Recording in progress.
Okay, so welcome to Trajan's half-year results investor webinar for H1 FY24, the period ending 31st of December 2023. Please note, all participants are currently in listen-only mode, and today's webinar will feature a presentation from Trajan CEO and Managing Director Mr. Stephen Tomisich and Chief Financial Officer Mr. Alister Hodges, and that will be followed by a Q&A session. If you do wish to ask a question, you can type it at any time into the Q&A panel at the bottom of your screen, and investors were also invited to submit questions which we've noted ahead of time when registering for the webinar. Please note, we will hold on all questions until the conclusion of the presentation. I would now like to hand over to Stephen Tomisich, CEO and Managing Director of Trajan. Thank you, Stephen.
Thank you, Marie, and good morning, everyone, and thank you for joining this morning's call. There's quite a lot we'd like to cover this morning, and the key topics that I'll touch on as I go through the deck in a number of areas are things like the destocking effect that we've seen in our business and across the industry over the last six months. We'll also touch on the activities regarding our disruptive technologies, and of course, I'm sure there are lots of questions and discussions to be held about the Trajan share price as well. Let's get into the deck here. The first slide here is really a reminder, I think, about the fact that Trajan, since IPO, has been on a journey of building this global business.
We set out at IPO with a vision and intent to build a global business of scale that would have a significant impact on human well-being, and we've progressed that journey enormously. If you think about where we're at now and look at our projections as we head into the second half and into fiscal 2025, the numbers tell us that we're going to be somewhere between 2 and 2.5 times what we were at IPO, and that's pretty much in line with the vision that we set out when we went to IPO 3, well, 2.5 years ago. When we did that, though, we certainly, at the time, did not anticipate the scale of inventory reduction, inventory movements that we would see around the world in our major customer accounts.
We have significant visibility of that activity, and I'm going to touch a bit more on that when we talk about some of the performance in the half-year numbers. From our perspective, yes, it has caused some softness in those half-year numbers, but really, in terms of the Trajan journey and our long-term view, it's more or less a bump in the road. These are some of the key things to remember about this business that we're growing and developing. We truly are a global organization with a global customer set, and we continue to leverage our global footprint to grow our internal businesses and those businesses that we've acquired along the way. You'll see some really, I think, positive news about our EBITDA expansion plans and the Project Neptune that kicked off at IPO.
New revenue streams are coming on board as well in terms of being able to commercialize some of the technologies that have been part of our development program. With our acquisition strategy, we've shared before that our approach has been initially to focus on the revenue synergies, the top-line synergies, bring teams together, and then progress further with the integration. That integration step has progressed significantly over the last half, and that'll lead us into the next element of how we derive shareholder value and business advantage through those acquisitions that we've made over the past couple of years. Just to set the context for the results as we go into this, one of the things that I'd like to share is what does this destocking activity mean to Trajan.
To give you a picture, Trajan is supplying many of its global OEM customers around the world to multiple sites across many, many different part numbers, and we have visibility of the level of stock that is held in those OEM sites around the world of product manufactured by Trajan. The way that that stock is replenished is that our customers set lower stock limits and upper stock limits, and we are constantly, almost on a daily basis, replenishing those stock levels around the world. What we saw from about April through to really September, October last year was that those target stock levels, in a number of cases, were halved. For example, some customers of ours lowered the level of inventory they would hold from about four months' worth of stock to two months' worth of stock.
What that means to Trajan is that there's effectively a loss of a couple of months' worth of sales over that time period in components and consumables going to our major customers. We do, though, through our visibility, we're able to see what was happening to the depletion of that inventory. In other words, while we weren't seeing orders coming into Trajan and therefore not realizing the level of sales in line with the market need, we were able to see at what rate was that inventory being depleted in our customer accounts. And as we tracked that, we could see that the end-market demand did not go away, that the depletion or the rate of depletion was relatively aligned with what we would . We then saw in Q2 the demand for our products coming into us went up significantly.
