I would now like to turn the conference over to Mr. Stephen Young, Managing Director. Please go ahead.
Thank you very much, Sherry. We're now on slide 2. Good morning, ladies and gentlemen, thank you for taking the time to join us. Together with me today are my fellow executive directors, Mark Vartuli, Jason Pryde, and Trent Northover. We're pleased to deliver strong results for the half year, demonstrating that we are continuing to deliver on our twin organic and acquisition growth. Our underlying EBIT for the half year was AUD 44.3 million, up 36% from last half year's AUD 32.6 million. Our underlying EBIT margin was 13.7%, up 50 basis points or 0.5% on last half year's 13.2%. We're continuing to grow organically at 12% in the half year, excluding Flanco, Vertex, WorkPac, all of whom were acquired since half year 25. We're pleased to be settling into acquisition.
WorkPac are currently recruiting 140 people for us. We've commenced on the cost synergies that we anticipate from having WorkPac in our group. Our underlying cash conversion %, excluding WorkPac. That's a result of our high recurring revenue base. We are able to invoice every month. We get paid the month after. Finally, we reconfirm our effort of EBIT, AUD 117 million, up 57% year-on-year. Net profit after tax of AUD 72.5 million, up 37%. Sherry, if we can have the next slide, please. Slide 3. Let me just pick out a couple of highlights from half year 2026. Our stats million, which includes one month of WorkPac. Our EBIT statutory AUD 40 million, a 12% growth. I should say, by the way, our statutory EBIT, 62% growth from the half year last year.
Statutory AUD 40 million EBIT, 12% growth. Net profit after tax, AUD 22 million. Dividend of AUD 0.06 per share, up 20% from the prior interim dividend. Our revenue to help you from comparative purposes, excluding WorkPac, AUD 323 million. Without WorkPac, our revenue growth was still 31%. Our underlying net profit after tax, AUD 26.6 million, 32% growth from AUD 20 million in half year 2025. Our earnings per share growth, 19% growth at AUD 0.106 per share. Mark, over to you to talk about WorkPac. Sherry, slide 4.
Thanks, Steven. Morning, everyone. The integration of WorkPac is well advanced and value realization is underway. WorkPac is now functioning as the growth engine for Tasmea. We have roles being recruited to support demand across our subsidiaries. We've identified approximately AUD 2 million in annual cost synergies, with the benefits starting in H 2 and at a full run rate running into FY 2027. WorkPac remaining me in maintainable EBIT target. Importantly, systems integration and working capital structures are now bedded down. I would like to think we're executing this integration of the strategy with excellence and have more to come in this space. Over to you, Trent, and Sherry, please, forward on to the next slide.
Thanks, Mark. Here to touch on organic growth accelerating into second half. The forecast revenue of over AUD 700 million for FY 2026, of which AUD 663 million or 93% is either delivered, secured, recurring, or intended revenue. This is 26% up on the same time last year. As we look forward to the second half, we have over AUD 340 million of scheduled for delivery, providing strong earnings visibility. As Mark and Steven have briefly touched on, we have over 100 executed long-term agreements. This underpins our contracted revenue streams. What's, what's important, though, is our strategy remains consistent. We have significant exposure to the essential maintenance-led services and supporting predictable demand.
When we look towards growth, we have record customer demand, of which significant interest from our tier one customers in our recent acquisition, particularly relating to labor consumed weekly to discuss the forecast, demand, and pipelines. Over to Jason.
Thanks, Trent. Good morning, everyone. Our electrical segment has delivered a record underlying EBIT of AUD 18.6 million, up 29% from the prior period. We have continued strong demand for our electrical services across all of our subsidiaries. In addition to our EBIT, our revenue ascend on prior year. Electrical comprises 42% of our underlying group EBIT. That outlook remains extremely positive as we continue to deliver and supporting our clients' increasing electrification demands. Sherry, could I please go to the next slide? Like Electrical, our Civil segment has delivered an exceptional result. AUD 13.9, our underlying EBIT, which is up 92% from the prior period. In addition to the EBIT growth, our revenue has also increased, up 57%. That EBIT improvement has been driven in the main by an outperformance of one of our recent acquisitions.
Civil order book is continuing to grow, supported by a record tender pipeline with new and existing customers. We expect our margins to then to be maintained for the remainder of FY 2026. The outlook for our Civil segment remains very strong. I'll now hand back to Trent.
