Good morning, welcome to the Monadelphous 2021 Full Year Results Investor and Analyst Briefing. Presenting this morning from Perth are Monadelphous' Managing Director, Rob Velletri, and Chief Financial Officer, Phil Trueman. Copies of this morning's presentation and associated materials are available on our website at monadelphous.com.au. Throughout this presentation, the speakers will guide you on when to click through to the next slide. I'll now hand you over to our first presenter this morning, Mr Rob Velletri, who will start on slide two. Please go ahead, Rob. Thank you, Kristy, and welcome to everyone to our 2021 Full Year Results Briefing. Today, Phil and I will present our financial and operational performance for the period ending 30 June 2021, as well as have a good look at our outlook. We'll answer any questions you might have. The structure of this morning's presentation will be similar to previous presentations, with some further detail provided as appendices. Looking now at slide three, our group performance and highlights. Monadelphous recorded revenue of AUD 1.95 billion, which was up approximately 18% on the prior corresponding period. The result reflects an increase in demand for the company's services as the industry recovered from the initial phases of COVID-19, with customers looking to capitalize on strong commodity prices, especially in the iron ore sector. The Engineering Construction division's revenue surged 59% to AUD 979 million, reflecting the significant progress made on our large portfolio of major construction projects. The Maintenance and Industrial Services division reported revenue of AUD 977 million, which was down 7%. Demand for maintenance services within the iron ore sector was particularly strong, with reduced levels of activity in the oil and gas sector. The period saw high levels of construction activity across the industry, particularly in Western Australia. Increasing demand, coupled with measures taken by governments to control the spread of COVID-19, including international and interstate border restrictions, resulted in an unprecedented shortfall of skilled resources, with consequent labor cost and productivity pressures felt right across the industry. Fly in, fly out operations in the Pilbara region of W.A. were particularly impacted. Since the beginning of the financial year, Monadelphous secured approximately AUD 950 million of new contracts and extensions, again, largely in the iron ore sector. I'm extremely pleased to report a substantial improvement in our safety performance, with our total recordable injury frequency rate down 39% on last year. I'll talk a bit more about this later. Net profit after tax for the period was AUD 47.1 million, an increase of 29%, representing earnings per share of AUD 0.497. The board declared a final dividend of AUD 0.21 per share, fully franked, taking the total full-year dividend to AUD 0.45 per share. Monadelphous ended the year with a strong cash balance of around AUD 176 million. Phil will talk a little bit more about this later in the presentation. Looking at slide four, Engineering Construction highlights. As I mentioned, the Engineering Construction division surged 59% on the previous corresponding period to AUD 979 million. This was the division's largest revenue since 2015. The result does reflect the significant execution progress made on the company's large portfolio of major construction contracts. Since the beginning of the financial year, new construction contracts were secured within the resources, energy, and infrastructure sectors totaling approximately AUD 480 million. This included a five-year, AUD 150 million crane services contract with Fortescue Metals Group. The division also secured a number of packages of work for BHP under panel agreements for Western Australia iron ore operations in the Pilbara, as well as for their Olympic Dam operations in South Australia. Mondium, the company's engineering, procurement, and construction joint venture with Lycopodium, made good progress on its strategically important AUD 400 million contract with Rio Tinto, the Western Turner Syncline Phase 2 project. The project is due to be completed later this year in 2021. During the years, Zenviron, the company's renewable energy joint venture, continued to perform strongly with the award of and commencement of work on the Murra Warra Stage II Wind Farm in Victoria. In addition, it completed works at the Dundonnell Wind Farm, also in Victoria, and significantly progressed works on the Crudine Ridge Wind Farm in New South Wales. Our China fabrication business, SinoStruct, established its own fabrication facility in Tianjin, improving its capability to support customers through the self-performance of fabrication and assembly works. Moving now to our Maintenance division, slide five. The Maintenance and Industrial Services division recorded revenue of AUD 977 million. As I said earlier, down around 7%. During the period, the division completed a significant amount of work in the iron ore sector with customers seeking to optimize production levels and capitalize on the strong iron ore price, as well as manage a maintenance deficit created during the early stages