Tasmea Stock

Good day, and welcome to the Tasmea Limited FY '26 Full Year Results. [Operator Instructions] And finally, I would like to advise all participants that this call is being recorded. Thank you.

I'd now like to welcome Stephen Young, Managing Director, to begin the conference. Stephen, over to you.

Thank you, and good morning, everyone, and thank you for dialing in. It's a pleasure to host this FY '26 results briefing. Financial year '26 was a record year and our team is proud of the results, which include an outstanding second half. We delivered an underlying EBIT of $118 million, up 54% on the prior period. Our underlying net profit after tax was $73 million, up 42% on the prior year and we generated a return on capital employed of 38% and a return on equity of 32%. Importantly, we delivered shareholder returns. Our earnings per share were $0.288, up 27% from the prior year. We declared a final dividend of $0.085, up 32%, excluding last year's special dividend. And really importantly, since IPO, we've delivered a total shareholder return of some 523%.

Our operating cash flow was strong, $147 million, representing 126% growth on prior year and 125% conversion of EBIT into operating cash flow. We completed 3 programmatic acquisitions, WorkPac, Maxim and JPS. And it's with pleasure that I announce that we're upgrading our FY '27 guidance up a couple of million dollars to $205 million to $210 million EBITA and net profit after tax and amortization, $130 million to $133 million.

Over to you, Mark.

Thanks, Stephen. Next page, I think, the financial highlights, Slide 3. I think the key message from here is that we grew organically at 18% as well as via acquisition, which is part of our compounding strategy. Our underlying EBITA was $118.1 million, up 54%; NPATA, $73.7 million, up 42%; and earnings per share, $0.288, up 27%. We achieved on a net revenue basis, a gross margin of 16.2%, which represents the delivery via our highly specialized margin businesses. Importantly, our return on capital employed increased to 37.8%. And we've provided an organic bridge at the bottom of this page in the table that takes $118.1 million, strips out the $8 million for the contribution that WorkPac made, which left just over $110 million against the pro forma FY '25 number of $93.2 million, signaling or generating an organic growth of 18.1%. Importantly, as Stephen mentioned, it accelerated in the second half strongly and every segment grew in the second half against the first half.

If I could turn over the page. And just continuing with that, the second half run rate, we are carrying through into FY '27. We've started the first month very strongly, hence, the reason for providing an upgrade. The first half EBIT of $44.3 million versus the second half EBIT in FY '26 of $73.8 million. Margin grew from 13.4% to 18.5% on a net revenue basis. There are a number of things driving this, which included the mix skew of the higher-margin revenue businesses coming through more specialist labor being sold versus a higher proportion of materials in the first half pass-through.

Importantly, greater self-performance and cross-selling across our subsidiaries, price escalations kicking in for the second half and far better labor utilization as a consequence of some deferred project work in the first half coming through in the second half, ensuring that our labor was highly utilized. On top of that, we've been driving an efficiency and cost reduction program across a number of our subsidiaries by merging a couple of our smaller ones up into our larger subsidiaries in the same segments and locations which saw a number of, I guess, headcount savings. And we've been adopting AI to streamline our back-office processes, which again has provided more rapid data and also an accurate data and also on top of that, eliminated a number of processing headcount.

I'll turn over page. We're forecasting just leaving that page of our EBITA margin to sit around 14% at this stage. If we deliver higher cross-selling like we're expecting, the risk could be to the upside there. In respect of our strong and consistent growth, our strategy been one which has now been going for 3 years since we've been on the Board and it's a compounding strategy. Total shareholder return was 523%, as Stephen mentioned, since we listed in April '24. Pro forma EBIT has grown from $55 million in '24 to $93 million in '25 to $128 million in FY '26. And on top of that, our compounding annual growth has been about 56%. Underlying earnings per share has grown from $0.179 to $0.288 and around $0.47 we're giving guidance at, which is about a 38% compounding return or increase. So shareholder value has increased alongside of our earnings and has not been diluted. Importantly, our business model generates cash, 101% over the average of the 3 years, and this is what is in funding our reinvestment.

If I turn over to the cash generation page on Slide 6. Operating cash flow is the engine model of our business model. We focus on it. We measure it and we ensure that our earnings is turning into cash. Operating cash flow before interest and tax was $147 million, 125% conversion to underlying EBIT. And as I said, has averaged over 100% since IPO. After interest and tax, it was $91 million. If you take out our stay-in business CapEx of just over $22 million or approximately 3% of revenue, we have a high free cash flow. What drives this is our schedule of rate contracting, predictable model, regular invoicing and recurring maintenance work for our long-term customers. We are not carrying long-dated project claims.

I'll turn over to our balance sheet. We have the capacity to continue acquiring without going to the market for equity. Net debt was down to circa $60 million from $110 million. Leverage was 0.04x at 30 June, but well below our 1x net debt to EBITDA target. It stepped up to about 0.08x after the acquisitions of Maxim, which completed on 1 July for Maxim and on 3 August for JPS. So still sitting well below our 1x. Our operating working capital efficiency also improved to about 4.4x, down from 11.4x. You can see we have a low-risk contracting model. Bank guarantees represent only 1.3% of pro forma revenue and we do not carry large performance security bond exposure for the majority of our work, which is done under MSAs for maintenance.

The effective cash payout rate for our dividend for FY '26 was within our target range of 30% to 50% being at 46.6%. Our DRP is taking a good proportion of that and putting it back into the balance sheet, led by the founders and executive directors reinvesting. The rest is retained and reinvested into programmatic acquisitions for high returns on capital. We're currently in live negotiations on a number of specialist opportunities, which none are allowed for in our FY '27 guidance.

I might pass back to Stephen.

No, to Trent, I think.

Just over to Trent. Trent?

