Good morning, and welcome to SHAPE Australia's half-year FY 2026 results webinar for the period ending 31 December 2025. Presenting today is SHAPE's CEO, Peter Marix-Evans, and CFO, Scott Jamieson. Today's format will begin with a run-through of the results presentation, followed by a Q&A session. Investors are able to submit questions via the Q&A function at the top of the screen. I'll now pass to Pete.
Thanks, Mel. Good morning, everyone, and thank you for joining us for our half-year presentation. We've got, as always, a slide deck to lead you through, and we will have plenty of time for Q&A at the end of it. And as Mel mentioned, you can throw those questions up as you go along. If it looks like it's pertinent to answer it during the presentation, we will. Otherwise, we'll circle back at the end of it. So, without further ado, I'll start with a brief disclaimer, which we'll move straight on to the financial highlights and get Scott to take us through them.
Thank you, Pete. It's very pleasing to be sitting here today with that screen in front of us. As you can see there, there's a sea of green with all the numbers pointing in a positive direction. But if we firstly start with revenue, so revenue, that is work that we've physically completed or work performed of AUD 553 million, which is up 16% against the prior corresponding period. Moving across to EBITDA, EBITDA of AUD 21.4 million, also a very large increase of 45%. That equates to 3.9% as a ratio compared with the prior corresponding period of 3.1%, that's of revenue.
So that's obviously up significantly, but that's also assisted with increased project margins. So our project margins have gone from 9.1% up to 9.8%. Again, that has been assisted by the modular revenue, so our modular revenue's moved from 3% of revenue up to 7% of revenue, and of course, the modular revenue does produce higher gross margins. Also in relation to that is our overheads. So looking at the prior corresponding period, our overheads were running at about 7.1% of revenue. They've moved down to 6.9%, and approaching 6.8%. So combined with increased gross margins, lower overheads, has obviously led to an increase in EBITDA.
Our net profit after tax, a similar increase there of AUD 14 million, that's up 49%. The depreciation, interest revenue, interest expense, they're not that dissimilar to the prior corresponding period. But moving across to project wins. Project wins of AUD 742 million, and that is just for SHAPE. That's up 39%. For those online that may be new to the SHAPE story, so the key difference between revenue and project wins, project wins is what we record. It's a management number. It's not a statutory financial number. When we secure a project, by way of example, a AUD 10 million dollar project, once that project's secured, we record that as a project win.
As we perform the work on that AUD 10 million project, we record that as revenue. So if we've done AUD 2 million worth of work on that project, obviously, we would, we would record the AUD 2 million as revenue, and the difference between those two numbers, which is AUD 8 million, that then moves into the backlog orders. So backlog orders are work we have secured in hand, still to perform the work. So that backlog orders is AUD 686 million. Again, a significant increase on the prior corresponding period, so that's up 33%. And it positions us very, very well as far as continued revenues and stronger revenues in the second half compared to, to those of the, of the first half.
The identified pipeline, again, strong result, AUD 3.8 billion, up 18% against the prior corresponding period. These are known projects, so that's just not a number out of Oxford Economics or the like. They're projects that we are tracking, that if they come to us on the right terms and conditions, we have the right personnel or team available, we will look to tender and undertake that work. The key takeaway with that number is that that pipeline or the size of that pipeline is bigger than the work that we can currently undertake, because we are limited by the size of our team or our resource, and we will only ever hire, take on work or grow as fast as we can hire, retain, onboard good people.
Just moving down to the cash and marketable securities of AUD 136 million, up 6% against the prior corresponding period. There is a split between cash and the marketable securities. So marketable securities at the 31st of December was circa AUD 30 million. We have. We've moved money from our cash into the marketable securities. Those marketable securities are, they're corporate bonds, they're investment grade, highly liquid, and the reason that we move money into those marketable securities is just to maximize our interest revenue on our cash. Earnings per share, 16.8%. Significant increase, again, 48% increase. And very importantly to certainly a lot of shareholders on this call today, is that our directors have declared a dividend of AUD 0.14 per share, which is up 40% against the prior corresponding period of AUD 0.10. Peter?
Fantastic. Thanks, Scott. Yeah, just moving very quickly into the next slide. This just gives you a little bit of an insight as to the growth of SHAPE over its history. So the business began back in 1989, first year FY 1990, and you can see there that there's been consistent long-term growth over those 36 years. There's a couple of blips along the way there around the FY 2013 period. That was actually GFC. The GFC, we had a lag effect of GFC, primarily because at that, when the GFC really hit us, we were fortunate enough to have about AUD 180 million worth of work that was being undertaken at the Star City Casino.
So there was a bit of a lag effect there, and of course, the other blip there is Covid, sort of FY 2021. But you can see as we've come out of Covid, and we're back to normal market conditions, that we've continued to rise. And those yellow lines there, that's just showing you the half since we listed. So you can see half on half that, there's consistent growth there also. Talking about growth, so we'll move on to our performance against our growth and strategy. And we've talked to those who've been on the calls with us before about three pillars, which we'll take you through. The first one being sector diversification. So you can see there a pie graph. There's more sectors there than we have traditionally reported on.