In total, our components and consumables demand in Q2 was about 27% above what it was in Q1, and for those product areas most impacted by the destocking activity, it was around 34% or so. But we didn't see that until very late into that Q2. What we can observe now is that the underlying demand is back on trend, and as we project forward and go into the second half with a strong order book and indeed a significant degree of orders that we were unable to ship in that first half due to the late exposure of the physical orders coming through to us, that we go into that second half with a significant tailwind.
One of the things that we looked at in this period of reduced activity was could we bring forward some of the cost savings that we anticipated would actually take place later in the financial year. You've heard me talk before about Project Neptune and the potential to realize synergies through some of the acquisitions that we made. What we did in November is that we were able to bring those savings forward, and so in November, we reduced the global headcount at Trajan by around 40 staff. Those 40 positions, though, they were planned in the later part of the fiscal year, had everything tracked as we had expected, and so bringing them forward allows us to go into the second half on a much lower or a significantly lower cost base as well.
Overall, through production efficiencies primarily and Project Neptune and indeed through realizing some of the acquisition synergies, we go into the commencement of calendar year 2024 around 70 or so headcount below where we were at the beginning of 2023. Looking at the current state of the order book, the level of activity across the industry, the fact that our investigation says that nothing has fundamentally changed about the Trajan business in terms of competitive presence, market share, customer set, we're set in this second half to see us reach a level that by the end of the fiscal year, we're confident it will be our 13th consecutive year of revenue growth for the business.
When we look at the summary of the financial performance, so on the left-hand side, we're looking at the revenue half by half, you can certainly see that drop down in the first half of fiscal 2024 at AUD 76.4 million. That half and indeed, to some extent, the half before that were impacted by this destocking activity. When we look at the current rate and trend of orders and we project forward into the second half, we have an expectation that second-half revenue will start heading towards about the AUD 90 million mark, about AUD 88.6 million is the midpoint of our projection. Now, if you look back and track over the longer time period, that is not extraordinarily out of pattern with what we would have expected had we not experienced the volatility of the destocking activity up and down during that time period.
When we look at to normalize EBITDA, the flow-through impact of that revenue reduction was pretty significant. About half of the drop compared to the 11.1 in the prior period was the drop-through loss in margin, not just from the revenue numbers but also a significant reduction in overhead recoveries. You can imagine that the efficiencies of the factories were impacted significantly. In the same period last year, our overhead recoveries were running around the 81% mark or so, whereas in the first half of this fiscal year, they were only running at about 53%. As we go into the second half, we expect that to turn around, although we have been relatively conservative in estimating to what extent that turnaround will happen.
The other two factors impacting that change in the core EBITDA are, first of all, that there was no significant change to the core support organization in Trajan. So things like salary increases and operational expenses were in single-digit up compared to that first half of the prior year, and some of the cost reductions that we did or brought forward really didn't have much of an impact until the last month of that first half. And then the final impact of about AUD 500,000 there relates to the cash equivalents that we hold around the world. They get revalued at spot rates at the end of the half, and that was about a AUD 500,000 impact there. So that's the top line and the overall summary of the first half. And now I'll hand over to Alister to step into the segmentation report.
Thanks, Stephen. So there's been two changes to the way Trajan reports its financial results in first half 2024. The first in relation to normalisations to EBITDA. New technology commercialisation costs are no longer normalised and are treated as part of normal business operating expenses. As highlighted in June 2023 results report out, the mark-to-market gain or loss on the forward exchange contract hedge book is regarded as a non-trading-related treasury function and is now normalised. The second change relates to reporting segments. Previously, Trajan reported 2 operational business segments being analytical products and life science solutions. From the current reporting period forward, Trajan will report 3 operational business segments providing a higher level of transparency on see-through business performance. Those 3 are components and consumables, capital equipment, and disruptive technologies.
