Ladies and gentlemen, thank you for standing by, and welcome to the Wagner's Half Year Results Briefing. At this time, all participants are in a listen only mode. With us today, we have the company's CEO, Cameron Coleman CFO, Fergus Hume General Manager, Michael Kemp Chairman, Dennis Wagner and company Secretary, Karen Brown. Please be advised that this conference is being recorded. I would now like to turn the conference over to your first speaker, Cameron Coleman.
Thank you. Please go ahead.
Good morning, ladies and gentlemen, and welcome to our half year results presentation. The first half of twenty twenty one has shown a great improvement when compared to last year. Overall revenue for the first half compared with the prior corresponding period is up 27% to $155,800,000 The pro form a EBIT result of $10,300,000 is a significant improvement as well. This result has been driven by growth in cement volumes, increased precast activity, increased quarry volumes, the commencement of a major project from our Waikol precast facility and continued strong utilization of our bulk oil hedge assets. Over the past 6 months, we have reduced our gross debt by over $11,000,000 Overall, the business is in a much better shape than a year ago or even 6 months ago.
Most of our businesses are performing well with bright spots being cement, precast, transport and quarries. We had some mixed results from CFT with strong performance coming from our cross arms in Australia and custom build in the Middle East. Sales in the USA remained low and custom build in Australia slowed compared to the prior corresponding period. Our low carbon concrete technology continued to make traction in the UK. Our contractual differences under a supply agreement with 1 of our large cement customers has also been resolved.
I'll now hand over to Fergus to take you through the financial results in more detail.
Thanks, Cameron. Looking at the first half twenty twenty one pro form a results. Our revenues have increased by $26,600,000 to $155,800,000 or 21% compared to the second half of twenty twenty and 27% compared to the prior corresponding period. As Cam pointed out, revenue increased across almost all business units, in particular cement, concrete, quarries and transport. EBIT has increased by $3,300,000 to 10,300,000 dollars or by 46% compared to the second half of twenty twenty and was significantly up on the first half of twenty twenty.
But EBIT margin also improved by 1.2% from the second half of twenty twenty and 5% from the first half of twenty twenty. Now looking at the segment results. Sales in Construction Materials and Services are higher due to increased activity in the quarry, concrete and transport division and the higher cement volumes. The increased sales in concrete reflects the higher volumes being sold as a result of the full commissioning of our asset plants and the increasing demand in Southeast Queensland. However, margins continue to come under pressure on fixed plant concrete sales.
The increased sales in the quarry area are due to the South Back Creek quarry increasing production volumes on the back of 24 hour operations and the Shepton quarry, which was purchased in June last year. Transport continues to be a strong performer on the back of increased activity in the mining sector. We're pleased to see the increased activity in these areas and this has led to a return to higher and consistent EBIT margins. New Generation Building Materials business has seen a decrease of 1.4% in sales, but an increase in EBIT of 69%. In CFT, we have seen the Electrical Cross Arm Distribution Supply business grow revenue by over 15% with growth domestically and internationally.
However, we also experienced a downturn in the pedestrian infrastructure and bridge division impacted by delays due to COVID-nineteen. We continue to invest in R and D and business development in the new generation building materials segment to create new product lines and expand geographically. For example, we have introduced poles into our electrical distribution products. We have spent over $800,000 in our low carbon technology air friendly concrete in the last 6 months, a 58% increase on the spend in the prior corresponding period, reflecting the increased research and development and business development spend to grow domestically and internationally with a major focus on market development in the UK. The CFT business had an EBIT margin of over 14%, an increase of 6% or a growth of 68% compared to the corresponding prior period.
The EBIT for CFT has grown by 43% compared to the prior corresponding period. It should also be noted that we haven't received any job keeper support at all. And now to the cash flow. There has been an improvement in working capital due to the timing of debtors with some significant invoices raised at the end of June. As mentioned in our full year results, these debtors were outstanding at the 30th June and have all been received in this half.