What we've done is look at the breakup from various financial reporting systems, including Oxford Economics, and looking at how they map and track the pipeline and the workload, and so we're just starting to bring that language and that sectorization back into our, our own work. So if we look there, education revenue has improved quite significantly. That's a combination of both fit out and refurbishment work, but also some particularly strong performance from our modular team, operating largely in certainly in Victoria, in the schools, both faith-based and public school system. More, the more established diversification sectors, so the ones that we've been operating in for longer, so hotels, entertainment, recreation, and health, they contributed, you know, circa AUD 94 million-AUD 95 million in combined revenue.
So again, just supporting us in our ability to future-proof our revenue growth. Revenue from defence of AUD 18 million, increasing slightly over the prior year. We're starting to see the defence work come back on, and we're well positioned to partake in that. Moving on to the industrial and data centres. So you can see there's some really strong growth, which will flow through into revenue, into the H2 period, with data centres in particular, along with aged care being sectors that we've identified for future growth. And again, all with the desire to make sure that we can continue to grow that revenue stream or that revenue top line.
Aged care project wins up to AUD 57.5 million, again, on the back of really strong growth in that sector around the country, but certainly in New South Wales, we're seeing the team have some success there. Office sector, that remains our core market. You'll see there, it's a big part of our pie. We do love the commercial office market. It's very transparent. Leases are registered. Our DNA over 35 years has had a very strong weighting in that sector, and we're not looking to exit that in any way.
We want to continue to make sure that we grow that market share, but we support that with other sectors as we go forward, which just allows us to protect that revenue through market cycles across any of those sectors. From a regional growth point of view, you can see the split up of regions. New South Wales has traditionally certainly over the last 10, 15 years had the stronger sort of piece of the pie there. We see Melbourne coming back, so the Victorian market has bounced back from 17% in the PCP or in the prior full financial year up to 19%. We mentioned in the last report that we're seeing the Victorian market have showed some signs of growth there.
Importantly, that regional growth into our offices in Gold Coast, Newcastle, Tasmania, Geelong, Townsville, seeing more than AUD 60 million of revenue coming from those areas. And that's following key clients in there, but also developing new clients as well. And one of the, the key factors to that revenue by region and as well as sector, is just our ability to transfer our people and our finite resources across those regions to focus on those local market cycles. So you can see there, again, some really good, strong growth out of Queensland, SA, and even into WA. Tasmania, as a startup operation, showing some really strong growth, and NT and, and Canberra, holding their own as well. From a capability point of view, you'll see there, fit out and refurbishment remains, our, our significant sector there.
It's saying that revenue from new builds has remained steady. As we've mentioned before on the calls, we're quite selective around the type of new build projects that we will carry out, 'cause we do have a fascination with shorter duration projects that are largely carried out inside buildings or inside premises, so that we have limited exposure to weather and industrial. Modular construction there continues to scale, so you can see really strong revenue growth in that first half, which exceeds the prior year, full year result. So that's driven by both expanded production capacity, higher utilization, and again, continuing to develop our brand in that modular market, which is going really strong with manufacturing facilities both in South Australia and in Victoria. During the FY 2026 aftercare and facilities maintenance-...
Which was a small part of the SHAPE business has seen some success in securing a two-year facilities maintenance contract covering eight buildings in the Melbourne CBD. So we'll continue to look to expand that. Those maintenance contract allow us to also be well-positioned for any work that gets carried out inside those premises as well. So you can see there the split with new build and modular. Modular representing circa 3% in the prior year, so you can see that strong growth there, which, as Scott mentioned, is also comes at premium margin. Looking at our, our business model, and I talked a little bit about our fascination with the blend of the work that we have.
So, most of our work is complete, certainly within 12 months, but the majority of it within 6 months, which is really strong in limiting our exposure to escalation or to any, you know, movement on cost of goods and that sort of stuff. Also, our internal versus external projects, so that's projects that are carried out inside a building versus external. External having a stronger, I guess, reliance on good weather and certainly having more chance of industrial impacts. So that blend there between the short duration projects carried out inside a building just really help to, I guess, keep that risk profile in an area that SHAPE have a, you know, a 35-year track record of delivering good profits.
You'll see there on from a repeat client point of view, whilst we continue to have repeat clients, and we really focus on our existing clients and on delivering exceptional customer service, we also continually add to that with new clients, which will become repeat clients as well.
So this is just a little bit more detail in relation to the backlog and certainly pipeline. As Pete talked about before, we've broken this out a little bit more than what we've historically done. So this more closely aligns to some of the data that we're receiving out of Oxford Economics. The numbers on here both include SHAPE and also DLG SHAPE. DLG SHAPE is a majority Indigenous-owned business that we have involvement with, where the David Liddiard Group owns 51% and SHAPE owns 49%. But I guess the big takeaway here is that we continue to diversify our book. Our core business is certainly still in the office sector.
But what this enables us to do, it enables us to pivot, and we can pivot into projects where there may be a better project profile, whether that's margin, whether that's the complexities, and those sorts of things and relationships with clients. But we also always wanna make sure that we have a recent and relevant project experience across our teams. But also on the bottom left there, you'll see that our tender conversion rate still remains very strong at just shy of 50%.
