Monadelphous Group Limited (8MP.F) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to Monadelphous' 2025 Half Year Results Presentation. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the call over to your host today, Ms. Kristy Glasgow. Thank you. Please go ahead.

Hello, and welcome to the Monadelphous 2025 Half Year Results Investor and Analyst Briefing. I'd like to begin by acknowledging the traditional owners of the lands on which we are joining you from today in Perth, Boorloo, the Whadjuk people of the Noongar nation and the traditional owners of country, and pay respect to Elders past, present and emerging, and extend that respect to all First Nations people. Presenting from Perth are Monadelphous' Managing Director, Zoran Bebic; and Chief Financial Officer, Phil Trueman, who are joined in the room by our Chair, Rob Velletri. Throughout this presentation, the speakers will guide you on when to click through to the next slide. The structure of this morning's presentation will be similar to previous results presentations with some further detail provided as appendices. And copies of today's presentation and associated materials are available on our website at monadelphous.com.au. I will now hand over to our first presenter today, Zoran Bebic, who will start on Slide 2.

Thanks, Kristy, and welcome, everyone, to our 2025 half year results briefing. Today, Phil and I will present our financial and operational performance for the half year ended 31 December 2024 as well as the outlook. We will then answer any questions you may have. I'll begin with our group performance and highlights on Slide 3. Monadelphous recorded revenue of $1.05 billion for the half year, which is in line with the guidance provided to the market, represents a 4.2% increase on the prior corresponding period. The Maintenance and Industrial Services division continued to experience strong overall demand for maintenance services and sustaining capital works, delivering revenue for the 6 months of $645.1 million. This was down around 9% on the prior period with energy sector turnaround activity returning to more normal levels after the heightened activity experienced this time last year. The Engineering Construction division reported revenue of $405.4 million for the half year, up 33.7% on the prior corresponding period and similar to the second half of FY '24. Net profit after tax was $42.5 million, up 41.3% on the same time last year. This result was helped by a $7 million after-tax variance in nonoperating items compared to the prior period, with operating margins improving as well. Earnings per share for the period were $0.433, and the Board declared an interim dividend of $0.33 per share fully franked. We ended the half year with a cash balance of $272.5 million, supported by a very strong cash flow conversion rate of 145%. In total, since the beginning of the 2025 financial year, we have secured approximately $1.7 billion of new contracts and extensions across a range of industry sectors, including energy, iron ore, other minerals and renewable energy. Moving to Slide 4. In the energy sector, we secured major construction and maintenance contracts with Woodside and Shell valued at approximately $800 million in aggregate. This includes a multidisciplinary construction contract with Woodside for modifications required for the Pluto LNG Train 1 facility and infrastructure as well as a 7-year contract to continue providing maintenance and minor construction services associated with Shell Australia's Prelude FLNG facility. In WA's iron ore sector, we were awarded several construction, maintenance and minor project contracts across Rio Tinto's operations. Our civil business, Melchor, secured a significant structural concrete construction contract with the Saipem Clough joint venture at Project Ceres, Perdaman Industries urea plant near Dampier in WA. Alevro, our heavy lift services joint venture with Fagioli, will also provide heavy haulage services at project. Zenviron, our renewable energy joint venture, continued to strengthen its market position, securing a significant contract for the delivery of CS Energy's Lotus Creek Wind Farm in Central Queensland. Moving to Slide 5 now. Our workforce, including subcontractors, at the end of the year totaled just under 7,300. Pleasingly, we saw overall employee retention rates continue to improve with staff turnover declining and key talent retention remaining very strong at around 95%. We focus on improving our early careers and talent development pathways, introducing a winter internship program to complement our existing VAT program and expanding the ongoing development, mentoring and upskilling journey of our future business leaders. We launched our refreshed onboarding and welcome hub, improving the new employee experience for both new starters and managers, and around 240 people participated in our graduate, undergraduate, apprenticeship and traineeship programs. As part of our ongoing commitment to ensuring a safe, respectful and inclusive workplace, we continue to embed our Respect@Monadelphous behavioral framework and launched our Respect in Every Step program. This forms part of our mentally healthy workplace strategy and is aligned to AREEA's’ workforce mental health framework. Looking now at safety and well-being on Slide 6. Our unwavering focus on the health and safety of our people continues with our total recordable injury