The $6,600,000 of capital expenditure this half has been spent across the business with $2,600,000 on land for the concrete, quarry and precast businesses, dollars 1,300,000 on quarry equipment and $1,100,000 on CFC plant to complement the $5,000,000 spent last year, which significantly increases our capacity and efficiency. This CapEx spend is mainly growth CapEx, not maintenance CapEx. And on to the working capital and net debt. As I mentioned previously, the net working capital has reduced whilst cash at bank has increased in the 6 months. This has allowed us to repay both equipment finance and term debt.
I'll now hand back to Cameron and Michael.
Thanks, Fergus. As reflected in the numbers that Fergus has just presented, it is encouraging to see the improvement in the business. While this improvement is positive, there remains further opportunities for the business to deliver growth in revenue and profitability. Michael will now update you on the progress of our new generation building materials business.
Thanks, Ian. Starting with our CFT business, for those that are unfamiliar with this technology, it is a lightweight, non corrosive, nonconductive fiberglass material produced here in Toowoomba by Wagner and used in electrical distribution networks. It's used in the form of cross arms, power poles and light poles. We also used it in a range of custom build structures including pedestrian infrastructure and bridges. Whilst revenue was relatively consistent with the first half of FY 2020, continued investment in technology has delivered significantly more efficient manufacturing processes flowing on to improve margins.
Our composite business across Australia and New Zealand achieved a 15% increase in cross arm sales compared to the prior half year. This was offset by stalling activity in local state government funded pedestrian infrastructure and road bridge projects due to delays we attribute to COVID-nineteen. The robotic arm on this slide is part of our new cross arm manufacturing cell. In addition to this investment in high-tech manufacturing, we have commenced the fabrication of 2 new protrusion machines to expand our capabilities at our Toowoomba facility. The investment in this plant and equipment will double our cross arm manufacturing capacity, will increase our protrusion capacity by 60% and allow our protrusion machine to be dedicated to the manufacturing of poles.
Looking now at our international CFT operations. In the U. S, COVID has substantially impacted sales along with our ability to build and commission a manufacturing facility. At this stage, we are planning to commence the installation of our new protrusion machine later this year once our technical team can get to the U. S.
With the ability to return home safely. So while U. S. Sales were slow, we experienced strong demand for our composite fiber technology in the Middle East in excess of $2,600,000 worth of CFT product was manufactured and shipped internationally in the first half demonstrating the demand for this product worldwide. More broadly, our international sales team continues to pursue opportunities that we can manufacture and distribute from our Toowoomba facilities.
Moving on to our low carbon concrete technology, earth friendly concrete, which has made great progress over the past 6 months. We have significantly increased our spend on the development of our technology in response to increasing international demand. Our technology replaces the cement powder used in traditional concrete. Given the production of cement is responsible for 8% of the world's carbon emissions, earth friendly concrete is now very much on the radar of concrete producers and consumers around the world. In the recent projects by Calfbrae, a major construction company in the UK, the successful placement of earth friendly concrete to a large water project in London saved 2 40 tonnes of carbon emissions alone.
When coupled with other projects completed using our technology in just the last 6 months, we have saved excess of 8 50 tonnes in carbon emission. We now have an accelerating take up of our technology internationally. Our air friendly concrete is being used in infrastructure projects undertaken by various construction companies in London through our U. K. Distribution partner.
In India, we continue to work with our partner JSW to obtain the Indian standards approval required for the application of earth friendly concrete into projects. Close to the home here in Southeast Queensland customers are beginning to select their friendly concrete for applications ranging from multistory building complexes to homeowners that value the environmental benefits our technology has to offer. That concludes our commentary on new generation building materials. I'll hand back to Cameron.
Right. So we'll move on
to the Construction Materials and Services segment. And as Fergus reported, on a consolidated basis, the first half has realized a 33% increase in revenue compared to the same period in FY 2020, and it's achieved a $14,800,000 EBIT. We've also seen an increase in our EBIT margin as a result of the revenue coming from sectors that realize a higher margin. I'll start with our quarry business, which has performed well. The fixed quarries have produced solid volumes, including a full 6 months from the Shepton quarry.
You'll see a picture of the crushing plant at the Shepton quarry on this slide here. When coupled with the increase in activity from the resource sector, this business has made a significant contribution to our performance through this period. Onto our Cement business, and you'll see at Slide 14 a great photo of the site with the world's 1st composite geopolymer concrete wharf showcasing our CFT and EFC technologies. From this facility and our Townsville site, we supply bulk and bagged cement products to the market. Cement has had a strong first half.
