Thanks for that, Mel. Good morning for those on the west, and good afternoon to everyone else. Thank you for joining us today for our FY25 half-year results presentation. As Mel mentioned, there is a Q&A aspect to it. You feel free to put questions up as we go, and if it's pertinent at the time, we'll try and get to them. Otherwise, we will have a bit of time at the end. Obviously, the disclaimer as per usual, and then moving straight into the financial highlights, which I'll get Scott Jamieson to take us through now.
Thank you, Peter. What I'll do, I'll walk through the key financial highlights, and we'll touch on a little bit more information as we progress through the presentation. I'll start by acknowledging that the revenue of $ 479 million is the highest revenue that we've ever had on record for a six-month period. That is actually up from $ 416 million in the prior corresponding period. That's a 15% increase in revenue. Part of that growth is a combination of not only our core business of what we've historically done, but also the growth in our geographies, being Gold Coast, Tasmania, and Newcastle, together with the non-office sectors. For example, in the defence sector, additional work going through there, and of course, our expanded service offerings, which Peter will touch on a little bit later.
That's translated into an EBITDA number of $ 14.8 million, also a significant increase against the prior corresponding period, up 21%. That flows into the net profit after tax of $ 9.4 million, up 26%. That's been achieved through continued operational excellence and disciplined cost management. Most importantly, looking forward, is the project wins of $ 531.5 million. The makeup of that is there's about 170-odd projects in there, and those ranges go all the way up to $ 50 million, with an average project size of just north of $ 3 million. That's just showing the level of diversification through our book. We still have, as at 31st of December 2024, backlog orders of $ 516 million. That's work that has been won that hasn't yet been delivered, and that's up 13%.
That sets us up very well for continued strong revenues into H2, combined with an identified pipeline of $ 3.4 billion. That pipeline, they are known projects. That's just not a made-up number. They are actual known projects where there is a genuine opportunity there. Those projects are those that we have the capabilities and skill set to undertake as long as they come to market on the right terms and conditions. From a balance sheet point of view, a liquidity point of view, a very strong position there with cash and marketable securities of $ 118.9 million. The split out there is we've got cash of $ 84 million and marketable securities of $ 35 million. Those marketable securities are highly liquid investment-grade corporate bonds, and they are managed by JB Were, and they're also up 21%. Earnings per share, significant rise of 26%, so $ 0.114 per share.
Most importantly for a number of the shareholders on the call today is that the board have just declared a $ 0.10 dividend per share, and that's up from $ 0.08. That is a 25% increase in the dividends whilst maintaining a dividend payout ratio of approximately 90%. Yeah.
Thank you, Scott. We are moving on to just how we're travelling with our growth strategy and performance, and starting off with non-office sector. As we've talked about before, whilst we're pursuing growth in non-office sectors, we do remain focused on maintaining our commercial office market position. Project wins in commercial office sector were strong again at a little over $ 410 million. That compares to a full year of the previous FY24 of $ 690 million. Office market still doing very well, and we still remain heavily focused on that.
Outside of that, it's all about protecting our revenue streams and making sure that we're able to pivot into the sectors and areas that have the best projects, both from a margin profile, but also from a risk profile. We continue to maintain that diversified portfolio. Revenue grew across the non-office sector by about 20%, and that's particularly due to strong wins in FY24 that are now currently in construction in FY25. You can see the split of the numbers there. Defence project wins, to note a couple of things, $40.5 million, which compares to a full year of $63.6 million. As we've talked about in previous reports and presentations, the Australian Defence Strategic Review did put a damper on the defence pipeline.
We are starting to see that open back up, and we would anticipate that we will continue to see more defence projects come out, particularly on the back of the investments, particularly in WA and South Australia with AUKUS and those sorts of projects. Interestingly and positively, health projects wins grew significantly as well. That's on the back of a number of projects, but certainly exacerbated by some project startups with a long-standing strategic client. You can see the breakup across the non-office sector there. As per the first bullet point there, that really offers a level of protection against any downward cycles in the core business. Staying on the growth strategy performance, but moving to service offering expansion. We have new build there. Revenue from the new builds increased by 250% circa. That's following the record wins in FY24.