of COVID-19. Although improving steadily, the division experienced lower demand for maintenance and turnaround services within the oil and gas sector. The division's been awarded around AUD 470 million in new contracts and contract extensions since the beginning of the financial year. Major contract awards within the iron ore sector included three three-year master services contracts with Rio Tinto for sustaining capital projects across various mine sites and port operations, as well as a number of contracts with BHP under the division's W.A. Iron Ore Site Engineering Panel Agreement. Within the oil and gas sector, Monadelphous continued to provide maintenance services under its existing contracts, performing major turnarounds during the period for both Woodside and INPEX. Planning has also commenced for major turnarounds scheduled across Woodside, Shell, and INPEX-operated facilities over the next couple of years. Company's Chile-based maintenance and construction services business, Buildtek, performed strongly, securing approximately AUD 100 million of new contracts with major copper producers since the beginning of the financial year. Monadelphous remains committed to strengthening its position in South America and is currently reviewing further growth opportunities in the region. The division continued to grow its rail portfolio, particularly on the East Coast of Australia. The company is now providing general rail maintenance services to multiple customers on the East Coast and in the Pilbara, as well as performing underground rail maintenance at BHP's Olympic Dam mine site in South Australia. During the period, the company continued to invest in specialist plant equipment to support the growth of its industrial services and civil capabilities. These investments will provide opportunities for expanding our services across existing major long-term contracts, as well as with new customers in the mining and oil and gas sectors. Turning now to slide six, Contracts Secured. You can see in total, Monadelphous has secured AUD 950 million of new contracts since the beginning of the year, including around AUD 200 million announced last week. The slide shows values and locations of each contract. Around half of this new work is in the iron ore sector in WA, with around 25% in the copper sector, with a few big contracts, Olympic Dam in South Australia, as well as overseas in Chile. Moving to slide seven, our safety performance. As I mentioned, we achieved a 12-month total recordable injury frequency rate of 2.26 incidents per million hours worked, which was a 39% improvement on last year. It's a very pleasing result given the extraordinary high levels of recruitment activity. During the period, we implemented a number of key health and safety initiatives to reinforce controls around line of fire fatal risk, including a new fatal risk standard and a life-saving rule relating to the use of mobile plant and equipment. We also released an updated Supervisor Safety Leadership program and completed further training for our Delivering the Safe Way behavior framework. We continue to maintain focus on the mental health and wellbeing of our employees, implementing and participating in a range of initiatives in the areas of resilience development and improving mental health awareness. Looking at slide eight, Our People. You can see on the graph here, Monadelphous ended the year with a total workforce, including subcontractors, of around 7,800, which was a 37% increase from 12 months prior. During the year, our direct employee numbers peaked at over 7,600. This is our largest employee base since May 2013. As I mentioned previously, high levels of industry activity in an already tight labor market, combined with the COVID-19 related travel restrictions and border closures, placed significant pressure on our ability to attract and retain labor. In response, we undertook a number of initiatives to bolster employee engagement and attraction of new employees. This included upgrading our employee development and performance management processes to support a strong pipeline of key talent. We also reviewed our benefit and reward programs to ensure they remain competitive. Acknowledging the important role workplace flexibility plays in improving employee wellbeing and job satisfaction, we formally established a workplace flexibility policy and implemented improvements to our parental leave policy. We also progressed a number of attraction initiatives, including launching an updated employer branding program and advancing the implementation of our new and improved recruitment, onboarding, and talent management system. A fair bit of work going on in that space. Looking at slide nine, Social Value. At Monadelphous, we're committed to making a positive contribution to the communities in which we operate, and our efforts are focused around key areas of diversity, community support, and education. During the year, we continued to make significant progress on our reconciliation journey, which is underpinned by our Stretch Reconciliation Action Plan. Pleased to report we achieved more than 3% Indigenous employment for the second year running. In addition, as part of the Australian