half, and hence at a top line, we saw that flow through. We are expecting a materially stronger second half for the business and expecting to see that CAGR continuing to run on. For those of you that aren't across the MLG story, what do we do and how do we do it? Our business model is one that's built around the processing of minerals and in particular gold, which puts us in a very good spot right at the moment.
We have an operating model that's built on four pillars, being our bulk haulage, crushing and screening, civil and mining, and our construction materials. That really wraps itself around a centralised processing facility. You would have heard a lot of our customers that are talking about the hub and spoke model over the last few years as they optimise their processing infrastructure and drive development of satellite ore sources. The likes of Genesis Minerals and Ramelius Resources and Gold Fields have been big users of that philosophy along with Northern Star, and they've sort of formed a key part of our growth story, really. We're continuing to see that roll on. We've had the recent announcement of Genesis Minerals bringing on their Mt Morgans facility, and we're looking at what we can do around the wider Goldfields Region at the moment with all of our customer bases.
They ramp not only processing infrastructure volumes, but also grade profile and unlock resources that are economically viable at the current gold price. In terms of the footprint that we operate in, as I sort of alluded to just now, the large focus for us has been across the gold industry for a large portion of our existence. However, we do have an exposure to the Pilbara through our crushing and screening division within the iron ore sector, and we've also got a large construction materials contingent that deals to civil infrastructure and road-type environments of supplying aggregates and sands and so forth for not only road sealing but concrete and so forth.
If you look at our order book and where our revenue is coming from, it's an array of both mid and tier one mining houses, large proportion of gold, obviously circa 85-86% of our revenue coming out of gold at the moment. We do expect to see the iron ore contribute a little bit more across the second half as we're ramping back up within our crushing division, and we will talk to that in a little more detail as we get into the slide pack. Large focus and exposure to gold, and that is driving an unprecedented amount of demand as we look to those customers starting to unlock their underlying resource portfolios and drive production volumes. The key part for us, the other thing that map highlights, is just the geographical spread.
I guess for those of you that are across our story, you would have known that we had some challenges sort of a few years ago with just dealing to the inflationary pressures and so forth that the whole of the mining service sector was being subjected to. The investment in technology, both in hard technology on our fleet, GPS monitoring, and in-situ cameras, dovetailing into a bespoke set of software has allowed us to generate a reporting platform that is second to none. We have live reporting across the whole of our business that allows every one of our operations to provide us with a P&L on a 7:00 A.M. every morning basis for the previous 24 hours and where they are a month to date.
Huge amounts of transparency, huge amounts of capacity to be able to hold our staff to account around key sets of deliverables and one that allows us to drive the business on a day-to-day basis. With that, I'll hand over to Phil.
Thanks, Murray. Look, as Murray described, revenue growth has been strong in the half, and we continue to see that over time. What we've seen in this half, though, is that the haulage and site services business really is starting to grow strongly, and you'd understand that in terms of the demand from our clients for more production, and we've seen those revenues strongly up, and those projects are really performing very well. They're certainly performing at a higher margin than we've historically had, and that's starting to kick through. This half is also showing that we did have lower crushing revenue, and that crushing revenue is a combination of timing factors. Twelve months ago in the same half, we had a significant project with Bald Hill that had been going for almost two years, and we've just finished a number of campaigns leading into the half.
We had a bit of a timing issue. As we sit today, though, all but one of those fleets is back in operation, and the other one is getting ready to be deployed as well. We are starting to see the crushing revenues come back in line, and that is what we expect in the second half, and that will contribute strongly into the margin continuing to grow through that second half and into next year. Across the group, we are very consistent now. We are seeing the sort of similar sort of results across all of our projects, and we are starting to see that each project now is performing, as Murray just described, with a lot more granularity in our systems. We are able to see what those projects are doing and hold people accountable to it, and that is giving us a result that is starting to be more consistent.
We have talked about, and we continue to be focused on margin, and we will continue to see margin rise, but in this half, it's been pretty flat in the last six months, and the margin in the previous period and the prior corresponding period was a factor of that higher crushing volume that we had. This is really a bit of a stabilisation six months, but we'll see it continue to grow into the second half. As Murray said, we're expecting a stronger second half. In terms of the balance sheet, we continue to grow our net tangible assets. They're up to AUD 1.02. Net assets at AUD 135 million. We've got a very good fleet. It's a fairly young fleet, and we continue to acquire the equipment that we need and that what our clients are needing.
