Morning and welcome to Rubicon Water's Investor Webinar to discuss the company's FY24 result. On today's webinar, we have CEO Bruce Rodgerson and CFO Andrew Bendall, who will go through the presentation released today on the ASX. To ask a question, please submit them via the Q&A button at the bottom of the screen. We'll do our best to get through as many of those as possible. I'll now hand it over to Bruce.
Okay, thank you, Ben, and thank you everyone for taking the time for this presentation today. So for those that aren't fully aware of Rubicon, we're a business that's focused on delivering solutions to governments, water managers, utilities, and farmers about improving agricultural productivity and water efficiency. We've been in business now for 28 years. Over that time, we've delivered over $1 billion worth of infrastructure globally. And now the stage of our business is we're growing from our established base in Australia to international, where 70% of our revenues are coming from now. And they're the big markets that we're growing into. So just overview of the presentation and the year that was.
So while revenue was up on the prior period, it was a disappointing result, albeit with some impacts from operational decisions made in both China and Chile, which had an impact on both revenue and EBITDA. Importantly, though, that result does set us up for the exciting growth ahead, and underpinning that is the result we had in the US market, not only the result in FY24, but the fact that we signed AUD 33 million worth of orders in FY24, which gives us a good base to deliver into FY25. That's a 200% increase on prior years, and demonstrates what we can achieve in a market that's 14 times bigger than the Australian market for us. Outside the US, we've also made significant investments in localizing our global operations, including ramping up the in-market presence in the growth markets that are so important for us going forward.
Demonstrating the scale of those opportunities and the spread of the global reach of where our technology is meaningful. We have secured last financial year our largest ever contract in Latin America, which is stage two of a significant irrigation development in Costa Rica, $2.5 million, and we're in the process of delivering that contract now. Also, we announced in July our largest ever FarmConnect signing in the USA globally, which was in California with one of the U.S.'s largest alfalfa producers. This is a $4.5 million contract, stage one of five years of equal scale to that $4.5 million, and demonstrates what that technology we've been building over the last five or six years can do on a commercial scale with these large commercial farms. So that's a really exciting new development for us, a new market evolving for us now on scale.
Importantly, that's not really a big part of our solutions pipeline that we talk about. This is a new market that's evolving for us on the back of these large commercial farms in the U.S. and from there globally as well. Final point on the overview slide is, I'm sure you're all aware, we were successful in raising AUD 16 million through a fully underwritten two-tranche placement. And that obviously sets us up well to be able to deliver on the really exciting pipeline of work we've got coming ahead of us. With that, I might throw it across to you, Andrew, to go through.
Thanks, Bruce. Our reported revenues for FY24 landed at AUD 58.4 million. And as Bruce alluded to, we were impacted by our decision around the China contract reversals, which amounted to AUD 4.1 million, meaning that our underlying new revenues that were won and recognized during the period were around about that AUD 62.5 million mark, which was AUD 7.3 million, or 13% higher than last year. These higher revenues helped push our gross margin percentage back above the 40% level, as not all of our cost of goods sold are truly variable. Our overall GM achieved was also positively affected by our project mix, and in particular by the strong performance in the U.S. and Indian markets.
The reported underlying EBITDA loss was undoubtedly disappointing, but without the AUD 3.4 million negative impact from one-offs including China and a doubtful debt provision in Chile, the result, a AUD 2 million loss, was significantly better than last year's AUD 8.8 million loss, and it's this 77% improvement that signaled a material momentum shift for us to carry into the new year. A stronger Aussie dollar across all our trading currencies, and in particular the Chilean peso, along with the larger finance cost on the back of increased average debt levels and higher interest rates impacted our bottom line. From a regional perspective, our ANZ market was relatively stable year on year, which reflects the mature state of those markets, which provides significant recurring and repeatable business of around that AUD 18 million to AUD 20 million mark. The Asian region was significantly down, but very much a case of two different stories.