Government's Employment Parity Initiative, we employed more than 190 Indigenous job seekers and upskilled more than 50 Indigenous members of our workforce. During the year, we're proud to launch a three-year Indigenous Employment Pathways Program in partnership with Rio Tinto, showcasing our joint commitment to creating meaningful and sustainable employment for Aboriginal and Torres Strait Islander peoples. Supported by dedicated coaching and mentoring, the program aims to increase the number of skilled and tertiary Aboriginal and Torres Strait Islander peoples in the resources industry and will be open to prospective apprentices, trainees, and tertiary cadets in a range of fields. Our fourth Reconciliation Action Plan will come into effect in the first half of the 2022 financial year. Plan places a renewed focus on engagement with Indigenous businesses, maintaining a minimum of 3% Indigenous employment, and improving mentoring and support for existing and new Indigenous employees. In line with our continued focus on gender diversity and inclusion, we successfully maintained female participation in excess of our 20% target for graduate and vacation programs and retained more than 90% of our female talent over the course of the financial year. We also announced the appointment of our first female operational general manager. During the year, we commenced a consultation process for our second Gender Diversity and Inclusion Plan, which will focus on ensuring a safe work environment for women, removing gender-based barriers, offering opportunities for women to enter trade roles, and extending targets for female candidates in our vacation and graduate programs. The new plan will be launched in the first half of this financial year. Across our operations, we took part in around 70 community events and initiatives throughout the year in support of the local communities in which we operate. I'll now hand over to Phil, who will provide you with some more detail on our financial performance. Thanks, Rob. Good morning, everybody. I'm now on slide 10, which shows our financial performance, and compares that to the previous period. As Rob's mentioned, our revenue increased substantially compared to last year, driven by significant growth in Engineering Construction work. Our earnings before interest, tax, depreciation, and amortization was AUD 108.7 million, an 18% improvement on the prior period. Net profit after tax was AUD 47.1 million, representing earnings per share of AUD 0.497. In the second half of the year, we reinstated a provision relating to the refund of R&D tax incentives, which we had reversed in the first half, while we continue to work through the matter with the ATO. The board declared a final dividend of AUD 0.21 per share, taking the full-year dividend to AUD 0.45 per share, fully franked. This equates to a payout ratio in excess of 90% of reported net profit after tax. Our Dividend Reinvestment Plan will apply to the final dividend. We ended the year with a strong cash balance of AUD 175.7 million. We experienced vastly different cash flow conversion rates over the last two financial years, this was primarily as a result of the initial impact of COVID-19, when materially reduced operating activity levels experienced in the months leading up to 30 June 2020 significantly reduced the working capital requirements of the business at that time. The improvement in the operating environment post 30 June 2020 has returned the company's working capital to more normal levels. The average cash flow conversion rate for the two financial years was a solid 87%. The strength of Monadelphous' balance sheet has and will continue to provide the company with the financial capacity required to effectively deal with the unpredictable and volatile effects of the pandemic, as well as take advantage of any potential investment opportunities that may arise. I'll now hand back to Rob to provide you with an overview of the outlook for the business. Thanks, Phil. Looking at slide 11, we can see the relevant current and forecast Australian market conditions for our business. As you can see, buoyant economic conditions forecast for the sectors we operate in, and resources, energy, and infrastructure sectors in the coming years are expected to provide us with a strong pipeline of opportunities. Moving now to the outlook. In the resources sector, the outlook for the Australian iron ore industry remains positive, with ongoing significant levels of capital and operating expenditures expected to sustain high levels of production, driving strong demand. Maintenance activity is expected to grow steadily on the back of aging assets and customers deferring work in prior periods. Strong commodity prices are contributing to a positive outlook for developments in lithium, gold, copper, and nickel. These markets will continue to provide opportunities for Monadelphous in Australia as well as overseas in South America, Mongolia, and Papua New Guinea. After unprecedented demand disruption during the height of the pandemic, conditions in the oil and gas sector are improving, with construction opportunities from the development of new LNG projects expected to emerge in the next year