We've experienced the increase in sales due to our largest customer returning to full contracted volumes. There has also been a general increase in cement volumes with the increased building activity in Southeast Queensland. Moving on to the concrete business. We've seen increased volumes from our concrete plants as our sites are now fully commissioned, all capable of producing earth friendly concrete as well as traditional concrete. We have also seen a general increase in construction activity in the Southeast Queensland market.
Whilst pricing has remained lower than historically achieved, there does appear to be some positive moves on these prices due to increased demand. So the business has continued to be impacted by pressure on concrete pricing and resulting margins. We are seeing early signs of market improvement and we expect this to continue. We operate a major precast and pre stressed concrete projects business at Wacol in Brisbane. In the first half of this financial year, we commenced work on the major infrastructure projects.
We expect higher revenue and EBIT contributions from this business in the second half of this year with further opportunities in the infrastructure sector already identified. Our bulk haulage operations provided another solid contribution to our financial performance this half. We have seen a continuation of existing contracts and the start of some new projects. Our customers have increased their outputs, which has meant higher utilization of our assets and increased revenues in this business. The resource sector continues to provide significant opportunities for our bulk haulage business as evident from the high level of tendering activity we've seen in recent months.
So if we now look at our outlook, in CFT, we look forward to the improved margins generated from our new automated cross arm manufacturing cell that Michael spoke about. Revenue growth is expected to improve in custom build applications, including the local and state government funded pedestrian and bridge market across Australia and New Zealand following the COVID-nineteen restrictions easing. The commissioning of 2 new Palfrejan machines from our Toowoomba facility will allow us to significantly increase capacity to produce poles, positioning us to service a market that is currently searching for an alternative to timber. In the U. S, we have commenced design and construction of our factory and the commissioning of the protrusion machine will occur later this calendar year.
In the meantime, we will continue to pursue sales opportunities across the U. S. That can be manufactured and distributed from our existing facilities. The Middle East will continue to provide opportunities for composite fiber technology on the back of the successful projects that have been delivered in this region to date. Our outlook for our Earth Friendly Concrete business focuses on increasing sales through our concrete batch plant network in Southeast Queensland and through our commercial partners in London and Germany.
We will continue to support our partner JSW in obtaining Indian standards approval and leverage of the Indian government's national action plan on climate change. Given the success of our earth friendly concrete technology in the UK, we are seeking potential partners that are dedicated to accelerating the use of green technologies. Our technology makes a positive impact on carbon emissions in the construction industry. We're excited about the global demand for green technologies such as ours. On to the outlook for Construction Materials and Services.
We look forward to secured infrastructure and resource projects adding an increased contribution across the group. We expect continued growth in our bulk haulage operations. We anticipate the growth in cement sales that have proven to be consistent throughout the year to remain. We expect our concrete business will improve with increased demand in Southeast Queensland, and we anticipate an improvement in selling price. We expect further growth in our quarry business with a full year contribution from the Sheffton quarry along with the benefit of contracts secured in our contract crushing and services business.
So in conclusion, we are encouraged by the first half result following a tough year in FY 2020. We have a positive outlook going forward within Australia and internationally with already secured work and a large number of opportunities identified and being pursued. Throughout this period, we've also resolved some disruptions that have affected the business, allowing us to now focus solely on operations and growth. There are still many opportunities for this business and we'll continue to strive for further profitable growth in all areas. We remain committed to our growth strategy as outlined in our full year presentation to achieve planned future growth through innovation and investment in developing new technologies, new product lines and production efficiencies across all of our business, continued integration of our various business units and international operations with a particular focus on establishing new markets for our composite fiber technology and low carbon concrete technology as friendly concrete.
Clearly, with the state of the world, execution of major projects and capacity to accelerate projects has been impacted. Once global lockdowns and restrictions ease, we will resume the pursuit of opportunities for major offshore projects. That concludes our presentation this morning. And as mentioned, I'm joined here today with Fergus Shew, Michael Kemp, Karen Brown and Dennis Wagner, and we're all happy to take any questions you may have.