As Murray described, some of the constraint in this half has been due to the fact that we have invested heavily. That AUD 29 million of CapEx did come in this half. The second half is expected to slow a little bit in capital, probably nearer the sort of AUD 20 million mark for the half. As a result, there are a couple of things happen as well. We also acquired an accommodation block in Kalgoorlie. This is a very strategic asset. It means that we are able to eliminate a number of rental houses that we have been managing across the Kalgoorlie site and ultimately be able to centralize the accommodation for us and run catering as well. A lot of those sites were just outsourcing to local pubs and bars, and this makes it a lot more efficient and a lot more effective for us to run.
That is now in our fold, and we will continue to be an important part of it. As I said, that gearing ratio of 1.4 times is expected to lower to probably nearer 1.1 times by June as we see profit increase and we continue to repay debt and lower our CapEx in the second half. When you look at that debt position, it is funded pretty much 70% by big banks and 30% by OEMs, with a little bit with finance companies in the middle. When you look at the breakdown of the AUD 77.5 million debt, you have 66 in equipment finance. These are all hire purchase contracts over three or four-year terms. They are all at fixed rates. They are all actually very economically sensible in terms of the interest rates that we get charged for it.
It also gives us a multi-tenor loan book because each of those contracts is financed on each individual asset that we purchase. They all have different maturing dates. Part of the lowering of net debt in the second six months is the fact that we have some contracts rolling off in the next six months. We actually will pay a lot of CapEx out in the next six months. As our actual new equipment purchases slow, we will see that gearing come back in line again with last year. In terms of those facilities, we have almost 50 or just over AUD 50 million of available facilities. We do have plenty of liquidity in equipment finance, and that has set us up for future growth in the future if we need to acquire more equipment.
As we said, the accommodation facility was purchased, so that's increased debt for this period. The working capital is just a function of the overdraft. We have a AUD 19.8 million overdraft. At December, it was slightly overdrawn. It was AUD 8.7 million overdrawn. I'll talk about that in the next slide as to why that was overdrawn so much. We typically do try and run that down to as much cash as we can on hand. On the 31st of December, and you'll see it in the cash flow on the next slide, we did have a significant amount of money that came in from our clients just a day or two days later after the half-year end. We had about AUD 12 million was received in the first week of January and not actually in December.
If you applied that back to that operating cash flow, you would see we'd probably be in the 90% sort of cash conversion. Because that was a large amount and it was received in that first week of January, everyone was having a nice Christmas, it has lowered our cash conversion for this half. I don't see that as an issue whatsoever. We've received all of those funds in now, and it will continue to come back to sort of more normal around that 90% cash conversion rate that we see historically, and that is what we expect for the full year. As mentioned, the CapEx was AUD 13.1 million in sustaining. That sustaining CapEx is really where we are changing out material components or improving our underlying fleet and making sure we reinvest to our existing fleet, and we'll continue to do that as we go forward.
We've got a very large fleet. Fleets do age over time, so we do need to reinvest some capital into that. Importantly, we did spend AUD 16 million on gross CapEx, and that is, as Murray described earlier, it was a strategic decision to acquire an expansion in our fleet in anticipation of where the market is at the moment, which is that it has a high demand for that fleet, and we want to be able to service that market demand. Plus, the accommodation facility gave you the total CapEx of AUD 32.7 million across the half. All in all, we are very comfortable with where the balance sheet and cash flow sits. Obviously, we would have liked a stronger cash flow for the half, but the reality is it's timing, and that will improve as we go forward.
I'll hand back to Murray just to take us through the outlook.
In terms of what sits in front of us, I guess I spoke to the fact that we did see some of that holding cost fall through to the first half, but that was very much planned from our perspective in terms of having fleet ready to go. What was unplanned was the timing of our actual counterparties' commencement of those particular operations. What we saw in the back end of the half is those projects start to ramp up and that fleet and equipment go to work. Where we sit today is one whereby we still have some capacity to be able to service our underlying customer base as they continue to grow, and we have capacity to flex for them, but we are starting to get to the upper end of available fleet as we sit.
We'll see in a few weeks' time the commencement of the Westgold South operations. For those that you saw or for those of you that didn't see this morning, we announced to the market a three-year agreement with Westgold to leverage our Goldfields-based fleet to service their southern Goldfields operations. We are seeing this increasing demand that continues to flow through, particularly around the gold space. We would get a phone call a day from a potential producer or one of our existing customers saying, "Hey, we want to bring this particular asset online.