or so. Australia's transition towards clean energy continues to gain momentum, with a portfolio of new wind farms coming to market in the next few years expected to provide opportunities for Zenviron, particularly as electrical grid access improves in New South Wales and Victoria. Rapid development of the hydrogen sector will also provide opportunities for us in the coming years. This year's seen an extraordinary surge in construction activity after the initial impact of COVID-19. With several large construction projects all completing in the next six months, full year 2022 revenues are likely to be lower than the previous years due to the timing of award and commencement of new major projects. Construction activity is forecast to be stronger in the 2023 financial year. The performance of the business will be dependent on the unpredictable nature of the COVID-19 pandemic and its impact on the company's operations. As I mentioned, the shortage of skilled labor will continue to be a major challenge for the company's operations in Australia. The impacts are particularly acute for fly-in fly-out work in the resource and energy sectors, where restrictions in the mobility of personnel due to the unpredictable interstate border restrictions are impeding labor mobilization and operational productivity. In response, the company's focusing on initiatives to enhance the attraction and retention of people, taking a more strategic approach to targeting new work, and continuing to work collaboratively with customers. Our reputation as a leader in our markets and as an employer of choice, together with our longstanding commitment to delivering safe, reliable, and cost-competitive solutions, places us in a strong position to capitalize on the opportunities and deal with the challenges ahead. In conclusion, I'd like to take this opportunity to thank our loyal and talented team. I would also like to extend my appreciation to our shareholders, customers, and other stakeholders for their ongoing support during these difficult and unusual times. Thanks. I'll hand over now to the operator for any questions. Thank you so much. Ladies and gentlemen, we will now begin the question and answer session. As a reminder, if you would like to ask a question, you may just press star and one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press the pound or the hash key. Again, it's star and one if you wish to ask a question. Our first question comes from the line of Rohan Sundram from MST Financial. Rohan, your line is now open. Hi, Rob and Phil. Just a couple from me. Just keen to understand, of course, around the labor markets, to what extent the issues are driven by the state closures versus the international closures. Just a reminder of how reliant were you pre-COVID on international FIFO labor, if at all? The way I describe the impacts here, I think the international borders which have been closed for a prolonged period, what, 18 months or so, we are just not getting skilled migration into the country which is normal on a macro basis. Clearly, we are left with whatever is in Australia. On the state borders, where I guess significant amount of our work is in the Pilbara, is fly-in fly-out. We would probably typically in construction work access 40%-50% of our workforce from states other than WA. It is a combination of those two factors. The state restrictions clearly mean there is just very little mobility of labor across the country, which fly-in fly-out operations just rely on. Okay, thanks. Sorry. You had two questions. What was the other one? Oh, no, I think you partly answered it, but I was just curious. Right. If you do see that easing up in the state border restrictions, is that a workable position for you, at least? The problem of course is it's unpredictable. If we knew they were going to stay open and everyone knew they were going to stay open, then there's confidence in mobility and people themselves would be comfortable doing it. The fact that it's so unpredictable and given the more recent restrictions over the last couple of months, it's clear that there's not a lot of motivation for people to want to work their fly-in fly-out when they're either going to be stuck or they can't rely on that as their form of income. Don't know. Yeah. Thanks, Rob. Actually, last one from me is, the tight pressures in the market, has it impacted your ability to commence new work and/or complete work on time? Well, those two factors, yeah. Clearly, it's increased costs in terms of wages, et cetera, and it's put a lot of pressure on productivity and pressure around being able to complete works when they're supposed to be complete. Yes, all those things. It's as you would expect, given the nature of what we're talking about. Okay, thanks, Rob. Thank you so much. And your next question comes from the line of- Oh, yeah. Sorry. Oh, I'm sorry. Sorry. Your other question was about, is it preventing us from starting new work? I guess, the answer to that is clearly that's a decision point for us around what work we take on and being comfortable that we can do it and complete it, and also the risks around the contracting arrangements, et cetera. Just taking that restriction into