Collectively, the components and consumables and capital equipment segments, along with the shared support corporate services costs, are referred to as core. So if we move to the first or the next slide relating to components and consumables segment, we can see here that the net revenue decrease in the first half 2023 over the prior comparative is explained by the destocking volume with order behavior and demand returning to normal trends in late Q2, as highlighted by Stephen. Performance gross profit margin decrease in first half 2024 is explained by the lower volume or throughput resulting from the destocking activity. Looking forward to the second half 2024, the net revenue and normalized EBITDA have been calculated at the midpoint of the guidance.
Performance gross profit margin in the second half FY 2024 is forecast at 43.5%, increasing gross profit by AUD 5.8 million, which is the main driver of the normalized EBITDA improvement from the AUD 14.7 million to the AUD 20.9 million in the second half. We look at the capital equipment segment. We can see that the net revenue in the first half 2023 compared to the first half 2022 is relatively flat, reflective within both the Axel Semrau and the Trajan Automation businesses. In the first half 2024, the performance gross profit uplift over the prior comparative was offset by increasing operating expenses resulting in a lower normalized EBITDA. Looking forward to second half 2024, net revenue and normalized EBITDA have been calculated at the midpoint of guidance.
In the second half, performance gross profit margin is expected to increase driven by higher margin sales mix, while general and administrative costs are forecast to remain relatively flat, resulting in segment normalized EBITDA to increase to AUD 6.9 million in total. If we move to the next slide, we can see that the performance gross profit margin for components and consumables was impacted in the first half by the lower volumes and is expected to increase in the second half with higher sales volumes and impact of cost reductions initiated in the first half. Importantly, within the disruptive technologies, sales of the microsampling tools generated a performance gross profit margin of 67.5%, but this is offset by the lower margins on the other early-stage seeding technologies, commercialization activities including Harpera, for example.
The overall total group performance gross profit margin is expected to trend towards 44% in the second half, resulting in an overall 42% for the full year. Detailed bridges for normalized EBITDA and Operating NPAT A can be found in the interim financial reports at pages 7 and 8. Operating NPAT A is calculated by adding back the tax-affected normalizations and amortization of the acquired intangible assets.
Thanks, Alister. So as we go into the second half, we start that with a very healthy order book of just under AUD 22 million. About AUD 12 million of that relates to our components and consumables business. Importantly, about AUD 4 million of that was product that, had we been able to, could have shipped in the first half. The capital equipment order book is sitting about where we would expect it to begin at the start of January, around the AUD 9 million mark. Indeed, the disruptive technologies, even though underperforming the first half, go into the second half with an order book of just over AUD 1 million. We're seeing this order trends across the business returning to what we expect the long-term trend lines to be.
And as we've gone into this first half, we can share that the level of orders due to be shipped to customers has actually continued to increase. So you can probably tell by the mood of the presentation here that we do go into the second half with some robustness and confidence about the uplift in order demand that we are experiencing. If we talk about disruptive technologies, we were disappointed with the revenue in the disruptive technologies in the first half. They were around about AUD 2.2 million compared to AUD 3 million in the comparable period last year. Some of that is due to the order book that we take forward, but some of that is also around the micro-sampling area and the fact that, historically, some of that product was going into research for COVID-related activities, and we've seen that area of research drop off significantly.
I'll show that in a chart that follows. The EBITDA impact of the disruptive technology in the first half was -2.9. Again, that's a step up from where it was in the prior year and no doubt of some concern. The reductions in costs that we executed in November included some reduction in this area. Moreover, what we're looking at now, particularly in the area of micro-sampling and micro-sampling-related activities, is a review of the investment that we're making and to what extent that's likely to convert into commerciality in the short term. Us, like some of the very significant other players that are participating in this emerging market, I think are observing that the rate of spend really is not having a significant impact on the rate of market adoption.
And so as we go into the second half, we will be resizing the investment that we make, particularly on the micro-sampling and micro-sampling-related activities, to ensure, as we go into fiscal 2025, that we're targeting a break-even operation in that part of the disruptive technologies. When we look at the Hummingbird area, there is some very positive and exciting news there. First of all, we were able to reach the stage of an industrial commercial design for the product, which you can see on this slide. But secondly, late in the half, we were informed that we will be granted U.S. patents around the miniaturization and modular architecture design of Hummingbird. We intend now to apply to have that patent protection extended across other jurisdictions.