Project wins have slowed down now as we continue to balance our future workbook because we do not want to be too heavily weighted in new build. Again, we do like our profile around the office market, which I will go into in further slides. Modular revenue, while still positive, was restrained mainly due to several withdrawals and more so commencement delays. On the back of last year's, the year before cancellation, 18 months of the Commonwealth Games, there was a lot more pressure put into that market. We have seen the construction costs moving in the modular, and we are seeing plenty of clients that are having difficulty in accurately forecasting their budgets going forward. We are just seeing a bit of delay there. Importantly, the pipeline remains buoyant. We are still very confident in that market. We continue to invest in that sector.
We have expanded our manufacturing facility in South Australia in the last 12 months as well. We continue to hire people as we gear up to continue to scale that production. FY24, just a note there, we'll talk about it elsewhere as well, being a bit sort of picky and choosy about which projects. You will see facades have scaled down slightly, or not slightly, significantly. That is on the back of withdrawing from several facade opportunity projects where we were not satisfied that the risk profile or margin profile was appropriate for the business. In a market where our pipeline is very strong and we continue to have the ability with the diversity to look at different sectors' capabilities, we continue to follow the money and make sure that we are presenting the best projects to the book. Last one on growth strategy performance covers off the geographic expansion.
You can see there combined project wins for our three regional operations, which did not exist three years ago, combining to total more than $ 120 million. That is really good. It gives us a nice strong backlog of work to be delivered in FY2025. As a result, you can see that the revenue grew significantly, up over 236%. Project wins by 2%. Obviously, we again typically remain constrained by our ability to hire good people. We have had 6% growth in our full-time numbers from employees. That is why the wins are backed off there on the back of that really strong backlog. Gold Coast of over 180% increase in revenue. That goes to the order book with the amount of different types of work that we are doing up there, and also with the new build component that is significantly in the Gold Coast.
We have also secured the region's marquee sort of largest office project in FY24 as well. We will see that revenue coming through the book for the rest of the next half. Also to note, there is the establishment of a permanent office in Tasmania, and we have grown the headcount there to eight people. In the first half of FY25, the pipeline and confidence remain strong for the rest of the financial year in all of those regions. That slide there, I have shown that slide before. I just put it back up for those who are joining us new to the business. Really, the highlight there is you can see the first half of FY25 compared to recent years. We are well positioned from a revenue growth point of view, but also just to demonstrate the 35 years of industry knowledge, experience, and profit making.
The business model for SHAPE. Again, we continue to deliver high-quality and cost-effective solutions. Really, we're all about the client. It's how do we minimize disruption to clients. We've got ability to win projects at all stages of the office cycle. That increases work opportunities. That's from new buildings, we're going in and doing new fit-outs, all the way through to maintenance and all the way through to repositioning buildings. Depending on where the office cycle is, in the commercial office cycle, we actually enjoy work at all aspects of that. Extensive and diversified range of customers. We predominantly work for ASX 100, 200 blue chip companies.
Again, have the ability to pay and the desire to pay and reasonably transparent in our ability to forecast when they're coming to market, particularly on the back of lease expiries and the registration of those sorts of things. Mentioned before that we're very attached to our risk profile that we've established for the business. We enjoy typically a shorter duration of projects. You can see there that 91% of our work is completed in under a year, and work less than six months is up over 50% of the book. A lot of very quick turnover, cash generative, and it means that we don't get the exposure to any cost of goods rise, rise and fall type things. The other one there to note, just as far as the risk profile goes, is that external projects is only 14% of our book.
Eighty-six percent of our work is actually completed inside buildings. It's actually a bit higher than that because the 14% does include some of our modular work, depending on how it's been categorized. That gives us a level of protection around both weather, industrial, and our ability to continue to build in all sorts of conditions. The last one there is just the high percentage of repeat business. Repeat clients are up over 80%. We have a very strong focus on delivering customer experience and exceptional customer relations. It's all about the journey for us and the project. Our people are very well trained and very committed to delivering on that exceptional customer service as well. We're seeing that manifest in the repeat business.
