Good day, and thank you for standing by. Welcome to Monadelphous' 2024 half year results presentation. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. It is now my pleasure to hand you over to the company secretary, Ms. Kristy Glasgow. Please go ahead.
Hello, and welcome to the Monadelphous 2024 half year results investor and analyst briefing. Before we commence, I would like to acknowledge the traditional owners of the lands on which we are joining you from today in Boorloo, Perth. We acknowledge the Whadjuk people of the Noongar Nation and the traditional owners of country, and pay respect to elders, past, present, and emerging, and extend that respect to all First Nations people. Presenting today are Monadelphous' Managing Director, Zoran Bebic, and Chief Financial Officer, Phil Truman, who are joined in the room by our chair, Rob Velletri. Throughout this presentation, the speakers will guide you on when to click through to the next slide. The structure of this morning's presentation will be similar to previous results presentations, with some further detail provided as appropriate. Copies of today's presentation and associated materials are available on our website at monadelphous.com.au.
I will now hand over to our first presenter today, Zoran Bebic, who will start on slide two.
Thanks, Kristy, and welcome to our 2024 half year results briefing. Today, Phil and I will present our financial and operational performance for the half year ended 31 December 2023, as well as the outlook. We will then answer any questions you may have. To our group performance and highlights on Slide 3. Monadelphous recorded revenue for the six months of AUD 1.008 billion, in line with the guidance provided to the market, representing a 5.8% increase on the prior corresponding period. Record levels of maintenance services activity were experienced during the period, and we ended the half with a record cash balance of AUD 263 million. In total, we secured more than AUD 1.8 billion of new contracts and extensions.
The Maintenance and Industrial Services division delivered revenue for the six months of AUD 708 million, up 4.6% on the prior corresponding period. A number of major turnarounds were completed for key customers in the energy sector, and we also secured a couple of really material long-term contract extensions and variations. The division continues to experience high levels of demand for services and sustaining capital works, assisting customers to maintain assets and supporting production. The Engineering Construction division successfully secured approximately AUD 750 million of significant new construction contracts, following high levels of tendering activity over recent periods. The division reported revenue of AUD 303 million for the six months, up 9.2% on the prior period, with several recently awarded projects commencing site activities.
Net profit after tax was AUD 30.1 million, up 3.2% on the same time last year, delivering earnings per share of AUD 0.312. The board declared an interim dividend of AUD 0.25 per share, fully franked. Zenviron, our renewable energy joint venture, continued to build on its strong reputation for the delivery of balance of plant work for wind farms, successfully completing work at the Rye Park Wind Farm in New South Wales. It also entered the energy storage market with the award of its first EPC battery storage project. Zenviron is well placed to capitalize on the significant growth expected in the renewable energy sector over the coming years. During the half, we acquired Perth-based structural concrete business, Melchor Contracting.
Melchor, which employs around 300 people and generates revenue of approximately AUD 100 million per annum, offers full structural concrete capability in the resources, energy, and infrastructure sectors. This strategic acquisition further broadens our multidisciplinary construction offering to now include civil capability. Moving to Slide 4. As I mentioned, we have secured approximately AUD 1.8 billion of new contracts and contract extensions since 1 July 2023, with major contracts secured in the energy, lithium, and iron ore sectors. In the energy sector, we were awarded significant long-term maintenance work with INPEX and Woodside, along with a further three-year contract to continue providing sustaining capital and maintenance services for Santos in Papua New Guinea. More than AUD 530 million of new construction work was secured in the lithium sector, including major contracts with Albemarle, Talison Lithium, and Liontown Resources.
In WA's iron ore sector, we extended our relationship with long-term customers, BHP, Rio Tinto, and Fortescue, with the award of new work and contract extensions. Moving to Slide 5 now, people. Our total workforce, including subcontractors, comprise just over 7,400 people at half year end. This was up around 20% on 30 June 2023, with the increase in construction activity as well as the acquisition of Melchor. Our steadfast commitment to continued engagement with our employees supported improved retention rates, which is particularly pleasing when industry-wide skilled labor shortages remain a challenge. We undertook a review of the effectiveness and design of our long-term leadership reward programs to ensure they continue to support key leader retention in a manner aligned to the creation of long-term shareholder wealth.
