Good morning, ladies and gentlemen, and welcome to Service Stream's half-year results for FY26. As per the introduction, my name is Leigh Mackender, Managing Director of Service Stream, and I'm joined today by our Chief Financial Officer, Linda Kow.

In terms of the agenda today, I'll start by covering some of the group highlights and providing an update on Service Stream's operational and financial performance. I'll then pass to Linda, who will talk through the group's financial performance in greater detail.

We'll then provide an update with regards to the group's outlook for the full year, and then finally we'll open up the call for questions. I'll direct everyone to slide 3, where I first want to touch on some of the key messages for the half year.

Look, from the outset, we're very pleased with the performance and the results that we've achieved over the first half of FY26 as the group continues to execute our value creation strategy aimed at delivering improved returns for our shareholders through growth, diversification, and driving enhanced quality of earnings. If I start with the latter, we're really pleased with the improvements that we've delivered over the group's financial performance and those enhanced quality of earnings, which have been evidenced through a significant step change in the profitability of our utility operations, up 130 basis points on PCP.

We've seen improved performance across transport operations, a 170-basis-point improvement, and those have been supported improvements at a group level with margins moving 50 basis points. That final component of course being cash flow and another exceptional performance result with a conversion rate exceeding 148%.

Those financial enhancements combined with improvements across our contract terms and conditions have contributed to a further strengthening of the group's net cash balance sheet, now reflecting $87.6 million as at the end of that half, and that provides important strategic firepower in support of further optimization, growth, and diversification initiatives. As we continue that theme through our growth and diversification elements of the strategy, the business had one of the most successful periods in the company's history with regards to winning work, substantially increasing our level of work in hand by 55% on the prior corresponding period across what is a strong and predictable annuity-style base of O&M work.

More importantly, this includes the successful expansion of the group's addressable markets into the defense sector through the award of a multi-year major contract with the Department of Defence that was announced in September 2025. We're really pleased—I'll touch on it in greater detail today—but certainly pleased with progress being made on the mobilization, which has supported the contract to successfully go live earlier this month.

Finally, on the back of these results, and ultimately our commitment to driving improved returns for our shareholders, has seen an increase in the group's interim dividend. Moving on to slide 4 now on the group's financial highlights, and first starting with group revenue over the first half year, which you can see was $1.194 billion.

This reflected a slight increase in the immediate prior period, but a decrease on the prior corresponding period. That was the result of a few factors, most notably we successfully concluded a major telco upgrade this time last year and a one-off mobile program in that prior period.

Importantly, this is in advance of transitioning to new fiber upgrade work programs that were secured last year and are currently mobilizing in the present. Business has also been increasingly selective as contracts are coming up for renewal with the intent to cycle off lower-margin utility operations and replacing these with those recently secured contracts that were supporting and enhancing our profitability.

We're confident of revenue and earnings growth in the second half of FY26. More importantly, underlying EBITDA was $75.3 million, and that reflected an increase of 2.3% on PCP.

Again, we're confident this will grow throughout the year, noting our comments at the AGM where our business will resume its traditional second-half bias associated with contract expansion and organic growth. In line with my opening remarks, a regular highlight of the group's half- and full-year performance has been the consistent generation of strong operational cash flows, and we're really pleased to report that this is again no exception.

The group generated OCFBIT of $109 million and achieved an exceptional conversion rate of 148.4%. This robust result is again reflective of our blue-chip industrial client base, the positive terms which have been negotiated across our contractual agreements, and that strong focus that we really embed across our business on the works-to-cash cycle.

Those higher cash flows have supported a strengthening of the group's balance sheet, as I said, closing with $87.6 million, and that reflects an improvement of $14 million on the prior period as of June 2025. We're pleased to see another strong result in this area ahead of consensus, particularly when we think about the business having to cater for increased dividends, large tax payment, and supporting the mobilization operations, including our defense contracts.

Finally, on the back of those results, and given the strong position the business finds itself, the board were very pleased to increase the group's fully franked interim dividend by 20%, which now reflects 3 cents per share. Moving to slide 5, I just want to touch on some of the operational and strategic highlights.