Our Indian operations had bounced back and were materially higher year on year on the back of some new contracts won, while the China market was extremely quiet for us, as government funding there for all construction and infrastructure projects was essentially turned off for most of the year. Our rest of the world region was very pleasing, led by the U.S., which really started to fire up, helping both this year's revenue and carrying forward contracts one into the next year. Europe was also performing well, albeit on a smaller scale. Our non-hardware was marginally down on last year's—sorry, it was on the last year, a slower year for projects on the back of slower projects in Chile and therefore the requirement for support services. Onto the cash flow.
Operating cash flow struggled, particularly in the first half of the year, where we weren't able to make any significant inroads into some of our Asian region debtors. This started to turn around in the second half, where we did achieve positive cash flows in the totality of the half. And we've already seen further payments in July and August giving us confidence of clearing these older debts in the first half of 2025. Inventory levels were managed down throughout the year, and the business maintained a relatively modest but important, nevertheless, spending investment predominantly on R&D works. From a balance sheet perspective, the key movements were in the current assets, where we saw cash, contract assets, and inventories all lower. Offsetting that was our non-current assets, which were higher, led by intangibles and the R&D spend that we made throughout the year.
Deferred tax assets increased, and our non-current contract asset base increased as well. We saw a reclassification of part of our banking facilities from current to non-current as its term loan was arranged. It expires in August 2026. And overall, our net debt was $31.6 million, was up 10.7% for the year, and our gearing, I think, was a 57% pre-capital raise. Speaking of capital raise, this next slide just captures a view effectively of a pro forma balance sheet taking the June balance, so the $31.6 million that I alluded to on the previous slide, overlays the $16 million that we have been successful in raising in the capital raise, which sees our pro forma debt level after the capital raise fall to $15.6 million. And also importantly, that our pro forma undrawn facilities increases to $22.7 million.
All right, so thanks, Andrew, and the opportunity for us, as we've been regularly saying, is huge. Our technology and the solutions we have delivered through what has been difficult through a few years has really demonstrated on a global scale the same benefits that we have in Australia. That market we're working in is roughly 50% of the infrastructure that delivers just under 50% of the world's water every year. So 70% of the world's water is used in agriculture, 60% of that in surface water, which is the infrastructure, which our technology has proven solutions for improving the efficiency and the productivity of that water, and pre-modernization, that's at 40%-50%, so the efficiency, so that's just a huge opportunity, so that's the space we're playing in.
And increasingly, as can be seen by what's happened in the U.S., the pickup and the India business after a delay. And the cases we have in Europe as well, we're demonstrating what our solutions can do in closing that water gap for what's required for the future. So as part of that, we've clearly been transitioning the business to this international over the last five or six years. So we've embedded our global operations. We've got assembly in the USA and Chile and manufacturing plants in India and China. We've increased the people we have on the ground in these key markets from 67 five years ago to 140 today. That mix of markets, you can see clearly back in 2018, we were predominantly an Australian business. Now we are very much an international business.
And when you look at across the bottom here, the scale of those markets, so that most of the billion dollars of infrastructure that we've delivered over our lifetime has been Australia. But that's on a market that's roughly 2% of the world market. Asia and the rest of the world segments are massive in comparison. We now have the reference sites across many of these countries, and we are really positioned for growth across these markets where we've been targeting and securing contracts over recent years. As part of that, it's important to understand the journey of our relationship with customers. We have very long-term permanent relationships with our customers, and the journey there is from the capital rollout of our system, sometimes over years and decades, through to the ongoing support and maintenance.
So the recurring revenue from software and O&M is a growing contributor to the business, but it lags behind the capital growth. So clearly, as we invest, as customers invest in our solutions, we deliver those solutions, and then it rolls to ongoing recurring maintenance. Our Australian customers, most of the big Australian customers have been with us for our entire 29-year journey. A lot of our long-term US customers have been with us now for coming up 20 years as well.