The review resulted in the implementation of a performance reward plan for the senior leadership team, replacing the employee option plan as the primary employee equity vehicle. Early career development remained a priority for us, with more than 200 people participating in our graduate, vocation, apprenticeship, and traineeship programs over the 6 months. These programs focus on providing learning and development opportunities around a range of relevant career pathways, with graduates currently engaged in construction management, engineering, and accounting disciplines. Our registered training organization at Bibra Lake delivered more than 700 training courses to over 2,600 tradespeople, including high-risk training, accreditation, and verification of competency. Looking at safety and wellbeing now, slide 6. Our unwavering focus on health and safety saw our serious incident frequency rate remain at low levels.
We also continued to focus on identifying, reducing and eliminating fatal risks across our business through our Fatal Risks Control campaign. We were recognized for our commitment to innovation and safety performance at the Queensland Work Well Awards and at the Queensland and Northern Territory Welding Excellence Awards. In addition, Melchor was recognized as a finalist in the WA Mental Health Awards, and in August, I presented the Managing Director's Safety Innovation Trophy to our Gladstone workshop team for developing a safer method to remove and refurbish heat exchangers. As a part of our ongoing commitment to the health and well-being of our employees, we offer general health checks, skin checks, and a series of health-related information sessions, as well as partnering with the Resilience Project to offer a resilience and well-being program for our employees and their families.
We also commenced an independent review of psychosocial risk management systems to identify opportunities for continuous improvement in supporting the wellbeing of our people. Now to slide seven. We continued our efforts in the important areas of diversity, community, and environment. Our Stretch Reconciliation Action Plan, or RAP, facilitates the identification and creation of opportunities for First Nation peoples and businesses, while fostering an internal culture of understanding and respect. Pleasingly, we continue to exceed our RAP targets for Indigenous workforce participation. Our ongoing partnership with the Polly Farmer Foundation continued, hosting school visits at our Perth office and Bibra Lake Employee Development Center as a key founder of the Polly Farmer Follow the Dream program, as well as supporting foundation alumni to pursue trades-related career pathways.
We released our reinvigorated cultural learning strategy, a key RAP initiative, incorporating a new cultural awareness and cultural activities, and delivered learning opportunities from the Acknowledge This! program to support our employees to learn about delivering a meaningful and genuine acknowledgment of country. We progressed the initiatives under our Gender, Diversity, and Inclusion Plan, which included participation in events such as the Bright Futures STEM program and the Inspiring Girls Forum, aimed at encouraging girls and young women to select STEM subjects. We were also named a finalist in the Women in Resources Awards in recognition of our Crane Operations Pathway Traineeship, a three-year program designed to prepare female and Indigenous trainees to qualify as crane operators.
Aligned with our commitment to giving back to our local communities, we supported approximately 70 community initiatives by contributing more than AUD 170,000 in funding and almost 400 hours of voluntary work. We also continued to progress our emissions and energy reduction roadmap in line with our commitment to net zero, advancing emission reduction trials and implementing emissions data capture processes ahead of the base year reporting. We also developed a hybrid power solution proposal to reduce diesel emissions in operational compounds, supplementing our hybrid and electrical vehicle fleet. Turning to our engineering construction division now on slide 8. The division reported revenue of AUD 303.1 million for the half year, up 9.2% on the previous corresponding period. Following higher levels of tendering activity, a material number of significant new construction contracts were secured.
In the lithium sector, we were awarded a major construction contract with Albemarle, valued at approximately AUD 200 million for the front-end pyromet works associated with two new lithium processing trains at the Kemerton expansion project. Late in the period, we also secured a further package of work for the utilities and reagents scope on the project. These awards followed the earlier successful construction of two processing trains by Monadelphous at the project, and the award of long-term maintenance and sustaining capital works for Albemarle's Kemerton operations last financial year. Following a successful period of early contractor involvement, we secured a AUD 160 million multidisciplinary contract at Talison Lithium's Greenbushes site. We also commenced construction of the wet plant at Liontown Resources' Kathleen Valley Lithium Project.