Thank you. Your first question comes from the line of Raju Ahmed from CCZ Equities. Please ask your question.
Hi, everyone. Thanks for taking the time this morning. Look, I've got a couple of questions. Can I start with the outlook statement? Have I is it fair to assume that you're expecting better revenue in second half of FY 'twenty one versus the first half and also better margins given the disruptions you've experienced in the first half?
And then what's the view there, Cameron?
Yes. Hi, Raju. Yes, we expect the revenue growth that's occurred over the past 6 months to continue on through the second half. We sort of ramped up we started really ramping up revenue due to the opportunities that were presenting themselves. And just as we commenced some of these larger project work, revenue started to increase well into the back half of the first half, and we expect that solid performance through the second half.
And as we pointed out in the presentation, that type of work does drive those higher margins.
Okay. So let's take that you've got I think you're referring to the Cross River Tunnel precast project there. But if you set that aside, when you look at the balance of the business, assuming there was a reasonable level of COVID related disruptions, as they ease out in the context of Australia, would there be an underlying margin lift in the business?
In the well, Raju, there's been a number of project opportunities that across the business that we historically see. So if you look at the COVID related challenges that we referred to and that you just touched on, they mainly impacted our custom build side of the business where we deliver pedestrian infrastructure and road bridges around Australia and into international markets. So we do see more activity now in that area of our business as those border closures have eased or lifted, and we can now get our products to market easier and get our salespeople to different sites to explain to asset owners what benefit our products bring to their project.
Okay. That's helpful. So just touching on CFP. I note your comment about the hit from COVID on the pedestrian and road bridge infrastructure projects. Can I assume that it's not so much that if there is demand there, it's more now a question of timing?
So then following on from that assumption, could there be a scenario where you've got a short term hump in demand, an upward hump before things start to normalize into your standard growth rate, like around 15% to 20% a year? Or is that dependent on capacity on the build?
Hi, Roger. Michael Kempe here. With the conference business, particularly in custody build, the level of quoting work has continued to be quite high. What we've seen is the amount of orders actually placed has been quite low. So there's still heaps of work out there that we've quoted that's in the pipeline, and it's about sort of seeing it come to fruition.
We have a feeling that as end of the financial year approaches, a lot of that's going to have to be accelerated. And so we're seeing we are preparing now to be able to meet that increased demand.
Okay. Just one more quick one on CFT. As you sort of look to install the U. S. Facility and put region line later this calendar year, I presume your the price that you sent in the past, I suppose, over the last 2, 3 years did obviously factor their shipping costs and freight charges and whatnot.
Those would be, I think, really, cycled out once you've got a local operation. Does that mean U. S. Operations could potentially operate at a higher margin than your Australian operations? Or am I sort of mixing things up here?
No, I think you've been right. So we are we're currently sending product to America. We are paying freight. And so operating locally, just being a local will give us more opportunities, but also obviously our freight costs will drop and we will see higher margin out of manufacturing in the U. S.
Okay. And look, the very last thing, there's talks about the press talks about the quarantine facility next to Toowoomba Airport. Anything you can update us on that front? Is it if it happens, is it likely to be an FY 2021 story?
Raju, Dennis Wagner here. The quarantine facility is a proposal from the family company that's associated with the well camping airport through the Queensland government. So we've put a proposal to the government that we would build the facility and they will operate it. From Wagner's perspective, the revenue generation there will be some revenue generation in concrete and quarry materials for the construction of the site. It will be FY 2021.
So if this happens and it's a government decision as to whether it proceeds or not, If it happens, it will happen before and we completed before the end of June. So there may be some revenue, but it won't be overly significant in the overall scheme of the business.
Okay. I'll leave it there. Thank you very much for the feedback.
Your next question comes from the line of Curt Joffre from Morgan. Please go ahead, Curt.
Hi, Dennis, Ken, Curt, and Michael. Thanks for your time today. I've also got a few questions. Firstly, just on Cross River Rail, can I just confirm, did you generate any revenue in that project in the first half of FY 'twenty one?
Yes. Yes, we did, Curt. Yes, it's the site's sort of into full production. So there's quite a
bit of revenue from that site. Production started in September, and we've been ramping up to get to full rates probably by the end of December. You can see the photo on the front of the presentation with all the tunnel segments in the yard. So we will see a better contribution in the second half because we'll be at full production for 6 months as opposed to 3 months of production.
