Peoplein Limited (PPE) Earnings Call Transcript & Summary

Good morning, and welcome to the PeopleIN Limited Half Year Results Briefing. [Operator Instructions] And finally, I would like to advise all participants that this call is being recorded. Thank you. I'd now like to welcome Ross Thompson to begin the conference, Ross, over to you.

Great. Thank you very much. Good morning, everyone, and thank you for attending this morning, and welcome to PeopleIN's first half results. I'd like to introduce Megan Just, PeopleIN's CFO, who's joining me this morning.

Good morning, everyone.

So PeopleIN is built on a simple but powerful practice to inspire excellence in our people. So that's a pleasure for me this morning to announce another record result for the business. We delivered $596.7 million in revenue, and our normalized EBITDA was $32.5 million. This is a growth of 88.9% on the revenue line and 50.5% on the normalized EBITDA line outstanding results from the business. We also delivered strong organic growth, 21.3% to revenue and 11.8% to normalized EBITDA. This 11.8% is up on our strategic goal of plus 10% organic growth. So again, we're extremely pleased with a solid financial result for the first half. Our performance is underpinned by our diverse reach into high demand and defensive employment sectors, including early learning, food services, infrastructure, which includes transport and water and health care. Pleasingly, our onshoring of international talent has significantly increased in the half. We brought in over 3,200 new workers. Industry tailwinds continued with low levels of unemployment, 3.7% as of yesterday, projected wage growth of plus 3.3%. And as you know that wage growth drives the organic growth in the business because of our business model and projected employment growth through 2026 of 9.1%. The business is well positioned to continue to deliver solid earnings. 82.6% of our normalized EBITDA and 106.2% of normalized NPATA was converted to operating cash flow, slightly down on what we announced for the full year. But as we highlighted in August, this is due to the FIP Group acquisition. So still very solid performance for the business. Exceptional performance continues from the 2 brands that joined the family towards the end of last financial year, so Perigon and FIP Group with a combined EBITDA contribution of $8.3 million. The M&A pipeline remained strong with a focus on establishing a global health care network as well as focused on professional services in the government contracting space. Balance sheet capacity of circa $40 million, which is up $10 million what we flagged at the full year to execute on strategic opportunities in this half of the financial year for H2. The strategic review that we announced in November continues to progress well with the goal of maximizing value for shareholders and turbocharging our growth. We'd also like to reaffirm our FY '23 earnings guidance with normalized EBITDA range of $62 million to $66 million, and we expect to be at the upper end of guidance. On next slide, just call out a couple of points here. So normalized EPS of $0.206. So this is 40% growth on the previous corresponding period, which is absolutely fantastic. Fully franked interim dividend of $0.07. That is up 0.5% on what we announced at the full year and a return on equity of 25.9%. And Megan will touch on this in a bit more detail later on, but it's impressive that the business continues to deliver really strong return on equity. For the next couple of slides, I just want to address that confidence that we have in our earnings. As I said before, we reaffirmed our earnings for FY '23. And we are one of the few businesses that came out in August with guidance, and we continue to deliver against that guidance. And it's really driven by 2 parts, one, is the competitive advantage that we have and the other is the market conditions. So on the competitive advantage, we have a strong business, we are a good company. And if there is any economic challenges, then good companies rise, the cream rises to the top, and PeopleIN is a good business for a number of reasons. And I'll call out a couple on this slide. Now first is around our clients. We provide a specialized at-scale complete talent solution. And you can see the wheel to the right. And we have one of the largest access to talent pool in Australia but also growing internationally as well. So we can deliver for our clients. We think -- I feel we think outside the box in order to meet their talent needs. From a candidate's point of view, [indiscernible] is good as the candidates and employees that we have. When we gave our client -- our candidates confidence that we will find them employment because of our sector and geographic diversity. I've called out previously, the chef example in lockdowns in Sydney and Melbourne where those chefs were working in restaurants, we were able to redeploy those chefs to mine sites for those that wanted to fly in and fly out. They don't have to jump on SEEK. It's our job to find employment for them. Industry-leading safety compliance approach and generally, our compliance approach is industry-leading as well. We are a good business. We also have leading back-office support that allows us to continue to drive efficiencies across the business, especially as we bring new family members into PeopleIN. And from a shared value point of view across our 3 pillars, we continue to deliver for First Nations, sustainability and equity and inclusion. Then with regard to market. So again, that point, why do we have confidence? Well, I'll start at the macro level and look at the unemployment rate. It came out yesterday with 3.7% -- that is still well our industrial employment, which is regarded to be around at 4.3%. So the market -- the labor market it's still tight. And when you look at the projections forward and what we've depicted here on the slide is the RBA's projections out to 2025, it's still 4.5%. There's still good conditions. And even when you look at when people enlisted in 2017, it was high [ 5% ] unemployment rate and still made good money. And when you get into that 4% mark, it just means there's more availability of talent out in the market, so we can actually service our clients even better with having access to those candidates. Then from a wage price index point of view, you'll see there on the graph, on the bottom left, then again, 3% plus of wage price growth which we've talked about this previously, is what we pass on to our clients and that does drive organic growth for the business. Then moving to the table. So there's 3 elements which make up our organic growth. There's new jobs in the sectors in which we operate. There's wage growth, I just talked about. And then there's also market share. That's leveraging our size to just take more market because we can push harder and longer with our balance sheet, whether that be international initiatives, whether that be opening new offices in new geographies, et cetera. So I'll call out health care and community in a bit of detail. So the expectation there is, and I think conservative, but number of jobs will increase annually by about 3.2%. Wage growth, again, I think it's conservative, it's around 2.9%. And we believe, given our size, particularly in that nursing space, we can grow the business now that our international piece, which we saw in the last quarter really started to get some traction. We can grow our market share by at least 10%. Adding all that together, gives you the 16.1%. So that's our expectation around annual organic growth for the foreseeable future in the health care space. And then we've called out a couple of other key defensive sectors that we operated, education, which is our early learning, which would be around that 14% to 15%. Food Services, double-digit growth, et cetera. So we'll start to refer to this more and more in future presentations, but we wanted to exempt that today especially given some uncertainty at the macro level with markets. But again, we are confident that we can continue to deliver and can continue to drive organic growth. So as a bit of a segue, I'll now hand over to Megan to talk more about our sustainable organic growth moving forward.