The contract, which is valued at approximately AUD 100 million, follows a fabrication and supply contract awarded to Inteforge in the prior year. In the iron ore sector, we continued on the structural, mechanical, and piping package for BHP's Car Dumper 3 Renewal Project at Nelson Point in Port Hedland, where the electrical and instrumentation scope was also secured. We're awarded a contract in the rare earth sector with Lynas Rare Earths for stage one of the Mount Weld expansion project, associated with the construction of the new concentrate processing facility, along with a contract with Chevron Australia to support the installation and modification of electrical power and control facilities at the Jansz-Io Compression Project at Barrow Island. Moving now to our maintenance division. The maintenance division delivered another record half year revenue result of AUD 708 million, up 4.6% on the prior period.
Pleasingly, the division has been awarded over AUD 1 billion in new contracts and extensions since the beginning of the 2024 financial year, including around AUD 800 million of long-term maintenance work with INPEX and Woodside, which I mentioned earlier. High levels of demand were experienced for maintenance services across all sectors, but activity levels were particularly high in energy. The division completed a significant turnaround at Shell's Prelude FLNG facility, as well as several shutdowns for Woodside's onshore and offshore facilities in Western Australia's northwest. Decommissioning work also continued for Petrofac on the Northern Endeavor. A large volume of work was executed in the Western Australian iron ore sector under our long-term panel agreements with Fortescue. We secured a one-year extension to our sustaining capital works agreement for services across Rio Tinto's Pilbara operations, along with an extension for the provision of general maintenance services to BHP.
Contract extensions were also secured at BHP's Nickel West, Mount Arthur Coal, and Olympic Dam operations, as well as to our fixed plant shutdowns contract at Rio Tinto's Gove operations. We successfully integrated BMC, our specialist electrical and maintenance services business, following its acquisition in June last year, and during the period, it secured an outage contract at the Loy Yang B Power Station based in Traralgon, Victoria. I will now hand over to Phil, who will provide you with some more detail of our financial performance on slide 10.
Thanks, Zoran, and good morning, everybody. This slide that we're looking at at the moment shows our financial performance compared to that of the previous corresponding period. As Zoran mentioned, we recorded revenue of just over AUD 1 billion for the half year, which was up by 5.8% on the first half of FY 2023. Earnings before interest, tax, depreciation, and amortization was AUD 61.3 million, delivering an EBITDA margin of around 6.1%, and this is similar to the prior corresponding period and slightly up on the 2023 financial year. Our net profit after tax was AUD 30.1 million, which is an increase of 3.2% on this time last year, delivering earnings per share of AUD 0.312, and the board declared an interim dividend of AUD 0.25 per share fully franked.
The highlight of the result was obviously the record cash balance of AUD 263.3 million, which was materially boosted by the significant advances we received during the period associated with the recently awarded construction contracts. Our cash flow from operations for the six months was an incredible 147.3 million dollars, delivering an outstanding cash flow conversion rate of 260%. Our strong balance sheet remains a key enabler of operational performance and supports our markets and growth strategy. We substantially invested in our heavy lift crane fleet during the period to support the delivery of the recently awarded construction contracts, expanding both the capacity and capability of our fleet, as well as undertaking major maintenance activities to extend the useful life of our existing assets.
Our heavy lift crane fleet provides a competitive advantage for our business, supporting our self-execution strategy and further diminishes our reliance on the external supply market. I'll now hand you back to Zoran to provide you with an overview of the outlook for the business.
Thanks, Phil. Slide 11 shows relevant current and forecast Australian market conditions for our business. Pleasingly, as you can see, the sectors in which we operate continue to provide a positive outlook for capital investment and operating expenditure over the next few years. Moving now to our outlook slide... Longer-term demand forecasts remain strong across most commodity markets, with global economic uncertainty moderating more recently. The resources and energy sectors are providing a significant pipeline of prospects across a broad range of commodities, with expenditure related to decarbonization representing an increasingly larger proportion of the investment activity. Production across most commodities is forecast to remain around the current high levels, supporting continued sustaining capital and maintenance spend. Some price volatility in specific commodities may lead to a decrease in production or deferral of capital investments as clients focus on reducing costs.