account. Okay, next question. All right, we'll proceed to the next question, comes from the line of Michael Aspinall from Jefferies. Michael, the line is now open. Yeah, thanks for that today, Rob and Philip. If I may, just kicking off from where you finished up there, how are the contracting arrangements adjusting for the current operating environment? Sorry, I didn't quite catch the last bit of your question. Yeah. Are you seeing contracts incorporating additional provisions or changing the structure of what risks you're willing to take on given the current environment? Well, yeah. I guess, excuse me. We are being a lot more mindful of the risks, clearly, in contracting in this environment and therefore, either not making prices fixed or putting sufficient qualifications, et cetera, and making sure that those risks are properly accounted for. Yeah. You mentioned strategic targeting of new work. Does that kind of imply with those, in combination with those comments, that that's not being done across the industry from all participants, or is everyone kind of adjusting the way that they're pricing work to meet new risks? Yeah. Well, I think everybody will be adjusting. They've got no choice to adjust. The point is just making sure that we're matching up our resources and capacity with the available work and making sure that we're selecting work that is best for us strategically and in the long term. Okay. We've seen some commentary from some other industry participants around claiming additional costs incurred from customers. What's your experience been, or have you incorporated much of that into the numbers you're reporting today? Well, yeah, look, the answer to that is, it depends on contracts and where we can, we are. It's not universal. It depends on contract conditions. Okay. In maintenance, in the past, you've talked about the mechanism of changes to wages within that kind of style of work as being negotiated with customers. Is that working as expected? Well, I guess, in the maintenance world, there's probably a lot of negotiation goes on with clients to match pay rates with availability of labor, and there's a fair bit of that that's gone on. That's always a challenge, clearly. Yes. It's probably a bit less of an impact in maintenance than it is in construction. Yeah, okay. Just another angle to that question. You might be able to negotiate the pay rates you need to pay to keep employees on site for the maintenance work, but are there any kind of protections there for any kind of step up in turnover? Not particularly. Not necessarily, no. That being a factor? Yeah. Probably, yes. To some extent, just recruitment costs have gone up, no question about that. We've seen turnover go up. That's definitely another impact. Okay, cool. Last one from me, sorry for badgering on. You've mentioned that activity in 2022 is gonna be lower due to the timing of new major projects. I know it's probably a bit too early in the piece, but can you talk to any kind of estimates as when you think those projects come through? I just wanted to see if you could give us a sense as if most of that was iron ore work or if there was a large part that was oil and gas too? Oh, no. It's a more general comment around the fact that we have had the period this year, we have had a surge in activity. Remember, we had probably, I think we quoted last year or something like AUD 100 million or AUD 150 million come from last year into this year. If you normalize the year, it's more like about 1.8, I suppose. The point is that we've got a lot of work coming off, and whilst there's plenty of opportunities around, I don't think the timing will certainly match or won't match the year past. It's highly dependent on timing. Highly dependent on time. Yeah. Okay, great. Thanks for that. Thank you so much. Your next question comes from the line of Wei-Weng Chen from JP Morgan. Your line is now open. Hi, Rob. Thanks for taking my question. Just a quick one on labor. Where are the pressures most acute? Is there a certain segment or type of worker where you're seeing more issues or is it just across the board? Oh, well, it's definitely in the skilled area. Electricians, mechanical fitters. In the sort of bulk numbers, it's in that skilled area and even some of the semi-skilled, scaffolders, et cetera, and physical. Yeah. Okay. Then just a question on, can Monadelphous get to a situation where you start to cycle higher labor costs and you get to reprice future projects? Does higher competition kind of prevent you from repricing work too much up? Well, you've always got competition, but I think the general movement in the market will be upwards. It just has to be. It's more competitive in terms of labor, so really that is going to push rates up. We're still competing with others, both on the labor side. I would expect we're all doing the same thing. Yeah. Okay, thanks. Last one from me, at this stage, how should we think about the quantum of sort of revenue declines in FY 2022? I'm sure you're working hard to replace the revenue, but at this stage, I guess how much is rolling off from FY 2021 levels? When you say FY 2023 is expecting stronger activity, do you mean relative to the year just in or do