How do we go about doing that? In terms of the wider MLG business and what this next half has in front of us, we have a strong underlying set of operations that have increased margin from a haulage perspective that have delivered strongly across the half and will continue to deliver strongly into the second half. We see that additional contribution coming through from those remobilised crushing plants and the kickoff of a series of new civil operations. We are expecting to see a material uptick in the second half that will deliver both growth at the top line, but more importantly, profitability growth too, both on a percentile basis and a total number. In terms of the outlook post that six-month period, we are seeing this huge inbound demand, particularly around the gold space, that we expect to continue to see flowing through.
That is across the whole of our service offering, be it open-pit mining, the crushing and screening, bulk haulage, and site services. We are seeing a huge amount of inquiry, and we expect to see that incremental growth continue. If you look back through some of our previous slide packs and look at the longer-term history of the business, our business typically grows in 24-month blocks. We will have a big sprint. We will have a consolidation period and then another sprint. The last six months has really been a reflection of that, and it has been back more in line with the way we have continued to grow. From our perspective, we are very pleased with where we sit. We would have liked to have seen some of those projects come on sooner, but we are pleased from a point of view as we are being prepared.
We've seen the back end of the half having those projects contribute both at a top line, but more importantly, at a bottom line. We're seeing that. We're expecting to see that to flow through in the second half and, more importantly, into the following financial year. In terms of highlights, guys, from an outlook perspective, strong underlying business. Importantly, the haulage business, which has been the challenging one for us from a margin growth perspective, has delivered consistently. That crushing business will and is coming back online and huge demand from our underlying customer base. Very, very comfortable with where we're at. Very, very comfortable with where the business is at in terms of managing the variability that has come across the period.
This result is really a reflection of the consistency that they're able to deliver subject or when there's things like project commencement, start-up, and so forth that are out of their control from a timing perspective. Well placed, looking forward to the next six months and are expecting to see the second half come home with a nice wet sail. With that, I might open the floor up to some questions.
Okay. Sorry, I was just trying to work out how do I mute myself there.
All right, Nick
Thanks for taking my questions. I mean, at the FY24 result, you sort of guided to revenue and EBITDA to grow year on year, but you did mention limited NPAT growth depending on project timing. Just keen to understand how you're thinking about NPAT growth for the full year. I know you've got a pretty significant D&A component now, so should we expect that to go backwards a little bit year on year, or are you still maintaining that limited growth guidance?
Oh, look, I think we're going to be working hard to get it back to the same number, Nick, just because of the timing of these projects. We had anticipated then that some of these projects would have started a couple of months earlier, and that would have made this half slightly stronger. We did AUD 11 million in NPAT last year. We've done AUD 4.1 million this half. As we've said, we expect a stronger half, but whether we can double that is the debate. I mean, we're going to have to see how the second half unfolds, but it should get pretty close. I mean, I think we're probably thinking that we're pretty flat at an NPAT level unless, as we know, there's quite a few projects that they're trying to push us through some more things.
I think it's going to be that challenge of how much more can we squeeze out of the second half just in a timing sense. I think it's going to be pretty much in line with that FY'24 NPAT, whereas EBITDA and other metrics are probably a little bit higher.
Awesome. That's helpful. Thanks, Phil. I mean, just looking into FY'26, you mentioned crushing and civil's revenue are on the up and projects have commenced, which is going to increase your margin into the second half of 2025. Just trying to understand whether they're long-dated contracts and whether we can sort of assume that FY'26 will be a high-margin year as well, or at least even first half 2026. How do you guys think you'd like?
Yeah, most definitely. The work that we're mobilizing into does run out across FY'26.
Okay. Awesome. You guys would be relatively comfortable with us sort of extrapolating your 2H margin into FY'26?
Yes. Yep.
Great. Thanks, guys.
Got a Q&A from Oliver Crichton.
Hey, Murray. How are you going? I've just put it in the chat there, but I've said, first off, appreciate the growth in revenue over the past few years. It's great to see capture of multiple different revenue streams. Firstly, both the subcontractor charges and other employee expenses are trending up as a percentage of revenue. This is actually having quite a big NPAT on margins. Just wondering what the justification of this is and how is MLG looking to lower these as a percentage of revenue?