Just covering off on safety, and we're very proud of our safety record, particularly in the last period, where we're continuing to see our TRIFR and our LTIFR decline, typically over that longer period, if you look back to FY 2022. So with everything we do, we wanna make sure that every single person that comes into contact with our sites goes home either in the same or better condition as to when they arrived. So no level of incident or injury is acceptable. You'll see there our TRIFR decreased from 7.3 in the PCP. Recent industry average is probably about 6.5.
Again, that's just a measure, really we're constantly measuring ourselves against ourselves, and just that incremental improvement, and relentless pursuit, really, LTIFR 1.3, increased slightly from 1.2, but if you look at, going back to FY 2022, it was up at the 2 level. So, well below industry average, and again, something that we continue to monitor and measure so that we can improve. If you look at, that 27% increase in proactive safety observations, so that's really important in that we're not just out there trying to catch people doing the wrong things, we're, we're trying to catch people doing the right things, and also pick up on safety incidents before they actually have the chance of happening.
Recordable injuries decreased from 16 on the PCP through to this year. On to our people, and as a people-focused business, as Scott mentioned before, really our biggest constraint on growth is our ability to hire and retain those, those fantastic people. We've had a 16% increase in our total workforce, up to 750 people. So that has, both, a significant impact on our existing people, because we rely on our, our SHAPE employees to help train those new people. And also we've welcomed in some fantastic, diverse talent, which is really good and again, continues to add to both the SHAPE culture but also our experience and capability, which allows us to continue to deliver, amazing experiences for our clients.
29.3% of our employees were promoted during the period, so that's fantastic. Our industry participation for females, 30%, that's above industry average, and we look at that from a... We want to attract and retain the best talent in the industry, regardless of background, diversity, et cetera. And interesting, or not interesting, important there, that we continue to invest back into our people with over 3,000 hours allocated to training. So again, it's about hiring the best people, keeping them engaged, and then they'll go and deliver amazing customer experience for our clients. Partnerships, talking about our long-standing trusted clients and consultants. So we've had over 270 projects in the period with revenue above AUD 100,000. Obviously, much more when you go below that.
Importantly, our Net Promoter Score, +87. We're very passionate about that, and that relates directly to the customer experience we deliver, but also it directly relates to our repeat business. So, very important, we track that. 90% of our projects achieve perfect delivery. That's an internal measurement, where we hold ourselves accountable for achieving fantastic projects, and we used over 1,700 subcontractors in that period. So that extensive network allows us to future-proof our ability to deliver that increased revenue as we continue to expand that subcontractor base, but also to be able to employ or contract to best-in-class subcontractors in different sectors and capabilities. So, you know, the subcontractors that work on a health or a hospital in a live environment, perhaps are different to those working in a commercial office.
So, our ability to have that strong base of subcontractors supports that ability to grow again from a revenue point of view. On to environmental social impact. So we did 6 projects completed this period, targeting Green Star certification. So again, we continue to be one of the pre-eminent leaders in that area. 450 furniture items donated and reused. So we're big on, you know, how do we prevent material from going into landfill? And you'll see there 980+ tons of waste recycled. And again, the industry is far too large a polluter and putting too much into landfill, and it's a strong focus that we have, and it's something that we can make a difference.
Importantly, there are also more than AUD 1 million of value in goods, labour, and services through both our supply chain, our subcontractors that we work with, and our ability to support our communities, which is very important to the business as a corporate entity, but also very important to all of our people that come here to work. It's just a bit of a range of our projects, and this deck will go up on the... or is up on the ASX, so you can sort of have a little bit of a look at it. But just to show you a bit of the depth and breadth of the work that we're carrying out, which goes back to that sector and capability and regional diversification.
So our three pillars and shows that our ability to pivot into whether it's into Tasmania with a new build fit-out or whether it's into, you know, a New South Wales modular in government housing, into, you know, Geelong with regional growth as well. So just a bit of a highlight of the different types of projects that we're pursuing. Again, into Noosa with hotel work, university work, and again, across into Perth as well, with some strong growth out of that region. So a good depth and breadth and diversification of skill set, capability, and regions. On to Scotty's favorite subject, financial management part.
Just a little bit more on the cash and marketable securities. So we talked earlier that, you know, our balance was AUD 136-odd million of cash and marketable securities. So that doesn't happen by accident. Our project teams and our finance business partners certainly place a lot of emphasis and a lot of focus on diligent liquidity management. So that is, that, the reason that we do place so much emphasis on that, not only is cash flow important, but we also get assessed for a, from a prequalification point of view, external financial assessments, and ensuring that our working capital and our ratios are appropriate for the projects to which we tender.
So we've got ourselves set up in a position that we are positioned where we can undertake projects in excess of AUD 100 million, and we meet those requirements. Included in that cash, though, is restricted cash. So the legislation has changed a little bit across the various states, particularly in WA, Queensland, and also in New South Wales, where we have to run project trust accounts or project bank accounts, and there's also retention trust accounts. So that money just flows into those accounts and then back out of those accounts. So it just means that we, for example, we can't use that restricted cash and put that into marketable securities, but it certainly makes up part of our working capital ratios and the like. We continue to maintain very strong cash conversion.