Understood. And how sort of have been margins on the production of those tunnel segments to date? I guess, how they sort of met your expectations? Yes.
They have, Curt, production targets are being met. The jobs are flowing along as we expect it to. So
And then sort of on
that sort of $40,000,000 contract, how much do you think you'll sort of receive in FY 2021?
I'd say 75%, 80%, something like that, depending on how our client goes in the installation of the elements into the tunnel under the river, which is just above.
And so you might have only received 15% or so in that first half, 15% that is?
It'd be more than that, I would suggest.
That's okay. I'll take that offline maybe.
Yes.
Then just on the Carmichael contract. What is sort of your second half 'twenty one volume expectations relative to the first half 'twenty one? Do you think volumes into that contract will be sort of stable or higher or lower, just broadly speaking?
That would be stable there, Kirk. We don't see any real change to volumes on that project.
Yes, that's great. And then just some of the other, I guess, infrastructure opportunities more into the core Construction Materials business. How has sort of tender activity been? And do you have sort of any line of sight or greater visibility? And when you think tender awards will start to flow after that business?
Well, tendering activity is strong. There's plenty going on out there. And we're winning our share of work sort of every week. So there's plenty of opportunity. We're winning our share of it.
And we see that this sector providing plenty more opportunities into the future. We sort of see it's a good spot to be in the construction materials sector with plenty of activity happening in Southeast Queensland. Then the resource sector is providing equal opportunities. Actually, we're seeing a lot of projects expanding, a lot of customers wanting to increase volumes. So once you're in there and performing contracts, the upside is quite significant when they start ramping up their export volumes.
Understood.
And then some of those major concrete projects, I think, in the wind farm space, I think you've touched on in the past how sort of those tenders progressing? Do you sort of expect anything to be awarded in the second half of twenty twenty one?
We do hope there could be
a couple less in the second half of twenty twenty one. However, I don't see that they would make any real contribution in this half, contributions from those projects would flow later this calendar year.
Yes. So that will help sort of build out the pipeline of work for the business into FY 2022 if you're successful on that time.
Yes, exactly. Yes. The reality of it is there'll be very little revenue generated from those projects before June. It's more into the next year.
And sort of inland, right, so that opportunity there, when do you sort of think progress will be made on tenders and award of work for some of the opportunity you're targeting on that project?
We're in discussion now on material pricing, albeit a little further away than the sort of local area here in Southeast Queensland. We do see we do expect revenue to start to flow or opportunities to start to be let in that area throughout the first half sorry, throughout the second half next year. So it's 12 months away at Leggett.
And just one final one for me, sorry. Those comments you made, sorry, about the your plans to sort of seek third party capital for EFC. I guess that was a bit of new information today. Could you provide maybe a little bit more color on that front in terms of how much of the business would you be willing to sell and sort of how advanced these discussions with third parties to invest in your EFC business?
Yes, I can do, Curt. What's happened there is we've been getting quite a bit of traction for the product, particularly in Europe. And as we've formed relationships with various companies over there, we've had a number of approaches to get a slice of the pie effectively, people that want to get on board and be part of our EFC growth internationally. So we're carefully considering what the best options are for that business and what the best channel to market is. A lot of the people that we've been in discussions with don't only sort of offer the investment or the assistance we need to really ramp up the growth of the business over there.
They also offer that critical channel to market. So we're actually looking at a number of different models for our wet friendly concrete business at the moment. And one of those is to bring on a partner that provides the access to the market and also that desire to really be part of a green technology that solves carbon emission issues.
So would you be sort of would you be the partnership in part sort of more of a fifty-fifty then share of the business going forward or
We don't know, Kurt, but I wouldn't say I'd get to fifty-fifty. We would want to maintain more business than that if we were to do anything if we went down that path. Awesome.
It's really about the future and the technology development. So we have basically a pilot level product at the moment that's getting great traction. Now we'll build something like 10,000, 11,000 cubic meters of concrete into London this financial year. The opportunity then to grow that and to continue development and get that product right for all grades of concrete, all applications is the vision. And that's where we're trying to get it and while we're looking at working with partners.