Notwithstanding this, levels of mining and mineral processing development in the energy transition metal sector are forecast to remain high over the longer term, and investments to sustain iron ore production levels will continue over coming years. In the energy sector, there are several new gas construction projects currently in the development pipeline, and demand remains strong for maintenance services, with decommissioning prospects expected to grow over coming years. The hydrogen market continues to evolve and is expected to provide more significant opportunities through the second half of this decade. Sustained levels of maintenance activity in the resources sector are forecast as production remains high and recent mining developments and expansions move into the operating phase. Accelerating decarbonization efforts in Australia's power sector are driving an expanding pipeline of renewable energy opportunities, including a large number of new wind farms and battery energy storage projects.
Planning approvals and network constraints have impacted investment decisions over the past year. However, Zenviron remains well-placed to capitalize on the significant growth expected in this sector over coming years. As the shortage of skilled labor in Australia remains a challenge, we continue to focus on employee attraction, training, and development initiatives to support retention. Following a solid first half and the momentum generated by construction awards in the period, full year revenue for FY 2024 is expected to see an increase of around 10% on the previous year. With labor and supply chain capacity constrained, we will continue to leverage our strong position and take a strategic and targeted approach to new work, engaging and collaborating early with customers, focusing on earnings quality, and maintaining an appropriate approach to the allocation of risk.
Supported by a strong balance sheet, we will continue to assess potential acquisition opportunities to facilitate service expansion, market diversification, and long-term sustainable growth. In conclusion, I take this opportunity to thank the talented team at Monadelphous for their loyalty and dedication to the company's continued growth and success. I would also like to extend my appreciation to our shareholders, customers, and other stakeholders for their ongoing support. Thank you. I'll now hand over to the operator for questions. Just be patient. We're just waiting for the operator to come online. We're just having a few-
Thank you, Aisha. Our first question comes from the line of James Wilson from Jarden, Australia.
James, are you there?
Aisha, our next question comes from the line of Nicholas Rawlinson from Jefferies. Nicholas Rawlinson, your line is open.
Are you there, Nick?
Ladies and gentlemen, if you have a question at this time, please press star one one on your phone. Once again, if you have a question at this time, please press star one one. Okay, I show our first question comes from the line of c ourse line is open, Mr. Wilson.
Hi, guys.
Hi, James.
... Can you hear me now, Phil?
Yes, we can.
Hi. Okay. All right, we're on. Okay, guys, perhaps as a first question, could you sort of give us a little bit more color on how you're expecting the mix between construction and maintenance work to evolve heading into the second half of the year?
We've made the commentary that, you know, we secured a lot of construction work in the first half, and we've started. Well, we've well and truly started site mobilization. So I'd expect that we will see a ramp-up in construction activity in the second half. Having said that, we did the back end of the six-month period, we did mobilize most of the contracts that were awarded, but we certainly will see a slight ramp-up in the second half in the construction side of the business.
I think it's also fair to point out there was a couple of big turnarounds in the energy sector in the maintenance side of the business in the first half. You know, we're not expecting to see that sort of level of turnaround activity in the second half, James.
Right. Thanks for that, Phil and Zoran. Just on that contract ramp-up, obviously, that sort of flattered the working capital balance that you guys reported for the first half. Are you able to talk about maybe, or talk us through the cadence of the unwind that you're expecting to see into the second half there?
Well, the advances. So if we specifically talk about the construction contracts, because the maintenance working capital is pretty consistent, you know, we got a fair amount of advances on those construction contracts. And I would expect that they would sort of roll off proportionately over the duration of those contracts. So, yeah, we probably see around half of those advances unwind between now and June.
Great, that's very helpful. And then just one final one from me, guys. Can you give us an update maybe on how you're seeing labor availability for, let's say, the incremental E&C contract, right now relative to your August result last year? I think we're seeing what others are seeing consistently. There's been a slight level of moderation. I wouldn't suggest it's improved materially, but it certainly hasn't got worse. But also understanding that the level of large-scale construction projects that are actually running at the moment is relatively low. So as we see this ramp up, I'd expect the tightening to continue. So I think it's the way I'd describe it, it's settled, arguably moderated slightly, but we haven't seen a material improvement.