One of the business programs and priorities over the last 3 years has been to optimize our operations, creating that scalable platform from which our business will continue to not only grow, but will deliver those improved quality of earnings and sustainable and increasing returns to our shareholders. A major focus has been to drive both improvements across our operations, but particularly across our utility division with respect to both its earnings and its EBITDA margins, and that's been one of our key priorities we've discussed over the last 3 years.

We're really pleased to have delivered increases across both of those areas during the half year. EBITDA increased by 31% or $6.9 million on PCP to reflect $29.3 million, and EBITDA margins moved up 130 basis points to reflect 5.5% margin.

The business has now delivered consistent and incremental improvement in its margins over seven half-year periods whilst also growing the overall revenue through new contract awards. Importantly, we've still got further opportunities which are going to support incremental improvements as we move forward, but we're very pleased to have already delivered on our stated commitment of holding an EBITDA margin with a 5 handle through FY26.

I personally continue to be very excited about the utility division, often referring to it as our growth engine. I think there's a number of exciting opportunities ahead that we'll look forward to updating the market on as we move into and throughout the year.

This, combined with other initiatives, has supported the group EBITDA margin of 6.3%, again reflecting another strong result which equates to a further improvement of 50 basis points on PCP. If we shift gears away from margins and look at the future order book and that level of work in hand, I've often talked about the primary focus for all services businesses being the retention of existing contracts as they reach full term and proceed to the market as well as securing new growth.

We're really proud that we've had the most successful period in the company's history in terms of winning work with a record $2.2 billion of contracted works being secured. This firstly reflected a strong retention rate of 93% for the agreements that reached a renewal milestone or the end of their natural contract.

Importantly, the business continues to be increasingly selective about contract renewal options and the associated terms to ensure that we're securing those which are going to enhance our margin and quality of earnings and not dilute into the future. The group's level of work in hand increased to represent $9.2 billion, and that's a 55% growth on PCP.

Importantly, that $9.2 billion only reflects the initial term of our agreements, with many of our contracts having multi-year extension options, and I'll provide more details the quantum that that represents later in the presentation. The business has worked diligently over 3 years to improve the quality of contract operations.

We've successfully pivoted away from major design and construction works delivered under lump sum fixed-price arrangements, and instead focused our energy on securing long-term operations and maintenance agreements. The award of a major contract with the Department of Defence supporting their base infrastructure across Northern Territory and South Australia marked what I believe is one of the most significant and exciting milestones in Service Stream's history.

This reflected the culmination of a 5-year journey where we sought to strategically expand the group's addressable market into an area where we could see significant increase in future investment. I'm really pleased to say that operations successfully commenced in February, and we expect these to add approximately $240 million in revenue for the group during FY27.

Finally, that enhanced net cash balance sheet, as per my earlier comments, really does provide strategic optionality as the business continues to pursue both organic and M&A growth opportunities. We're very confident of supporting and delivering on organic growth.

In fact, we've secured a portion of that this half, as you've just heard about, particularly with defense, but with other contracts. We also acknowledge the opportunities to expand our service offerings and exposure to broader markets that comes with M&A.

Moving on to slide 6 and just looking at the group's diversified revenue base. Over the last 6 months, we continue to see an improved mix of work delivered across the group, with operations and maintenance-related revenues reflecting 72%.

Minor capital works reflects 25% in this period, and we think that's an appropriate balance. It was 30% in PCP and will move around depending on the nature of projects secured.

Most importantly, these projects are generally secured under multi-year panel arrangements, and they offer the ability for our business to review and selectively bid on discrete opportunities that fit our criteria. If we look into the commercial models that have overseen or been delivered through these works, that's another real strength.

You'll note we continue to see the majority, 91% in fact over the last half, was delivered under either a lower-risk schedule of rates or a cost-reimbursable and alliance-style model. We also continue to see improved diversification aligned to those strategic priorities I spoke of earlier, and the group has successfully expanded its revenue across water, gas, electricity, and industrial markets, and prior to the next half, which will now include a growing revenue base in the defense market.