Thanks, Mark. Operator, Slide 8, if I may. We've shared this slide previously when we announced Maxim and that image on the left. We've just given a few quick updates on the right-hand side. But what it confirms, I think the market has already confirmed that is data centers are real and they are an absolute near-term electrical market for our business. You'll see on the left that there's a forecast capacity to grow to 3.2 gigawatts by 2030, with Melbourne representing 1.1 gigawatt of that. We see that's obviously critically important to Tasmea because we own Maxim in Melbourne.

And in the first 2 months, we're proud to say the group has won a few extra contracts in Victoria with their existing customer and that was already part of the DD that we forecast. So outside of Victoria, we see South Australia as the second front. There's been a lot of discussion around IREN coming to town. They've announced that they will have an investment in South Australia. And likewise, Firmus is looking at 2 opportunities in Regional SA. You'll see that AEMO has highlighted that 225 sites are in development already this year, up against 97 last year. So what does this mean? I think it's the constraint on all of this is that it's the power not the land or the buildings. So transmission, substations and connections. This is our work. This is what we're proud of and we have one of the largest remote specialist electrical workforces in the country.

Over to Slide 9, please, operator. Back to our core market. So that's the sustaining spend. So this is a recurring far less cyclical than the growth projects. You'll see in the last week, BHP and Rio have touched on the market, they are about $22 billion in annual CapEx. $15 billion of this is in sustaining and replacement CapEx on assets that already are operating. This is our addressable market and what we're working towards. Sustaining spend is maintenance led. It repeats every year. It's exactly why we put so much focus on the Master Services Agreements.

You'll see that BHP is very much focused on Copper South Australia. So the 3 key sites, Prominent Hill, Carrapateena and Olympic Dam. And they also got a big focus on Car Dumper 6 over into the Pilbara. What's exciting is BHP is called Copper SA, the most expandable major asset with over 80 years of life left. For Rio, the focus on the Pilbara mine system and the port replacement CapEx and a bit of work up in Weipa and Rhodes Ridge. So what does this mean for Tasmea? We've converted over $80 million worth of maintenance contracts with BHP in the last 90 days and super excited about supporting them in their growth ambition.

If you go to the next slide, please, operator, Slide 10. Our most recent acquisition, so JPS, this opens a new end market for Tasmea, but the same maintenance economics that we've run in the past. So we completed with JPS on the 3rd of August. This sits inside our mechanical segment that you'll see. You'll see in the image, there's over 10 producing LNG facilities across the country. This is about 20% of the global supply. So these plants are built, they're committed and they're running. So we see decades of operations, maintenance and shutdowns. We see this as our sweet spot. JPS is also considering and pursuing opportunities in the United States with some global customers that we already service in Australia.

I'll hand over back to Stephen or Mark.

Thank you, Trent. Maybe just to round out Trent's comments, I urge those who are on the call that haven't already done so to review both Brendan Craig's comments for his FY '26 results. And likewise, Simon Trott you'll see that they share our outlook or maybe better put, we share their outlook, and they are excited about electrification and the fact that they are mining materials that they see will be an exceptional demand. I wanted to share that our compounding strategy is delivering value. And if we could turn to Slide 11, there are a couple of key messages.

First of all, our twin pillar high-growth model is continuing to generate significant shareholder value. Our total shareholder return, as both Mark and I have mentioned, and we're very proud of, is 523% since IPO in April 2024. We seek to acquire #1 or #2 specialist operators at 4 to 5x earnings to EBIT, earnings value -- enterprise value to EBIT. We retain the leadership and that's really important. We get asked from time to time by shareholders, how can you manage so many businesses? The answer is we don't manage them. We direct the owner-operators who manage them and we support them to grow, but they do the day-to-day management.

We grow earnings organically. We encourage cross-selling, which makes a significant contribution to our margin. Really importantly, we convert their earnings to cash. It's something that Mark monitors every week. And then that cash that's generated, we reinvest it in a disciplined manner. We are very disciplined about capital allocation into the next acquisition. That is the loop that you see on Slide 11, and it's absolutely critical. So our unique business model has delivered 38% earnings per share compound growth, high returns on capital employed, 38% at the 30th of June. We continue to expand our portfolio and diversify across key industries, which reduces risk overall.

So it's interesting for those of you who were shareholders before we bought Maxim to consider whether post Maxim, we are more valuable, more diversified and less risky as a result of that acquisition. Obviously, we considered so, which is why we proceeded. Each business contracts and trades individually. Really importantly, Tasmea does not trade and the only parent company it's given is to our financier. So we've got the benefit of diversified customers, diversified commodities and diversified geography, reducing risk for the founders and all of our fellow shareholders. As we expand our specialist businesses, our cross-selling and organic growth accelerates and delivers strong compounding shareholder returns.

It's very important, I think, to talk about alignment between us and yourselves. So we are led by founder directors who collectively own 54%. I've previously said in very Australian terms, we own a ship load of equity and we've got a lot of skin in the game. But really now very importantly, we've got more than 90 employees leaning into our results. They're included in our long-term incentive plan, which is now going to deliver most probably double the benefit they ever could have hoped when we achieve our numbers next year.

Really importantly for us, I mentioned last year that we are focused on getting Jason's option package working to his benefit. Jason gets his first tranche of options today, and we hope that he will get. And obviously, our guidance would have him getting the next 2 tranches prior to the 30th of June or on the 30th of June '27 results release. Importantly, we've now put in place an options package. My apologies, we haven't put in place. We've proposed an option package for Trent that will go to shareholder approval at the upcoming AGM. The incentive plan runs for 5 years. It's tied to EBIT growth from $200 million in FY '27.