So if you looked at our, our operating cash flows to our EBITDA, we're about 151%, so very, very strong. On the left there, down the bottom, what I'm particularly interested in is the FY 2025 first half. Sorry, that should be say FY 2026. But, if we look there at AUD 107 million versus AUD 96 million, so our average cash balance was about AUD 10 million up, and even though we had a decline in interest rates by the RBA during that particular half, we still managed to maintain roughly the same amount of, of, of interest earnings. The right-hand graph there, that just gives you a little bit of an indication on a typical monthly cash flow cycle, so that's just taking the, on a day-to-day basis, an average over the last 12 months.
Where you see those dips, that corresponds with our payment cycles. We are obliged to follow the Security of Payment Act legislation that applies in each of our jurisdictions, and that does differ across the jurisdictions, and that dictates the number of days to which we need to be paying our supply chains. That just gives you a little bit of an indication on how the cash builds, and then it'll dip through those payment cycles. Peter?
Just a little bit of outlook. So, if we go back again through our three pillars, so from a sector diversification point of view, so in addition to expanding our, our office market share, which, which we are very focused on, we'll continue to strategically target, growth in those selected non-office sectors, just to make sure that we do have that ability to pivot. Our target sectors include non-residential categories of commercial, industrial, so hotels, entertainment, recreational, retail, industrial, data centres, along with social and institutional, being education, defence, health, aged care, community, and transport. As well as the residential sector of accommodation. So that is residential buildings, developed for institutional and public sector clients. That'll be more on the back of modular.
Macro trends such as population growth, aging population, geopolitical tensions, are expected to drive ongoing government investment in many of these sectors, hence why we've targeted them through identification of pipeline. Defence pipeline continues to recover. When I say recover, they had the Defence Strategic Review two years ago, where they channeled a lot of the money from the defence property sector into the AUKUS deal. So we're starting to see that softness come off now, and SHAPE are really well positioned to compete for those upcoming opportunities. Onto the regional growth. So we'll continue to focus on expanding our market share in those new regional offices that we've opened up over the last couple of years.
So these locations have strong pipelines, and we'll look for those strategic opportunities, both with the key clients, but also with new clients in those areas. The group remains disciplined in that geographic expansion. So we will only sort of move into or prioritize markets where we can scale, where there's client demand, and where the operational efficiency can be sustainably achieved immediately. So we're not looking to go into operations and have loss leaders or that sort of stuff. We will only go in and establish ourselves where we believe that it's scalable and sustainable. And then, the final one there of our pillars of growth, capability expansion. So we will target short-duration, new-build projects, to continue our exposure there.
And that just helps us to also bolster our people and to make sure that we can recruit and have the ability to have in our expertise that specialist talent for the new build works, so that we can, again, pick and choose. A very strong continued focus on growth in modular. We still maintain that the Australian market is somewhat immature from a modular point of view, when you compare it to the U.S. and/or European markets. So while we think there'll be some volatility there in the work coming in, we think over time, over the next five years, it's certainly going to be an area of growth and an area of opportunity. And we'll continue to expand and to invest in that sector.
We will expand our design and build services to other states. So we've anchored that largely in Sydney at the moment or in the New South Wales region. We will look to follow clients around the country with that design and build. That really provides turnkey service where we're responsible for every aspect of the project for the client. We will grow our aftercare and facilities maintenance service, so AFM by SHAPE. As I mentioned earlier, we picked up a contract in Melbourne for eight buildings. We will look to continue to choose the right contracts and opportunities to grow that business, and again, that's typically at a higher margin than the SHAPE BAU.
And finally, we're on a capability expansion, and welcome to any of our Arden team that are joining the call. So we completed the acquisition of Arden Group in December of 2025, and this further strengthens SHAPE's capabilities, particularly across facilities maintenance, and national multi-site rollout programs. Largely focused and specialized on the fuel and convenience sectors, but the Arden Group have really strong and deep relationships with Ampol, Coles, BP, you know, Officeworks. It's just some really strong relationships and importantly, have a number of longer-term MSA contracts of, you know, 3- and 5-year type contracts, where they're providing that ongoing service to some really key blue-chip clients. So very excited with that.
And after, you know, our first month and a half of our ownership, we're really pleased that the teams have got together. We're happy with the culture of the business. We're happy with the process or progress thus far of integration with all of the employee contracts coming across, all of the major client contracts coming across. We've identified succession planning already, and we're working really closely with the leadership team there to make sure that we can maximize the benefit of the Arden Group to SHAPE, but also of SHAPE to the Arden Group. So really exciting times and, yeah, very, very pleased with that acquisition.