Finally, you'll note 67% of our work is delivered through either local, state, or federal government entities, with the remainder being tier-1 industrial client base of asset owners and operators across the country. Turning now to slide 7 and touching on the group's safety performance.

I've stated many times that the health and safety of Service Stream's workforce, our clients, and the communities in which we operate remains our number one priority for the business. There is nothing more important than the safety of our people.

It's our commitment. It forms a major focus and a shared vision for all of those who are proud to work across the organization.

Over the course of the half, we're really pleased to deliver improved performance across major lag indicators, and that included a 3.9% reduction in lost time injuries and a 25% reduction in high potential incidents on the prior corresponding period. As we move forward, the business will continue to focus on those high-risk work activities and particularly those new contract mobilizations, ensuring that we can embed our strong safety-focused culture across an expanding workforce.

Turning now to slide 8, and I'll provide some insights and high-level commentary on the insights across our three reporting segments before Linda will touch on the finances. Starting first with the telecommunications division, which successfully transitioned over to the new field services agreement with NBN during the half, reflecting one of the group's material contracts and a major program to expand and settle in our workforce across Victoria, SA, NT, and WA.

This coincided with the business commencing design works and the early field mobilization to support a major fiber upgrade program with NBN across our allocated states of SA, NT, and Queensland. This program will be a main focus for our telco team as we expect it to provide a larger contribution in the second half of '26.

Pleasingly, we're now through the design phase, and early construction works have begun on what will be a 3- to 4-year program of works. It was my pleasure to attend the official launch of that program in the ACT alongside NBN and government officials last week in Canberra.

The business successfully secured a 5-year agreement with Telstra to support the modernization of their wireless infrastructure, and that marks a major milestone in what has been a 20-plus-year partnership between our two organizations. A new agreement was also secured in the last half with Optus to support the staged decommissioning of their legacy HFC network across metropolitan cities around the country.

On to the utilities segment. In line with my earlier comments, it's been another busy and productive period for the utility division, and again, really pleased to see that strategic repositioning continues to provide positive outcomes and significant benefits not only for the division, but the wider group, as evidenced by that step change in margins and delivering on our stated commitment we made 2, 2.5 years ago to deliver a 5 handle over this financial year.

In terms of the improvement program, we continue to execute a range of initiatives across three pillars. The first being successful renegotiation, and now more commonly on occasions exiting or renegotiation of lower-margin contracts.

Whilst the business has completed the bulk of that work in 2024-2025, we continue to assess the contribution of works as they periodically come to the market, and we'll not hesitate to step back if we believe that a future contract contribution could be dilutive to the utility's performance. This is what we mean by reference to that strategic contract retention.

The team continues to work diligently through the second pillar, focusing on a range of optimization initiatives, driving improvements in labor productivity, operational contractual performance, procurement savings, direct overheads, and property consolidations. Pleasingly, the division has also continued to see success in securing new, incremental, and more profitable growth opportunities aligned to long-term maintenance agreements, which represents that third, important pillar of growth.

The business successfully mobilized a 10-year electrical and mechanical maintenance contract with Urban Utilities at the start of the half year with field operations commencing on 1 July. We continue to see a number of exciting growth opportunities for the utility division, and I'll provide more insight into the sheer market size and opportunities later in the presentation.

Moving on to transport, it's been a successful period for our transport division. Performance across a range of the O&M works that we hold continues to meet or is exceeding expectations.

The focus for our transport team is certainly now squarely on securing sustainable growth across the O&M works profile that we favor. Whilst we continue this as an ongoing priority, it's been pleasing to see that over the half we, as part of a consortium named Together North, were successful in being shortlisted as one of three potential parties that could represent, to be successful, in a major Northland Expressway transport project in New Zealand.

It's an exciting opportunity should we be successful, providing an opportunity for long-term annuity revenues over what could be a 25-year maintenance period and reflect a beachhead for the business to leverage broader market opportunities in a safe geography. On to slide 9, looking at some of the secured contract awards I referenced earlier.

Again, I've spoken many times of the importance of our business retaining contracts as they proceed to market at the end of their respective terms, as well as securing new growth. I'll provide insights into just a few of the agreements that have been secured over the last half.