[Operator Instructions]

Hello. It's Stephen Young speaking. I understand that either my line dropped out or something similar happened. I'm back, and hopefully, everyone is still with us. I was announcing that we proposed a 5-year share options package for Trent Northover, our Executive Director, commencing the 1st of July '26, which will be approved by shareholders at the forthcoming AGM. Importantly, the incentive plan runs for 5 years and is tied to EBIT growth from $200 million, which is the guidance we've provided roughly in FY '27 to $600 million in FY '31, which requires an organic growth of 10% per annum. So we will continue to pursue our twin pillar strategy of organic growth and growth by acquisition. We will provide more details around that at the AGM.

But I think just at a very high level, as set out on Page 12 in the navy blue box, 900,000 options every year for the next 5 years and the EBIT target goes up $100 million each year for the next 5 years. Whilst that may look like a stretch, it's worthwhile noting that our EBIT target this year has gone up by nearly that amount.

Over to Jason now to talk about the conversion of our FY '27 pipeline.

Thanks, Stephen. If I could go to Slide 13, please, to discuss our pipeline. We have never had this much visibility this early on in any previous financial year. This is our highest ever pipeline. Our June guidance shown on the left-hand side, secured plus revenue plus tendered work was at $1.21 billion or 85% of the pipeline. Two months later, it is at $1.31 billion or 90% of the pipeline. That is the derisking of FY '27 happening in real time. We have more than 125 live Master Services Agreements with 5 recently executed and a number under current negotiation. MSAs are the reoccurring base.

In regards to the contracts themselves, in the Electrical segment, Maxim has been successful with 2 data center contracts in Victoria. We've won more than $80 million of maintenance work at BHP. Tasman Power continues to win MSAs and MCA work throughout the Pilbara. Sigma Power Services has a record order book and Future Power was awarded recently the BHP Ministers North project, just to name a few. In mechanical, Forefront have an MSA in the U.S. GMS rig hire contract has been executed and TRA has won MSA with Fortescue. In the Civil segment, Flanco continue to win multiple contracts throughout the Goldfields and Northwest Mining and Civil have recently won a Rio Tinto Iron Ore rail contract with their Master Miner Works Agreement.

If I could go to Slide 14, please. We're excited to provide an upgrade some 63 days after setting our original guidance because the demand shown previously has told us to. Like what Stephen has already touched on, our EBITA is up to $205 million to $210 million from $202 million to $208 million. Our NPATA is up to $130 million to $133 million, up from $128 million to $132 million. That's minimum growth of 74% and 76% on FY '26. What sits behind it all is a full 12 months of Maxim, 11 months of JPS and our continued 10% to 15% organic growth across our existing businesses. This is underpinned by our strong order book with major wins across our Electrical, Mechanical and Civil segments. We've had a very strong start to trading in FY '27, which was significantly up on the previous period of the same year. And as Stephen said, demand for our specialist services is as high as we have ever experienced.

I will now hand over to Stephen for questions.

Thank you very much, operator. We're prepared to take questions now. I'll leave you to handle the mechanics.

[Operator Instructions] And your first question comes from the line of Jonathon Higgins from Unified Capital Partners.

Congratulations on the results and the early upgrade. Maybe just on the first one, on Jason's point, it sounds like you started the year up pretty strongly. You've got plenty of visibility. Just the dynamics that are driving that in particular? And is that something that picked up through the half?

Maybe I'll go first and my colleagues might want to add to that. We've had a very good July, both in terms of actual performance. So July was well in front of budget, which is exciting. July is a continuity of the last quarter of last year, which was exceptional. And some of the jobs that we've won, some of the MSAs that we have secured have all kicked into touch during July and we're quietly confident about the way both the year looks and importantly, how the first half looks.

Right. Good color. A couple more from me. Perhaps on the acquisitions. So you've got JPS and Maxim coming through. You've completed those businesses. You've called out those data center wins. Just wondering if you can tell us about sort of how long they run for or do they expand from here? And then also on JPS, you've also called out the U.S., I think, for the first time. Just wondering if you can tell us what that sort of looks like.

Yes, we can. Let me do with the U.S. bit, and then I'll hand over to Trent. There are a number of Australian operating customers who have asked both Forefront and JPS to go to the United States. We did that a couple of times last year with Forefront very successfully. Believe it or not, those customers think it's better value for us to put a team on a plane. They pay for them whilst they're on the plane and the airfares, go over, do the work and turn around and come home. That's very easy to say yes to that work. We're cautious about growing too quickly in the U.S. But in the event our clients want us, we'll meet our clients' expectations. I'll get Jason to try again. I get Trent to add to those comments and importantly, deal with the Maxim part.

I'll just finish on JPS. Yes, Stephen has been vocal and supportive of where the direction is. As he said, the customers have asked for us to go over. I'm supporting JPS in the next fortnight with 7 days of visits to see about 15 customers. So the interest is there, but it will always have to come back for Board approval around our expansion. But it's exciting that JPS have been asked to go there similar to when they went to Angola 4 weeks ago. With regards to Maxim query, Jono, the 2 contracts are enabling works with the existing customers. So we did see those through DD phase. And it's always nice to see not long after settlement that those are confirmed. So they are with existing customer and enabling works.

Excellent. I might go one more, if I can. You sort of talked towards the shortage and availability of power and sort of personnel in regards to that. And you guys are one of the few sort of now multiregional operators in the electrical space. When do you sort of think you'll see -- do you have a view on when you'll start to see the remote and sort of more flying fly electrical contracting work in DCs coming through for your business?

Let me just touch on that. And then again, I'll hand back to Trent. If you look at Australia's current data centers, they're all located in CBD locations. If you have a look at what's going on in the United States, that was where they were maybe 5 years ago, and there's been a lot now that have gone to Middle America and in particular, Texas. We think the trend will be the same in Australia that data centers will have to go to where land is cheaper, power is available and water is available. Australia is unlike the U.S., a population of 28 million that live essentially around the Australia's coastline in the capital cities. As you know, our business is focus on remote, and we've got Australia's largest remote workforce, blue-collar workforce. And we think we are uniquely positioned to take advantage of that trend as and when it happens.