This slide we touched on earlier, the project wins. There's a couple of other metrics there with decisions pending of $ 328 million and currently tendering $ 116 million. What those metrics show us is that we're continued to position ourselves for a strong H2. Those two wheels on the right-hand side there, our backlog, order book, and the pipeline, both show the continued diversity of our book with the diversification across many, many sectors. That helps us in two ways. One, it provides an opportunity for continued growth in all of those sectors, but it also provides us with a level of resilience. Should a particular sector show any sign of weakness, we have the ability to pivot across all of those sectors with the skills and capabilities of all of our people on board.
Whilst if you went back in history and you had a look at some of those graphs, the % there for office has come down. We're not moving away from office, but we're just, as we continue to build and diversify, that office component becomes a smaller % of the full book.
Just looking at where we're working, our ability to win and execute work. I guess I have talked before about the pipeline. We've got a very strong pipeline. As Scott mentioned, that pipeline of over $ 3.4 billion is known projects. Those projects go into our CRM, which we use Salesforce. We've got a number of bespoke algorithms built in there that actually allow us to forecast our Opportunity Predictor Model, forecast our ability to win that work based on a number of inputs. That is currently sitting for the half year at 46% by number. We win 46% of the work we price. Pricing work obviously costs you money. We're very particular about what we price, who we price for, and how we price it. We don't price for practice. Some really, I guess, sophisticated front-end entry there.
Also, I noted before on the office side of things, transparent lease expiry. All leases are registered. We have a really good transparent view of the forward workload in the majority of our business, which you can see there is on the previous slide up at 50%-60% for commercial office. From revenue by region, you can see there that New South Wales remains strong. Predominantly, if you look at the piece of the pie for the remainder of those states, it typically follows non-residential construction starts in each state. It would appear that we are reasonably well weighted in most of those markets. Probably South Australia is outperforming against non-residential construction starts. Apart from that, it tends to be in line with what is happening around the country. You can see that they do change over time, but the different weightings are there.
Execution, long history of strong investment in our systems and process. Whether it be our safety systems, our quality systems, our financial control, the robust financial management, we have a very strong focus on making sure that we're supporting our 650 Shapians in being able to deliver their projects excellently with the backing of not just the support from corporate services and people, but through investment in systems. Last one there, Aftercare and Facilities Maintenance, AFM. We've got a dedicated team there. They're really focused on maintaining client relationships, again, through all stages of the life cycle. From an operational highlights, that slide's very busy. I'll pick out a few things. From a safety point of view, our TRIFR has actually increased, which is certainly something that maintains a lot of our focus. Pleasingly, our LTIFR, lost time injury frequency ratio, has decreased.
I'd note both of those stats are below industry standard. However, in saying that, we maintain our view that no level of incident or injury is acceptable in our business and/or in our industry. I will go into a little bit more of that on the next page. From a people and culture point of view, you can see there we did achieve another Cultural Achievement Award from Human Synergistics, which we're very proud of. We put a lot of focus into recruiting, attracting, and retaining the best people in the industry. That way, we can deliver the best projects in the industry. Had a 6% increase in our total workforce to up to 645 employees. Again, I've mentioned before that our ability to grow is related to our ability to hire exceptional people or really good people that go out and do amazing things for us.
Female participation has remained fairly stable for us, around 30%, which is above the industry average. From a diversity point of view, we continue to be focused on diversity, equity, and inclusion across all of our people to make it a fair place to work. Partnerships, I mentioned the repeat business. That is on the back of client Net Promoter Score of +88. Also, 82% of our projects achieve Perfect Delivery, which is an internal program where we challenge our teams to achieve what we deem perfect on a project, which is certified by the customer, not by ourselves. We continue to grow our extensive range of trusted subcontractors. From an environmental point of view, you can see there we have donated a number of items, over 2,464 furniture items donated or reused. We are really proud of that.
We want to continue to divert those materials from landfill. You can see there $ 964,000 in value of goods and labor donated through charities and through our CSG. Back to the safety, as I mentioned before, you can see those statistics there from a graph on the right-hand side. You can see the TRIFR has come back up. We have significant additional hours and exposure. Pleasingly, the LTIFR, sorry, the lost time injury frequency, has come down. What is good to note is the long-term trend is we continue to trend down. We will continue to put in place both leadership programs, system resources, and a focus on safety to continue to drive that down. Some interesting things we're looking at in the future is development of predictive project performance reporting.