It's certainly not an exhaustive list, but a small selection of those. Whilst I won't go into the detail, I think there's a number of positive attributes I should touch on.

As I said earlier, that 93% strategic retention rate reflecting the maturity and discipline which has now been embedded across our business to ensure that not only are we growing, but we're looking at how we can drive improved quality of earnings. And $2.2 billion of works that was secured, reflecting a new record for Service Stream.

Again, that only covers the initial contract period, not the multi-year extension options that exist. Whilst we reference an average contract tenure of 17.5 years, it's important to note with every new agreement, that number obviously comes down.

Many of these agreements are often secured over what is now more commonly a 5-year term, and that demonstrates the business's success in delivering for our valued clients and re-securing if they're tested in the open market. We have many contracts which now celebrate their 30-plus year in a long-term partnership with our varied clients.

On to slide 10 and looking at that work in hand and how that sort of adds up to the group's overall work in hand levels. Those contract wins and that 55% increase on PCP to reflect $9.2 billion in future contracted works is also supported by the extension options that often exist under many of our agreements and equates to an additional $6.2 billion, taking our total work in hand potential to $15.5 billion in total.

A great position, certainly a strength, and reflects circa six times our revenue cover as we sit here today. I think most importantly, though, that work in hand is of a higher quality than it's ever been before.

It reflects 80% of that being annuity-style O&M works across that tier-1 client base that I touched on earlier. Clients are well capitalized, work is generally contracted under reasonable set of terms, and they pay their bills on time.

It certainly supports ongoing organic growth as they look to expand their asset base and deal with some of those challenges of population growth and aging infrastructure. Finally, before I hand across to Linda, I wanted to touch on the success of our expansion efforts in the defense sector on slide 11.

I must say, again, it was with great pleasure and pride that the business was able to confirm it was successful in securing a major material contract with the Department of Defence in September of last year. Contract marked the culmination of a 4- to 5-year strategy to position Service Stream as a credible and capable sovereign partner for defense and secure an initial long-term contract.

Mobilization activities commenced in September last year, and we're really pleased to confirm that we successfully went live on the 1st of February, just a few weeks ago. This saw the successful engagement and deployment of more than 600 resources, reflecting of employees and special subcontractors, and also the deployment of upwards of $25 million in new plant and equipment across South Australia and the Northern Territory.

Mobilization costs in terms of hits the P&L have been deferred to half 2, but are largely recoverable. Importantly, these were delivered in line with our expected budgets.

The business expects operations to steadily grow between February and July this year when we will hit a steady run rate that should support circa $240 million of annual revenues for Service Stream being delivered in this area across FY27. We will see some revenue in FY26, but as we stated previously, we don't expect to see a contribution to the earnings given that staged ramp-up and the mobilization program.

More broadly, we of course have opportunities to grow and expand beyond that contract as we look to assist defense with their capital works and other projects. I'll now pause and hand across to Linda to walk through some of the group's financial performance in greater detail.

Thanks, Leigh, and good morning to everyone on this call. Echoing Leigh's comments, this first-half result is yet again another positive step forward in demonstrating the positive momentum across the business, delivering improved quality of earnings whilst also reinvesting in the business to support future growth and further improvement.

Whilst first-half total revenue decreased by 5.8% to $1.2 billion, this was largely due to an abnormal first-half skew last year impacting the year-on-year comparatives. FY26 in comparison is expected to revert to a more traditional second-half skew.

EBITDA from operations was $75.3 million, an increase of 2.3% on last year. This reflects the improved group EBITDA margin, which is up 50 basis points to 6.3%, with the group benefiting from incremental operating leverage and productivity initiatives as the business grows.

Adjusted NPAT for the half was $36.6 million, which is a 4.6% underlying improvement on PCP if we exclude the one-off legacy tax refund in the prior year. Statutory net profit after tax was $26.8 million, with SaaS cloud-based systems transformation costs being written off as opex in line with accounting guidelines.

Cash flow performance and net cash continues to be a strong highlight for this half. Operating cash flow before interest and tax, OCFBIT, was $109 million, which was underpinned by an exceptional OCFBIT conversion rate of 148%.