Thanks, Jason. Sherry, over to slide 8, please, Mechanical segment. As you can see, the revenue was relatively flat for this period. We did touch on in our last announcement that we were focusing heavily on GMS, Rollwell, and Tasman Rope Access. I'm happy to say they're all improving, with GMS receiving some significant orders in the last month or so, which will generate in calendar year 2026. Rollwell also had a client deferral of a whole construction project that will push out into the second half. Heavymech, we're really happy to say that have relocated. That is now complete, and they're in their new facility. Tasman Rope Access, they're, they're now executing work consistently and in line with budget. Over to slide 9, please, Sherry, the water and fluid segment.
Similar to Mechanical, the revenue was relatively flat in this segment, but we're, we're excited that the EBIT increased by 11%. This is based on our high-margin businesses, so Labtech and AusPress outperforming. What we're seeing at the moment with our customers, there is lots of discussion in mining and water, specific focus around tailings dams and regional water storage. I'll now, now hand back to Mark.
Thanks, Trent. Sherry, if you could just move over to the next page. Our capital allocation framework remains disciplined and balanced. We've been growing dividends. We have a strong reinvestment capacity within our balance sheet. We've declared a fully flat 20% on last year. Our continuing 50% compounding annual growth rate of interim dividends since... Importantly, our payout ratio remains conservative at around 35% cash payout, given the strong support of the executive directors and founders, and remains at the lower end of our target range of 30%-50%. Both the founders and executive directors are materially participating in the upcoming DRP of this interim dividend, reinforcing our alignment and reinvestment into the growth of Tasmea.
Strong cash flow generation and low gearing of 0.45 times, as Stephen mentioned, gives us good capacity to grow both the dividend and fund programmatic acquisitions. If I could turn over to the next slide, cash flow conversion. Our resilient, high-quality earnings and strong cash discipline model continues to show through. Cash conversion remains a defining strength of Tasmea. If we're not generating cash, our viewers, we're not earning it. We delivered 130% EBIT to cash conversion in H 1 2026, and over 108% for the last 12 months rolling. Importantly, underlying free cash flow was AUD 26.5 million, which equates to 100% of NPAT to free cash flow conversion. Our cash flow supports our strong dividends, assists with our deleveraging, and helps promote our discipline acquisitions.
Our model continues to consistently convert earnings to cash. Sherry, if I could turn over to the next slide 12. Our second half is visible and executable, and we have reconfirmed guidance. In this regard, the earnings skew is consistent with prior years, and we've already delivered AUD 44 million in H1 . We've provided a bridge which shows a clear, logical progression from H1 EBIT to full year guidance, with identifiable and executable drivers underpinning the second half uplift. In this respect, these drivers are the record MSAs that we have executed, the order book conversion flowing through on Mechanical and Civil, delayed client works flowing through into H2 for delivery. That's by us having over 140 trade roles being currently recruited for via WorkPac, and also our cost out initiative that we've implemented.
We have over AUD 340 million as secured, recurring, or tendered. Importantly, the second half is not a step change in risk. It is the conversion of the work we've already secured and initiatives already implemented. Based on this visibility, we confidently reaffirm our FY 2026 guidance of AUD 100 million, which has us at a run rate well above our pro forma EBIT of AUD 128 million, which includes a full year of WorkPac. Over to you, Stephen.
Sherry, slide 13. Tasmea can reach shareholders high quality returns, and we have strengthened our balance sheet. Our is approximately 38%. We've been able to maintain returns on our capital employed to a significant degree because of our operating model and our disciplined programmatic acquisition. Our return on equity, 35%, again, underpinned by our disciplined and clear capital management strategies. We have delivered strong and sustainable shareholder returns. Our high growth, low risk business model is evidenced by the low level of bank guarantees to pro forma revenue. We are 1.7%, second lowest amongst our peer group. We've reduced our net debt from AUD 110 million, as at the 30th of June 2025, to now AUD 68 million. That net debt represents a gearing of 0.45 net debt to EBITDA.
Finally, we remain with a very efficient operating capital ratio of 4%. This is reflective of our capacity to invoice monthly and get paid the following month. You will have noticed from prior announcements, we've got a similar model in place, not adversely impacting working capital and notwithstanding, following the acquisition of WorkPac. Slide 14. Our outlook and momentum is strong, with FY 2026 guidance of AUD 117 million, up 57% and EBIT AUD 70. That confidence comes from the strength of our order book. We've continued to increase the number of MSA to competition, barrier to entry for competitors. Our 12% organic growth in half year 2025, combined with our strong forecast, will deliver our exceptional 57% growth to AUD 117 million.