How do we use AI and our data to actually predict where we should be looking, where the risks are, where we can focus to help drive both of those statistics down. From a sustainability point of view, we continue to reduce our carbon footprint. We will continue to work on that. All of our corporate operations remain carbon neutral. We have delivered two Green Star projects in this period, awaiting certification for both, but those have been completed. 77% of our corporate electricity is via green energy providers, which is an increase on the prior period. Carbon accounting software, we have talked about that before, but I guess we have embedded that in each of our regions and program offices now so that we are starting to get some better transparency and continue to improve on the accuracy of that reporting.
Just put in here two pages of just some project sheets just to show you the type of work that we're doing. You can see there The Cove End of Trip. That is a refurbishment, circa 600 sq m. Repeat client working inside a building. The next one, CDU, so Charles Darwin University. That is a new build, approximately just under 4,000 sq m. That is topped out now. We are going through starting to fit out in that now. You can see the size of that, circa up over $ 25 million. It is a health training facility and is going really well in Darwin. Sandringham Hospital Outpatients, another refurbishment. That is 48 weeks, 2,000 sq m. It is a new client through Alfred Health. Second one, second page of some of our projects.
This is just to give you a feel of the diversity of the types of projects we do. Obviously, there are similarities in that they are predominantly fitout and refurbishment with some new build added to it. It just gives you a diversity of projects ranging from 14 weeks to 52 weeks for private, for public, for government, hoteliers, that sort of stuff. A good demonstration of that diversity in our book. I will move back to the financials and hand back to Scott.
Yeah, as we mentioned earlier, revenue, EBITDA, and NPAT, they were all records for the six months. That is highlighted. Obviously, there are significant improvements on the prior corresponding period, which is highlighted in the movement column there. All of those metrics are sort of 15%-26% increases. Gross margins remained relatively stable at 9.1%. Even though they were stable, that is actually a slight increase on expectations. For anyone that was on that call back when we produced our 30 June results, we did talk about the book and the margin and how the margin falls out of a project during the project life cycle. Because there was a number of delays on projects, our revenue was slightly down to what we thought. Because we would have had the revenue, there was a bias towards a going margin rather than an exit margin.
Throughout a project, we have a going margin. As we progress through that project, through variations with clients, through working out better and more efficient ways, and letting positions with subcontractors, and then closing out the risk positions of a job. As we work throughout the life cycle of the project, you generally see increases. What we anticipated, we were at 9.1%. Because we had some delayed in revenue, that revenue was coming through in the first half of this year. We expected a marginal decrease in that gross margin. As it has turned out, just due to the success on a number of projects, we have actually been able to maintain that margin at 9.1%. We will continue to look at ways of improving or thickening that margin, both from an efficiency and effective point of view on all of our work.
More importantly, as we continue to blend that book, for example, in the modular business, as we continue to grow the modular business, the modular has higher gross margins than we do on our business as usual. As we look to any M&A activity, again, we will be looking to blend that book. Our overheads as a percentage of revenue, that remained relatively stable. What we did see was an increase in our management fees that was coming out of our associate business, DLG SHAPE, as more revenues went through that business. As the capability partner, a lot of our people and back office requirements are running through SHAPE. Of course, we also had some significant increases in interest earnings, which we'll touch on a little bit later. I'll just quickly on the, yeah, so on the EBITDA margin.
That is all reflected there with an increase in the EBITDA margin from 3% up to 3.1%. We touched on the dividends and the cash earlier in the presentation. This slide just shows a little bit more on the breakdown between our cash and marketable securities. I did mention earlier that the cash is $ 84 million and marketable securities is circa $ 35 million. We continue to put a lot of effort into cash management across every single person at SHAPE, right through to our project management and all of their team to maintain that high liquidity or high balance. Obviously, it is important from a risk management point of view, but it is also important because of the interest earnings that we generate off there. What that also shows us is that we had an average position of $ 96 million.
