I would now like to hand the conference over to Mr. Ross Thompson, Chief Executive Officer. Please go ahead.
Thank you very much. Good morning, and welcome to PeopleIN's first half financial year 2026 results presentation. I'm joined by PeopleIN cofounder and incoming Managing Director, Tom Reardon, and PeopleIN CFO, Adam Leake. Our purpose and the core of what we do is to inspire. During the first half of FY 2026, we've strategically transformed our operations by disposing of lower growth businesses into long-term, high-growth sectors of infrastructure construction, especially in Queensland, manufacturing, agriculture, and food services. We delivered AUD 16.1 million in earnings, in line with expectations, and it's worth noting that this includes only 5 months of Techforce earnings. With the divestment of Techforce and our health and community division, our ongoing business delivered AUD 10.5 million, which is down on last year, predominantly as a result of lower PALM worker numbers.
However, our engineering, trades, and labor division delivered over 40% in organic growth, mainly driven by Queensland operations, benefiting from the ramping up of infrastructure construction spend throughout the state. We're pleased to announce that we've entered into an agreement to acquire Infrawork. Infrawork is a New Zealand headquartered business that will provide a leading Asia-Pacific skilled trades, recruitment, and labor mobility platform, enabling us to grow in New Zealand as the infrastructure sector rebounds, leverage this platform to provide talent to the booming Queensland infrastructure sector. We hope to complete the deal. We'll continue with our previously announced share buyback. We've experienced a solid rebound of performance from the second half of last year, with engineering, trades, and labor division being the largest contributor to this growth. As highlighted on... impacted by reduced worker numbers and shutdowns, especially in Southern Australia, as a result of the drought.
But pleasingly, their hours started to increase in Q2, and we expect this to continue into the second half of the year. Similar to FY 2025, we're continuing to experience improved billing rates, positive claims experience, and reduced overheads. As mentioned previously and highlighted further on these, in these charts, momentum is starting. It's slower than we'd hope, but the trend has turned, which is positive. Now I'll hand over to Adam Leake to take you through the financial results in more detail.
Thank you, Ross. I would like to start with the finance. With the sale of Techforce and our health and community brands, there is significant noise in our published financial reports. As such, our analysis focus on the ongoing operations of PeopleIN. Our ongoing business is experiencing positive forward momentum, driven by our traditional engineering, trades, and labor brands. As can be seen, while down in several of our key metrics from prior corresponding periods, the group is experiencing positive growth to last half. Ongoing revenues, while down 8.2% to prior corresponding period, is flat on last half. Billed hours over the half. Engineering, trades, and labor growth has been offset by lower hours in food and agriculture. As previously flagged, we have experienced a reduction in PALM candidates across last year. Pleasingly-
One moment, please. Please. Please stay on the line. You've been reconnected. Please continue.
Hello. Apologies for that. There's some minor technical difficulties. I might restart without going through our slide six, is it? Our financial results for the period. As we've talked in our accounts, our ongoing business is experiencing real positive forward momentum, driven by traditional engineering, trades, and labor brands. As can be seen, while down in several of our metrics, the group is experiencing positive growth to last half, with flat revenues on half. The key part of this has been the increase in billed hours over the half. Engineering trades and labor growth has been offset by lower hours in food and agriculture. As previously flagged, we've experienced a reduction in PALM candidates across last year and into this half. Pleasingly, hours have started to improve in food and agriculture late into the half.
Bill rates continue to improve, up 5% on this time last year. There continues to be a scarcity of skilled labor across our markets. Together, we have seen a shift to more qualified roles, favorably impacting billing rates. We are also benefiting from favorable workers' compensation experience, demonstrating the return on investments we have made in this area. Our operating expenses remain well controlled, down 3.6% on the prior corresponding period. We continue to remain focused on ensuring we have a lean and efficient cost base in this new operating environment going forward. The smaller group post divestments results in a 20.2% net revenue margin for the period. As we have said, we'll be looking to stay lean and focused on getting back to that 25% net revenue margin goal. The lower debt position reduces our interest costs.
There continues to be some noise in our tax costs between, and expect to settle back to normal ranges going forward. In addition, amortization costs have reduced, and will reduce again in the second half before falling quite significantly in FY 2027 and FY 2028. This is before we start to consider the impacts on amortization of any new acquisitions. All of these combined produce a AUD 0.046 per share normalized NPATA result, up 52.3% on the prior period for the half. For the entire group, the normalized EBITDA, including discontinued operations, was AUD 16.1 million. This result includes only five months of the Techforce business and up 15% on the last half. Turning to each of our three operating divisions. First, engineering, trades, and labor.
The division showed significant uptick on the first half of 2025, and up 131% from the last half year. This uplift has been driven by an increase in billed hours over the period, together with an increase in billed rates. Growth has come across a wide range of areas across the East Coast, but it's particularly prevalent. We've seen a noticeable pickup in qualified trade roles, fueled by the early stages of construction and development in the Brisbane Olympics projects, together with an increase in infrastructure spending in the region. We have also had a sharp rebound in those areas that had been previously impacted hardest by discretionary spending. Our hospitality brand, Tribe, is up 90.4%, and childhood education brand Expect A Star, up 133%.