The group's net cash position has improved by $32 million since this time last year or $14 million since June to $87.6 million. Finally, capping off the headlines, reflective of the group's strong balance sheet position and full-year outlook, the directors have declared an interim dividend of 3 cents per share, fully franked, which is a 20% increase on PCP.

Now on to segment performance, starting with utilities on page 14. The utilities segment had strong first-half results, with the segment's strategic repositioning delivering a demonstrable lift in the quantum and quality of earnings.

This first-half result marks the seventh consecutive half of improved EBITDA and EBITDA margin. Revenue for the half was $531 million, up slightly on PCP, noting that prior-year revenue was first-half skewed due to the scale and phasing of client annual shutdown programs.

There was also some residual revenue from discontinued operations and D&C projects that have now cycled off. The water sector in particular has continued to deliver strong organic growth across key clients with the addition of the new Queensland Urban Utilities maintenance contract from the start of this year.

EBITDA for the half was $29.3 million, up $6.9 million, which is a substantial 31% increase on PCP. EBITDA margin increased by 130 basis points to 5.5%, a strong result which was ahead of our targets.

Further margin improvement is targeted, but given the recent rapid improvement, incremental gains are expected to be realized at a more gradual pace. Slide 15, telco.

The telecommunications segment had a comparatively softer start to the year as compared to PCP due to a number of programs being completed last year and transition to new contracts. Revenue for the half was $538 million, which was $88 million lower than PCP.

This was driven by a slower ramp-up of the next tranche of the NBN fiber upgrade program, with wireless revenue also lower due to completion of client programs in the prior year. EBITDA for the half was $45.6 million with EBITDA margin of 8.5%, in line with expectations, which reflects the transition to the new long-term NBN Field Services Agreement from July.

Slide 16, transport. Transport revenue for the half was $124 million, up 12.4% on PCP.

This was driven by additional funding for pavement repairs in our Connect Sydney JV and the pull-through benefit from the VicRoads maintenance contract, which mobilized last July. Transport EBITDA was $9.2 million, up 53% on PCP.

This reflects an EBITDA margin of 7.4%, an increase of 190 basis points, which was driven by improved VRMC performance, which was still ramping up in December last year. The ITS program also benefited from phasing of works secured in the prior year.

Slide 17 sets out our group profit and loss, both statutory and adjusted metrics. As touched on previously, comparatives to PCP this period are impacted by the unusual first-half skew last year, with FY26 expected to return to a normal second-half bias, particularly the addition of defense operations from February.

Whilst group revenue was lower than PCP, group EBITDA from operations increased slightly due to improved EBITDA margin, which is up by half a percent to 6.3%. This is despite absorbing the expected reduction in telco margin, which was more than offset by improvements elsewhere across the group, driven by the group's continued focus on quality of earnings through tendering and new work profit expectations, risk appetite, and operational delivery.

With regards to defense costs, incremental mobilization costs have been deferred to H2. Most of it will be recoverable, with any residual wash-up not expected to be material.

Normalized NPAT growth for the period was 4.6% if we adjust for the $2.7 million tax benefit received last year in relation to historical claims. As foreshadowed at the June full year, investment in SaaS systems transformation costs have been excluded from our underlying financial metrics, but are charged to statutory profit.

As per usual, we've provided a reconciliation of our reported results to statutory financials in the appendix. Now moving on to group cash flow on slide 18.

As noted in the headlines, we've had another really strong cash flow half, notwithstanding high tax and investment cash flows. Net cash has increased by further $14 million from June, underpinned by an exceptional first-half OCFBIT conversion rate of 148%.

This does include timing benefits typical of the December cycle, which is expected to unwind over H2. Improving our balance sheet has been a key area of focus since the acquisition of Lendlease Services, and we have been able to reduce our net working capital as a percentage of LTM revenue from 4% to 2.4%, which equates to about $40 million of cash released over this period.

A key call-out of cash flow is the quantum of tax paid, $35.5 million. This includes $26 million final installment for FY25 tax as provided for at June.