There is a fair fluctuation, which is represented on the right-hand side there. That is showing an average daily cash position over the last 12 months. You can see that there are a few dips in that graph there. They correspond with the Security of Payment Act legislation, which dictates the number of days that we need to pay our subcontractors or our supply chain. ACT, for example, is 15 days. New South Wales, 20 days. Queensland and WA, 25 days. Those others that have extended periods, we pay that on the first business day of the following month.
We also, obviously, are very conscious, and some on the call may think, "Well, why do you hold so much cash?" We also need to be conscious, and we're certainly very diligent around the way we manage our cash because we need a certain number, a certain working capital ratios, net tangible assets to turnover ratios for the purposes of pre-qualifications and external financial assessments. We have got ourselves positioned really well from that point of view so that we are in a position that we can tender and undertake projects of up to $ 100 million.
Just want to hear that question there.
Sorry, there's a question coming through on the screen. Of the $ 119 million in cash and marketable securities, how much is required for bonding and other security purposes? We have fairly favorable positions with our providers. The amount that's set aside in relation to that exact question is less than $1 million. We do have other restricted cash. When I say restricted cash, in Western Australia, Queensland, New South Wales, those jurisdictions operate project trust accounts and retention trust accounts. That means money has to flow through those trust accounts. That amount is $ 14 million of restricted cash in relation to those.
Back to the growth strategy. Just a bit of, yeah, I guess looking forward. Our growth strategy, as Scott mentioned earlier on, remains focused around three main pillars. The first one being non-office sector expansion. We continue to see opportunities in growing revenues using health, hotels, education, retail, and defence. We are also seeing macro trends such as population growth, obviously an aging population, and along with those geopolitical tensions expected to drive ongoing investment, both from government and private sector in those. I mentioned earlier, well positioned for defence and also importantly for Defence Prime. Defence Prime being the consulting and the professionals that surround the defence industry. The second one there is the service offering expansion. In FY24, we invested in laying a foundation for growth in the modular business. We opened a new 5,000 sq m facility in South Australia.
We have invested in several professionals down in South Australia to supplement the team down there. First half of FY25, modular business was established, modular hire business. We remained focused on implementation of that hire business into our growth plan. That is not to start to compete with Coates or those sorts of stuff. We are looking at hire of sort of more upgrade, higher grade sheds, office environments, that sort of stuff. The beautiful part about that is that does supplement the modular team when they have an ability to help to optimize manufacturing in any quiet spells they might have. We are building on the early success we have already had with our design and build service. We have mentioned before that we have had a number of larger projects come in through the design and build service offering.
We continue to focus that more around the sub 1,000 sq m projects where we can be the partner of choice for clients and just, again, deliver turnkey service for them. Our healthcare and facilities maintenance, continuing to expand that. We've continued to expand our client base for that. On the back of that, we will look to continue to develop more and more professionals into that area. As Scott mentioned, we remain what I call opportunistically acquisitive, looking at opportunities that would be synergistic to the current business as far as us being able to understand, manage, and enhance the risk profiles of anything that we might look at. The third and final one there is geographic expansion. Continuing to focus on expansion on the Gold Coast, Newcastle, Tasmania.
We have just secured a new office for our Gold Coast and Newcastle teams, having outgrown those offices. We continue to explore other regional locations. I do want to point out there that whilst investing in our growth and strategy, as I mentioned earlier, we do remain focused on maintaining our significant market share in the commercial office sector. I maintain that that does represent more than 50% of our backlog revenue and, again, more than 50% of our pipeline going forward. That takes us to the end of the deck. We have had one more question, which was, so I have got a couple of questions now. The first one there, Scott, did you want to add anything to the outlook for margins? The question is, could you comment on your outlook for margins as higher margin verticals become a bigger part of your mix?
I think generally, as far as the outlook goes, what we touched on before, that as we continue to grow and blend our book, whether that's with capabilities or any M&A activity, we will look at ways that we can continue to grow that margin. I mean, an outlook would be a continuation of increased project margins.