frequency rate remaining relatively stable at 3.34 incidents per million hours worked. We received broad industry recognition for our commitment to safety and innovation, with Melchor receiving awards at the Mason Construction WA Awards and Alevro collecting awards from The Cran1e Industry Council of Australia. We're also finalists for a range of other national and state safety and innovation accolades. We continue to deliver our Fatal Risk Controls campaign, aiming to further improve the identification, reduction and elimination of fatal risks across our business. Our focus on health and well-being continued, offering a range of employee support services and information sessions on relevant health topics, and we launched another program within the Resilience project titled Authentic Connections. Now to Slide 7. We continued our efforts in the important areas of diversity and inclusion, community and environment. Further progress was made on our stretch reconciliation action plan commitments, again exceeding our RAP targets for First Nations workforce participation and for First Nations business spend. Career opportunity pathways were provided for current and future First Nations employees through traineeships, apprenticeships and the Indigenous Pathways Program in partnership with Rio Tinto. We also extended our long-term partnership with the Polly Farmer Foundation for a further 2 years. We aim to enrich the communities in which we operate through our community investment initiatives. And during the period, we delivered the Karratha community grants program for the second year running and launched similar programs in Darwin and Bunbury. We progressed a range of initiatives to support our Net Zero goals with trials of electric use, site-based solutions to reduce diesel usage and electric forklifts to reduce LPG emissions. We also continued the transition of our facilities to renewable power with the installation of a solar system at our Mackay workshop facility in Queensland. Turning to our Engineering Construction division, now on Slide 8. The division reported revenue of $405.4 million for the half year, an increase of 33.7% on the previous corresponding period and secured approximately $740 million of new construction contracts. Activity levels were high with construction of the wet plant successfully completed at Liontown's Kathleen Valley project and work progressing on the Chemical Grade Plant 3 at Talison's Greenbushes site, where Melchor also completed civil and construction works. Work advanced at BHP's Car Dumper 3 Renewal Project at Nelson Point in Port Hedland and on the construction contract associated with the dewatering of surplus water at BHP's orebody 32 in Newman. Work also commenced at BHP's Prominent Hill Expansion Project in Mount Eba, South Australia. In the energy sector, we progressed construction at Chevron's Jansz-Io Compression Project and Alevro delivered specialist haulage and lifting services to Bechtel at Woodside's Pluto 2 project in Karratha. Inteforge, our fabrication business, secured contracts for the supply and fabrication of structural steel work and pipe racks for Iluka's Eneabba Rare Earths Refinery Project in WA. In Mongolia, we successfully completed construction of surface infrastructure at the Oyu Tolgoi underground project, achieving a strong safety record over the project's duration. Finally, Zenviron progressed work during the period at Tilt Renewables' Latrobe Valley Battery Energy Storage System Project located south of Morwell in Victoria. Moving now to our maintenance division. Our Maintenance and Industrial Services division recorded revenue for the half year of $645.1 million. High demand for maintenance services across all sectors continued, and the division secured approximately $950 million in new contracts and extensions since 1 July 2024. In the energy sector, we delivered a significant volume of maintenance and minor construction services associated with Shell's Prelude FLNG facility as well as for Woodside's onshore and offshore gas production facilities in WA's Northwest region. Turnarounds were completed for Trains 1 and 2 at INPEX' EPS LNG onshore processing facilities in Darwin, and we also delivered maintenance services for their processing and storage facilities offshore. WA's iron ore sector continued to drive significant activity levels as we provided fixed plant maintenance services and sustaining capital projects to Rio Tinto, fixed plant services to Fortescue under our long-term panel agreements and general maintenance services to BHP. We continue to provide decommissioning services to Petrofac on the Northern Endeavour FPSO facility, further developing our capability to support future decommissioning activity within Australia's North West Shelf and the Bass Strait regions. Our long-term presence continued in Papua New Guinea with the provision of sustaining capital projects and maintenance support activities at Newmont's gold operations at Lihir Island and Santos' production and support facilities in the Southern Highlands region. WA Southwest, we secured a 3-year contract for shutdown and maintenance services in addition to a new 3-year contract for the provision of minor project works at South32's Worsley Alumina operations, where we have been providing services for 20 years. I will now hand over to Phil, who will provide you with some more detail of our financial performance on Slide 10.