As Trent has already mentioned, there are well beyond the drawing board projects that are coming up in South Australia. We're aware that a couple of the hyperscalers have been having a look at the Pilbara, which again is our backyard. So we see that we are very well positioned for a trend that is emerging. I know Australia's data center operators organization, whatever they call themselves, announced yesterday that there's $46 billion of data centers committed over the next 3 years. These are just extraordinary numbers, and we'll do the very best we can to keep up with them, but that's most probably a number of multiples of the amount of electrical labor that's available to build them.

Yes, I can support that, Stephen, if you like. I think we've got over 2,000 sparkies in the group, Jono. I think you know that. So that will be a mix of FIFO, DIDO. That is what we're set up to do traditionally. What's important is we've got collaboration within the group. So the Maxim business are a fantastic bunch of people and have been very open to sharing some of their insights and their skills, and we're trying to get that collaboration happening within the group to make sure we're ready for the next phase.

Operator, we're ready for the next question, if there is one.

Your next question comes from the line of Amanda Kelly from Barrenjoey Capital Partners.

I'm just wondering if you can talk through the acceleration of the electrical margin into the second half. Just what type of works drove that stronger profile?

Amanda, it's Mark here. I'll let Jason answer after this. But in the first half results, I think we mentioned that we had a fair bit of material supply at low margin, which with the deferral of a bit of the project-based work into the second half meant we had a bit of unutilized labor as well in that first half. So when you flip that on its head with everyone being super productive and more specialist labor being sold and one of our businesses, SPS had a stunning second half and that is quite a high-margin business, given the specialist nature of high-voltage commissioning work that they do. It's very unique and they work for a number of the players in both the electrical space and also direct for end clients. Do you have anything further Jason...

No, you've pretty much covered it all, Mark. Just to support what you said, yes, the first half had a lot of the material component purchases and some of our project work in the second half, we're able to execute that, get all the installations done and all the commissioning completed, et cetera. So yes, Mark's covered it.

You notice that we've got the guidance of 14% EBITA margin for the next year.

Yes. Cool. And maybe just a second one. Just wondering out of the JPS work in the U.S., are you expecting the FY '27 work to become like more recurring maintenance then? And does that mean that you might consider having a base in the U.S.

I think we'll proceed with a great deal of caution. It's very important that we meet our clients' expectations. The U.S. is a very big market. There's not a lot of evidence of Australian companies going to the U.S. and doing well. As a consequence, we'll focus on maintenance and we'll grow cautiously. Obviously, when you end up with more work and you're no longer doing fly-in, fly-out, JPS are a very capable specialist organization, and they've got technology and skills that clearly their global customers, which I think is really important. If you have a look at their customer list, most of their customers are actually global in their operations. And they are seeing skills that have been deployed by JPS in Australia that they would have like to have offshore. So one thing is to go to Angola. It's not hard to imagine that Australian skills are better than you might have in Angola. It's exciting to think that our skills might be better than what's available in Houston. But if that is the case, we'll grow cautiously.

So just to support Stephen's comments, Amanda, I think I will bring up a Stephen comment is I don't go anywhere without a PO. That was his first comment internally when we raised it to do this visit in the next couple of weeks. So we've received this endorsement for one flight without a PO, but it's client side focus, which is probably the key point here. So there's no delivery risk. We're not spinning spanners over there in the U.S. market. We're not trying to get that labor. It is the LNG market labor likely from Australia that we can grow into the U.S. to support our customers. So we're just supporting the maturity of the LNG market as it expands in the U.S.

[Operator Instructions] And your next question comes from the line of Lincoln (sic) [ Lachlan ] Woods from CGS.

I guess the first one is, can you kind of talk through just the success you're having with Maxim in terms of bringing in the other subsidiaries and kind of cross-selling them into the key customers?

Can I again just touch on that before handing to Trent. We are managing the cross-sell with a great deal of caution. We are providing labor to Maxim. That's easy. Going the other way and sharing skill and knowledge is something that we will hasten with caution. There are very significant opportunities arising outside Melbourne and we just need to be very careful, first of all, to be seen by our customers to be looking after -- this is our existing customers to be looking after them first. Then we need to expand as a group and look after new customers operating in new locations.

As we've shared with you, we are concerned about the available labor. We think that Tasmea, as a result of the WorkPac acquisition, best placed to meet the increasing demand for skilled labor. But you'll gather from my comments now on a couple of points. We are growing consistently, but we're also growing with caution, trying to meet our customers' expectations in a way that we exceed them rather than let them down.

Lachie, do you want any more info or you're happy with that?

If you've got any more, we would always love it.

No, it's more supporting Stephen's comments. So the cross-sell is real, but what our biggest focus is to make sure we support their labor demand. They've got existing customers. We want to deliver on what we've got. Jason has always said, don't give up what you've got, don't walk past new customers and miss the existing one. So we want to make sure we do that first. They've got a lot of experience in data centers and that's where we're collaborating. It's a long-term strategy for us. If that eventuates, happy days, but we're not going to let it impact our existing operations with our existing customers.

Yes. That measured approach makes complete sense. I guess the second question for me, like qualitatively, can you also just give us a bit of color on the demand you're seeing across like the key subsidiaries like Tasman Power, Flanco, ICE, et cetera. Just can you kind of just talk us through what demand is driving each one?

So Jason, why don't you start in the West with what's driving demand in the West. And then we'll hand over to Trent to do the same thing in the East.

Yes. So overall, our clients continue to put through record tonnes or if they're not record tonnes, they're close to it. Their assets, like we've sort of said previously, they continue to age. What that means for us is they require more maintenance or brownfield project upgrades to ensure that they can keep to maintain those record production levels that they're chasing. So in the Electrical segment, Tasman Power, Sigma, Future Power, the future engineering communications guys, they're all experiencing record order books than what they've had previously. Civil is no different. Flanco continues to do exceptional work throughout the Goldfields. Their record book is by far the biggest they've ever seen. Northwest has had its strongest start as well. They've got -- they've won a significant MMWA, which is very similar to an MSA that they haven't had previously. And we think that, that really positions them well to secure long-term growth for them.