you mean relative to FY 2022? I mean relative to FY 2022. Yeah. I think if you kind of look at the profile of some of the large contracts that are going to come about over the next two years, most of them are going to impact the second year, not the first year. No, I can't really give you a number. It's too hard. Yeah. All right. Thanks for that. Thank you so much. Your next question comes from the line of John Purtell from Macquarie Group. John, your line is now open. Good morning, Rob and Phil. Hey, John. Hey, John. Just had a few questions, just picking up some of the points. Rob, we've previously talked about pre-COVID EBITDA margins of 7%. Is that still the type of margin that you would expect to bid on new work? When would you expect that to flow through to your book? Oh, no idea. The answer's probably somewhere around there, yeah. You got to deliver and it's going to be a question of how well you can perform on contracts. That's just the way it is. That's normal. It's certainly more challenging now, although clearly new work is going to be bid with all those risks in mind. All things being the same, I guess the answer is yes. I couldn't tell you when. Thank you. I appreciate there's a range of moving parts, but the question is whether you think the second half of 2021 represents your likely margin trough. I suppose the theory sort of is or was that you're completing obviously peaks of iron ore work and incurring additional costs to get that done. As that sort of eases off, provide some form of relief. Just interested in your thoughts around whether this is the trough year. I could only say I hope so. What happens in the future, unfortunately, at the moment is pretty uncertain. The positive is that we know what the risks are. We know when we're negotiating new contracts, et cetera. Other than that, I'm not sure what else I could tell you. Okay, thanks. Just got a couple of others if I can. Just in terms of staff numbers, Rob, they've obviously sort of continued to move higher. Do you expect them to sort of come off this type of level now, consistent with your sort of revenues or do you sort of you're looking to try and retain that labor? Yeah, look, the labor goes with the work. It's going to fluctuate with the work, but clearly, we'll be trying to maintain those levels. I don't think we'll take a dive. Probably at this stage, we are in a situation where we could probably, well, we're looking for people. In the short term, I think the numbers will be maintained. This probably dovetails into the final question just around your bidding pipeline. Rob, can you flesh out the sort of major opportunities over the next six months? Yeah. The iron ore work is just there all the time. The major opportunities in iron ore will probably feature more the following year, as in new developments like Western Ridge for BHP and Western Range for Rio. Nevertheless, there's significant ongoing sustaining capital AUD 0-AUD 50 million type contracts. Plenty of other work, but the big jobs will come a bit later. Same with copper, work at Olympic Dam. Mongolia, Oyu Tolgoi has got to get going again. It will get going again within the next few months. Covalent Lithium is probably a sort of nearer term, first half opportunity of scale. That's a new lithium hydroxide plant here in W.A. There's wind farms available in the short term that we're hopeful of. Otherwise, there's work more generally in Nickel West. There's work in other lithium opportunities for Talison. Albemarle is still going, but there's another two trains possible there. They're probably the more significant ones. Thank you. Thank you so much. Your next question comes from the line of Steven Anastasiou from Bell Potter. Steven, your line is now open. Hi, guys. Well done on delivering that revenue increase in such a difficult operating environment. Sort of just touching on that and the margin piece, is it enough to expect margins to start to normalize sort of from that second half 2022 period once all your pre-COVID construction work starts to complete? Do you think you're really gonna have to see a normalization in borders as well? No. Probably the former rather than the latter, because most of the work that we've had on is all pre-COVID. Most of it was work won before COVID even existed. It's been through that. We've had those restrictions impact that work. I guess hopefully we'll be able to manage those risks better now that we know about them going forward. I think the key risk to margin is more about volume than it is, if you get what I'm saying. Yep. Yeah. No, that makes perfect sense. Once you start to cycle all that work from first half 2022, as the things complete, hopefully it's onwards and upwards from there. Yeah To your level of volume. Yeah. Correct. Yeah. The other one I had a question on, there was sort of quite a big increase in the contract asset position. Does that sort of reflect the difficult environment and some higher than historical claims, or is it just maintenance work that was completed near the half year end that was yet to be billed, or perhaps a bit of both? I don't know. I think it's a bit of both. We've got large volume of work in the final stage of completion. You're