Moving on to our next question and it comes from the line of Peter Wilson from Credit Suisse. Please ask your question, Peter.
Hi, thank you. Good morning all. Can I just follow that one up on EFC? The type of partner that you would be looking for, is this a are we talking kind of integrated cement and concrete companies or construction companies?
It could be that, but more of a green technology type investor that's got the desire to see this technology pushed ahead. It's probably not really an existing cement manufacturer that's a potential partner for us. It's more of a organization that's just totally committed to that green technology that provides solutions to the world's carbon emission issues.
Okay. So that would be some kind of investment, some help on the technology side, but not necessarily the use in distribution of the product?
Yes. We see the system we have can be added to any batch plant around the world. So it's reasonably straightforward process to put the equipment that you require to batch EFC on an already existing batch plant. So we need to create the demand for the consumers need to create to demand the product and then we'll have batch plant companies wanting to adopt that technology to meet the market requirements.
Okay. And a question, I guess, for Michael on that. I mean, it does seem like green concrete's time has come particularly like in Europe, in the U. K. When you look at bed friendly concrete, how do you think it's measuring up to some of the other solutions over there, some of the other dry cement products?
We believe that we are well ahead. If you look at the traction in the market that we've been able to obtain, so as I said before, something like 11,000 cubic meters, We are mining batch plants in London and put into our footings and into projects such as HS2, the train line from London to Birmingham, the biggest construction project in Europe. So we've had concrete onto that. There's a real push certainly in London where our focus has been for the for green materials. We're seeing it at all levels.
We're seeing it from top levels of government over there and it is filtering down through into the guys that are collecting materials to be used on projects. And as your question is to competitors, we've had other or the companies that we're using let's put it this way. The companies that we are that are buying the activator from us and supplying it from the Calgary market have previously used our competitors and dropped them to use us.
That's a good time. And
then there's a bit of an exit feedback there. CFT cross international sales, how significant were they in the half? And what growth are you seeing there?
The international sales were fairly small, but I guess it's a start. So generally, what we find is that a new customer will come on board and they're taking smaller numbers. And then it is a slow moving industry. They take time to become the standard product. 10 years ago with Energex in Queensland, we're supplying a few of them.
So today, 3 year contracts to supply cross arms. So in the last short period, we've had new customers, too many customers in New Zealand. We've been sending cross arms to Oman in the Middle East. And they've only been initial orders. So we're expecting feedback.
Wherever they go, they love them and we end up using more selling more and more of them.
Okay. Got it. And then on the Construction Materials Services segment, I'd just like to understand some of the pluses and minuses in terms of margins for the first half. So in the cement business, for example, given that your major customer has been ramping up volumes, would we be right to assume that the overall segment margin would have declined in the first half?
The cement? No.
Yes.
No. As our volumes have gone up, Pete, we're absorbing more fixed costs. So as we've said previously, it costs us takes us the same amount of people to produce 200,000 tonnes as it does to produce 600,000 tonnes. So our margins have improved.
Okay. That makes sense. And so that dispute with the major customer has been resolved. Can you give us an update on how the pricing worked out for that one?
Yes, we can, Peter. We're sort of comfortable with where we've landed after that dispute and pricing is quite
appropriate. And
it is as per the contractual agreement we have in place. So yes, it's an appropriate price and it's as per our agreement, which is good.
Okay. And I guess going forward versus the first half, I mean, should we expect any kind of major change in kind of margins on that contract after the business going forward? Or is it just a case of increased volumes, increased fixed cost absorption like Fergus said?
I think going forward, we can't talk about specific pricing on the specific jobs, Peter. But going forward, we see increased volumes. And as we pointed out through the presentation, particularly in the concrete side of things, we see some improvement coming in concrete selling prices, which is pleasing because it's certainly been a tough market over the last 12 months and we look forward to it recovering.
Okay. And then aggregates, so the sales of aggregate material, can you comment on which kind of market segments that's going to and what kind of grades and whether it's been kind of low grade, high grade products?
