.. “Leigh MacKender, Service Stream Limited - MD & Director [4]...

.. “Leigh MacKender, Service Stream Limited - MD & Director [4]

Thank you, Linda. I'm now moving to the divisional highlights and work through both reporting segments, starting with utilities on Slide 13.

So much of the focus of the utility division over the first half of the year has been on building momentum across our BD pipeline and securing growth opportunities, whilst we also continue to drive improved systems and processes.

A key component has been the migration of Comdain across to the group's ERP system, which has gone well and is expected to go live in a matter of days.
That will provide enhanced levels of control and visibility across operations, ensuring as the business grows, it does so with a solid foundation.

Linda has touched on the headline numbers already, and we see revenue largely flat on pcp, with EBITDA of $14.7 million.
To pick this apart, the metering operations were down, largely associated with COVID impacts that I've previously mentioned, particularly associated with Stage 4 restrictions and the moratorium on reconnection/disconnection works.
The decline in metering services revenue was, however, offset by increased revenue growth of 5% across Comdain operations as the group was successful in securing a number of opportunities in the preceding period, which is starting to deliver benefit.

The business has recently been successful in securing a number of work programs and maintenance contracts. One reference here with SEQ Water in Queensland for the provision of a 27-kilometer water pipeline, bulk water storage and pump station infrastructure, supporting the business's ability to grow our Queensland presence, which has only commenced over recent years.

In summary, a pleasing result for the utility division, considering the impacts of COVID and the restrictions across our operations, with Comdain on track to deliver 15% growth ahead of the full year.


Slide 14, in telecommunications.
As for the headline numbers, the division generated $209 million of revenue and $28.7 million of EBITDA during the half, down on the prior corresponding period, which included those onetime NBN construction programs that management have previously talked about not reoccurring and a higher proportion of activation volumes being completed.

Revenue from the activation and assurance or maintenance operations in the period was actually higher than we expected, with a favorable work mix and additional ad hoc programs of work offsetting the reduction in the overall volume.
Wireless revenue of $33 million was down on pcp, and this continues to be an area which is difficult for the business to predict work volumes, and we continue to see a slow ramp-up of 5G expenditure.

The last half has been a busy and productive period for the telecommunications division as many agreements came up to their natural expiry date.

Pleasing that the business is able to achieve favorable outcomes and resecured all agreements.

Of these, important to note is our agreements with NBN under unified services and networks, previously referred to as OMMA and NMRA, and may cover the provision of activation, maintenance, both planned and reactive works across the NBN network and each being secured for up to an 8-year term.

The business announced in January that we're successful in securing a new agreement with Telstra for the scope of work, including fixed line and wireless infrastructure upgrades and deployments.
Each of these agreements provide the business with the opportunity to expand our market share and grow work volumes on the back of positive performance, something which the business has done historically very well.

So as we look ahead, the business is working to secure work under NBN’s future upgrade program, which was announced last year.

We're currently taking part in initial trials and responding to nbn's formal RFT process, which will determine the volume of works to be awarded as one major opportunity for growth.
We've also referenced additional opportunities in terms of broader mobile infrastructure customer base that we believe will be an opportunity for the business over the coming 12 months.


Moving now into the group strategy and outlook, I direct you to Slide 16 and provide an update on some of the key focus areas.

If you look at our current state, the telecommunications work, which have been a large portion of the group's historical growth, have declined from their historical construction-led peak in FY '20.
As a result, the group will need to continue to work to replace these revenues across a more diversified base to support future growth.

Our strategy over recent years has been focused primarily on diversifying group earnings away from what was a strong bias to telecommunications.
That's certainly not to say there's not immediate opportunities to secure additional growth programs across the telecommunications sector. It's quite the opposite.

And we've referenced 2 immediate opportunities over the next half associated with NBN’s upgrade and other wireless infrastructure works, which are pleasing and positive.
The nature of these works is the infrastructure is heavily impacted by advances in technology and will require regular upgrades to support into the future.

Business is well positioned with the agreements that are now being resecured in this most recent period to capitalize on these opportunities as they present.
A key component to the group's diversification strategy was the acquisition of Comdain 2 years ago, which provided the business with solid earnings and expanded capabilities.

Business has access to a wider addressable market of infrastructure projects, and the operations, as stated earlier, are on track to deliver revenue growth of 15% over FY '21 full year.

More broadly, the group's operating model is strong and fundamentals are robust.
This will provide a platform which will support the next change in growth as we look to further diversify our revenue and serve as a catalyst to support a step change in future growth.

As we look ahead, the group is focused on maintaining that strong focus on enhancing our core fundamentals, continuing to execute works well and meeting or exceeding our clients' expectations, whilst working to secure organic growth opportunities across what is an expanding pipeline and a recently secured contract base, all while ensuring that we maintain a flexible and scaled model and a proportionate group cost base to protect margins as work volumes flex.

And as I stated earlier, diversification is certainly a key focus. The business will continue, though, to take a disciplined approach to assessing M&A opportunities, which will support that next step change in growth.


And finally, we move to the group outlook on Slide 17.
The group expects continued demand for services across core markets. However, the outlook for FY '21 has been progressively impacted by the COVID landscape and client delays to work programs.
This, unfortunately, occurred at a time when revenues across our telco construction-related operations have concluded and activations were declining from historical peaks and the business entered a cycle that needed to resecure future agreements for their next contract cycle.
Taking this factor into account, the group now expects the current trading conditions, including the COVID impacts, to continue throughout half 2, with results approximately in line with half 1.

Business fundamentals, as I said, are strong with regards to profitability, the strength of our balance sheet, quality of earnings and our favorable industrial client base and the markets which we face into and operate across.

Our priorities for the second half are outlined on the page on the right-hand side, and they include the mobilization and transition of those recently secured agreements; securing additional organic opportunities, most notably associated with NBN’s upgrade program, but more broadly across our entire client base with many opportunities across the utilities and a growing pipeline, whilst we continue to assess those external growth opportunities to support that step change in future growth.

That concludes the presentation of the results, and I'll now hand back to the moderator.

I'd be happy to take questions from those joining us today. ================================================================================