Just a little bit more on that. This is probably more for the people that are newer to the story or haven't been involved in some of the presentations and discussions that we've had in relation to Arden. So just furthering on what Pete had said, just a little bit more detail. So that business has been going for 23 years. So it started back in 2002. Has 80+ people now. Revenues of circa AUD 50 million, and that's split out between AUD 35 million of fit out and construction work. Primarily, as Pete talked about in the fuel and convenience space, working with a lot of blue-chip clients, such as BP, Viva, Officeworks, Liquorland, Coles.
Their average project size a lot less than SHAPE's is, so their duration is a lot quicker. They're in and out, AUD 125,000, compared with SHAPE's, which is sort of AUD 3 million-AUD 4 million. Then, of course, they do a lot of maintenance work orders, so 7,000-9,000 work orders a year at about AUD 2,000 per order. They are in 5 locations across the country, so in Melbourne, Brisbane, Adelaide, Perth, and of course, Sydney. And as Pete touched on before, of course, this is well and truly in alignment with SHAPE's growth and diversification strategy. It expands our offering. We talked about the blue-chip clients.
One of the important things around this acquisition, which is what our, obviously, our long-term strategy is, is continue to grow the top line, but most importantly is to thicken margins and thicken that bottom line, which is what Arden goes to, to achieving for us because their margin profile is superior to the SHAPE BAU profile. And of course, Pete has already touched on the established management team and how we're progressing with the integration, and the business is certainly performing very well.
That brings us to the end of the slide deck. So we do have plenty of time left. We don't have any questions that I can see up yet, but I... unless, Mel, you have any for us?
Hey, Pete, we do have a quick question, sorry. If there are any questions, feel free to drop them in the Q&A function. John has also put up his hand, so I'll ask John Hynd to, I'll give him access to speak.
You'll probably have to unmute yourself, John.
John, are you there? Would you like to ask your questions?
Sorry, just trying to unmute. That's, I should have figured that out by now. How about the composition in the order book? Can we, can we start there, guys? Really strong, and I think within that number, we've probably got EY in there, too. It looks like you, you won that over the period. So, like, can, can you talk to perhaps, like, the skew to larger projects within that composition and perhaps timing? Because we're, you know, we're, we're getting to a period where some of these larger projects are going to probably have an impact on a quarter-on-quarter or half yearly basis looking forward.
Yeah. So if we, if we look at the, the composition, you're quite right. You-- I mean, EY certainly was, was in there. We've got three jobs in that order book that are in excess of AUD 50 million. When you look at the prior corresponding period, we had one job of AUD 50 million. So what that goes on to, to sort of... You extrapolate that out, which is probably where you're heading, is to, to what does that do by way of revenue? Because the longer, the, the, the larger jobs obviously take a little bit more time to, to turn over. Historically, we've, we've worked in the range of 1.7-2.5 times the backlog to provide the next 12 months of revenue.
That averages out at about 2.2, but of course, as that composition leans towards larger projects, that ratio starts to pull down. If we then looked at just the, you know, we took the backlog and the positions of those backlogs over the last couple of halves, and we looked at the revenue that that generated over the you know, the following 12 months, that was pretty close to 2, I think it was 1.98. So really, what's happening now is that ratio is starting to thin a little bit. So if we took AUD 686 million, you couldn't apply 2.2 because of the size of those projects. So that would start to dip and come in under the 2 mark.
Yeah, okay. That's really helpful. I guess extrapolating that conversation, the larger projects, obviously, we're going to see a little bit more flex in the gross margin dollars, I think from, you know, half to half period with that. Are you going to give us a little bit more color as larger projects roll through the book, or you still think the growth profile that you're achieving now means that's unnecessary?
Yes, I think what's going to happen is, because, I mean, we still do have a number of projects that are starting and completing. And then, of course, where you probably see the margin movement, so, you know, I mentioned earlier, is that our gross margins on our core business or our projects, we have been extracting a little bit more margin out of them. Where you see the step changes is more in the capabilities. So when we look at modular, modular obviously generates us more gross margin than the BAU, and of course, Arden generates us more margin than BAU. And as we continue to look at expanding capability, or going down the M&A path, we'll continue to look at those projects that can enhance that margin profile.
Of course, in our numbers, we don't have any of Arden's numbers yet because we, you know, we obviously, we completed that on the thirty-first of December, and but the second half, we'll have some of those numbers coming through.
Yeah, thanks. That was probably my next question. With that, can we expect to see Will Arden move the dial in terms of the gross margin it's able to achieve? Will we, will we feel that in the number in the second half, Scott?
So the revenue of Arden, you know, on an annual basis, we talk about AUD 50 million. If you take that as a percentage of SHAPE, I mean, it's still low-ish. It's still, you know, single, single-digit numbers. But their, their gross margins are double that of our BAU margins.
Yeah.
So if you extrapolate that out, you might see a 20-point movement on that, subject to, of course, how the BAU component of the business performs.
Great. Do you want to give us more of an update on Arden as well? And if you've got any key learnings, and is it helping you win? I mean, are you getting those cross-selling- You guys move pretty fast, so are you getting those cross-selling opportunities available yet? I note that the business mix is slightly different with Arden in that facilities maintenance or management. So, are they joint tailwinds now?