Okay, great. Thanks, guys.
Thank you. Our next question comes from the line of Nicholas Rawlinson from Jefferies. Please go ahead.
Hi, Zoran and Phil. Thanks for taking my questions. Firstly, could you just give us an update on the state of play in your big lithium contracts?
Okay, the state of play, so I mean, all of our work is still contracted. I would expect, certainly in terms of, Liontown and CG- CGP3 Talison, we're not seeing any change at this stage. I think Albemarle's changes are reasonably well documented. What we've seen there is, we're expecting there's a focus on Train 3, so we'll expect to see, a moderation in terms of the revenue profile on that contract, but we still expect to, complete all contracted works, so the duration might push out a little.
Great, thanks. And the margin looked a little light, given E&C work stepped up on the PCP. Was it just the ramp-up profile that was driving that? And should we expect to see some half-on-half margin expansion in the second half?
I wouldn't necessarily say that. The broader environment, it's still challenging from a margin perspective. You know, there's a bit of volatility in some specific commodities, and there's still an issue, you know, the challenges in terms of the labor market, getting access to labor and productivity outcomes, and supply chains are... Whilst supply chain constraints have moderated, there are still supply chain constraints that everyone's navigating through, so-
We're still at the early stages of these jobs, Nick, eh?
Okay. Okay, well, that's helpful anyway. Just the last one from me. Could you sort of give us an indication on whether any of the iron ore projects or gas construction projects in the pipeline have progressed any further? Like, are you starting to see any contractor involved on any of these?
It's probably not dissimilar to the commentary we made in December. If you look at the in August. If you look at the large greenfield projects, they're still, I mean, they're still further out. So when you talk about Brockman Syncline, Rhodes Ridge, I mean, they're pushing out. But what we are seeing, there are definitely there's a higher level of engagement around putting the category of, you know, material brownfield projects across all three of the major iron ore players. So it's still a sustaining capital portfolio profile, I think, for the next 12-18 months before you see some of these larger scale or large-scale greenfields projects come to fruition.
Yeah. Okay, that's it for me, guys. Thank you.
Thank you. And I show our next question comes from the line of Nathan Reilly from UBS. Please go ahead.
Hi, gents. I just was curious, just a bit of an update on just tendering conditions in general. Maybe just walk us through, I guess, your key end market exposures across energy, iron ore, and I guess through materials now. Just give us a sense of how tendering conditions have evolved over, say, the last 6-12 months.
We're seeing high levels of tendering activity across the business, consistent with six months ago. Our focus—well, you know, we've got a strong order book, so our focus is now looking a little further out, and, you know, we need to build on the FY 2025 order book. But across cross-market, there are opportunities in energy, there are opportunities—you know, the pipeline's pretty strong, as I spoke about, in terms of the iron ore market, sustaining capital opportunities across all customers, as well as other commodity markets. I think the pipeline, if I look at the pipeline and compare it to six months ago, it's not dissimilar. It's pretty—it's very strong.
Thank you. And what's the level of exposure to nickel you've got in your maintenance order book?
Yeah, so our nickel exposure is very, very low. It's centered or concentrated around, it would really be around our Kalgoorlie operations. So, I mean, not only is it not material, it's very low.
Okay.
If I put a number, if I put a number to it, I'd say less than AUD 20 million on an annualized basis. Yeah, that's very low.
Gotcha. Okay, well, thanks for taking my questions. Much appreciated.
Thank you. I show our next question comes from the line of Jon Patel from Macquarie. Please go ahead.
Oh, good day, Zoran and Phil. Hope you're both well. Thanks for the commentary. Zoran, just to pick up on that pipeline comment versus six months ago, not dissimilar. I know you, you, you'd sort of been awarded one or two of the lithium jobs, but still some to go. So essentially, is, is what happened, you know, you've been awarded that lithium work now, but has, has that been refilled or backfilled, if you like, by other, other end markets to keep a flat pipeline?