From a labor perspective, that's a direct correlation to, obviously, profitability. I mean, the other big piece is the labor hire component. We've been very focused on transferring contract labor and increasing our underlying MLG headcount, which does materially contribute. We sort of put a slight halt on that across the half, Oliver, because we had some project timing delays that were sort of standing or had us standing there going, "Well, whilst we've got an underlying employee base and we've got an element of contractors fulfilling a piece, we don't want to continue to bolt more permanent employees in whilst we're waiting for projects to start." Now that in the back end of the half, those projects started to ramp up more materially, we're now turning our focus back to driving the, I guess, the crossover from removal of those contractors back to MLG employees.
That's the one that has the biggest effect on the labor cost. The second piece, the subcontractor charges, combination of things. Some of that is project timing commencement and gold price-related items where a client picks a phone up and says, "Hey, we need to shift this 500,000 ton from 300 km away. We want to start tomorrow." Obviously, we don't run a taxi-rank road train high service. In that situation, we transition with some subcontractor fleet and a combination of ours, and then we work through that to push our own fleet in over time. We see a material reduction in that. Obviously, we've got one project at end of May that's got a large MLG fleet on it.
That project comes to end of life in the next few months, and that fleet transitions back across to be able to drop out a large amount of the subcontractor costs that sit across the business. We will continue to utilise subcontractors for that sprint capacity and the short-term needs. We do not expect to see it materially uptick. This recent half, as well as the recent two halves with the ramp-up in gold prices, had a lot of that short-term ad hoc stuff starting to or required us to flex to our customers' needs. We very much have a plan in place in terms of that end-of-May fleet coming out. Some of that will go into the Westgold South operations, but the remainder of it will take out a large portion of those subcontractor costs. We do expect to see that reduced.
Okay. That's good to hear because at the moment, it's running at almost 9% of revenue for subcontractor charges, whereas in the last half year, it was closer to 7%. Has a pretty significant NPAT.
Yeah. Very much material NPAT . In some cases, we get clawback from that from our clients. In other cases, not so much, but that's becoming a more and more robust discussion as the gold price gets higher and they're looking to unlock these things in a more timely manner.
We're probably not going to see a material drop in the next half year because of that contract rolling over at the end of May. It'll more likely be a FY' 26 roll-out.
Correct. Correct.
All right. No, thank you for that. Last question, probably more of a comment. I think the market's pretty aware of the related party transactions that occurs at MLG. Now, I'm not going to go into specifics, but it tends to be around AUD 1.5 million per half year. And whilst these are done at arm's length contracts, I believe as the major shareholder, Murray, and also the amount of performance rights you have for increasing the share price, I believe it's 10% per annum. You get 2 million shares or so. Just I think most shareholders would appreciate this number trending down in the next few years. I think even if the works can be contracted elsewhere, I think there's plenty of opportunity for you to create value for other shareholders and yourself outside of these related party transactions.
We don't have any related party labor hire transactions, Oliver. That's all third party.
It's not labor. I know it's, but you've got purchase of prime movers.
We had some legacy fleet that we've 100% transitioned over that was owned in another entity that was private. That has all been washed out and has been purchased entirely by MLG via a third-party auditor process to make sure that it was at market-effective rates. The only thing that's left is some property lease for industrial properties that are leased back from myself personally to MLG. In every circumstance, they're independently verified through third-party auditors and third-party valuers at every lease period. Personal exposure and related party transactions from myself have materially reduced compared to where they were sort of two and a half years ago. Outside of those, the actual property leases, there are no more transactions being entered into or entertained by the group in terms of related party transactions.
We are very cognizant of where the market sees that and views it and have been effectively working through a process of unwinding those particular items that potentially create the questions.
Okay. Appreciate that commentary, Murray, and the honesty. Nothing else from me.
Thanks, Oliver.
Thanks, Oliver.
Got another question on the Q&A from Mohammed. Mohammed, I'm just going to unmute you.
Far away, Mohammed. You there, Mohammed? Sorry, we're unable to hear you, mate, if you're asking your question.
Still there? No.
I've got another question if no one else is going to jump in. That's right.
Yep. Go for it.
Far away. What's the business? What's the three-year goal for the business? Where does MLG want to be? Because obviously, there's a limited amount of gold mines in the Kalgoorlie region and across Australia generally. Is the plan to sort of optimise, become the major player in the field, and then return capital—sorry, return earnings to shareholders? Or is the plan to be taken out eventually? Where do you see the business in three to five years?