But this is quite a coup for Trajan in terms of now holding some patents around this approach to miniaturized HPLC as we head towards decentralization of this type of measurement technology. We've seen some very successful work in large pharma in the U.S. with Hummingbird. And in the first half, we also were able to demonstrate its performance measuring PFAS, these forever chemicals related to fluorinated compounds in the environment on-site here in Australia, including some of the major airports. And that has generated a significant level of interest as to where we're heading with this particular product platform. I did want to share this chart here. On the right-hand side, this is the history of sales relating to our blood micro-sampling products.
And what we've done here, just to help everyone understand the trends that we're observing, the grey chart or the grey bars here, they represent sales of our microsampling products going back to 2020, 2021, 2022 that related to COVID research. So this is not selling products for COVID testing, but product that was going into research programs to understand the behavior of the virus and, to some extent, the development of treatments for the virus. What we have witnessed in the first half is that now has completely gone away. The other part of the microsampling or the blood microsampling business continues to grow at double-digit rates. So this is the non-COVID area. This is about therapeutic drug monitoring, toxicology. In some areas, it relates to hormone testing.
But what we can agree and observe is that even though this is a healthy rate of growth, we're still not moving the needle significantly in terms of the overall potential and the rate of market adoption. One thing to also observe in the micro-sampling area is the growing interest in Harpera. So Harpera is our microbiopsy, our skin microbiopsy technology. And I'm pleased to report the interest in that technology has grown faster than what we expected. And we are now uplifting the production of these investigational use-only devices. And we're expecting now, in calendar year 2024, around 40,000 or so devices to be deployed around the world for a growing range of application areas, from various skin conditions through to parasitic infections and even to some extent being used in the areas of personalized cosmetic-type product development.
So it's an exciting area that we are seeing to grow further. I want to touch briefly on Project Neptune and particularly to circle back to IPO. So IPO, we said some of the funds were going to go into this initiative, which was all about driving production, productivity, and getting margin expansion happening both through the automation of some processes here in Melbourne but also the establishment of our Penang, Malaysia, facility. We said at the time that we expected to realize an annual savings rate around about AUD 2.7 million on the volumes that we were selling back at that IPO date. What we can say now is that phase one of Neptune is largely complete, and it is now delivering above what we expected.
So it's been a very successful deployment of engineering resources, and all credit to the team here that's been driving this initiative and achieving the results that we can see. The shop floor here in Melbourne looks very different now to what it did three years ago with the level of automation being deployed. We're not done yet. What happens next is that we transition. Over the next six months, we'll be putting together the detail around, well, what is Neptune phase two? And at a high level, Neptune phase two will be taking the same types of thematics in terms of how do you drive further margin expansion and production efficiencies but now at a global level, looking at our global footprint and our global activities and driving further those initiatives in that direction.
To look at the balance sheet and the cash flow summary, I'll hand back to Alister.
Thanks, Stephen. So just hitting the headlines here. So cash receivables, payables, and inventory decreased from June 2023 in line with lower sales and manufacturing activity. The decrease in inventory levels was particularly pleasing as this had been an area of focus and management since June 2023. The decreases within inventory were across all major lines, being raw materials, components, work in progress, as well as finished goods. Overall net debt reduced by AUD 0.9 million during the half, and the cash conversion ratio remains consistent period to period at circa 1.1 times. Move to slide 16, the guidance. So previously, in FY 2024, full-year guidance, as released in late August, reported net revenue in a range of AUD 170 million-AUD 180 million and called normalized EBITDA in the range of AUD 25.7 million-AUD 27.5 million.