Yeah, so we're definitely already starting to see some cross-selling opportunities. So, we've had Arden introduce us to a number of their clients who have shown an interest in a couple of things. One, having a relationship with the SHAPE business, but also, a number of those clients have said they're excited at the fact that with SHAPE's support, they believe Arden can continue to take on more work. So, something that I've, you know, spent the first month going around and meeting with, you know, your Ampol, your Coles, your BP, your Officeworks, and one of the things that really has been a key takeaway for me is the focus on customer experience that the Arden team have developed really strong and long-term relationships with these blue-chip customers.
So they're really excited to support Arden in coming across. So we've seen, for instance, People's Choice Credit Union is a South Australian client of ours that SHAPE have had. We're already talking to them with Arden as a combined opportunity to assist them elsewhere in the country. Vice versa, we've had some great relationships and introductions from the Arden team into their existing base as well. So yeah, definitely starting to see those synergies in how do we work together and that cross-selling opportunity. So yeah, watch this space for sort of, I guess, the development of that backlog and pipeline in both those areas.
Okay. Will you break out Arden, Scott, given it's got that facilities line, or will that just all be consolidated in the top?
Yeah, at this stage, it's all consolidated.
Yeah. Right.
It will be.
Just quick housekeeping for me. Reduction in the financial assets on the balance sheet looks like some of those assets have matured. Have you reinvested there at similar levels? Or, I mean, I know you guys are, you're not adverse to debt, but you like having low debt, or are you using that to pay down or reduce the debt that you took on from Arden? How did that work through?
So the high-level numbers, so we had AUD 40 million in marketable securities. We reduced that down to AUD 30 million. So we used AUD 10 million of that for the acquisition of Arden, and then we borrowed AUD 15 million. And the next question would be: well, you know, given the amount of cash that you hold, why didn't you just use the whole AUD 25 million of cash to make the acquisition? And then that comes back to maintaining the appropriate working capital ratios and the capital management that we need to adhere to for the purposes of pre-qualifications, external financial assessments, and the like.
Got it. Okay. Last one from me, sorry. D&A, that looked—that was softer on a year-on-year basis and softer as a, like, you know, rough revenue, you know, ratio to revenue, but your employee count's up a fair bit. Is there anything we need to learn here about that profile going forward? Has something changed?
The only thing that's changed is that... Well, there's a couple of things that will change moving forward. So part of that is in relation to, of course, your, the old favorite, AASB 16 accounting standards where, where we've got some of our office leases rolling off, and then we've got new ones that are starting, those sorts of things. So there'll be, there can be some movement in relation to that.
And the other thing, of course, is with the Arden acquisition, we'll, you know, part of the goodwill obviously then needs to split out as part of the purchase price allocation, and are then, allocating the, you know, the intangible components to, you know, things like the, the customer relationships, the brands, and, and those sorts of things, of which some of those, of course, do need to be amortized over a period of time. So that's a long way of saying that you'll, you'll see it, it'll bump up a little bit for the next half.
Thanks, Scott. Thanks, Pete, and well done. Amazing result.
Yeah, thanks, John. Cheers.
Thank you. Back to you, Mel.
Yeah, we just have a few more questions, guys. So Matt at Moelis has asked: Can you talk to your ambitions around the modular division over the next couple, couple of years? Is there a percentage mix target, or is there a path to growth inorganically? And just further to that, we had another question that I might combine with that. In the first half 26, modular exceeded full year FY 25 levels. Can you maybe also talk to some of the utilization rates in South Australia and the Victorian facility? And do you anticipate adding new facilities or capacity to support further growth?
Yep. Okay, so to start that off from a growth point of view, as I mentioned earlier, the modular market in Australia is not in its infancy, but it's certainly not as mature as markets overseas. So again, we're guided by what happens in the European markets and the U.S., where we see a much stronger adoption of MMC, modern methods of construction, and the modular market. We do tend to follow those markets, and so we're anticipating that that will come along as both SHAPE and other modular builders in Australia continue to educate both property owners as well as designers in how to best get the most out of modular design.
Part of that is modular versus new build, stick build. There's not really a price difference if you're just building one-off bespoke building. Where we get the efficiencies from a modular point of view is building a number of the same buildings in the same style, and also being able to design the modular so we can make it more efficient from a, you know, sheet size, less material waste, safer to build, those sorts of things. So, we're still educating designers around how to get the best out of that. That will continue to drive efficiencies, which will bring the price point down for people that are developing and/or, you know, gonna build properties.
So, what I anticipate over the next 5 years and what we've seen certainly over the last couple, is a somewhat volatile market, as programs come out, and probably a little bit more false starts as clients look to adopt modular, but need to come to terms, and there's a bit of education process in that. In saying that, modular year-on-year continues to grow, and you can certainly see from our point of view, the increase in revenue, and how that's done. From a how are we going to grow point of view, there's definitely room for organic growth. And if we look at, for instance, our South Australian... So we've got 2 facilities. We bought one in Victoria a few years ago, which is producing some really strong results.