So the mechanical as well, Rope Access had a tough couple of years, but their July was a record month for them. That's the best month we've ever had, the most amount of hours. Their pipeline is as strong as we've ever seen it. GMS has got some drill rigs on hire, which is no secret that's been tough. We've been able to pivot that business. So that's going very well. And yes, overall, across all of the segments in WA, it is the strongest that I've ever seen at West Coast Lining is doing a great job. And yes, Sigma just continues to perform year-on-year. Their specialist service is really being valued by all of their customers and their name continues to grow. I'll hand it over to Trent.

Yes. Thanks, Jason. Similar to Jason, Olympic Dam, I think we've highlighted, we've put a lot of focus there. I think we've had some very detailed discussions with senior leadership there regarding not wanting to take over the world. That could be left for other Tier 1 contractors. There's a lot of what Stephen might call bits and chips and that's what we're really good at. But that value at Olympic Dam, Prominent Hill and Carra is significant and low risk. So we want to clean that up. NT is expanding, thanks to JPS. They've got a good network there. Gladstone, Mark touched on it, we merged ICE and Corfields. Corfields was a good local company, but we've boxed them into ICE. That's generating a lot of interest from Rio Tinto in the mainland in Gladstone, but also the customers on Curtis Island. Why? Because we've got a bigger balance sheet and a bigger group to service for them. So that's going well.

I think we touched on in the last results or half year that Santos had been quiet and that's sort of probably consistent with what we've seen, but the major projects globally are done. There's a bunch of free cash coming and they're doing a bunch of maintenance and shutdowns next year and that's Tasmea and all of our subsidiary sweet spot. So that's what we'll be focusing on. So I'm actually a bit excited about Santos' growth next year for us.

Can I just repeat a comment I made earlier. I was excited, best way of describing my response to Simon Trott's briefing from Rio. I then got even more excited when we had Brendan Craig's briefing from BHP. Both of them have done better than their iron ore business in copper last year and obviously, both committed to further growth in the copper sector. Copper province in South Australia is the next big step for BHP. We won't be that involved in the construction. Having said that, we're doing non-process infrastructure work currently up at Olympic Dam, but we'll get the bits around the edge of the large construction work and then we'll hopefully be involved in the maintenance once that is completed.

So as I look at what's going on, you've got most probably in this order: data centers, copper, iron ore, but even BHP mentioned coal in the last announcement. I don't reckon BHP has mentioned coal for 5 years. And all of a sudden, their Chief Executive is saying we might even invest some more in metallurgical coal, which is a brave comment for any CEO to make. So I'm really very confident about all of the segments that we currently operate in.

There are no further questions at this time. So I'd like to hand back for closing comments.

Thank you very much, operator. To all of you who have dialed in, thank you. We appreciate your support. Mark, Jason, Trent and I will be available to answer any questions. I know we've got a couple of more briefings via the brokers during the course of the day. And hopefully, we'll get to see a few of you on our road show next week. Thank you for your time and thank you for attending.

That does conclude our conference for today. Thank you for participating. You may now all disconnect.

Thank you. Good morning, everyone, and thanks for making the time to join at short notice. I'm joined on the call today by my fellow Executive Directors, Jason Pryde and Trent Northover, who both know JPS well. And they will take you through some of the operational detail about the business as we go through our presentation this morning.

This morning, we announced that Tasmea has agreed to acquire the JPS Group, which is a specialist services business embedded across Australia's LNG and energy infrastructure. We signed the share purchase agreement last night, and we're targeting a settlement on or around the 1st of August. We're both excited and confident about this JPS acquisition. It's earnings accretive immediately, around 5% to our pro forma FY '26 earnings per share before any synergies. It's fully funded from cash from our existing approved banking facilities, and we do not require any equity raise.

It keeps us comfortably inside our target leverage of about 0.085x (sic) [ 0.85x ]. And critically, all 5 founders of JPS are staying with the business with a meaningful portion of their consideration in Tasmea scrip and are tied in for a 4-year earn-out. Their interests are definitely aligned with the Tasmea shareholders. We'll now take you through the transaction and business with the presentation online, and then we'll open up for questions.

So operator, can we be on the transaction highlights, Page 2 of our presentation. This slide is the whole story essentially on a page. I'll just highlight a couple of matters that are key. First, who JPS is. It's a highly specialized integrated services provider to the energy sector. It embeds skilled workforces directly inside the energy asset operators, which are underpinned by long-term master services agreement and recurring shutdown and maintenance work. The client list is genuinely Tier 1: Chevron, ConocoPhillips, INPEX, Mitsui, Santos, Shell and Woodside.

Second, the alignment, which is central to how we do our deals. All 5 founders are staying. A large part of what they receive is Tasmea scrip and the earn-out is paid over 4 years only if the business delivers. They are all motivated to grow this business, and they're rewarded the same way as our shareholders are.

Thirdly, the earnings quality of the JPS business. This is a recurring sticky revenue business, more than 10 long-term MSAs with regulation-mandated shutdown cycles and statutory maintenance for the assets they maintain. We already have over 80% revenue visibility into FY '27 and also just over 70% for FY '28. And we are forecasting that the revenue will double over the next 3 years by FY '29. This is definitely a high-growth business.

The financials, it is immediately earnings per share accretive, about 5% on pro forma EPS before synergies. We've paid 5x EV to EBIT upfront consideration and a total enterprise value around $75 million should all the earn-outs be achieved. As mentioned before, it's fully funded with about $50 million upfront, of which $25 million approximately is in cash and $25 million approximately in scrip and a further $25 million in earn-out. We also confirmed our FY '26 guidance today. I'll now hand to Jason to explain the business a bit more.