Also as foreshadowed, our combined investment cash flows have stepped up this period to $31.5 million. This includes fleet, equipment, and systems for the new defense and Urban Utilities contract mobilizations.

We are also now in full flight on our finance and people and payroll systems transformation programs. Collectively, approximately half of our cash investments relate to either new business or transformation initiatives.

Finally, an update on our balance sheet and capital management across the four pillars that underpin our approach. Firstly, the balance sheet continues to be supported by our capital-light business model and full operating cash flow conversion, creating capacity and optionality.

Secondly, we are actively deploying capital to support organic growth and new contracts and uplifting our systems to continue our optimization journey and support our ability to grow. We reiterate our expectation that total investment cash flows for the next 2 years will be at the upper end of our guidance range, prior to any additional investment required to support new material contracts such as defense.

The ERP transformation program is expected to run over the next 2 years with costs to be managed within this target range. Thirdly, we continue to review M&A opportunities in line with our strategic criteria, with balance sheet well positioned to transact.

Finally, we maintain the importance of delivering sustainable dividends to our shareholders. This is reflected in the increase in interim dividend to 3 cents per share.

That's all from me. I'll now hand you back to Leigh to take you through the remainder of this presentation pack.

Thank you, Linda. We're now towards the tail end of the presentation, I'll move to the group's outlook section and direct everyone firstly to slide 21, market growth.

We've just provided an update here around the group's major markets and the level of annual maintenance expenditure. We continue to see strong demand from infrastructure owners and operators as they look to expand and upgrade their critical infrastructure assets.

That investment is generally driven by a number of factors which include population growth, aging infrastructure, the energy transition, digitalization, and the impact or avoidance of extreme weather. We now have a secure foothold in the defense sector and have a total market which exceeds $60 billion in annual maintenance revenues and continues to grow year-on-year.

We can see the size of these maintenance markets relative to our beginnings in telecommunications, and this also supports our strategy of continued diversification and expansion. In short, we see a number of significant opportunities and a strong pipeline ahead to support ongoing growth.

Finally, if we move to slide 26 in terms of the group's outlook. As we've outlined today, Service Stream is in a very strong position following a half-one performance.

We stated clearly at the group's AGM in October that the business would shift back to that minor traditional second-half bias, which reflects the scaling nature of our projects and contract operations. With the group confident in delivering earnings growth in FY26, supported by the half-one performance, sustained margin improvements across our utility operations, and larger contributions from recently mobilized contracts across telecommunications and utilities, as well as ongoing works to optimize and improve group operations.

That concludes the formalized section of the presentation today. On behalf of the Service Stream board, I'd like to express our personal thanks to our fantastic staff who may be listening to this call, working right across the country, for their continued efforts and dedication.

I'll now hand back to the moderator to open up the call from any questions of those joining us.

Yes, good morning, Leigh. Good morning, Linda.

Thanks for taking my questions. Just the first one maybe on the telco segment.

We think about that historical kind of 45 to 50 first half, sort of 50 to 55 second half split. Are we sort of back in that territory at this point?

Then also we're also thinking about that Optus contract as incremental for the second half? How much of those activities were included in the first half as well?

Thank you.

Yeah. No, thanks for the question, Ian.

I think that's an important area to cover. As we called out very clearly a year ago that we didn't expect telecommunications to grow.

We'd kind of hold that steady. We thought there could be some softness there, and we certainly called out that the margin for telecommunications would be lower associated with the re-securing of that major part of the NBN before we start to drive some improvements over the next couple of years.

In terms of the Optus piece, I think we certainly haven't seen any contribution in the first half. That's been secured, and we're looking to mobilize currently, and then that will deliver in the second.

It is a staged program over multiple years. Look, I think that there will be a slight bias to the second half currently as we sit.

You're sort of talking somewhere in sort of 2%-3% range, sort of first half, second half, Ian, to give you some sort of guidance there. Hopefully, I think what we are seeing at the moment is certainly a number of initiatives that will support an improvement in that margin.

As we know, I've said drop down to sort of 8.5%, which is what we forecasted, from 8.9%. I'm not suggesting we'll get all the way back there, but I think we will certainly see some improvement in that margin in that second half.