All of this improvement in result has come in a responsible way, with costs down 8.4%, with improvements in both efficiency and productivity. In food and agriculture, EBITDA is down from the prior H1 in 2025 and is showing, although showing momentum up 8.4% from last half. Total PALM candidates reduced to 4,100 as at December 2025, down from its peak midway through 2024. As previously flagged, visa processing delays in replacing departing workers has been the primary cause of this decline. Pleasingly, we have seen PALM candidates have stabilized over recent months. Trading has not been impacted by weather events, as was seen last year, and the lifting of drought conditions in Southern Australia has seen hours worked increase from November this year. The demand for PALM candidates remains strong.
Billing rates increased 20% as clients actively seek PALM workers to fill the demand for critical food processing roles. In addition, we are continuing to see favorable workers' compensation experience improving our results. While visa processing issues are improving, it will take a few more months for growth in total PALM workers to return despite the demand for these roles. As a result, it is not expected to re... until 2027. In professional services, normalized EBITDA reduced 7.2% from the previous period. During the half, there has been a noticeable change in the market, with confidence returning across both the contracting and permanent recruitment market. Contracting hours were steady across the period, with improvements late in the half across corporate services roles and IT contracting. Both government contracting and also contracting into the SME market continues to improve.
A good sign of this momentum shift is the improved permanent fees were 15% higher on the services roles. Many of these roles are as a result of regulatory changes across the financial sector, aged care, and in health and safety. The professional services division has reinvested in key talent and leadership across the half. This has enhanced the already strong sales culture in our brands and optimism for coming periods. Turning to our operational cash flow. Unfortunately, we fell below our desired 80%-90% normalized cash collection to EBITDA target for the half. A significant part of this is the timing of weekly payrolls during the half. With the 31st of December falling on a Wednesday payday, this resulted in 27 pay periods in the half, as compared to 26 in the previous periods.
This results in a net cash outflow of some period that is collected in subsequent weeks. Irrespective, after considering this, the net cash collections to EBITDA would be in the 65% range, still slightly short of our target. The group did make a strategic investment in the purchase of accommodation in the Southern New South Wales region for use of PALM candidates, increasing CapEx during the half. While the purchase did assist in solving accommodation shortage, do not see this as an ongoing program of investment. The increase in debtor days for the period is due to the timing of the period end and not a structural change. The debtor days of the ongoing business are approximately four days lower than the larger previously combined business. This will assist further in achieving collection targets.
We do remain committed to achieving our 80%-90% cash collection target over the full year. A key focus on the business has been the improvement in our balance sheet strength. Over recent periods, we have actively paid down debt and ensured we have the capacity to grow when the economic cycle improves. The divestment of our Techforce and health and community businesses netted some AUD 49 million in cash proceeds. That has allowed the group to further deleverage the balance sheet to growth areas. As at 31 December, total net debt stood at AUD 14 million, which includes a cash balance of AUD 61.1 million. In addition, we continue to hold significant available debt funding lines available for strategic acquisitions. The board has strategies to ensure the best shareholder returns.
As such, the board continues to pause the dividend to ensure that it holds the capacity to fund both the acquisition announced today and the strong pipeline of potential future acquisitions under consideration in a responsible way. To date, over AUD 1.7 million of shares have been bought back on market. The board does remain committed to the continuation of the previously announced share buyback of 6 million. At this point, I'm able to thank Ross, and I'll turn to our incoming managing director, Tom Reardon.
Thanks, Adam. We're committed to establishing ourselves as the largest and most efficient workforce solution provider across Australia and New Zealand. As announced on December nineteenth, we reaffirmed our ambition to achieve market leadership by expanding our international staffing options and enhancing our service capability for over 4,000 clients in the South East Queensland and greater regions. The infrastructure boom is pivotal. A key strategy has been to secure alternative labor mobility solutions. Instead of solely in Queensland and the broader Australia, we've successfully acquired an Asia-Pacific platform that offers a unique footprint, difficult for competitors or clients to replicate. We're concentrating on major pillars that enhance synergies within the blue-collar volume market, fostering organic growth in both existing businesses and our new platform opportunities. Continuous improvements in operational excellence are supported by advanced technology stacks, enabling more targeted service offerings in Australia and New Zealand.
The accretive acquisition opens doors to delivering Pacific staff into New Zealand markets and facilitating cross-selling of professional services to a substantial client base already established in New Zealand. We're excited to introduce Infrawork, New Zealand's specialist trade sourcing business, catering for the infrastructure and construction sector through Extrastaff and Visa Hub. This initiative includes specialized migration services aimed at fast-tracking worker placements and addressing major labor shortages. This expansion enhances our footprint as the largest employer of Pacific workers in Australia and broadens our mobility capabilities from Asia to New Zealand. As the New Zealand economy strengthens, our platform allows for sourcing long-term Pacific Queensland, providing a distinct...