Yeah, I'll talk through this slide, Bruce. I think this is an important slide because to me, what it shows is while the last couple of years, the revenue levels have been slightly lower and therefore resulted in EBITDA losses, that hasn't always been the case. And in fact, we've seen many better years in the last 10 years. And when those revenues get up higher, we see the gross margins kind of hover anywhere between 40%-50%. And while it's not explicitly spelled out on the slide, you combine that with the operating expenses, which is the green line, and there's been quite significant EBITDA profits made over the period. And in fact, I think just during the period of 2017 through to 2021, the business generated in excess of AUD 50 million worth of EBITDA.
The operating expense line has risen a little, particularly in the last couple of years as the business has positioned itself for its global platform rollout, but this now gives us the ability to leverage and can start that operating expense level can stay quite stable as our revenue line grows.
The growth opportunity for us is significant. This slide demonstrates what the life cycle of our engagement in a market is. The green bars here are our Australian business since 1995. We had the early stage of our engagement here was building the technologies, building the systems, doing the pilots, demonstrating what our technology could do in a market. Then in the early 2000s, with the Millennium Drought, the price of water took up, kicked up, and that's what really built the business case around a really large-scale investment for us. Roughly AUD 730 million of infrastructure delivered over the next 15 years as we modernized most of the large irrigation authorities in Australia, and that's now rolled off to a recurrent sort of support maintenance level.
And importantly, though, that the FarmConnect business for us will build off that base, as will over time the necessary renewals of some of the aged fleet that we delivered coming up 20, 25 years ago. The red line here is the U.S. is our U.S. business, which follows a similar profile. And importantly now, based on the severe drought in the west of the U.S., the price of water over the last few years has skyrocketed. That's led to a compelling business case around larger investments in the technology and solutions we have delivered over time there. And that's seen last year, FY24 deliver a AUD 25 million revenue figure for the U.S., but on the back of AUD 33 million worth of signings. So clearly, this is a yeah, and we see that growing as we as another base for the substantial revenues and profits for the business.
We do see this same cycle following in other markets where we are the same dynamics. We're in the markets. We're demonstrating our technology. We're starting to roll out at various stages of the infrastructure. Globally, water prices are continuing to accelerate. So our pipeline is progressing through to the near term. Strong pipeline growth, but diversification of these projects, importantly, across different markets, not just Asia, but the rest of the world and within those, the different countries. There are, for our sales and marketing, we've got the underlying work that happens across a lot of these markets, but there are 12 key transformational opportunities that we are really focused on securing for FY25 and beyond. Just drilling into that near-term pipeline again, AUD 225 million in total, which is made up of 310 projects, which vary in size from AUD 100,000 through to AUD 30 million.
They're spread across 20 countries. Average deal amount at $640, but as I said, there's a real spread of those. Again, those 12 key opportunities I spoke about really represent 65%-70% of that near-term projects. So really substantial contracts that we're confident on delivering in the coming year and beyond. So just having a bit of a look at the geography of where those markets are. It's important to say the USA and Australia follow similar characteristics in that our relationships with customers in these markets revolve around contractual relationships that are typically buying contracts that are based off established price benchmarks. So in the USA and Australia, we don't tender for a fair portion of our revenues. We've got existing contracting arrangements, and our customers purchase off us as they're required to build out their infrastructure.
That means in the US here in our near-term project, we've got 117 different projects, which is really healthy in that it gives us a really broad spread of customers and revenues and allows us a lot of robustness in being able to predict where we get to, as is the case in Australia as well. But the big water reform projects that we're talking about in those 12 are typically predominantly in these larger reform markets where the sovereign decision-making in these countries is around taking the aged infrastructure and poor operational practice to world's best practice and doing that on a scale which isn't present in the USA and Australia anymore. So typically, clearly, India, our NLBC project, and yes, we've had, it's created some pains for us in terms of the collection of the final funds on that project.