And then on the back of what we learned there, we established another facility in South Australia, which we built from scratch. So just employed the right people. That facility in South Australia, we outgrew our first facility in a few months, and went into a much larger facility. And just recently, we've actually added to that facility with some extra square meters as well, as we continue to just make sure that we've got the runway to support the pipeline, which goes to utilization. If we look at both facilities, Victoria and South Australia, they operate slightly differently and to different markets. Utilization, certainly in the Victorian facility, did peak at a period in the last six months.
In the yard, there's two parts to modular. One is while you're building it inside, and then the next part is while you're installing it on site. So there's certainly they had some really strong utilization. In South Australia, again, that probably got to near peaking, and that's why we took the extra space. So just that extra space giving us more runway to run at those projects. But what the, sort of, the telltales or the DNA of that sector still are showing us is that we don't want to invest ahead of the market. We want to be patient for the market to come up to speed with both educating itself and just developing that level of maturity, such that the pipeline over time will thicken.
So if we look at the SHAPE pipeline, after 35 years of, you know, a good, strong focus on fit-out and refurbishment, that pipeline's very thick. We couldn't possibly satisfy that pipeline because we, you know, we don't have the people. Versus in the modular side of things, that pipeline continues to develop every day. So I think there's definitely runway left for organic growth without needing to look for anything inorganic. We will probably certainly over the next 5 years, I would anticipate that we will continue to expand that operation across the country. That doesn't necessarily mean you need manufacturing facility everywhere, but it does mean that you can operate and...
Because once we build these modules, whether they're on a truck for 50-mile or 500-mile, is not sort of the big. You know, there's obviously difference in transport costs, but it's not actually huge when you look at it in the scheme of things. But yeah, exciting market. We remain heavily invested in it, and we're buoyant about the future, albeit we anticipate some volatility in the revenue stream there for the near term.
Thanks, Pete. Can we just, while we're on modular, Ben at Ords has asked about aged care, and if any of this could go through the modular facilities, and how significant is the opportunity in aged care, given the big jump in project wins in the half?
Yeah, so aged care, we have looked at that sector, and aged care's obviously been around for a fair period of time, and certainly with an aging population, there's a huge opportunity there. We have, again, going back to our desire to maintain our risk profile, close to what we have had for sort of 30-plus years. We've looked at the aged care from a rather than going and building new buildings that have a long exposure to external works, we're looking at refurbishment of aged care facilities, which certainly aligns to our skills. If you look at, we have a strong track record in delivering hotels, and if you look at an aged care facility, it's more or less a combination of hotels and health.
So you get those synergies from the existing capabilities. So at the moment, we're looking predominantly at aged care fit-out refurbishment versus the new build. As far as that could pertain to modular? Absolutely, that's an opportunity, whether it be aged care and/or retirement living. We are certainly talking to people about that. Again, I go back to the maturity of the market, and there's a fair bit of tire kicking in that area. And we have a pipeline larger than we can currently fulfill. Therefore, we're somewhat selective about the number of sort of tire kicking opportunities.
But we're certainly open to, yeah, if people have a strong near-term pipeline, that's very real, we would definitely see an ability to participate there from a modular point of view, and to add value and some speed and some synergies to that sector as well.
Thanks, Pete. And just sticking with your order book here, is there a multiplier we should be keeping in mind, when we think about the order book over the next 12 months?
Yeah, that goes back to what we were talking about with John. So of that multiplier, look, in very rough and high-level numbers, it moves between sort of 2-2.2. But again, now, our order book now has got, so 3 projects that are over AUD 50 million, so that'll start to come back into the high ones for the next 12 months.
Great. Thanks, Scott. This last question that we've received is about auditors. So as SHAPE is now a much larger and complex firm, is there consideration around moving to a bigger audit firm as part of a continuous process of financial governance improvement?
So our current auditor is RSM. They are a large multinational firm, and we have gone through partner rotation, and we've got a new partner on the audit for this financial year.
Great. Thanks, Scott. Actually, John Hynd has just raised his hand again. So John, did you want to ask your question?
Yes, please. Thanks, Mel. I don't think we've touched on the ANZ contract, guys. That's a big one. I'm assuming that's in the AUD 4 billion pipeline or the AUD 3.8 billion pipeline. Can we? Is it possible to talk about an update given the size?
Yeah, that, that project, I mean, when, when you talk about given the size, that's reduced significantly in size from what it started out as, obviously under a new CEO, into some, some cost-cutting or some, some measures to look at the type of money they want to spend. We're currently down to the last 3 there. From an impact point of view, if we look at that, if we were to secure that work, that would, you know, the current program, circa 2 years. If we were to secure that work, then, then that's great. If we were to miss that, then we would, yeah, find other work in the pipeline, or we would probably price more work in our pipeline instead of declining it.
So, while that would be, you know, a large project for a key repeat client, it's not really going to be impactful necessarily on success or on if we were to miss out on that as well. But, I would anticipate, that'll be in the next two months or so, we'll have a stronger clarification on that. But again, I don't anticipate that changing the Victorian, the performance of the Victorian branch.