Thanks, Mark, and good morning, everyone. If I can please go to Slide 3, operator. JPS embeds highly skilled specialists directly into their customers' operations, executing critical work scopes on their energy infrastructure.

That work falls into 4 pillars, which are shown on the screen. The first is integrated operations and maintenance, embedded teams, keeping critical assets running day in and day out. And importantly, those scopes routinely expand into broader operational roles over time, which shows how a small initial engagement becomes a long-term relationship.

The second is shutdown and campaign execution. When a major LNG asset shuts down for maintenance, JPS is the first point of call, and these are large planned reoccurring events. The third is specialist project execution, the complex high-value scopes that expertise lets them win often on a sole-source basis because the client trust what JPS does; they do it safely and to a very high standard.

The fourth is ongoing statutory maintenance, compliance-driven work in a tightly regulated industry. JPS are accredited to work on more than 15 Major Hazard Facilities nationally, which is a high bar and a real barrier to entry. Underneath those pillars -- they have 3 structural growth markets: LNG operations and maintenance, asset life extension as the asset base ages and the tech-enabled isolation offering, which I'll come to on the next slide, please, operator. So the unique offering with Safe Isolation Australia with the DBB Saver.

So I'll explain what that is in plain terms. On energy plant, valves that are meant to seal often don't, creating what's called passing valves, which leak hydrocarbons when a valve is passing, you can't safely do maintenance downstream. So work often gets deferred with product loss, contamination, and emissions risk along the way. JPS solution is patented technology called the Double Block & Bleed Saver. It uses a nitrogen-driven pump to create a vacuum between passing valves and deliver 100% isolation.

The practical effect is significant. It's one size fits all. The client can carry out maintenance while plant stays online, avoiding a shutdown that otherwise have to schedule and pay for. This is attractive on 2 fronts. JPS, the sole Australian distributor and service provider under a 5-plus-5-year agreement, so it's protected. And strategically, it opens doors. It gets us in front of customers who have never used JPS before. And from there, we can undertake our cross-selling core services.

If I can please go to Slide 5. JPS' core competitive advantages and what they're good at and why we like them. Number one, they've got established trusted customer relationships and the quality of work delivered makes them hard to replace.

Number two, they've got reoccurring sticky revenue, which is low risk, major clients issued in purchase orders, which are underpinned by long-term MSAs.

Number three, like what Mark touched on, they're founder-led, and that's what matters to us. The business is led by 5 founders with an average of more than 20 years' experience in the oil and gas industry, and they're staying. They're motivated to continue to lead and scale their business. They have exposure and growing markets where our exposure is limited in the sector, and JPS creates a large opportunity to cross-sell our other Tasmea subsidiaries.

Number five, they've got a proven track record and at the first point of call when it matters. They are there to support the clients for their entire asset life cycle. They have a strong financial model, specialist margins, revenues forecast to double in FY '29, they're capital-light, strong cash conversion and organic growth is self-funded. And finally, they're specialists. JPS ticks all of our boxes on what we look for, and I'll now hand over to Trent Northover.

Thanks, Jason. Slide 6, please, operator. So this slide is effectively the customer base on a slide. So everything you can see here is the operators that run Australia's LNG industry. JPS has really earned its place to work with them by delivering critical, high-risk activities, both safely and well across the full asset life cycle.

JPS has performed for these customers in Australia, but what's really interesting on this slide is you'll see that some of these customers that are global are inviting us into the international operations. So you'll see specifically in the middle down the bottom, Chevron's Angola, Africa, asset. It will show you how in the next slide how this translates into a growth pathway.

Next slide, please, operator, Slide 7. This slide growth is our growth case in 4 parts. So firstly, JPS runs a core workforce around 150 specialist individuals. This means we can mobilize the right people quickly when our key customers need them. Secondly, the workforce is deployed across the critical Australian LNG and gas assets. So onshore, offshore, and you'll note that the floating LNG is also included. All of these are blue-chip customers for us.

Third, this is where we feel Tasmea adds a lot of value is the cross-sell. We can introduce our existing capabilities through JPS' already open doors, which is where the organic growth we see will come from in the future. And finally, the global markets. JPS' core clients operate worldwide.

Expansion is already underway: Chevron in the U.S.A. and in Africa, Woodside in the U.S.A. and ConocoPhillips in the U.S.A. What's key to note is we're not speculating about international growth. It's already started.

Slide 8, please, operator. Finally, this is the market backdrop. So we've spent a bit of time ensuring this image is quite clear. But you'll see that Australia has 10 producing LNG facilities across Western Australia, Northern Territory and Queensland. More than $300 billion of capital has gone into the LNG projects over the last 20 years. You'll see that on the left-hand side of the slide.

Infrastructure now has to be operated and maintained for decades to come. These assets aren't going anywhere. That's clear. They have to keep producing. They've got long contracts, the client contracts running out to 2030s and 2040s that they need to supply, which means they have to be keeping maintained across all their asset life cycle. On the bottom left, you'll see in the green box, the Ichthys case study makes it concrete.

A single shutdown in Darwin was a maintenance program worth over $200 million in Australia and ended up having over 1,600 people work on that maintenance program. This is exactly the kind of recurring, large-scale regulation-driven work that we see JPS has the capability in the future to deliver. I'll hand back to Mark to take you through the deal terms and numbers.

Thanks, Trent. Operator, if we could have Page 9, please. We're acquiring 100% of the JPS Group, both the operating business and the Safe Isolation Australia. The total consideration is around $75 million, roughly $50 million upfront with $25 million in earn-out spread across FY '27 to FY '30. The upfront $50 million splits into about $24.5 million in cash settlement and $25.6 million in Tasmea scrip. Just over 3 million new Tasmea shares issued to the vendors at an $8.50 price. So the founders have taken a substantial part of their consideration in our equity at a fixed price and are holding it.