But that project is a fantastic benchmark, which is driving demand from end users to secure the same level of service that is now being delivered to the farmers in that region. We're seeing that with members of Parliament in Karnataka from the neighboring regions lobbying and pitching for getting our technology rolled out and spread into further areas. And likewise, it's a benchmark for us to go to other parts of India. It's also a really great reference site for us in places like Central Asia. It's one thing to deliver technology in Australia and the US, which reforms an irrigation district and reforms the operations. To be able to point to having done that in rural India really gives confidence for the likes of Central Asia, North Africa, to really have confidence to invest with us on large projects.
Those 12 projects are predominantly in India, in EMEA, both in Spain, Italy, but also in North Africa, where we have really exciting prospects for us in Egypt and Morocco, as well as in Central Asia, where that Aral Sea Basin, particularly in Kazakhstan, where we've got our reference sites. The projects we're working through, that near-term pipeline there, are really substantial for us and will underpin the business in coming years. Summing up before we get to questions, we are really uniquely positioned now to grow, to capitalize on the growing demand for better management of water. As I said in those slides before, just under 50% of the world's water is managed through open surface water infrastructure, canals, rivers, which our technology has been designed for. That demand to manage that better has never been stronger.
Our globalization strategy has laid a really strong foundation for our growth in FY24, FY25 and beyond, and really sets us up there for growth in the markets that I've outlined, which the serviceable addressable markets in those countries is more than 20 times the scale of the opportunity we face in Australia. FarmConnect, we've invested very heavily in FarmConnect product development, and the really substantial contract there we've won with one of the biggest farmers in the U.S. that positions us really well. As I said, that business case that we're delivering with that farmer and we'll be doing some joint press with them soon around what the business case is that our technology is delivering for that particular operation. That's already spurred a whole new range of opportunities coming at us from other big commercial farmers, particularly in California and Arizona.
And from there, the big commercial operations on surface water that we're looking at in North Africa and Central Asia. The really long-term value in us lies in the maintenance support and software offerings that is ongoing. So we have this big solution development capital rollout phase, which then turns into long-term relationships with our key customers where we continue to adapt our products and solutions to deliver value for our customers in the long term. Clearly, the capital raise that we undertook really positions us well. It strengthens our balance sheet, provides us access to the working capital required for us to deliver on these opportunities in front of us in these developing markets. And so we're really looking forward to an exciting year ahead.
I know the last couple of years have not been where we wanted to be in terms of the sales and the end financial results. But the work we've done has really set us up for an exciting period ahead. And the capital raising is part of that and setting up the balance sheet to be able to support that growth. So I might throw back to you, Ben, for questions if we've.
Thank you, Bruce and Andrew. A few questions come through. So first one, why is the list of near-term projects looking stronger than it has in the last few years?
Yeah, I think that journey we've been through post-listing, which was towards the end of the COVID epidemic, that really had an impact for us in terms of having our key commercial people on the ground. As we've spoken about many times, our project acquisition is a lengthy time where we have that engagement with our stakeholders to build. We're a market creator, if you like. We're talking to customers and stakeholders about building up the business cases, and then leading them through the procurement processes. That all takes time, and the inability for us to be present in these markets over those COVID years had an effect that we didn't fully appreciate at the time in really putting a hole in that project acquisition pipeline, but two years in, that's what's really strengthened up this pipeline now.
These 12 opportunities and that near-term pipeline growth has really come about through the investment we've been making over the last couple of years, which is some really exciting opportunities in front of us.
Sorry, just on those 12 key opportunities, are they in various geographies and what scale should we be thinking?
Yeah, so those 12, some of those 12 are in the US where the scale is a few million dollars, but still quite strategic ones with new customers or stage one of larger programs. They're certainly in Asia, predominantly India, where the scale of those projects are $20-30 million dollar opportunities. They are in Central Asia of a similar scale. They're in Europe, particularly Italy, and also in North Africa, again, on a similar scale. In North Africa, yeah, Morocco and Egypt.
Thank you, Bruce. I've had a few questions regarding the US. Could you provide some further color on the operating environment there? What's changed in terms of the market, and how does the pipeline look today compared to 12 months ago?