With Infrawork's proven history of staff mobilization since 2011 from Asia-Pacific and PeopleIN's successful PALM initiative in Australia, we're positioned to leverage the Trans-Tasman Agreement for cross-border operations and utilizing the upskilled staff in each geography. We're pleased to announce the acquisition of Infrawork for New Zealand, NZD 24 million, an initial multiplier of 4.8x. This investment capitalizes on over 15 years of established Asia-Pacific networks, providing access to skilled trade and a seasoned management team with a track record to growth. We anticipate earnings of NZD 5 million, with an earn-out potential that allows for a maximum multiplier of 3.7x, based on performance. As previously mentioned, this acquisition benefits all major channels through cross-selling our professional services, enhanced access to New Zealand markets, aligns closely with our existing Australian client base.
The agricultural and food sectors present opportunities to utilize upskilled PALM workers transitioning from Australia to New Zealand post their expired visa. During New Zealand are essential to supporting the infrastructure boom in Southeast Queensland.... The strategic direction positions us strongly for future growth and operational excellence, reinforcing our commitment to providing exceptional workforce solutions in both Australia and New Zealand. I'd like to hand it back now to Adam.
Thanks, Tom. Before we conclude, I think it's important that we assist the investor community on what the new PeopleIN business looks like, post divestments and acquisitions. To do this, we've provided some key metrics, together with a revision of our segment reporting in line with the new businesses. These are included in the appendices. On the right-hand side of the slide, we have outlined on a last 12-month basis to December 2025, the impact to normalize EBITDA of the divestments and acquisitions. The last 12 months historic trading. Further, the acquisition of Infrawork is subject to customary conditions, and we expect to complete during Q3 FY 2026. We do not present this as guidance for the full year, but as a pro forma for understanding of the whole group. Importantly, the focus strategy expedites the simplification of operations into a well-established and known specialist disciplines.
The acquisition of Infrawork increases the net debt level of the group to approximately 1.5 times ongoing EBITDA. This remains well below covenant levels and a level we have comfortably managed prior to the divestments. This recycles our capital into much more strategic, high-growth markets. A new business initially operates at a net revenue margin of 21%, slightly higher than the ongoing program and the impact of higher margin business in New Zealand. We now have a clear path to our target of 25% net revenue margin. Thank you. At this point, I'll turn it over to the moderator for any questions.
Thank you. If you wish to ask a question, please press star, then one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you are on a speakerphone, please pick up the handset to ask your question. In the interest of time, we one question per person. Your first question comes from Ian Munro at Ord Minnett.
Good morning-
Please go ahead.
Tom and Adam, thanks for the presentation opportunity to ask a question. Just maybe looking at the Infrawork acquisition, looks like it sort of draws on some of the, I guess, expertise in the PALM sector, which is something that PeopleIN's been involved with for some time. Can you maybe just, I guess, elaborate on the degree of customer overlap that's already within Infrawork? You know, how is this, I guess, a better business inside PeopleIN? And how did the acquisition come about, with respect to, you know, vendors sort of staying on within the business, existing sort of run rates of revenue and earnings, and how have these tracked over time? Thank you.
Yeah, thanks, Ian. Tom here, mate, I'll answer those. The current construction base that they've got there are a similar client base to the Australian market. If you look at the PALM scheme, we currently don't supply PALM into the New Zealand market. It's under a different visa type, which is what Infrawork has access to. The beauty of that, from our perspective, is that we've got PALM workers on 3-4-year visas that are finishing up, that are generally highly skilled in the food processing space. Whether they be boners, slicers or those skill sets, which then have to move back to the Pacific, where not, there's a limited amount of opportunities in that space in general.
So, it gives us a good flow to be able to access into that food space into New Zealand, which Infrawork currently are, aren't, which also obviously we've got the skill set to take into the little no skills. Additionally, it gives us access to Philippine skills, either via New Zealand that have obviously a large network there with Infrawork, which obviously easier access with the Trans-Tasman Agreement, the 1976 Trans-Tasman Agreement, with free flow of labor between Australia and New Zealand. But then it also gives us a resource hub in the Philippines of skilled trades into the construction sector under a 482 visa into the Queensland and Australian market.
Hopefully, that sort of explains that side of things, Ian, and then obviously, our Halcyon Knights and Paragon businesses currently work in Australia, with some of those larger clients that are working in New Zealand, but we haven't branched into New Zealand with those two brands. So, it'll be a good opportunity to be able to offer that, offer that into those, into that sector as well.
Just how has the business been performing in recent years? Obviously, we're seeing some sort of PALM, sort of visa processing delays, which look to wash through now across Australia, but I'm interested in sort of how's their positioning in New Zealand and performance been over the last couple of reporting periods?
Yeah, I think the whole of New Zealand's been sort of slow for the previous period. We're probably getting it at the very low of the market end. We've seen that business. I started talking to that business probably seven years ago. We've seen that business, you know, but it's at the bottom of the cycle at the moment.
Very good. Thank you. I'll jump back in the queue.
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. That does conclude our conference for today. Thank you for participating.