going to see that number go up because of that timing. How are your negotiations going with customers more generally? They obviously are well aware of the issues that are plaguing the industry. Are they pretty good in terms of your claim negotiations and the like? Could always be better. Excuse me. Yeah, could always be better. Yeah, it's a mixed bag. Depends on what job with who. Yeah, it's certainly, what's the word for it? It's not terribly easy. Yeah. Not terribly easy, but. Yeah At the same time, it doesn't look like there's going to be any sort of major blow-up, or not blow-up, but any sort of major difficulties with customers. By and large, you're still able to- Well manage things well enough. Well, I think that's what we're forecast, yeah. Yeah. Beautiful. Well, thanks, guys. Thank you so much. Your next question comes from the line of Shaurya Visen from Goldman Sachs. Your line is now open. Hi, Rob, Phil. Thank you for taking my question. I have one on margins. Now, you have provided some very good commentary around the rising labor cost and shortages. Can you give us a sense of your current order book? What proportion of contracts would be fixed price so that we can think about margins going forward? Thank you. Sorry, what's the actual question? What proportion of fixed? Of current order book. Of current- What proportion of your current order book would be fixed price contracts? Well, the vast majority of our construction contracts would be fixed price or sort of thereabouts fixed, yeah. 80%. Yeah. That would 80%. Okay. Yeah. Okay, no, that is very helpful. Thank you very much. That is all. Thank you so much. Once again, ladies and gentlemen, if you wish to ask a question, it's star and one on your telephone keypad. Your next question comes from the line of James Wilson from Jarden Australia. James, your line is now open. Hey, guys. Thanks for taking my questions. Just three from me today. My first question is, in your outlook, you've called out steady growth for maintenance. Given that some of the Pilbara E&C jobs will roll off over FY 2021, do you expect the business mix to swing back towards maintenance, especially as some deferred oil and gas maintenance operations come back online? If that swing occurs, will it occur more in the first half or the second half, do you think? Well, I think the answer is yes to that. It's just the extent to which the mix changes because the volume of construction drops off. Yeah, on the maintenance side, there is continued opportunity. We probably haven't seen the oil and gas revenue quite return to back where it was pre-COVID. There's probably some opportunity there. Great. Thanks. Yeah. Oh, no. Continue, sorry. I thought you'd finished your response. No, I'm sorry. Was there more questions? Yes. My second question is your guidance of stronger construction performance in FY 2023, is that purely driven by contract timing of currently signed contracts or something else? Just interested to know what underpins that, especially given the tougher recent commodity pricing in iron ore. Well, just when I look ahead and look at the pipeline of projects that we are pretty confident will be available to us, the timing is such that there's a lot more of that work in the FY 2023 year than FY 2022. Just timing. It's not work that we have. It's work that's available for us to secure. Yep. Okay. That makes sense. My final question is, can you run us through briefly the step-up that you guys saw in right-of-use asset depreciation over the second half of 2021? The right-of-use assets are basically our rental properties, James. Also, it's pretty dependent on when you have renewed leases during the period, and we did have a couple of leases that we renewed for a bit longer. We also took on a lease in China for the SinoStruct business as well. That's what would've contributed to the step-up in that depreciation. Thanks, guys. Thank you so much. Again, if you wish to ask a question, it's star and one on your telephone keypad. Your next question comes from the line of Nathan Reilly from UBS. Nathan, your line is now open. Oh, hey, Rob and Phil. I was just going to ask around this margin decline, just to try and get a bit of, I guess, a bit of understanding around that second half margin decline versus the first half. 5.1% down versus the 6% at an EBITDA level. Just so I'm clear, that decline, is that all increased turnover and labor cost inflation? In the second half, probably is, yeah. Yep. Yeah. Okay. With that, can you maybe speak to your pass-through mechanisms around labor cost inflation? Notwithstanding, this is, I guess, an industry-wide issue. Is this a factor that maybe just Is it the COVID situation that just you now have COVID clauses or pandemic clauses in contracts, or is the whole industry kind of taking an approach where they just need to share this issue? No. Well, it's not just labor cost. Labor cost is one factor. It's also just availability of labor and not having quality labor. It's also productivity impacts, so not being able to do the work in the necessary time, et cetera. Do you know- Yeah. Do you know what I mean? Yeah. There are a bunch of impacts. There's labor cost, there's productivity as in having