Thanks, Zoran. Good morning, everyone. So Slide 10 shows our financial performance for the half year compared to that at this time last year. And revenue from contracts with customers was $1.05 billion, up 4.2% on the first half of FY '24. Our net profit after tax was $42.5 million, which is an increase of 41.3%, helped by an approximately $7 million after-tax variance in nonoperating items. Pleasingly, operating margins also improved. EBITDA was $79.8 million, an increase of 30% on the prior corresponding period. Our EBITDA margin increased from 6.08% this time last year to 7.59% for the 6 months ended 31 December 2024. About half of the variance is attributable to a small number of material nonoperating items, including proceeds from insurance and favorable foreign exchange movements, with the balance of the increase relating to an improvement in the operating EBITDA margin. Earnings per share was $0.433, and the Board declared an interim dividend of $0.33 per share fully franked, up from $0.25 last year. We ended the half year with a cash balance of $272.5 million, which was bolstered by a number of advances received from customers and construction contracts. Cash flow from operations was $93.1 million, giving us a very pleasing cash flow conversion rate of 145%. Our strong balance sheet puts us in a good position to take advantage of appropriate strategic investment opportunities that support long-term sustainable growth, and that will create value for shareholders. And I'll now hand you back to Zoran to provide you with an overview of the outlook for the business.

Thanks, Phil. Slide 11 shows relevant current and forecast Australian market conditions for our business per Oxford Economics. Pleasingly, as you can see, the sectors in which we operate continue to provide a positive outlook for capital investment, operating expenditure over the next few years. Moving now to our outlook on Slide 12. Resources and energy demand is expected to remain strong over the long term, underpinned by sustained economic growth and increasing investment in decarbonization activities. Despite some global uncertainty, worldwide economic forecasts expect growth to remain resilient with the resources and energy sectors expected to provide a significant pipeline of prospects across a broad range of commodities. Demand for sustaining capital works and maintenance services continues to be driven by ongoing high levels of production across most commodities. In Australia's iron ore sector, investment is projected to continue to sustain current production levels with a focus on operational discipline and efficiency to maintain a position of global competitiveness. After a period of significant price volatility within the energy transition metal sector, there has been a slow and modest recovery in commodity prices over the past year. Long-term fundamental indicators remain robust, and mining and mineral processing development in the energy transition metals sector is projected to increase over the long term. This extends to copper and critical minerals, which will require significant capital investment to meet forecast demand. The energy sector continues to provide opportunities, including several gas construction projects and ongoing strong demand for maintenance services. We remain well positioned to support the decommissioning activities expected over the coming decade for oil and gas assets. Additional opportunities are arising from customers' decarbonization investments, which includes electrification of operations and energy storage. Australia's net zero emissions objective is driving a pipeline of renewable energy prospects within the coming years as high investment activity is forecast across generation, storage and transmission. Zenviron remains well positioned to capitalize on the growth projected within the wind farm and battery energy storage sectors. Significant long-term investment is also forecast for the essential electricity transmission infrastructure needed to support energy transition and grid stability. The power sector is addressing challenges such as network constraints, supply chain pressures and delays in planning approvals, which will further expand these opportunities. While labor demand has moderated and general labor availability has improved slightly, the challenge of the skilled labor shortage remains within Australia's resources and energy sectors. We continue to address this by enhancing the capability and capacity of our workforce through focused employee attraction, retention and development initiatives. We will continue to focus on sustainable growth and quality of earnings through a selective approach to new work, collaborative customer engagement, high standards of delivery and the appropriate allocation of risk. With construction activity levels increasing and with the strong flow of new work to date in FY '25, we are anticipating to see high single-digit revenue growth together with improved operating margins for the full financial year. A strong balance sheet enables us to continue to assess strategic acquisition opportunities, which support an expansion of services and capabilities and market diversification, driving long-term sustainable growth. In conclusion, I would like to take this opportunity to thank the talented team at Monadelphous whose loyalty and dedication supports our continued growth. I also extend my appreciation to our shareholders, customers and our many other stakeholders for their ongoing support. Thank you. I'll now hand over to the operator for questions.