No, I think that we still have a material amount of growth in front of us. It is one, I guess our three-year plan from a strategy perspective is built around unlocking value through the integration of our service offering. It has really been about getting the scale to be able to do that. We are starting to see that flow through now. We expect and anticipate that we still have a material amount of growth in front of us. We are fielding inbound inquiry from the wider resources sector, be it across iron ore and copper and so forth, around the integrated model supporting processing infrastructure. The challenge that we have had is being able to grow at a sustainable rate, be able to procure the fleet and the people in a timely manner to maintain that growth and fund that growth.
Where do we see ourselves in three years' time, Oliver? I think we see ourselves with far more vertical integration, still a reasonable amount of, I guess, exposure to gold, but also one that sees us spreading that across other jurisdictions, Pilbara potentially, Queensland, but one that really sees us leveraging that open-pit mining, crushing, and screening and haulage in a more combined way in support of our customer base.
Sure. Appreciate it. Thanks again.
G'day, Murray and Phil. Sam here, Mate. Guys, just the Westgold contract, that looks like you've obviously renegotiated that. I'm assuming there's some rate increases there. Across the portfolio now, are you happy with where all the contracts are? Are there further kind of further rate improvements to come through in the portfolio?
Yeah. I guess for clarity, Sam, it was not a renegotiation. We were not currently conducting those works with Westgold. That is a new piece of work completely. There have been some smaller local contractors conducting that. As part of a wider strategy, Westgold have looked to us to help them unlock value there. Yes, I can tell you that it was negotiated at current market rates. We are expecting to see that materially contribute to us across not so much this half. Obviously, we do not start for another sort of four weeks' time. As we transition into next financial year, we expect to see that be hitting its full run rate.
I think if we look across the whole of the underlying business, it's easy to stand back and say, "Rody, you had a 10.9% margin last half, 10.9% margin this half." Importantly for us, what we did see across the whole of the business is every single one of our operations performing and performing consistently. It's no secret that the bulk haulage piece of the business has been the lower margin piece. In the past, it's been supported by the crushing and screening division. The crushing and screening division, just through a series of timing-related items, had projects that were washing off right at sort of the early part of this half and then starting to ramp up at the back end of the half. What we saw across that is the capacity or the growth in margin within our haulage business in particular lift.
That carried the crushing and screening division across that half. With the contribution of the crushing and screening starting to deliver again and the underlying haulage business continuing to grow in profitability, we are seeing that continue to grow in profitability month on month. The fact that we have a very consistent delivery now across that part of the business where there was variability that existed 12 months ago, we are confident that we are going to see that start to contribute to those margins growing on a percentile basis. Given that we are looking at top-line growth as well, we expect that to have a material NPAT in a positive way on our EBITDA.
Sorry. G'day, Murray. Matt Mirams here. Just wondering, some of your profit share opportunities that you've been talking about, I guess, on those smaller open pits that are starting to become economic, just wondering how you're assessing those. And I guess are there benchmarks in place to actually make them worthwhile for you guys to enter into?
Yeah. There's been a few benchmarks just recently. The biggest challenge with that at the moment with a AUD 4,600 gold price is either the expectation of the owner of that particular asset, but more importantly, the unlocking of processing infrastructure to be able to process it. I can tell you we are across a few of those as we speak and are actively working through getting the finalise or getting to a point where we can get to a no or go type decision. They are really sort of reliant upon finalising of processing infrastructure capacity. Now, the fortunate part about our group is obviously we are providing the key support services to the majority of processing infrastructure across the whole of the Goldfields region of Western Australia.
That does give us an automatic end to be able to open a negotiation and discussion with our client base around how we access some time at that processing infrastructure. To say that market is hot at the moment is probably an understatement, Matt. There is a huge amount of activity around trying to unlock these particular assets and a lot of jostling around getting access to processing infrastructure and what is fair and equitable value to be delivered to both the underlying resource owner, but also ourselves as the entity that can bring that particular asset to commercial realisation. We're close, mate, but we're not quite there yet is the short answer.
Good. Thanks, guys.
Any other questions? Or we might wrap it up there if there's no more? No more, Rhys? Okay. Thanks, everyone. Much appreciated. All the best for the rest of the week. I'm sure you've got lots of other results to go through, and we'll talk to you shortly.
Appreciate your time. Thank you very much, guys.