SGH (SGH) investor relations material

Strategic Direction and Operating Model

• Emphasizes a relentless operator mindset, applying a consistent and scalable operating model (the SGH Way) across all businesses to drive long-term outperformance and margin expansion through hundreds of marginal gains, with AI as a key accelerator.

• Focus on industrial compounding and privileged assets in sectors with strong demand thematics: infrastructure, mining, energy, and construction, leveraging market-leading positions and defendable moats.

• Operating model is built on four pillars: People, Operations, Assets, and Financials (POAF), with disciplined capital allocation, a strong owner's mindset, and clear accountability and autonomy at the business unit level.

• Recent changes in Australian tax and regulatory policy have increased the cost of capital, prompting a broader geographic lens for capital deployment, though Australia remains the anchor.

• The SGH Flywheel compounds value by deploying capital, driving performance, and delivering sustainable returns, requiring continual energy and focus.

Financial Performance and Capital Allocation

• Achieved half-year EBIT of AUD 844 million and operating cash flow of AUD 1.1 billion, up 32%, with net debt to EBITDA at 1.85x; 18% EBIT CAGR and 410bp ROCE expansion over the past decade, and a 10-year TSR of +800%.

• Over the past decade, EBIT grew from AUD 300 million to AUD 1.6 billion, an 18% CAGR, with a 10% organic and 8% inorganic split.

• ROCE improved from 6.9% to 16% in FY 2025, with capital allocation governed by strict hurdle rates (ROCE >15%) and a diversified funding base.

• FY26 EBIT guidance reaffirmed at low to mid single-digit growth, with leverage targeted below 2x ND/EBITDA; ambition is to deliver 10% EBIT and EPS CAGR over three to five years.

• Cash generation funds dividends, deleverage, organic reinvestment, and growth, with a focus on compounding capital and maintaining strong liquidity.

People, Culture, and Operational Discipline

• Workforce of 15,000, with over 87% frontline-focused; strong emphasis on safety, leadership depth, and capability building, with SGH Corporate remaining lean.

• Engagement rates are high, with Boral at 68% and participation rates up to 97%; leadership succession and internal promotion are strategic priorities.

• Safety performance has improved significantly, with LTIFR at 0.5 (64% improvement over three years) and TRIFR at 2.4 (48% improvement); Zero Harm culture embedded.

• Lean structures, cost discipline, and a decentralized but standardized operating model ensure agility and accountability.

• Balanced Scorecard process cascades KPIs from frontline to board, ensuring accountability, alignment, and continuous improvement.