Yeah, I think that's fair to say, and that's just the timing issue around where that lithium work fell last year. There were a lot of opportunities in that window. Having said that, there still are opportunities in the lithium market, but they're not as significant as the period we saw 12 months ago. And you're right, I mean, the broader pipeline in terms of other markets backfills that.
Zoran, the timing of some of these sustained business opportunities across iron ore, is it sort of over the next 6-12 months, you would expect? We see that BHP's approved the Western Ridge Crusher Project there. So that's a $900 million US investment. I mean, is that an example of that, an opportunity for you there?
Yeah, that's an example on the larger side. There are other opportunities with other customers and materially larger number of a smaller value. But that is an example.
And obviously appreciate you've got to get through 2024 first, but. And I suppose it depends how the pipeline sort of moves. But, do you see, you know, still see there's good potential to grow engineering construction revenue in fiscal 2025?
I mean, I think the pipeline's there. We need to secure the right opportunities. I think growth potential is there. Yeah, and probably highlighting, you know, the Melchor acquisition helps within the EC business in terms of we talked about, you know, extending our multidisciplinary capability. So having that concreting capability, detailed earthworks helps expand our reach and opens up other opportunities.
Got it. Just a couple of final questions, if I can. Just, Phil, the tax rate was a bit higher in the first half. It looked to be around maybe the equity accounted profit, reducing just in terms of full year tax rate expectations and just around that cash flow comment before. So it sounds like you're still expecting, I mean, it was a really strong cash flow. It sounds like you're still expecting some of that will moderate, but you're still expecting, you know, positive operating cash flow in the second half.
Yeah, I mean, so on the first one, Jon, I mean, the sort of the underlying tax rate for the business is 30%. We did a bit of work in Mongolia in this six months, and there's a dividend withholding tax you have to pay over there. So once you strip that out, it's about the 30% underlying rate. In terms of cash, I mean, we always try and maximize and optimize our cash flows in the business. Regardless, it does. It's very reliant on how you collect or how your customers actually pay you at that year-end or half-year end. But I'm thinking about it along the lines of a sort of 100% cash flow conversion rate.
And then, as I mentioned, a couple of questions back, you know, sort of some of those advances that we've received, by the time we get to the end of the year, probably be half of them less, is what I'm expecting. So if I think simply about a sort of 100% cash flow conversion rate with a little bit extra from the advances that remain.
Got it. Thank you.
Thank you. And I show our next question comes from the line of Rohan Harrison from Bank of America. Please go ahead.
Good day, guys. Just on CapEx, I mean, there was a pretty significant step up in the first half. Is that something we should look out to be kind of a run rate going forward in the second half of 2024 and maybe 2025 as well?
As a very rough rule of thumb, Rohan, we sort of run at about 2% on average of our, of our revenue, on an annual basis. Certainly, you know, for as, as we've mentioned for a few periods in a row now, we've, we've seen, you know, this, this work in construction coming. We've now secured that work, but, you know, we've had to... We've, we've taken the opportunity to, to invest in, our especially our heavy lift crane fleet, which is a real key competitive advantage. For our business, I would expect, just this year's CapEx to probably be, maybe somewhere in there, up at 3%-4% range, is what we're thinking at the moment.
Gotcha.
I think the comment around, you know, the broader pipeline and the outlook in the business has been growing over the last 18 months also supports the confidence in investment in CapEx.
Yeah. Okay. And then, just on... There was a pretty significant step up in the proportion of subbies used in your total headcount. Is that gonna weigh on margins heading to the second half and FY 25 as well, maybe?
No, I wouldn't. I wouldn't expect there's a direct margin cost correlation. Yeah.
Okay, that's-
Sorry, I'm assuming you're referring to the thousand differential between direct employed versus, the total numbers.
Yeah.
So for example, there are some, you know. That's been impacted probably most materially by our work in Mongolia. So a reasonable proportion of that workforce is not directly employed, so under our control and supervision, but not directly employed by us.
Okay, thank you. Very clear.
Thank you. I show our next question comes from the line of Julian Mulcahy from E&P. Please go ahead.
Just a couple from me. Firstly, with the joint venture, the revenue result was down quite sharply as also the wind farm's completed. Where, when do you think that's gonna ramp up again?