The new guidance ranges are net revenues of AUD 163 million-AUD 167 million and normalized EBITDA of AUD 22.3 million-AUD 23.7 million. These ranges are being revised, resulting from the impact of two things. First of all, the components and consumables industry destocking observed in the first half and net revenue returning to normal growth trends in the second half. Secondly, the cost reductions in the second half resulting from the implementation of cost disciplines in the first half, including 40 FTE reductions in November, delivering an annualized saving of AUD 3.5 million, of which AUD 1.8 million is to be recognized in the second half. In the waterfall chart on the right, bridging from the first half, 2024, core business reported normalized EBITDA of AUD 6.9 million to the midpoint of the full-year normalized EBITDA of the AUD 23 million.
We can see the impact of the FTE reductions in the second half with AUD 0.9 million labor savings in gross margin and AUD 0.9 million labor savings in general admin marketing. The main driver for the higher normalized EBITDA in the second half over the first half performance baseline of AUD 6.9 million is the expected gross margin uplift resulting from anticipated volume price increases driven by components and consumables net revenue, returning to the normal growth trends in the second half, sized at AUD 6.3 million.
Thanks, Alister. And so when we look at that uplift in the second half, if we only compare it to the performance of the business in the first half, it looks like an extraordinary uplift. But what I would repeat is that if you look at it in the context of the long-term trend and then you back out the volatility that's purely caused by the supply chain movements, that it is very much on-trend. One of the questions I have been asked has been, well, if you had the transparency, if you had the see-through capability, then why didn't you know this level of where you expected to land in the full year?
Part of the answer to that is that as we were observing the depletion of stock at our OEM accounts, we weren't willing to increase our expenses and increase our factory activity until we saw the physical evidence. In other words, until we were starting to see the orders flow through to us. That really didn't happen until about December, so late into Q2. Our ability to then ramp up our operations over Christmas, New Year, going into January is somewhat constrained. That's what leads to us now saying that being able to get to the original guidance by the end of the financial year is going to be a challenge. It would have inferred a second-half revenue in the order of about AUD 100 million. As it is, we're projecting a second-half revenue that's going to be approaching about AUD 90 million.
The takeaway for me is that when you look at that and you then think about, well, what does that mean as we head into fiscal 2025? If we're talking about a second-half revenue of about AUD 90 million, immediately with a little bit of tailwind from the orders that we were unable to ship in that first half and now looking at an EBITDA level that is starting to approach those high percentage in the teens that we had spoken about at IPO, we're feeling pretty confident about where this takes us into the future. So overall, as the investment thesis, of course, there's no presentation here that's completed without some sort of reflection on the share price and what is it that we can do about it.
When I think about our roles and what we can do to help to provide confidence in the Trajan stock, there's two things, really. There's one is how we go about running the business. And secondly is how do we communicate about the business. In terms of the operations of the business and how we're tracking and where we think we'll continue to track over the next couple of years, it's very much, if you like, a methodical march from where we were at IPO to where we'll be next year and beyond. And there's certainly no way that the movement in the share price has reflected that disciplined transition of the business that we've been managing over the last couple of years. But I think where potentially we can do a better job is communicating about the business.
I think one of the things that has been a battle, given how we've been tackling so many things in parallel, the acquisitions, Project Neptune, global consolidation, the way we've treated the commercialization of new technologies, it makes it really difficult to peel all that back and get line of sight as to, well, what's the underlying performance of this business? But now, as we go into this second half and what I'm really viewing as a period of consolidation, I think that'll become a lot clearer, particularly as we go into next fiscal year as well. And it is going to be a period of consolidation. I want to see us strengthen our balance sheet. We have no intention of pursuing acquisitions that could be dilutive in nature.
As we think now about the next step with regard to our acquisitions, as we've stated before, the first steps were all about top-line synergies and bringing teams together. Now we're at this stage in the second half where we'll have a good stop and look at, okay, how is our capital now deployed and ideally, how should it be deployed? How should we be managing that for the best return for the business and indeed leveraging that to continue to drive margin expansion and the growth of the business? What you can't see here at the moment is that the level of this destocking activity camouflaged some of the positive news that underlines the business still. For example, we saw some of the syringe products that relate to chromatography in the calendar year 2023 decline by something like 20%-25%.