Yes, we've seen a shift in that area in our average selling price, an upward shift in our average selling price, which indicates higher grade materials are moving more so than the lower grade materials. And we've got a sort of strong performance from both the Southeast Queensland assets that we operate combined with the mobile crushing and services business that we run. So both those areas are providing strong results for us.
Okay. Good. And the precars business, what's your confidence level in keeping that one operating once the Cross River Rail contract ends at the end of the year? Do you think there'll be enough to fill it?
It's looking pretty good. There's some major highway upgrade projects that have actually been let now and are going to happen. So there's one in particular to the north of Brisbane that's going to consume a lot of precast. And the other huge opportunity sort of 12 or 18 months away for the precast business is the inland rail project. There is a massive amount of precast concrete elements required in our region for that.
So we are quite excited about the precast opportunities that in the market and already identified. We have a number of tenders in place now that if successful will drop in line with the wind down of Cross River Rail. So it's pleasing to see those opportunities lining up. So we don't end up in a position where we're sort of winding down that precast factory.
Sure. Got it. And one last one for Fergus. So in the results, so is it in the pro form a, I guess, there was $3,800,000 of adverse movements in foreign exchange contracts excluded. Can you just remind us what are these derivatives?
What are they hedging against? I mean, obviously, what are you hedging against?
So U. S. Dollars and there's an interest rate hedging there as well. So interest rate hedge, whilst they're paying it down, the interest rate going against us hasn't helped there. And with the dollar, we took out some coverage when the dollar dropped right at the start of COVID because there was a lot of doom and gloom around.
And that coverage we've still got going forward. And as the dollar has instead of dropping and flattening before it starts to rise, it bounced. We've got ourselves in a position where it's looking worse because the dollar has moved a lot. It's not unexpectedly budgeted for at those rates that we were hedged at. So we're quite comfortable with the position.
It's obviously disappointing not to be able to take some of the higher rates on offer at the moment, but that looks better for next year.
So it might be a bit of shifts, but if this you've only got, I guess, a very, very small amount of U. S. Dollars revenue. So what is this hedging?
U. S. Dollar expenses.
A lot of our raw materials in this order station are purchased in U. S. Dollars. So that's in our new generation building materials business and in our cement business.
That's just that's a mark to market, Peter. That $3,000,000 will unwind mostly that will unwind in the second half.
Okay. Yes. I guess I think it remains to be fair to the quantum of your U. S. Revenues, but that does make sense if it's your expenses.
Not related to our U. S. Revenues. Yes. It's not at all related to our U.
S. Revenues. It's related to our ongoing monthly requirements for raw materials into the Southeast Queensland business here.
Okay. That makes sense. Fine. I'll leave it there. Thank
Your next question comes from the line of Robin Liu from Macquarie. Please ask your question.
Hi all. Thanks for taking my questions today. So I just want to touch on the concrete business. And I know you mentioned that you're seeing some improvement in prices here. Can you just give us an indication of just what the size of these improvements have been?
And then just touching on where you see the market balancing through 2021, particularly given the fact that infrastructure and residential have been showing signs of improvement there?
Yes. Concrete price increases in our organization have been sort of order of magnitude 10% to 15% up. And the volumes that we're seeing particularly out of the residential activity coupled with the increasing infrastructure work, projects such as Cross River Rail and some major road upgrade work that's going on, we see we have a fairly optimistic view on concrete volumes going forward. We see them increasing and providing opportunity for all concrete producers in Southeast Queensland.
Do you mind elaborating a little bit on the residential markets? I know you talked about infrastructure a bit. Just seeing whether there is some direct benefits from increasing demand in resi, particularly in Queensland?
Yes. Our biggest exposure to the residential market is probably outside of Brisbane, particularly around sort of the Sunshine Coast and Toowoomba region. And we've seen significant increase in activity in the general residential market in that area. I would say the majority of our customers are now sort of booked out almost 12 months in advance on their home build program. Whereas if you wind back 12 months ago, they were probably sitting at about 4 months work ahead work in hand.
They're now almost 12 months work in hand, if that helps.
Yes. Thanks. And then just on CMS, obviously, haulage business has been doing pretty well. You've been doing contracts over the last 18 months. So can you give us a bit of an update around the mix movements in the overall CMS business based on against what you would have seen in the first half twenty twenty and just on the impact on margins as well?