Yeah. So, what has really one of the key characteristics of the U.S. compared to Australia is its scale. So, 28 million hectares as opposed to Australia's 2 million hectares of irrigation, of surface irrigation. So, the scale, obviously, is substantially bigger. It's also quite a segmented market in terms of the individual irrigation districts are typically privatized or basically owned by the farmers that own the water rights. So, our core customers in Australia are six or seven of the really large irrigation districts: the Goulburn-Murray Water, the Murrumbidgee Irrigation, Murray Irrigation, Sunwater, for instance. Whereas in the U.S., we have over 200 irrigation districts as our customers. We have, over the last 15 years, been delivering technology across those 200 customers and building up that base, and basically selling products and solutions on a year-by-year basis to solve local operational problems, typically with each of those customers.
The dynamic that has changed is that water stress that's now there, which is leading to the value of water that is now making the business case more compelling for those districts to do much larger transactions to save more water because there is a market for that water, and so that in itself drives it. I suppose the biggest buyer of that water, like it was in Australia, is AG to Urban transfers, particularly in California. San Diego and the Metropolitan Water District are actively investing large sums of money to get efficiencies in the irrigation in the Central Valley and the Colorado to transfer that water through to the water-starved areas of California. Same in Nevada and Arizona.
But also the central government in the U.S., so the Bureau of Reclamation and also the Biden Infrastructure Funds are now actively investing and putting money forward to basically free up the, well, to improve the reliability of water, particularly in the Colorado. So funds about increasing agricultural productivity to put reserves back into Lake Mead in the Colorado. So I suppose the dynamic in the U.S. in summing up is we have that spread of customers across what is a very large market. We've got those relationships. We've got the ability to deliver. The water stress that's there from this drought has seen water prices increase. And the market for that water is now established through both increased agricultural productivity, ag to urban transfers, and the federal government wanting better water security.
Thank you, Bruce. Question regarding India. So what policies have been put in place to mitigate some of the risks around slower payment collection that we've been experiencing with the Indian customer, particularly given some of the regions which are being mentioned in the pipeline?
Yeah. So, in India, so I suppose talking about the KBJNL project, which was the large project where the tail end of the collections there has been problematic for us. To put into perspective, that's AUD 75 million worth of revenue for Rubicon. And to date, we've collected roughly AUD 65 million. So it's that last portion which has been the state funds. And we are in the process of unwinding that. We've had payments across July and August. And importantly, we've had all our capital bills approved for payment, and we expect to unwind the remainder of that in the coming weeks. But going forward, our learnings are significant in dealing in this marketplace. So primarily, certainly where we had the funding from federal and external resources, that funding is much more predictable.
So clearly, we're targeting projects that are heavily federally or externally funded than the state governments, and we are also working with our partner to de-risk the payment side of these contracts, so our JV partner, moving away from back-to-back payments where we get paid when the end customer paid, to different commercial arrangements where we can underpin the payment cycle via contractual commitments with our partners as well, so on several fronts where we've certainly learned a lot, it's been even on the management of the projects to be able to get the payment approvals through, we are much more educated. We've got a better team on the ground. We're going to have better contractual arrangements with our partners, and we are going to, and we are targeting the projects which have more secure funding lines.
Thank you, Bruce. That concludes the Q&A segment of the webinar. I'll now throw back to you, Bruce, for some closing remarks.
Yes. Thank you, everyone. Thank you for your time. It's been a difficult couple of years in terms of the results, and I suppose that culminated in the capital raise we have done over recent weeks. As I think evidenced by the confidence in the board and the management of the company, which really underpinned that capital raise, the confidence we have in the business and where it's going has never been stronger. This transition to an international business is a tough one, and we overlay that with the, as I said, the environment we've had post-COVID. That has been difficult, but we are on the journey through that. The market in front of us, we still don't have competitors coming and taking market away from us. We're building this market. The opportunities are real, and the future ahead of us is really exciting.
So I thank existing investors for being patient with us. And where we are at the moment, this is a really exciting time from my perspective to invest in the business, as I and all our directors have in this recent process. Thank you.