WorkPac currently is assisting materially in our capacity to grow and are presently recruiting 140 specialist positions to support our subsidiaries. We have a number of acquisitions in the pipeline. I wish to reconfirm, we remain committed to programmatic acquisitions of maintenance-biased businesses servicing the mining and resources sector. The acquisition pipeline is robust, and we have a number of acquisitions under evaluation. I think finally and importantly, the sectors in which we operate have got strong outlooks. You've recently seen BHP and Rio announce their results. They've expressed confidence in their outlooks. Iron ore looks strong. Similarly, gold is on fire. Copper contributed strongly in BHP's result, and we're quietly confident that they'll announce a commitment to expansion in the copper triangle in the near future.
Likewise, electrification continues as a very strong trend across a number of the industries we work in. Continue to deliver. I would make the comment that 57% growth to $117 million, both in net profit after tax. Together, our team are focused on delivering the next half and are confident. Sherry, I'm happy to take questions.
Thank you. If you would like to ask a question, please press star, then one on your telephone keypad. If you would like to remove your question, please press star two. For participants using a speakerphone, please pick up the handset to ask your question. Our first question comes from Megan Kirby-Lewis with Barrenjoey. Please proceed.
Oh, morning. My first question, just on the mechanical segment, I guess just to fresh up, particularly around the GMS business. Just what are you assuming, in terms of the sales to come through, and how certain is that timing?
We received unprecedented, I suppose, the best way of describing our December orders from customers to do engine conversion. We also got, in all, the number was about AUD 10 million. And I think, Megan, to be perfectly frank, been a long working on getting those orders, most probably for nine months, and I'm, that's the best way of describing it.
That's helpful. Thank you. Then just on the WorkPac integration, I guess just keen to understand a little bit more, sort of how far through the process you are, what is left to do? Then just on those 140 people as well, just which areas of your business are they directed into?
Let me hand that question, if I can, to Mark. Over to you, Mark.
Thanks, Stephen, and hi, Megan. Yes, so, they are in the main, about 50% of those are in the electrical space, that they've just recruited for, a reasonable large size shut, for the mechanical division, which commences next week. It's really in the rope access in both the South Australian and Queensland markets. There's a little bit to do with the civil space, execute. With regards to the second part of that question about integration, we've, we've written code system that interfaces between our subsidiaries and, what framework on how we're to recruit between the organizations and our subsidiaries, which is now implemented and underway, and it's improving every week, which we're pleased to say. The real opportunities going forward relate to payroll, commencing that in March.
Our first payroll for 1 of our businesses, is we've got our software programmers working on integrating that into our ERP system for the rollout. We think there could be significant savings there over the longer course, but that will take probably 12 months to roll out, at least across our whole of our subsidiaries. But we'll start with one, and we'll progressively roll them out as we go through. There's obviously then the labor hire, which we're keen to roll through, which was circa AUD 12 million last year, that we're trying to redirect all through WorkPac, which should keep that margin within our group, albeit in a different pair of pockets in the same pair of trousers.
That-
As a reminder, it is star one on your telephone keypad if you would like to ask a question for questions.
Sherry, I've got 2 questions that have been text through from John O. Higgins, from UCPS, because he hasn't been able to log on. The first question, we're seeing several of the services companies flagging stronger second halves, we're seeing commodity strengthen and plenty of project work kick off. Can you describe what you're seeing in the second half and what clients are doing and acting? Jason and Trent to help with answering that first question.
Jason, you want to go first?
Yeah, happy to go first, Trent. Thanks, Mark. Yeah, the second half remains what we see as being very strong for us, especially in the, the civil segment, that we, that were deferred in the first half, that are now gonna be executed in the second half. So there'll be record projects for those subsidiaries that, that will be delivering those works. So that'll be the, the largest growth that, that they've seen, which is really exciting. They're obviously able to support that growth with the integration of WorkPac, which is able to support them with the increased labor that they need. Again, it's very similar in the electrical segment. The order books that we've got within our businesses are at, at record sizes. The tender activity remains really strong, and our clients' demands continue to increase.
We've obviously been focusing on securing our MSAs to underpin that work, so we get confidence in our pipeline, and I'll, I'll hand to Trent.
Yeah, thanks, Jason. probably similar to Jason. What I'm seeing in the east is a genuine interest from our customers around Tasmea in terms of as a group and its subsidiaries. Rather than going to one indi, let's just say, electrical for the component, they're wanting to understand all of the subsidiaries that Tasmea owns and wanting to contract with them as well. What we're seeing is to engage with our subsidiaries at, at, at a more, sort of macro level. There is some growth coming in Queensland, again, linked to, our, our acquisition with WorkPac. They've got an extra 50 sites that we weren't on, and we're having discussions with the CEO, Hamish Griffin, around, you know, attending some of those sites and having chats with those customers.