As we look forward to both the diversification and any potential acquisitions and/or continuing to invest in modular and design and build, those are all areas that we're seeing margins that are typically higher than the BAU core business. We will continue to blend that book. Next one there was, you have an identified pipeline of $ 3.4 billion. At what level does this max out? IE, SHAPE don't have the capacity to take on incremental new work. I guess I touched on that a bit earlier in that we've grown our workforce by 6% in the last period. As I noted, we will only ever grow as quickly as we can hire good people. A couple of reasons for that.
Whilst we have strong investment in system and process and a strong support base from our corporate services, we do rely on human beings doing the right thing because they can, not doing the right thing because we're standing behind them. We have to hire good people in the industry. We have to invest in them. We have to train them. We have to retain them. That is part of the challenge in balancing that. As far as $ 3.4 billion, we would not be able to, if that all came to market in the next 12 months, we would not be able to partake in that. What that would allow us to do is to continue to optimize the projects that we do target and secure.
Next one, are you able to provide any insight into how progressed any M&A opportunities have progressed and whether you have come across any interesting targets? We are always in the market looking at different targets. Over the last 18 months, we have done several mild DDs to look into opportunities that we might look at. Obviously, we would not comment on anything that was ongoing ahead of any market announcements other than to say we recognize that M&A would and should be a part of a growth strategy going forward. That is all the questions I can see on the board at the moment. I will just have a small pause to see if anyone is in the middle of typing or anything else.
I just, there's one more question come through, but also John Hinds from Petra has raised his hand, so I might ask him to talk.
Okay. We'll just go into the last question on the board that's come through from us. Commercial office result was a highlight. Are the landlords still offering large incentives? Are incentives coming down or still high? I think, yeah, commercial office has been good. I mean, even coming out of COVID, we've always maintained that we believed in the commercial office market. We have maintained that we believe there will be a return to the office. I think we're almost seeing not quite normality. Maybe it's the new normal, but we're certainly seeing offices pick back up. We are still seeing incentives remaining quite high. That fluctuates, obviously, depending on which market you're in. Sydney is very different to Melbourne. Again, related back to vacancy rates. Typically, we're seeing incentives stay reasonably high.
For us, the incentive component does not necessarily impact our work. Sometimes, if there is a really high incentive, you will see clients maybe spend a little bit more per square meter on the fitout. Often, in this sort of new age, they are taking a large component of it as rent abatement anyway. It is not a real big impact on the type and the amount of commercial work we get and/or the financial profile.
John, did you have a question you wanted to ask?
Yeah, thanks, Mel and hi guys. Thanks. Well done on the result. Thanks for taking my question. Just probably for Scott, if it's okay, just a little bit more color on how we're looking at margins in the second half. There was obviously a bit of noise and a bit of movement in the first half, and you've still come out with quite a strong number. Should we think about this as a new normal, or is there opportunity for that margin to expand a little bit more in the near term or near medium term? If so, what is that opportunity, please?
Yeah, thanks, John. I touched on it a little bit earlier where we talked about coming during the June result and some of that work that we had that we expected that was going to go forward in that June half. That work got delayed. What we were seeing is we were seeing delays. The way that works, without getting right down into the complexities, is that we thought that because that delayed work was then going to start and commence in the first half of this year, we would see an easing of the gross margins. What we have actually now seen is that those delays are embedded in the book now. It is ongoing. A couple of things can happen.
Where that work has started in H1, and then as that work continues through H1 and then closes out in H2, generally, again, it depends on the size and the composition of the projects and the duration of those projects. You can see as projects close out, if they work in our favor, which is generally the case, that we'll make more margins. All other things being equal, we did 9.1% last year. We were thinking that might ease sort of 20-odd points for this half. It remained stable. We made the, I guess, the expectation that H2 would have picked back up to sort of that normalized level. What we're seeing is an enhanced gross margin position through a number of our projects and as we blend some more of that modular work.
The other thing is that we've got through all the noise of COVID, and we're not seeing those price fluctuations that we were seeing back through COVID as well. We've been in a favorable position where we've been able to negotiate positions with subcontractors and things with them not having to worry about the significant increases with prices, materials, and those sorts of things.
Okay, thanks. That's helpful. When I think about, so that's the gross margin. When I think about the top line, we have things stabilizing in your sector, materials being more available, and you talk about labor being more available, and you talk about the delays for the second half being less prevalent now in the first half. Is there a risk, I guess, to the upside that your client base start approving projects faster? So we could actually see an acceleration in projects and opportunities for you in the second half?