Again, I'll repeat, it's not because we lost market share or there was some strange competitive behavior or that we lost any customers. It was purely two months' worth of sales that didn't happen. If I look at some of our syringe products in other areas that weren't subject to that, for example, some of our products that go into clinical systems and biochemical analyses, they grew by 15%. If I look at our systems going into HDX for proteomics, we saw the business almost double in the first half of this fiscal year compared to where it was the year before. Now it's becoming a significant contributor overall. Our activity in ImmunoTips, again, leading into areas like the omics, metabolomics, proteomics, coupled to mass spectrometry, are currently on a 40% growth trend.
As we go into this second half and go into next financial year and take this platform that is now starting to have much more efficient cost structures and there's still more room to go there, and we look at the overall growth trends returning to normal, we go into that second half with a good degree of confidence. I'll stop my little rant there, Marie, and perhaps hand back to you.
Thank you, Stephen and Alister. So now I'd like to open up to questions and remind everyone that they have the ability to type in questions into the Q&A panel if they need to. Our first question that's already come in is, how is the company managing its cash flow? How can investors be confident that Trajan will be able to meet its loan repayments while continually growing the business?
You would have seen in the first half there, even though we were facing a challenging period, we still achieved a net debt reduction of AUD 0.9 million. As we go into the second half, we will continue to drive a reduction in our net debt levels. You would have noticed that in terms of management of capital, we drove a significant reduction in our inventory holdings around the world. Indeed, as we go into this second half and look at overall capital management, that will continue to be a driver. There are lots of things about the bringing together of acquisitions that gives us the opportunity to really think again about our capital management. For example, what we had tag along with the acquisitions since IPO is almost AUD 10 million worth of property assets.
Now, "do we really want to be involved in owning property in the long term" is a great question. But as we think about the EBITDA projection going into the second half, we can have strong confidence in not only the ability to service our debt but to continue to drive net debt reduction.
Thank you. The second question is, what is driving your confidence to bridge to the core EBITDA in your forecast for the full year?
I think people know that some of us have been in this industry for a very, very long time. As we develop forecasts and look at projections, we don't just look at the short term. We look at the long term. The long term takes into account the fact that a large amount of our recurring revenue isn't subject to macroeconomic factors. It's all about continuing to replenish the installed base of instruments that operate around the world. So there's some degree of predictability we have around that. As we're able to project that forward, that gives us one element of our forecast. With our capital equipment business that is now a global workflow solutions team, we have good visibility on the orders they have in hand, their order book. Those things combined give us some confidence about the top-line forecast.
When we look at our cost structures, our cost structures don't move a lot unless we move them. And indeed, what we've been able to do through Project Neptune and through realizing some synergies is to go into this second half with a better control over those cost structures. Will we need to add some medium-term resource to deal with the uplift in factory input? Yes, that's inevitable. We'll be doing some of that. But in the long term, we will still be seeing the margin benefits that we had projected going forward. I don't know if you want to add to that, Alister, at all.
I think that's a really good summary. But I'm just going to highlight the commentary around the destocking. So it's a global phenomenon that's actually impacted many industries. And I think that more broadly, it results in supply chains that were stocking up during COVID period. Now we've entered that post-COVID period that globally, many supply chains are - inverted commas - destocking. So this is not a circumstance that is unique to Trajan. It affects many industries. And as Stephen suggests, there hasn't been any change in the fundamental underlying mechanics of the industries in which we play. There hasn't been any major new entrants or anything like that. And that gives us a degree of confidence that certainly top-line revenues will return to the normal trend in the second half, which was the answer to the question.
Thank you. And the third question, can you help us to understand your visibility to customer inventory, order expectations, and demand?
The visibility we have is quite extraordinary in that for a number of our larger customers, we're able to see in real time what they are holding of product that we produce across hundreds of part numbers, many locations around the world globally. We are electronically interconnected. And so as stock levels move within the set target ranges, those movements trigger a demand signal through the Trajan global footprint to the site where the product needs to be produced. And that triggers our production activity to then replenish those stocking levels. So we have quite a view of our customer stocking movements. But moreover, because in a number of areas, we are a key supplier across the industry, we also have a view across the industry, across multiple customer stocking arrangements.