Thanks. Sorry, Robin, are you talking about just the project style of things or across the whole business?
Across the whole CMS business, just around the mix movement across the 4 key segments.
Look, in terms of first half versus first half, we would have like so cement revenue wise is up nearly 23%. Concrete's up nearly 47%. Our 480 projects is up 75%. Our transport project is up 76% in revenues.
And then possibly on margins or is that something that you could talk to?
So obviously, cement margins are much better as we've got a higher volume, as I said before. Concrete operations, the margins are about the same. So we whilst the revenue is risen, we haven't seen a great increase in the actual underlying margin. It is a better margin than it was, but on a percentage wise, it's about the same. Our 4A project has seen a really large increase because we've gone such a big increase in revenue has driven such a large increase in the profitability.
And likewise with transport, we've seen a large increase in our EBIT as well there.
So in summary, we're very happy with the margin growth on all of the businesses, excluding concrete.
Yes. So if you look at projects that we're missing, as Sam said, we haven't had a concrete project drop for a while and concrete projects are one area where we do see some good margins and good revenues. In terms of quarry projects, we still got some equipment that we'd like to see better utilized. Our transport projects, we've got our transport fleet very well utilized there. So for us to look at some improvements in transport would really come down to just small increases and increases in capital.
And cement, obviously, volume really helps cement. It's a volume business. We are also looking at more better utilization of the plant and better and more small loads of moving products and things around in the cement plant. So there is some potential there. So we're not we're encouraged by what we've done, but we've got a lot more to do.
Yes. That sounds good to me. I just want to touch on costs for a second. So particularly around your input costs, given the higher Aussie dollar, how have you seen this contributed to your particularly your CMS margin expansion, whether it's cement or other raw materials?
So as I said before, part of the reason why we've got that mark to market is because we've hedged out a lot of our U. S. Dollar exposure. So we haven't as I said, we haven't enjoyed that uplift. So we probably haven't seen that improvement in margin.
But next year, we are in a position to take advantage of
the higher exchange rate.
So we should see an improvement in margin.
Yes.
Sort of more operationally, shipping is the expense that's the one to watch at the moment. We've got a good shipping contract in place. However, as we look into the future, we are watching that shipping pricing. It's certainly on the uplift.
Yes. That makes sense. And then the last one for me is corporate costs. Just saw a $3,500,000 increase year on year. Do you mind just giving some color around what drove the higher cost this half, please?
The derivative mark to market. If you exclude the derivative mark to market, our underlying costs are down on the first half and second half of last year.
Okay. Thanks. That's all for me.
Your next question comes from the line of Brook Campbell from JPMorgan.
Just a quick one. It might have already been referred to, but just keen to understand the timing of the additional concrete batching plants that you're looking to bring in commission, I presume, over the next sort of year or so, just the timing of that one, please? And also,
Yes, Brook. So we've got 2 more sites that we've got. One of them now has the VA back and is ready to go. We don't have a desire to put a plant on that in the next couple of months. But certainly, I think we'll bring that plant online over the next 12 months.
So we would see no revenue generated from that plant. It's on the south of Brisbane in the next 12 month period. It will be a plant that has the same sort of capability or capacity of the other plants we've put in place. So I would say 12 months away for that one. The other site that we've identified is just on the west of Brisbane.
And we've purchased that land and it would be similar timing. It would be 12 months.
That's great. Thanks actually. And then I guess for the 2 sites combined, what would be the total CapEx for sort of land and building up the plants over the next 12 months or so?
The land is already taken care of. The plants would be in the range of sort of $2,000,000 to $3,000,000 at both sides.
Great. Thanks.
You generate sort of at least circa 10,000 cubic meters a month out of the 2 plants.
That's great. Thanks. There are no further questions from the telephone lines. I would now like to hand the conference back to the presenters for closing remarks. Thank you.
Well, thanks very much for dialing in to hear our results today, everyone. That concludes the presentation. And we will we are hosting a number of 1 on 1 investor presentations over the next few days and are happy to accommodate anyone that would like to organize that with us. Thanks very much. We'll close the call.
Ladies and gentlemen, that concludes today's conference call. Thank you for your attendance. You may now disconnect.