There is a chance that if the delays start to ease, what you'll get, you'll get a minor sugar hit where you'll see that, for example, if the delays were 60 days and then they started to compress back to 30 days, for example, during that compression, there'll be a small sugar hit where you could potentially see an increased revenue. Obviously, there's going to be a little bit more additional demand on our people to get through that period, noting that we potentially have to recruit more people as well, which we are constantly looking at through the growth.
These contracts, the ones that are delayed, are they dynamic in the sense that pricing's changing for them every month or whatever as they come back to the table to talk about it further? Is that dynamic working in your favor at the moment?
I'll jump in on that. Typically, it does work in our favor. The downside is the delay in the project commencement. We put a team aside who have applicable skill set, capability, experience to carry out that job, depending on the profile of the work. The delay in starting means that we've got transition costs. What happens during the value engineering process is typically there's an ability there to shore up the margin, make sure that all of our pricing's very accurate, some really good cover. Through that process, we tend to get better buying power out of the subcontractors too. There's an advantage in saying that there's a transition cost that we hold for our staff as well.
Yeah, got it. Okay. That's helpful. One more from me. Scott, you mentioned about having good people on board to help you grow. Does the company have, I guess, any capacity constraints on how many people you can bring on on a monthly basis and how long they take to get trained up? And then essentially, part of that revenue per employee number that I assume you look at through the cycle?
We do not necessarily have capacity constraints. The way that we operate is that we take a risk management position. What we do look at is that, as Peter indicated before, we will only grow as fast as we can hire good people. Whilst we could go out and bring in 100 people tomorrow, we are obviously very conscious of what that would do to our culture. It would do to them understanding our systems and processes, and particularly out on site and all of the safety and the rigor that we place on those sorts of things, that we are very conscious that when we do something, we want to do it exceptionally well. Peter talked about our Perfect Delivery model, also our high Net Promoter Score, and our good, strong brand.
We take all of that into account, and we have growth, but we are very conscious on how fast we grow for that point of view. If we start looking at M&A activity, slightly different because some of those businesses that we might look at, we'll then consider how integrated we make those businesses. That does provide us an ability to grow and bolt on something there because they've already got that established culture and system process and the way that they operate.
Okay. Thanks. I'm just going to go one more if I can. On modular, you've mentioned a few times that that's got a good gross margin. I guess, is that business profitable at first half 2025 revenue levels? I'm assuming when you talk about a good gross margin, it's probably higher than that 9.1% that you printed in first half 2025?
Yeah. I guess touching on the gross margins to start with. The modular businesses, the gross margins are north of 15%, so roughly double that of the other business. When you say, is that business profitable? The short answer to that is yes, the business is profitable, but we are continuing to grow. We have hired more people as part of the development and the continued growth of that business.
As you normalize those sorts of things, like if you took what the business would currently be doing as far as a revenue and a profitability point of view, that would be higher had we have not injected a little bit more time, effort, and cost in continuing to look at ways to grow that while putting on people like business development and associated overheads to continue to look at ways of growing those businesses, and particularly with the establishment of the Adelaide market and the opportunities that are presenting themselves there. In saying that, we are continuing to look more broadly at opportunities further around the country.
Yeah. Okay. I mean, broadly speaking on that business, aside from people, what are the other and rent, what's the other main cost lines there? Would it impact the EBITDA line? What's the main bucket there? Is it different to a normal construction?
No. I mean, the rent is, yeah, it's mainly people and rent. They're the two largest costs. In saying that, that's the same for our core business. It's people and rent.
All right. Thanks, guys. Well done.
Yeah. Cheers, John.
Peter and Scott, that brings us to the end of our questions. I'll pass back to you for final comments.
No worries. Thank you, Mel. Again, thank you for all of those who joined us today, particularly if you managed to stay on the webinar for the whole time. Obviously, we're contactable, certainly through NWR, and available for any more detailed presentations and/or discussions as people see fit. Thank you for your time, and have a good rest of the afternoon. Thank you.