I think, you know, just for everybody's benefit, that that's primarily Zenviron. Zenviron did have a bit of a lull during the six months. We did see some delays in terms of the approvals on the projects that they hoped we're gonna be working on. But I think the outlook for, I mean, it's no surprise, the outlook for renewable energy projects within Australia especially, is very strong and they've got a good pipeline of opportunities. It's gonna be dependent on, you know, some of the easing of these issues that developers are having in terms of approvals. But I've got no doubts that the future for renewable energy and specifically for Zenviron is very good.
I think Zenviron-
No, I was just gonna make a comment. Zenviron came off a very high base last year, so the Rye Park Wind Project, most of that work was materially completed within the 12-month window.
Your question, Julian, is back on timing again, and it's just dependent on the timing and the award of new work. But as I said, there's a lot of opportunities that are coming through.
Probably not similar result second half?
It was... Yeah, something like that. Next, we think it is a 25.
Yeah, 25 story.
Yeah. And with the labor market, you think it's still gonna tighten up again, what do you think that means to margins, particularly in the construction business, which typically, you know, does very well on the upcycle? Do you think you're gonna see expansion there?
... That's hard to comment on because the—I mean, that's not the only factor that impacts margin. I mean, absolutely, we'd like to see the margin tick up. Yeah. We've got to price work and execute well, and work well to see an improvement in margin. And there are, you know, at a macro level, there are a broader set of constraints that make it pretty challenging.
Cool. Just anything to sort of say on the sort of competitive landscape, in Tier One's emptied out over the last few years? How are the sort of tiers below in risk of pushing up into your markets?
I mean, that risk is always there, but, one of the conversations we've been having internally, we've, we've seen a lot of, consolidation and issues and changes in the competitive landscape over the last five years. But we were actually making the comment a couple of weeks ago that the last 12 months, it feels like it's settled down, so we haven't, we haven't seen too much, too much change in terms of that space over the last six-month period.
Cool. Thanks, guys.
Thank you. I show our next question comes from the line of Richard Aplin from CLSA. Please go ahead.
Hi, gentlemen. Good afternoon. Couple questions from me. Can you-- are you able to confirm what revenue contribution Buildtek gave into the first half 2023 result? Just trying to make sure I account for them, for that not contributing to the first half 2024.
Yeah, Buildtek had no revenue contribution. It ceased operations in the second half of the previous financial year.
Last year.
For last year, the full amount of revenue for the nine months was about AUD 80 million bucks, I think.
Sorry, I missed that. Can you say that again?
AUD 80 million for the nine or ten months that it generated revenue during FY 2023.
Okay, thank you. Can I clarify Melchor's revenue contributed into the construction segment in this first half 2024?
Yeah, Melchor, we owned from the first of November about AUD 25 million.
Yep, and that, and that all went into construction rather than maintenance?
All went into construction.
I'm not as familiar with you guys as some of the other analysts, so it'll feel like covering the ground again a bit. But, in the construction business, you've reported that 44% of your revenue came from energy transition materials. Yeah, that seems like a heavy exposure to be carrying in going forward on the basis that some of those commodities are really facing some challenges. I guess, you know, what are, what are... Give, and, you know, apart from, apart from the construction contracts you already have, that are on foot, what is the, what's the sort of trend-- what's the outlook, past the next six months in terms of activity levels in lithium and some of those related commodities?
Well, you know, we won over AUD 500 million worth of lithium contracts during the period, and many are probably due for completion somewhere over the next 12-18 months. I mean, I think really, Richard, to answer your question, we are very fortunate that our construction business, we are able to point it to where to the commodities and the sectors of the resources sector or the segments of the resources sector, where the activity is. And as we have said, you know, outside of lithium, which is certainly and nickel, which we, I can't remember the last time we did a job in nickel. But outside of lithium, you know, the pipeline of opportunities is very strong.