The earn-out is where the protection sits. There are 4 annual payments of roughly $6.25 million, and they're paid if JPS hits a maintainable EBIT of $12 million in each of the years. It's geared against us in the right direction because every dollar of EBIT below $12 million, the earnout reduces by $2, falling to nil if the EBIT floor falls below $8.9 million. In other words, we only pay the full price if the business delivers the earnings that we've agreed it will between the JPS team and us.

In respect of timing, we executed the SPA last night. We're targeting settlement on or around the 1st of August, subject to customary conditions, including ACCC approval under Australia's new mandatory merger regime. I could turn over, please, operator, to the next slide. So the numbers on a pro forma basis is showing that Tasmea plus the recently announced Maxim acquisition and JPS as we owned them for a full year.

Our underlying EBIT, the group moves from $128 million on a pro forma basis with these 2 new acquisitions to $185 million. With that, the existing Tasmea is about 69%, Maxim is about 25% and JPS 6%. Underlying NPAT moves from pro forma $78 million to $113 million. And the measure that matters most for shareholders, underlying earnings per share moved from $0.298 to approximately $0.41 on a pro forma basis with both the recent Maxim and JPS acquisitions included.

Just in relation to this EPS figure, because it captures both the combined M&A of Maxim and JPS on a like-for-like basis, JPS still is about a 5% earnings per share accretive before any synergies, which is the cleanest number for assessing the transaction on a stand-alone basis.

As mentioned before, on the balance sheet, gearing moved to just under 0.85x net debt to pro forma EBITDA. This figure keeps us comfortably within our stated target leverage, and we're not stretching our balance sheet to complete this transaction. If I can turn over the page, please. Just to summarize on the strategic rationale. We believe this acquisition does at least 4 things for us.

It adds an embedded specialist service platform in energy with a skilled scalable workforce and genuinely differentiated technology in a tech-enabled isolation. It gives us exposure to a high-growth structurally supported market where JPS revenue is forecast to double by FY '29 with further upside from SIA and customer-led international expansion. It retains and aligns the founders who built the business.

Scrip plus a performance earn-out means the founders win when all of our shareholders win. And it brings high-quality capital-light earnings with strong forward visibility, which diversifies Tasmea's revenue further into the energy sector. On top of all that sits the synergies, which we have deliberately not built into our accretion number.

The clearest is the cross-sell. We can take Tasmea's existing trade streams, electrical mechanical in the main and introduce them to JPS' Tier 1 energy clients. There are also operational synergies through our corporate services and labor platform and cost synergies on procurement such as insurance, et cetera. So the 5% accretion we've quoted is before any of this.

We believe the JPS acquisition is squarely on point from a strategy perspective, another disciplined, well-structured, fully funded acquisition that strengthens the Tasmea Group and aligns the people delivering it. Operator, we'll now pause and open it up for questions.

[Operator Instructions]

And your first question comes from the line of Megan Kirby-Lewis of Barrenjoey.

My first question is just on the revenue trajectory. So a very strong 100% growth over the last 3 years. I guess just keen for a little bit more color on how the business has been able to achieve that?

So we call it -- or they call it a land and expand strategy. So they get invited in to do a certain section given their expertise, and then they just grow from there and they never leave. We've got visibility by person, by site, by shop, by roster that drives that revenue forecast out to FY '29 and where we believe that growth is.

And then just on the margins, it looks like it's going to sit within mechanical, which has margins around 11%. How should we be thinking about JPS margins relative to that?

That will sit more around where our electrical margins sit.

Right. Okay. And then maybe just how you guys are thinking the capacity for further acquisitions from here.

I guess, firstly, just on sort of timing, sort of management time uplift for any further deals from here given you guys have been pretty busy. And then just in terms of on the debt facilities, where you see, I guess, where capacity is on the existing facilities?

Well, I promised, Megan, there will be no more of is financial year. This is the last one. But no, we -- we have a twin-pillar strategy, as you know, with organic growth and programmatic acquisitions. We continue to assess a number of early-stage acquisitions that we're attracted to, but none are imminent in the next week or so, I should say.

Re capacity, you see how we structure our deals. So we have significant capacity given our leverage and significant capacity given our ability to issue scrip. And so unless we were to do an out-of-the-box acquisition from a size perspective, we believe that we've got plenty of balance sheet and firepower to continue acquiring businesses in our -- in the sort of, call it, $10 million to $50 million EBIT.

In respect of management time, as you know, Trent recently joined only 12 months ago, although these couple of recent acquisitions will keep him a little bit busier. But we're actively looking to grow our talented executive team, and we'll look to complement that if we look to need to get more support to support these business.

But we do run a decentralized acquisition model and very much rely on the founders continuing to grow their business with us supporting them to scale it and then provide the corporate services and shared services to take away the pain points often that they have in growing their businesses. We're able to provide that, whether that be through recruitment and Workforce Solutions, legal, commercial, et cetera.

And your next question is from the line of Lachlan Woods at Canaccord.

First question from me. Can you kind of just talk us through how this acquisition came about? Like was it an existing relationship or the founders, I guess, on the other side of clients for some time?

I'll let Trent explain this one. I'm going to attribute the introduction to Trent and he'll explain why.

With regards to the question of known--

[Technical Difficulty]

And ladies and gentlemen, we will just be placing you on a music hold just for a few moments. Thank you all for standing by. We will now resume with the answer to that question.

Are you there, Lachlan? Can everyone hear us okay?

Yes, coming loud and clear.

Yes.

Fantastic. Okay. Sorry, apologies for that. We think there's been a Telstra issue in the building. So apologies for getting kicked out. Lachlan, to answer your question, I've known JPS and all of the directors for 7 years to the point where I saw them pack up their Troopy van in the Gold Coast and head across to the West without an office.