[Operator Instructions] Our first question comes from the line of William Park from Citi.

Just in terms of your outlook, appreciate that you have provided largely unchanged outlook slide apart from your reference to energy transitions and electrification. But could you perhaps provide some color around some of the meaningful opportunities that are up for grabs in the near term?

Sorry, Will, I missed the first part of the question. In -- outside of energy transition or in our core markets?

Sorry, Zoran. Just in general, like meaningful opportunities that's up for grabs in the near term that you see.

Yes. So we spoke at the full year, there is, I'll say, in the category of a program of larger sustainment capital opportunities, and I use the word sustainment in terms of supporting sustaining production levels across our key customers in resources, but in particular, in iron ore. So between BHP, Rio Tinto and FMG, this -- we continue to see a program of work that will be awarded in the next 12 to 18 months. There's a fair bit of work in that space. We continue to see some opportunities in the oil and gas sector, which includes Shell Crux, the back end of Santos Barossa, Arrow work in the Surat Basin, brownfields, upgrades potentially for Chevron on Barrow Island as well as the Ichthys Project. And probably the other one I'd put in that category is Stage 2 of the Waitsia project for Mitsui and Beach.

And just in terms of your comment on -- around the expectation of improved operating margins, can you just clarify whether you're expecting a sequential improvement in second half versus first half? Or how should we be sort of thinking about EBITDA margin heading into second half in the context of what you guys have delivered in the first half?

[ What ] was written, Will, it was intended to be in comparison against the prior full year, so full year, so FY '24 v FY '25, not sequentially half on half.

Yes, that makes sense. And then just 2 quick ones. Other income item, it looks like there's a sizable uplift here that is not related to gain on sale of PPE. Could you please outline what drove that up? And also CapEx, it looks like it stepped down a fair bit in the first half. Could you just step through how you're thinking about CapEx level in second half and perhaps going forward?

So the other item in other income is proceeds of insurance. And in terms of CapEx, Will, for the full year, I mean, for a long time, the long-term average of CapEx runs at about 2% of revenue, and we are expecting that long-term average to continue. Yes, we didn't spend much CapEx in the first half of the year but just remembering that we did spend -- we invested heavily in CapEx last year. But I do think that we'll sort of end up somewhere heading towards that 2% of revenue number for the full year.

Our next question comes from the line of Nicholas Rawlinson from Morgans.

Just further to Will's question on margin. Obviously, operating margins expanded quite materially year-on-year. What were the key drivers besides the obvious mix effect? And subject to execution, is there any reason why we shouldn't extrapolate that first half margin into the second half and into FY '26 and beyond?