Thanks, Leigh. Just maybe switching to the utility segment.

Just called out some of the D&C kind of projects reaching completion and a bit of mixed change there. Are you able to give us a steer as to, well, I guess the quantum of revenues that were in sort of first half '25, but not in first half '26?

I'm trying to get to, I guess, an understanding of where the underlying sort of contracts are performing on a go-forward basis. Are they still growing?

Are we, yeah, more of a second-half-weighted? Just yeah, trying to understand that

dynamic.

Thanks. Yeah.

No, that's okay. Thanks, Ian.

Go ahead. I'll I'll take that.

In terms of what we cycled off, it was a couple of residual D&C projects and and other minor projects. I would say single digits, Ian.

I think what was really the skew, if you go back to last year's pack, you could see that we actually had a very strong 1H skew because of the scale of the industrial shutdown program. We had a extra-large shutdown, and then and then actually brought forward a minor shut as well straight on the back of that.

We knew last year—remember last year, I think we were about 530 from from memory, and we weren't sure if we're going to hit a billion dollars for the full year because of that skew. That was actually the key the key reason.

Okay. Thanks, Linda.

Appreciate that. Just the third one, if I may, just with respect to the SaaS investment.

Can you perhaps give us an understanding of how much of that is ongoing? Just noticed that it's been put out as an abnormal.

How do we think about that into the second half?

Yeah. I can see that this investment in, call it, the transformation will be over a 2-year program, more heavy in the first 18 months.

I guess the guidance that we give is that overall we'll manage that program like we do with our overall cash flows within that sort of upper end of that guidance range, that 2%-2.5%. As we've been running significantly below that for many years because we had been thinking we would be doing this, but we hadn't triggered it yet.

We will manage to within that range.

Thanks, Linda. Appreciate it.

Thanks, Ian.

thank you, Leigh and Linda. Just building on the telco comment or question a moment ago, I think it has been pretty well communicated that we were anticipating some softness there, but I guess I'm just curious about where that field module contract is performing relative to your expectations.

Is the softness that you're seeing generally in pricing or volumes? I suppose I'm really curious about the volume dynamic particularly.

Yeah. No, that's a good question, Nick.

It's more the latter. It's more about volume.

The pricing is coming in as we expected, virtually hitting exactly the number that we thought. The volume is what I think has really sort of seen a bit of softness on there.

I think, as I said before, though, importantly, what we are seeing over the last couple of months is a number of initiatives that the team have been working through, very similar to utilities, to try and drive improvement in that margin as well. We'll hopefully see some activity there.

I think the mobilization of that Canberra-based fiber upgrade program, as well as the upgrade program we've secured in SA and Queensland, will certainly assist telco as well. The most important thing, as is driving that improved earnings.

Got it. Very clear.

Just to remind us, I think you've referred in your pack to returning to a typical one-half, two-half skew. Have you put a figure on that?

Is that a 48/52 dynamic? I guess the other part of that conversation or question is, FY26 is obviously unusual on the basis that defense has been introduced to the business.

I guess I'm just curious, what is the go-forward one-half, two-half skew that you'd like us to think about, please?

Yeah. Yeah.

No, I think we haven't commented, I think, publicly in terms of the split. You're probably looking at a couple of points there, like I said, yeah, 1%-2%, I'd say, probably first half, second half, 2%-3% in.

It's just given the nature of some of those scaling operations coming into the second half that will naturally provide a larger contribution. In terms of defense, as I said, we started off very slow with work volumes.

We successfully commenced on 1 February. That will continue to scale now, and the full expectation, and we are seeing the numbers increase almost on a daily basis, we are confident we'll see that hit that peak as of sort of 30 June, 1 July, and we should see about $240 million come in.

We're not at this stage obviously familiar with any sort of bias around sort of skews for defense. We've assumed that it's going to be more evenly spread half-on-half.

Yep, makes sense to me. Very last one for me.

I think you've mentioned in the pack that there are some defense mobilization costs that are going to be deferred into the second half. Could you just comment on what they are specifically?