I've seen all the JPS directors grow as a business. They're all either ex-Shell or ex-Bechtel senior leaders on commissioning of these large-scale LNG assets and the business that really thrived off the back of that through Santos and Woodside relationships. So to answer your question, I've watched proudly, I guess, from the sidelines for the last 7 years as they've grown. They weren't for sale. We've tapped them on the shoulder and had the discussions with them. And I guess that was an important part of this acquisition for them is to be part of our group.

And second one from me, if you can still hear me, it is just -- so the pathway to doubling revenue in FY '29, can you guys just kind of give us a bit of a mix in terms of the drivers? Like is it predominantly shutdown work? Or is it more the operation support work? Like can you just kind of talk us through that?

Yes, it's both, Lachlan. So obviously, you see a number of the assets. There's over 10 LNG assets in the country now. They are at mid sort of cycle or maturity. They're not new. So they need a lot more maintenance. So they have a lot more regulated requirements to shut down.

They do operate heavily on the client side. So clients will get them in early, almost like on an ECI type environment to plan their shutdowns and help them with some technical risks. And then a lot of the time, they'll end up engaging them on the shutdown for either client side or the technical operations.

So yes, we can see -- I think we state in the document, we've got high visibility into FY '27 and also FY '28 of above 75% to 80%.

And further, as people move around these assets and given the expertise, like as a plant manager moves from one asset to another company, et cetera, pretty well, there's a call done immediately to get the JPS guys. So we've got numerous opportunities in front of us to maintain new assets that we're not currently on that we're plowing our way through to deliver against.

So if I could share an example of that more on the international space, Lachlan, while we're in discussions under HOA with -- with JPS, a phone call did come from Chevron. And now one of the directors is in Africa and Angola at the request of Chevron to support their LNG facility offshore. So that's not a tender. That's a direct phone call request for support for JPS' services.

And your next question is from the line of Nicholas Rawlinson of Morgans.

Maybe one for Trent. I understand you do a fair bit of work for Santos and you sort of have a historical relationship there. Is there any other customer overlap with the legacy Tasmea business?

In terms of cross-sell synergies?

No. In terms of like it's the legacy -- well, yes, partly, but it's -- like I'm just not sure exactly who your oil and gas customers are within the legacy Tasmea business. So I know you guys do work for Santos, but do you guys do work for Chevron, Shell, Woodside? Yes, just keen to understand that?

Yes. So primarily, Santos has been, let's say, the large one across all 7 or 8 assets in the past. A couple of our mechanical companies like Nobles, et cetera, work for Woodside and Chevron. They do some work over in the West. But there's -- and DLNG and also up at INPEX, we do some work there. Tasman Power has done some work over there in the West as well.

Okay. Awesome. That's helpful. And so the earn-out goes above $12 million maintainable EBIT, it looks really achievable in the context of your commentary for revenue to double by FY '29? Or is a lot of that being driven by sort of project work, which wouldn't be captured in the definition of maintainable EBIT? I guess I'm just keen to understand how you guys define maintainable EBIT in this business.

We pick a number that they say they're going to make, right? And then we back them to make it, right? Because that's what we bid off. And so we let them know that they can tell us whatever number it is, right? But if they don't make it, they're not getting their earn-out. And that's where we landed and then we go do due diligence on providing and getting ourselves comfortable with their pipeline that they're going to deliver the $12 million because it's always never a pleasant day if they don't make the $12 million, and we are very comfortable that they'll make their $12 million.

I've got MSAs that underwrite that. I mean I've got 165 names that will talk to that and what sites on, which month, which shut, et cetera, what new customer opportunities of a whole lot. So we're very comfortable with their outlook and especially with the cross-sell opportunity for them to provide some new services to their existing customers, whether it be electrical or mechanical, which currently they don't provide that they could provide if the customer requires some additional support. And then vice versa, that we think that they'll be able to bring us on to a number of their customers where Tasmea currently doesn't do much work.

Nick, if I could support Mark's comments is we touched on the MSAs. So you're all aware of sort of how we focus on MSAs as our growth focus. But what we touched on in the slides is the major hazard facilities.

So that's a regulated requirement and it's even more high barrier of entry than a standard MSA, and that links back to the specialization that JPS provides for our customers. So that's what we're really honing in on. It's -- you can't just walk in off the street and replace what JPS do in our opinion. They are highly regarded for their experience in LNG, both at the front end of the asset life cycle and at the back end.

Thanks, Trent and Mark. And just lastly for me, guys, like, just for reporting purposes, will this just be a separate division like you've done with WorkPac? Or will the work be allocated across verticals?

No. These guys will slot into our mechanical segment.

And sorry, can I just ask one more? On the technology, the patented technology, is it making it, like, meaningful revenue and EBIT at this stage? Like could you give us an indication of sort of what it is in the $10 million EBIT for this year?

It's not a massive contribution, but it's a large enabler for them to sell their services because they want that, but then we provide a whole lot of other services. So that specific is a smaller proportion of what their overall revenue is from each sort of shutdown or service that they provide.

Yes, it's new technology, Nick. So customers are absolutely coming on board with it. They've used it, they love it, and it stops the customer in certain areas having to go into a shutdown type environment to do some certain maintenance. Once customers on an LNG facility get comfortable with that, that's high risk, but it's very, very positive for JPS. And like Mark said, it enables the discussion for other innovative sort of how they can do activities online.

And that concludes our Q&A session for today. I'd like to turn the call back over to Mark Vartuli for closing remarks.

Thanks. So thank you, everyone, for joining us on the call. We -- as mentioned, we're really excited about this opportunity. The growth aspirations and prospects of this business are significant, definitely more than a lot of the other businesses we've acquired and long-term sustainable low contracting model risk. So right in our swim lane and right on point. And they have a great team and a great business, and we're excited to be the custodians of the JPS business and assisting them with scaling it.