All right. I'll provide color around a couple of points. I mean you would have seen, firstly, the mix -- the business mix was a little different. So it was weighted a little more EC revenue than in prior periods. So that was a contributing factor. I think the other comment I'd make is if you look at the status or the position of major projects or our larger EC projects this half versus last half, last half, we secured a lot of work -- sorry, last half pcp, we secured a lot of work, and we were either mobilizing or just ramping up projects. So in this 6-month period, we had more projects that were well in train, and we completed a number of projects. So we obviously had a little more confidence in terms of outcomes as they came to the back end. So that was a factor. And I think the third factor was, if I look across the business and not just specific to EC, we have really operational performance right across the business, and that contributed to the margin position as well.

Okay. That's helpful. It was some time ago now, but on a conference call when you were helping us with our FY '25 and FY '26 forecast for E&C, you mentioned you were basically aiming to get back to FY '21 levels of E&C revenue, which was just shy of $1 billion. Is that still how you're currently thinking about FY '26?

Well, I'm not sure we'll get back to that $1 billion number in FY '26, but we're on a trajectory to get back to $1 billion worth of revenue for EC, I would like to think.

Okay. And just a last one from me. One of your key construction competitors called out that it's seen delays to projects, and that includes iron ore. I appreciate you gave some color to William just before on the larger sustaining capital opportunities. But are you seeing any of those sort of shift to the right? And can you talk about whether there are any due over the next, say, 6 months rather than 12 to 18 months?

Yes, that's a fair question in the sense that probably, over the last 3 or 4 months, we've seen some delays in awards of projects. I spoke about the sustainment work and the quality of customers. So I would expect that work will still be awarded. And when we talk about delays, I think I recall sitting here at the end of FY 2023, 18 months ago, having the same conversation around the delays we are seeing in terms of contract awards. So it's not -- I wouldn't put that in the unusual category. I'd probably suggest that maybe the difference for us is as well that we're in a reasonably good position in the sense that our current order book is pretty solid. So yes, I support the view that we are seeing some delay in contract awards. I expect those contracts will be awarded. It's a question of timing. The broader pipeline is still solid, and we're in a position where we've got a pretty solid order book at this point in time.

[Operator Instructions] Next questions comes from the line of Jakob Cakarnis from Jarden Australia.

I just wanted to focus on where you guys think you're at in terms of execution. Clearly, that's one of the drivers of the margin improvement in addition to the mix that you're talking to. I mean what's left to play in terms of the second half? But then more importantly, as we look into '26, it sounds the sequencing of contracts maybe are in your favor, but just focused on the execution side that you guys can control that might benefit some of the margin, please.

I mean if I look at the work we've secured and the ramp-up profile of the work, I think I would expect that the execution phase that we're going into is not dissimilar to this half. I mean I made the comment earlier, we were in a different position 12 months ago with new contracts starting and ramping up almost simultaneously, whereas I think we're in a different position -- we were in a different position for the first half, and I think we'll be in a similar position for the second half. Comment around FY '26, I mean, that's still a long way away. We still need to continue to win work. But as I said, if you look at the work we've secured to this point in FY '25, $1.7 billion worth of work, reasonable amount of that is sitting in Engineering Construction, around $750 million. So we're in a reasonable position, but we need to continue to win work.

And just to -- for Phil quickly, we keep on coming back to this 2% of revenue number for CapEx. It looks like that ends up being pretty meaningfully different from depreciation. Can you just let us understand what the sequence, I guess, or what the guidance is alluding to there, please, Phil?

So I'm not quite sure of the answer to the question, to be honest, but I reiterate my point is that just over a long period of time, we probably invest about the equivalent of 2% of our revenue in capital expenditure. Some years can be more than that. Other years can be less than that. It really just depends on sort of the economic conditions that you're in at that point in time, the future outlook for the business, the age of your assets. So this comment that I have answered twice now, it's really no -- it shouldn't be a surprise to anybody, and it shouldn't set up any alarm bells. In terms of more specifically the depreciation, yes, I mean, I think we did invest quite a lot of money last year in our plant and equipment fleet, higher than I can ever remember. So therefore, we would expect to see our depreciation go up this year. I hope that answers the question a bit more clearly.

Next question comes from the line of John Purtell from Macquarie.