the right number of people or the quality of people, for that matter, for the work and increased costs around recruitment because of high turnover levels, et cetera. There's a combination of all those factors. Yeah. I guess this is the reality of. So- delivering in the Pilbara and in Western Australia at the moment. Yeah. With the new work which you secured more recently, and I think that's going to be contributing pretty significantly to the first half of FY 2022, have you been able to address some of those challenges? Well, yeah. The prices are much more expensive. Yeah, there's clearer conditions around being able to recover impacts, et cetera. Yeah. Another question. As I said to you, as I said earlier on, most of the work we're talking about is work that was won pre-COVID. Yeah. I'm just trying to get a sense of what's rolling off and what's rolling up. Yeah The new work- Well, you've still got stuff rolling off. We've still got a few jobs that are gonna finish in the first half. Then you've got some work maybe that we've announced more recently that's new work that we wouldn't be concerned about. Yeah. There's some work that we've taken on that's reimbursable. Because there's also a shift in mix here, isn't there? With some of the new work which is going into the iron ore market. Yeah it looks like there's a big reduction in those big, large projects and the big mine replacement projects. Yeah, correct. in terms of you've added, there's quite a lot going on in that smaller sustaining capital projects worth AUD 0-AUD 100-. Yeah Odd million size of- Spot on. Yeah, spot on. Yeah, there's a lot more which we feel more comfortable about. Yeah. Would you want to give me an idea of the mix there? In terms of the new work which you've secured in this new environment in the iron ore space, what the mix is between the larger sustaining capital projects versus the smaller? All of it's been the smaller one, I think. Is that where you can sort of price this a little bit more efficiently? A lot of it does. Some does. It depends on the scale of it. Some of it's a little bit bigger. Yes. It's more generally at the lower end across- Yeah Maintenance and also in the Construction division. Right. With these, just so I'm clear, these new iron ore projects, which are mainly skewed to smaller sustaining capital projects, are they done on schedule of rates in terms of price? They can be. Some of them are lump sum. Some of them are, yeah, particularly if they're kind of difficult to scope, they're more reimbursable. Mm-hmm. Okay. Yep. In terms of the labor intensity, you've got a very big workforce at the moment, and you said earlier that you're looking to add. Just in the context of your revenue or your lower revenue outlook for the full year. Yeah Does that suggest you're gonna be quite busy through till December, January, and then you're expecting it to kind of roll over for the second half of the year and then pick up again in 2023? With what we know now, that's probably a fair assumption. Yeah. Okay. I guess I say that because, sorry, I say it that way because it's not that easy to forecast too accurately six months down the track. And within that- I think the other factor is it's probably more labor-intensive than some of our projects where we had quite a bit of previously. Well, we did have more supply involved in those contracts, perhaps. We're doing large shutdowns that are heavily people-intensive. Okay. just maybe finally, just so I'm clear, can you give me an example of what your turnover rates were over the last six months, and also what was your average cost inflation that you saw from a labor point of view? Well, labor-wise, it's probably around 10%, maybe 5%-10%, but there's things like retention bonuses and other schemes that have been put in place to try to keep people to finish jobs, et cetera. It could be as much as 10%, but it'll vary depending on the job. Overall, between 5% and 10%. Then, turnover-wise, it's probably doubled. It's a sort of doubling, which really just pushes up your recruitment costs. You have to find people to replace people. What's the normal turnover rate? There's a fair bit of churn. Sorry? What's the normal turnover rate? I wish I could give you one number for one workforce. That's why I'm saying it's probably doubled. Okay. Got it. Yeah. Sorry, last question. I've asked probably too many there, but just last question around Gudai-Darri. This looks like some work which you've secured later on in the piece in terms of delivery of that project. Does your pricing reflect that? I guess the current circumstances in terms of trying to deliver that project towards the timeframe? Yeah, definitely. Most definitely. Right. Okay. That's great. I mean, yeah. Yeah. That project will support the first half, won't it, of 2022? It will, yeah. Yeah. Great. Thanks for asking, or sorry, answering all my questions. Much appreciated. No problem. Thank you so much. If there are no further questions at this time, speakers, you may continue. Thank you very much for your participation today. That now concludes our briefing. Thanks, everyone. That does conclude our conference for today. Thank you for participating. You may all now disconnect.