So certainly iron ore has always been, and just purely by its size, is a very, very, very strong sector or segment of the market for us. That is where we see probably the next range of projects coming from. I think Zoran spoke about some of the opportunities that are available to us, in the energy sector as well. Renewables is strong. So really, it's all of the sectors that we have got experience and what we believe to be a good, strong competitive advantage in, offer a very good pipeline of opportunity. And once these lithium projects are completed, then, you know, then we will be working on opportunities in those other segments.
If you have a look over many, well, over the entire time that I've been at Monadelphous, you know, the proportion of a particular commodity that... Sorry, the proportion of a particular commodity makes up of the revenue pie in construction can change quite a lot from period to period.
I mean, I think, I think our broader exposure in terms of the energy transition metals is circa 20% of total revenue, so I wouldn't say there's a concentration risk there. And understanding that we've historically, we've had periods where you'd argue we had a concentration risk with the level of iron ore activity we had.
Okay, thank you for that, Colin. Just in reference to the FY 2024 guidance, the way that I've calculated it, it seems that the expectation is for revenue to be flat, half on half, first half, second half, and sounds like construction revenue will be up half on half, and that implies maintenance will just drop back just to, you know, modestly. Is that the way, is that consistent with sort of what you guys are trying to project?
Yeah, that's. You've got it. That's the way we think.
Okay. That's, that's it for me. Thank you very much, guys.
Thank you. And I show our next question comes from the line of William Park from Citi. Please go ahead, William Park.
Hi, Zoran and Phil, thanks very much for taking my questions. I think the majority of my questions are already being answered, but just a couple, if I may. Firstly, just on the EMC side, has there been any more sort of, I guess, conversations that you have with your clients around the pricing arrangement? Has there been any changes or trends that we should be aware of, like, particularly with respect to fixed price work?
I'm sorry, Will, so was the question around pricing, did you say?
Yeah. So I mean, just to be clear, just around whether if you've seen any changes around the proportion of your work in hand in the EMC part of the business that is fixed price, under a fixed price around?
We haven't seen a material change or a material change in the conversation since the full year. Back then, we said that, you know, we thought that in the EC business, we probably had, I think we said something like 60% fixed price and 40% other compensation arrangements with customers. But that hasn't changed. Not only has that not changed, we probably haven't seen too many changes in dialogue or conversations with customers either, in terms of existing work or certainly, the pipeline.
No, thank you. And just one last one. Safety performance over the last six months, could you just comment on that? Thank you.
Safety performance? Yep. Okay. So, I mean, we have a suite of safety performance KPIs that we measure against some leading indicators, some lagging indicators. Our two key lagging indicators are Serious Incident Frequency Rate. And we made, you know, we made a comment that that's sitting at below 0.7, which is close to or around historically low levels. They're certainly the incidents that can result in serious injury or fatality, so we're pretty pleased with that. In terms of our other key lagging indicator, our Total Recordable Injury Frequency Rate, that has ticked up from June. We said that it's sitting at 3.82.
So, we've got some work to do in that area, and we've had and continue to see, I'll say, worse possible outcomes attached to simple line of fire injuries and a lot of hand and finger-related injuries in terms of... Yeah, well, hand and finger injuries.
Thanks very much.
Thank you. And I show our last question comes from the line of Nicholas Rawlinson from Jefferies. Please go ahead.
Hi, guys. Just a quick follow-up. Phil, you mentioned no material oil and gas turnarounds in the second half. I understand that you guys have pretty good foresight into these. So, could you just give us an indication of what the turnaround schedule is like in FY 2025 for the oil and gas projects?
Well, yeah, I've been, Nick, I'm just drawing on the conversations I've had with the energy team.
Yeah.
And I think there, I don't think there are, there certainly aren't an abnormal number of turnarounds next period, but I think they're evenly weighted between first half and second half in FY 2025. But this-
Okay.
This first half of FY 2024, we had an abnormal number of turnarounds, as well as the size of the turnarounds were significant, and more specifically, Shell Prelude FLNG, that was a very large turnaround. That was the first major.
Okay. That's helpful. That's it for me. Thanks, guys.
Thank you. That concludes the Q&A session. At this time, I'd like to turn the call back over to Kristy Glasgow for closing remarks. Please go ahead.
Thank you. That now concludes our briefing. Thank you all for your participation today.