And so that also underpins our confidence in terms of where is the market heading, what are the industry trends, and what can we expect to unfold in the months ahead.
The next question is, please articulate the path to increasing returns.
I think we've touched some of those. If you look at what we're projecting in the second half, that is a significant increase in returns. The drivers behind that, I think we've covered reasonably well.
Thank you. The next question is, greater awareness of PFAS, Forever Chemicals, is gaining momentum. Over 96% of Americans have some level of it in their blood. What opportunities exist for Trajan on testing, and how big will this market be for Trajan?
That's a really good question. So PFAS, or these Forever Chemicals, the opportunities for Trajan are numerous. First of all, PFAS is present in many different types of sample, not just blood, but it's present in the environment, in soil, in drinking waters, and so forth. What we did in the first half is that we developed and presented in the U.S. an automated laboratory workflow for doing PFAS measurements in samples, to start off with in environmental samples. And that received a very strong reception by not just some of the larger U.S. contract laboratories that provide these measurement services, but also there's been interaction with the U.S. EPA. The benefit of our system is that it allows a high number of samples to be analyzed in a time period, in other words, a good sample throughput. But importantly, our solution also uses far less solvent.
So the use of solvent in laboratories is equally an environmental concern. Secondly, already available in different parts of the world are self-blood sampling kits using Trajan microsample devices. If you reflect on the slide I showed for non-COVID growth, some of it relates to this area where anyone is able to order a package from one of our customers that includes our blood microsampling tools to be able to take a microsample at home, send it back to the laboratory for analysis. The third area that I'll touch on is that as other companies, our partners in the industry, are also developing products for the analysis of PFAS, one of the things that needs to happen is that the system itself needs to be PFAS-free.
In other words, you don't want the syringe or the sealing septa or other components in the sample workflow to actually contaminate the sample with PFAS. And so we've started to offer a range of components and consumables to our partners around the world that allows them to put together specific systems for PFAS analysis that don't introduce contamination. And lastly, the highlight was at this environmental conference here in Melbourne. We demonstrated a unique capability to be able to take a portable miniaturized system like Hummingbird on site and do PFAS analysis on site. And that's quite a unique capability. So yes, it's an area of great interest for us, and we think of significant potential.
Thank you. What do you believe is driving the Trajan share price so low, given your growth since IPO, and how are you addressing it?
Well, I've touched on that a little bit. I don't know how else to comment except to say that we, of course, look at things like revenue growth and EBITDA growth. When we look at some of the other metrics, like if you're looking at earnings per share or NPAT and so forth, things like the level of amortization that we're carrying because of the acquisitions that we carried out are impinging on that a bit. And they're here to stay. Things like the interest payments that we need to make impact some of those numbers. But of course, as we continue to drive debt reduction, that will tend to resolve itself. I think overall, the growth is an answer to many of these issues because as we continue to grow the margins, grow EBITDA, grow the revenue line, a number of those other factors will resolve themselves.
I think the other key thing is for us to keep thinking about how can we communicate more clearly the performance of the business. Let's remember, we got to IPO with seven acquisitions under our arm and already at around AUD 70 million in revenue three years ago because of the strength of the underlying business that we're able to leverage and then reinvest. And we've been continuing to do that over the last few years. But that in itself does make it difficult to get a clear line of sight as to just how strong that underlying business is. And I'm hoping as we go into the second half, and particularly as we look at fiscal 2025 and these things are consolidated and we start to hone it further, that'll become really clear just how strong this business is going into the future.
Thank you. The next question is relating to debt and equity. What is the Trajan attitude towards debt with respect to more or less cost of business, ability to leverage, reduce or increase the balance sheet risk, and for equity dilution to existing shareholders?