Just had a few quick questions if I could. Look, firstly, just on the maintenance side, obviously, last couple of years, we've seen quite a big first half, second half skew more obviously weighted to first half. Are you expecting a more even profile of revenue this year across the halves, in which case you could see maintenance revenue grow in the second half of this year versus last?

I don't think that's an unreasonable assumption the way we're seeing it. I mean we called out -- the reality is the first half of last financial year, there were an abnormal number of large turnarounds, particularly in the energy market that happened to coincide in that half. From memory, there was Shell shutdowns, INPEX shutdowns and Woodside shutdowns. So that was a little unique. But I'd expect the revenue for the second half to be more consistent and up slightly on the first half.

Second question, just around, obviously, the Albemarle project, and that was demobilized in the period. Was there any material benefit to margin from that in this result?

So we did demobilize from Albemarle Kemerton project. We did finalize the commercial and contractual arrangements, and they were in line with our expectations. So the outcome is reflected in the half year's results, but there wasn't a material impact to the number as a result of that.

And the last one in relation to renewable energy prospects. Obviously, the sector is going through some challenges from a sort of project economics viewpoint and government support perspective. I mean how are you seeing the outlook there taking that into account?

I still think the outlook looks pretty positive, particularly if you focus on -- I mean, if you look at 2 particular parts of that renewable sector being wind and battery energy storage projects, the outlook looks very, very strong. So we're still confident there, John, as well as the progress and the thinking that some of our customers are making in our traditional core markets, the resources sector, we're starting to see a number of renewable opportunities there as well. So overall, it looks pretty solid.

Our next question comes from Julian Mulcahy from E&P.

A couple for me. Firstly, can we have some sort of breakup of the $7 million after-tax benefit? I mean do we assume that, that was $10 million pretax. It looks like $3 million was from insurance. Where was the rest coming from?

So we were impacted. The variance between the 2 years was impacted by the proceeds of insurance that I spoke about earlier. There was a variance in terms of foreign exchange movements between the 2 periods. And then we also saw a couple of million dollars more interest revenue than we had in the prior period as a result of the -- obviously, the higher cash balance and the high interest rates that we've got at the moment. So those -- there's ups and downs all over the place, but we -- those are the 3 that impacted the nonoperating variance.

Two, is your pretax number $10 million?

Yes, pretax number's $10 million.

Okay. And also -- so Zoran, with that comment on the energy transition, does that take into account if there's a change of government?

I know there are a lot of things that need to happen in terms of, one, change of government; two, change of policy. But I think irrespective of that, I think based on what we know now and even if there was a change in government, we're still reasonably confident with the broader outlook in terms of the renewable market.

Right. And when do you think you'll be pitching for some of the sort of decommissioning of offshore platform work?

Decommissioning, I mean, there are a number of smaller opportunities that exist here in WA. But I think the more significant decom opportunities are probably 3 years plus out and the larger proportion of them, I would suggest, are associated with Bass Strait decom activity.

Our next question comes from Rohan Sundram from MST Financial.

Just one for me just in terms of how you're seeing inflation pressures on your business and to the extent that that's easing and maybe just one around do you anticipate to see any less indirect impacts from tariffs, especially on China or anything like that.

In terms of inflationary pressures, we're still seeing some pockets of wage growth pressure, but the reality is it's moderated from the levels we saw, I'll say, 2 or 3 years ago, particularly in terms of supply chain inflationary impacts. They have come off more materially.

And any thoughts around -- sorry, the tariffs and any indirect potential impact?

I don't have any specific thoughts or views around that. I think that our customers are probably trying to get their heads around what that means more at this stage or what that could mean.

Next question comes from Richard Amland from CLSA.

Just 2 quick questions from me. One, I just was hoping to confirm the Melchor incremental revenue contribution in this half. I sort of had it based upon the time of acquisition completion at the end of October '23 that you had about 2 months of incremental contribution worth about $50 million, and that was into the engineering construction sector. Is that a segment -- is that accurate?