We're seeing growth in Queensland as well.
The second part of that question was, net debt moved lower through the period. Should we expect you to remain active on the accretive acquisition front in the near term? In respect to that question, yes, net debt has moved down lower. Our 13-week cash flow forecast is look evident, and we would expect to put some of that cash to work between now and 30 June, through some programmatic acquisition or ac- as Stephen mentioned, a strong pipeline of specialist trade services, maintenance businesses that we're looking at, and progressed in discussions. Sherry, back to you, to see whether you've got any other questions on the line.
Yes. Our next question is from Nicholas Ralston with Morgans. Please proceed.
Hi, guys. Thanks for taking my questions. Just two from me. Just a quick one on, on, on mechanical. Like, with, with a few rigs there, and they can be pretty key to margins, can we have a bit of a status update on, on utilization in your rig fleet?
No immediate shift in demand, increased level of inquiry. As you know, the rigs we supply are used in production as opposed to exploration. We've received a number of inquiries that would increase our confidence, but the forecast that we've provided, doesn't involve a material shift in rig higher demand.
Okay, that's helpful.
I'll let you know as soon as it's occurred.
Okay, thanks. Thanks, Stephen. Yeah, I mean, obviously the civil segment was really strong, understanding that, you know, the key drivers are probably, you know, sustaining capital works from the big iron ore players there. On electrical, that was sort of flat year-on-year. What, what can we look out for, that's gonna see conditions pick up in, in, in that space? I'm talking at the EBIT line.
Yeah. Maybe over to Jason to answer that. Just seek clarification. When you say it was flat year-on-year, what we, what we shared with the market was underlying EBIT was AUD 18.6 million, up 29% on last half year. Not, not sure, you may be talking about...
I think that was fair value, Jason.
Some of the accounting puffery, and obviously that needs to be backed out.
Yeah.
I think, the participants in this call should go, to underlying half year 25 did have a financial derivative gain of AUD 4.6 million.
That's right.
I think that may be what's influencing your representation as flat, wherein we would tell you it's growing 29%, which is a significant number. You might remember we spoke about organic growth, you know, circa 15%. Back to what's driving that growth, over to you, Jason.
Thanks, Stephen. Yeah, look, lots of growth across the variety of subsidiaries we have in our electrical division. Sigma, they're having record numbers. Tasman Power continues to grow. ICE has had a huge year compared to the prior year, thanks to obviously Trent's support there. The electrical segment as a whole, though, is in our order books, the strongest, the tender activities, the largest. The demands from our clients seem to be more and more around the electrical focus with the electrification demands that they're decarbonizing their plants and their emissions. That's just huge opportunities for us with the ability to have our electrical subsidies, so they can offer their end-to-end electrification capability to all of their customers. We can support the FEC customers, FEC can support Tasman Power, et cetera. That goes throughout the whole organization.
Our customers are seeing the value and just being able to make one phone call to one of our subsidiaries that they've got an existing relationship with that they trust, and they're able to offer more volume to the rest of our subsidiaries. Obviously, like we've said previously, it's underpinned by having those MSAs in place, and we're just seeing huge demand across from that. Again, like what Mark's already touched on, having the ability now to pull labor from WorkPac has been a key driver to give our subsidiaries confidence and being able to have such, what we would call aggressive growth in their businesses.
I could jump this, but I think it's important. You've got to do specialized work, and you have to do it safely. What Jason's noting is a lot of our subsidiaries are turning up to do our work, and we're not injuring our people. That's critical to our customers. In the east, we've just finished a project that was about 12 months long, 120,000 hours without an interest that we're working with. I think you need to take in the growth and the demand, but also the clients are looking at your safety performance as well.
Got [crosstalk]that down, guys.
Thank you, Sherry.
As a reminder, it is star one. If you would like to ask a question, we will pause for a brief moment to see if there's any final questions. With no further questions at this time, I would like to hand the floor back over to Mr. Young for closing remarks.
Thank you, ladies and gentlemen, for attending today's briefing. We are available via the various brokers for one-on-ones next week. Look forward to catching up with a number of you then. Let me wrap up by saying, we're quietly confident about the second half. We've explained to you that the second half, we are on budget, our second half, in percentage terms, is in line with what we did last year, we look forward to your ongoing support, and thank you for that.