Thanks. Just while we're on Victoria, looks like a reasonably good turnaround in the last sort of 6-9 months there for that team. Where are they focusing their time at the moment? Is there a skew...? I mean, I'm conscious of a lot of civil work going on with data centres and a lot of contracts available. Where, where's their work predominantly? And is there any commercial coming back, fit out work coming back?
Yeah, so we're seeing, you know, we did mention, I think in the last update, that we saw their pipeline increase significantly with a number of projects in the commercial office side. So certainly coming to market, you know, we picked up EY. That was the first, sort of the larger ones to come out. There's more to come with UniSuper, Coles, a number of other larger ones, which again, we can't run at them all because we won't have, you know, we don't have B-grade and C-grade teams, we've only got A-grade teams. So, when we have those resources fully utilized, that slows down our ability, and we'll always be very honest and transparent with clients around whether we can do the work for them.
So there's certainly that work coming on, but also if you look at, for instance, we're doing 235 Bourke Street, which is a conversion from an office building to student accommodation. So those types of work as well. So the work is around the fit out and refurbishment, typically, with a strong, very strong, modular, workload at the moment, down there as well.
Thanks. Maybe just one more. I think you noted in one of your outlook comments that you're focusing on hiring a new commercial build specialist. Can you expand on that, what the size of the market might be, how if the metrics are different to your typical fit out for existing commercial?
Yeah, I think the key there is that we continue to look to diversify into adjacent skill sets, capabilities, and sectors, and we will support that with the people. So we're only as good as our people. SHAPE are, you know, our only... We don't have any assets other than our people. So as we make sure that we have an ability to do new build and or health, we will pursue resources that have a you know relevant capability, experience, and track record in those areas. And certainly, the same goes for, you know, for modular. We'll continue to expand that modular sort of base through business development and through getting the right people. So the nuances are slight, but it's probably more comes down to experience-...
more experience than capability, because certainly, you know, we have an ability to transfer our resources across those sectors at the moment.
Yeah, I mean, so the profile is very similar, is it? Or, in terms of-
Yeah, very similar. It's just, it's more around what experience that, you know, the individuals have had, and how do we draw on that. And then we share that knowledge. If you look at, you know, the way we treat sectors, we don't have them in silos. We have knowledge captains in the business that we share across. So if we're doing a hotel, you know, in Adelaide, we might pull on some resources from elsewhere in the country that have a strong track record or have just finished a couple of hotel jobs to bring the relevancy and the lessons learned to that project in South Australia and/or Queensland and/or, you know, anywhere else.
Yeah, got it. And the size of that market, or is it sort of almost irrelevant at this stage for you, Pete?
Probably irrelevant at this stage, 'cause it's, I mean, the market is far greater than we could satisfy.
Yeah. Yep. All right. Thanks very much.
Pete, we just have one final question that's come in, and it's in regards to hiring people: How are you faring with respect to bringing on quality people into SHAPE?
Yeah, great question. So we have a couple of things at SHAPE. So I'm just trying to look at the question, so there was another one there that seems to have disappeared. I have a number of ways that we look at that in SHAPE. So SHAPE, we employ fantastic people, and fantastic people tend to know fantastic people. So we have an employee referral plan. So, for all of our employees internally, we reward them for bringing us new candidates, because no one, you know, no one knows our business quite like our own people, and they know who will be suitable. So we have that. We have also a number of internal recruiters. We participate in, you know, university open days and all that sort of stuff.
So we have a strong recruitment at the front end from a cadet intake, and that investment, we continue to do that year on year to make sure that we're investing strongly. And those cadets are, you know, amazing. We're getting, generally, it's a 50/50 split, male, female. A lot of it's double degrees. You know, they really get the tech side of things. You know, they're digital natives that have a strong affiliation and ability to use AI to their advantage, to be more efficient. So really seeing some good benefits coming through with that. But really, yeah, we're constantly hiring. We've got over 30 open roles in the market at the moment.
We've got an amazing team, our people and culture team that continue to sort of scour the market for the best people in the business. That brand, the SHAPE brand, and so the Arden brand as well, are really very helpful for attracting staff as well and for attracting candidates. And then after that, it comes onto the onboarding and how do we bring those people into the business, 'cause the retention part is just as important as the attraction part, 'cause there's no point hiring people and then find you're losing them. So our unplanned churn still circa 10%, which is, you know, pretty much best class for the construction industry, you know, which is normally up above the 20% from an unplanned churn point of view.
So we're very particular about who we hire. We look for the best people, we look to onboard them well, and then we look to keep them engaged with the business.
Okay, that brings us to the end of the Q&A. I might pass to you for final comments. If anyone has any questions that weren't answered, feel free to email me. My details are at the bottom of the release. Thanks, Pete.
Yeah, thanks for that, Mel. Thanks for everyone that joined us on the call. Fantastic to see such a large number of people joining us on the call to hear the story. Really pleasing to be able to present such good numbers. That is on the back of the hard work of all of our people in SHAPE and in Arden. Strong welcome to all of our new people that have come across from Arden. We're really pleased to have you as part of the SHAPE Group. We look forward to continuing to work with our amazing client, subcontractors, and our people to work on delivering another great result in H2, and look forward to catching up with you when we next present. Thank you very much.