I have no desire to see us grow our debt levels. I want to see us strengthen that balance sheet and reduce the debt levels. Let's remember that debt level came about when we did the CRS acquisition a year and a half or so ago. And secondly, I have no desire to see any dilution of shareholders' equity right now with any other type of dilutive acquisition or anything like that at all. This is a period now of consolidation, driving strong organic growth, leveraging the benefits from the acquisitions that we've made thus far, and taking the business into a strong platform as we go into next fiscal year.
Thanks, Stephen. The next question is very related to that. What are the plans for Trajan regarding further acquisitions, opportunities, debt and equity considerations, and timing?
Look, there's no shortage of opportunities out there for us. But just to repeat the current comment I made, is that I want to see us in a much stronger position before we contemplate anything of significant scale.
How should we view the order book and backlog in particular? Is there an execution risk that you won't be able to move quick enough on new orders?
That's a great question. So we moved slowly in H1. That was a management call, my call as well, in that we weren't willing to start ramping up production activities until we saw physical evidence of the rate of order growth coming through to us, not just inferred by the way we're watching our customers' inventory being depleted. As we go into the second half, it was really difficult to scale up activities in January, if I can make that comment. I could also comment that the trend I'm speaking to has certainly continued in terms of the order patterns returning to normal as we've gone into this second half. So when we think about the catch-up, February's almost done. That catch-up really needs to happen in this March, April, May, June period. We've done a really hard look at that.
As long as the resources are in place, the plan would see us deliver in line with the revised guidance that we've provided today. I'm hoping that we can do that with some confidence. One of the nice things about our business is that while we're in this mode, very rarely, if ever, do we lose orders. We have great relationships with our customers around the world. So one of the key measures that we'll be ensuring is around customer retention and servicing those customers in a timely period going into this second half.
Thank you. The next question is, what level of price rises did we see in the first half of 2024?
We didn't make any significant price rises in H1 2024. We have just put through some normal price rises across some of our network in January this year. That adds another small tailwind to the second half as well.
Could you please comment on the market liquidity of the shares? Stephen has a very large percentage. Is there any institutional interest?
Yes, we have a range of institutions who are shareholders. You've probably seen who our second largest shareholder is. Liquidity is, of course, a problem. And one of the reasons it's a problem is that it only takes one or two parties who have any significant holding to decide to buy or sell. And it causes enormous movements in the value of the stock. So hopefully, over time, we see that liquidity increase and that the share price isn't as exposed to volatile movements based on very, very low levels of trading.
Thank you. The next one's around our market segment. Could you please provide some color around demand trends in environmental, pharma, food? Did one impact revenue growth more than another?
I think that the takeaway for me was that the pharma area, despite some of the industry reporting we're seeing in mainstream pharma, had the most positive impact for us in the first half. And maybe that's because of some of the specialized areas we're involved in. The growth in HDX was strong in the first half. The growth in our dispensing syringe products that go into clinical and automated biochemical analytical systems was strong. The growth in our ImmunoTip business that's servicing the omics, metabolomics, proteomics, and so forth was also strong. So that area performed well. Environmental and infusion, I think, performed pretty much on trend. There was no huge standout there. And those areas were impacted the most in terms of Trajan sales by this stocking-destocking activity that we experienced.
Thank you. And what are the sustainable margins going forward? Can they get up to the high 40% range in the next few years?
The simple answer to that question is yes, with some confidence, that we'll continue to drive margin expansion. It's not just about production efficiencies, but it's also around managing our global footprint as we continue to dilute the overhead costs over a growing revenue line, but also as we continue to think about how we consolidate some of our operations and look at how that, too, can leverage the margin gain. So we have pretty good confidence there. And if you start to look at the second half projection and think about the core business and look at where we expect the EBITDA margin can be compared to revenue, we're already starting to head into those high teen percentages, which is what we had hoped and forecast when we went to IPO two and a half years ago.
Thank you, Stephen. There are no further questions. This brings us to the conclusion of the Q&A session and also to Trajan's half-year results investor webinar for H1 FY24, the period ending 31st of December 2023. I'd like to thank you all for joining us this morning. Thanks. Bye-bye.