I think in the last year, I think it was about $25 million for the 2 months. I think we bought the business at the end of October. And for the 6 months, I would suggest it's sort of similar on a pro rata basis, maybe a little bit less.

So I think -- so is that $25 million a month or...

No, no, no, for the 2 months, for the 2 months.

All right. $25 million -- so you've got an extra $25 million. That's fine.

Yes, somewhere around there. Yes.

[indiscernible] EC business.

Yes. And then the other question I had was in the context -- the engineering construction awards of $750 million, a good healthy number. Can you give us a bit of indication over what time frame that that's expected to be delivered? Should -- is that sort of notionally a 2-year order book? Is it less than that? More than that? Just a broad framework.

I mean, yes, I need to have a closer look, but it's probably 15 months to 18 months, somewhere around there. Some of that work's [ still in Train ] and some of the work is about to kick off. So if I look -- I won't say [ I haven't ] specifically looked at it, but just trying to dimension it, it's probably somewhere between a year and 2 years, so 15 months to 18 months, intuitively, seems right.

Next question comes from Nathan Reilly from UBS.

Just a question. So I'm looking at your comments around solid sort of project pipeline/bidding activity in the resources and energy markets but also just marrying that up with your comments around the skilled labor shortage that you're seeing in some pockets. I'm just curious, are you seeing any change in how you're approaching like project delivery models in that environment?

Not in the last 6 months, I wouldn't say, Nathan, in terms of changing delivery models. And I think the -- I think whilst my comment around skilled labor shortage, I think the reality is there are more -- a few more people out there, but it's a quality issue. It's the depth of quality in the labor pool. And there are particular classifications or trade classifications, both blue collar and white collar roles that are still pretty -- not pretty tight, tight.

And can I get an update on just general productivity levels in the industry at the moment and from your perspective, just in terms of timing of awards, project approvals, processes and just general labor productivity across the industry?

Well, I think the timing of awards piece is linked to the comments around we are seeing some delays in terms of getting through the approval processes to awards. And I'd expect to see some further delays over the next 6 months. But as I said, I've got confidence that, that work will be awarded and executed by someone. In terms of the productivity piece, I made the comment that one of the contributors to our margin performance is operational performance. And if you get underneath that, a component of that is our ability to be able to execute the work we've had in hand reasonably productively. So arguably productivity, generally, has improved slightly in this period. But that's not necessarily -- I wouldn't necessarily take that as a macro view. I think we've had really strong operational performance. And as I said, not just in the Engineering Construction business, across the business.

Got it. And final question, are you seeing an increase in early contractor involvement to the tendering processes?

An increase? Probably not, but there is a level of BCI activity that we're engaged with at the moment.

We have a follow-up question from Nicholas Rawlinson from Morgans.

Just a quick follow-up. Could you comment on the shape of the E&C book in terms of how much cost plus you're doing and how much schedule of rates as a proportion?

Right at this point in time, I don't know. I'd probably say there's a mix of maybe 60-40, between some version of rates reimbursable versus more fixed price work. But even within that, Nick, there are nuances to reimbursable contracts and fixed-price contracts in terms of components within the overall pricing. But I'd say 60-40, somewhere around there.

As in 60 is schedule of rates?

Probably or more akin to schedule of rates.

Yes.

[indiscernible] of rates.

Yes. And do you see that -- I mean, it was 50-50 probably a year or 2 ago. Do you see that trend continuing to increase in terms of sort of fixed price versus schedule of rates?

Well, in terms of continuing to increase, I'm not sure about that. But at this stage, I probably expect to see a similar split for allocation.

We have no more questions from the line. I'd like to hand the call back to management for closing.

Thank you all for your participation today. That now concludes our briefing.

Thanks, everyone.

Thank you.

That concludes today's conference call. Thank you for your participation. You may now disconnect your lines.