Because, as you say, Leigh, the business mobilized at the start of this month. Just curious about what's shifted or was that anticipated and we may not have been aware of it?

Just on that, please. Thank you.

I'll take that one. It's just really the cost of actually bringing on people, obviously getting things done, warehouses that you need to rent, moving things around.

We had to defer to the second half from the accounting perspective simply because we have to match the mobilization fees we receive from defense with accounting matter. We'll wash that up in the second half.

It really is just all the stuff we've got to do before day one that we don't get paid for until we've effectively mobilized and then we get paid for it.

Got it. Very clear.

Okay. Thank you, Leigh and Linda.

Thanks, Nick.

Okay. Morning, Linda, Leigh.

Just keen to talk through the potential for increasing this geographical revenue diversification, especially into that Queensland market. Just how you're finding it as you ramped up with Urban Utilities.

Can you also talk to further contract opportunities in that Queensland market as well?

Yeah. No, great question, Evan.

I appreciate it. It was certainly been looking to obviously diversify our base across broader markets.

As said, we've talked about industrial, gas, electricity, and defense. Certainly geographically as well, Service Stream really over the 20 years I've worked for this business has always been East Coast biased.

That's really been Victoria and New South Wales. Queensland was an area we've broken into with telecommunications, and then most recently with Urban Utilities.

That's really, I think, performing well. We are seeing other opportunities around industrial maintenance in Queensland.

There's a lot of other assets associated with power generation and other industrial clients there where we are targeting works in those areas, as well as other geographies like South Australia and WA as well. Queensland has been, I think, on the back of the Urban Utilities win and our strong presence in telco, a really fruitful area for us.

It's interesting the changes in dynamics. We're actually seeing, as I said, that transition away from New South Wales and Victoria.

South Australia now, with defense, telecommunication operations, and other utility, I think, could certainly be our second-largest geography over the next couple of years. We'll see how we proceed.

Yeah. Go on.

Just got two more. Just coming to the utilities again.

The water looks like it's growing pretty well as you mentioned, up about 14%. You've exceeded the $300 mil revenue mark for water.

Is this a fair or new type of baseline this business can continue to grow off, or anything we need to be conscious there for that part of the segment? Yeah.

It's a really great question, Evan. I think this is fundamental to that focus for us on growing that O&M base.

There's no one-off significant water projects in those numbers. This is really about the maintenance that we're providing on behalf of those asset owners and operators.

We certainly are focused on water. We've been talking about it for many years.

The acquisition of Comdain, other things to get us into that space. I think that will continue to be at least half, if not more, of the division for the foreseeable next couple of years.

If we look at the whip, and we obviously had the advantage of seeing that year-on-year, we can see consistently higher levels of O&M maintenance and investment in water, particularly ahead of gas and power. As I said, we're not playing so much in the energy transition around stringing lines across the country, but certainly water, we would see that, yeah, I think upwards of 50% for the next couple of years.

Yeah. Okay.

That's interesting, all right. Good.

Come on. Just a final one for me.

You've smashed through the 5% margin utility segment. I know you said further margin improvement will be more of a modest pace from here.

Can I just be a bit cheeky and can I get some updated thoughts from you, Leigh, on where you're targeting next for that utility margin?

You can. Linda will be kicking me under the table, but look, we've been open I think for many years about the opportunity here.

We've got a growth engine in the business. We needed to address the work mix, and we needed to address execution, and we've been really pleased to do that.

In terms of your question here, I think we will see incremental improvement throughout the course of this year. I would love to see over the next 18 months or so potentially the ability to get a 6 in front of that margin, but we have to see how that goes.

That's reliant not only on volumes, but also continued execution. We've got a division that's circa if you annualize this, a billion dollars in revenue and should be growing.

I think that is what our target will be over the next sort of 18 months or so to see if we can get a 6 in front of that number, Evan, as the next sort of major target.

Go on. All well answered.

Thanks for your time.

Appreciate it.

Thank you, moderator, and really appreciate everyone joining us today. Understand how busy it is.

Linda and I will look forward to engaging with you as we commence our roadshow across Melbourne and Sydney. Thank you again for your time.