Thank, Ross. The year again, PeopleIN has delivered double-digit organic growth for both revenue and EBITDA. Diversity in the industries we operate in has assisted in producing these results of 21.3% growth in revenue and 11.8% in EBITDA. We've seen demand in early learning, food services and transport infrastructure all increasing over the half year, reflective of 9% organic increase in just the industrial services [indiscernible]. We have been able to increase [ hours ] With the utilization of international candidates because of improved visa processing time. We placed more than 3,200 new workers onshore in the first half of the financial year across all the verticals. The acquisitions we've performed in the second half of the last financial year have also performed well, leveraging from the group by utilizing cross-selling opportunities and the scale of the group to win multi-brand contracts. And because of the increase in demand in the industries that they provide staffing services to. The contribution from these 2 acquisitions was $8.3 million EBITDA for the half. Reiterating our statements of prior periods, we believe that we have a sustainable competitive advantage to our scale and diversity and have an ability to continue to win market share in a growing addressable market. We are continuing to target greater than 10% organic growth for the full year group-wide and have confidence in achieving our earnings guidance. The interim results are impressive with revenue growth at 89%, EBITDA growth at 51%; NPATA growth at 49% and final earnings -- finally earnings per share growth at 41%. This growth has been derived from strong organic growth, supported by strong performing acquisitions. We believe that we can continue to deliver on these results into the foreseeable future as demand for employees continue and wage growth is also continuing. There is also significant market share for us yet to obtain. Our 3 vertical structure is deliberate to ensure that we weather any change in economic conditions and still provide good returns to our shareholders. The normalized EBITDA contribution was $32.5 million from revenue of $596 million, being an increase of 51% from last half. EBITDA margins have reduced from the full year to 5.45% as we preempted due to the acquisition of Food Industries People Group. Additionally, we've seen a change in the mix of our revenue with contractor revenue increasing from 90% to 93% of revenue. This is due to increase in contractor hours, but particularly in our industrial and specialist services vertical. This vertical has lower margins and very high volumes. Pleasingly, we remain above industry averages of approximately 3%. We are expecting an improvement in the margins into the second half as we see continued growth in the health and community vertical that we saw in the second half of -- second quarter of last half. Normalized NPAT is up 48% to 16.1%. This is despite rising interest rates and increased amortization due to historical acquisitions. Cash flows from operations have been strong again with normalized operating cash flows of $22 million for the half. Our normalized net receipts from customers is $26.8 million compared to normalized EBITDA of $32.5 million, resulting in 82.6% of that EBITDA being converted into operating cash flow. Normalized operating cash flows were $22.1 million compared to normalized NPATA of $20.7 million, being a conversion rate of 106%. Our results are supported by a strong balance sheet. Net debt has increased at the end of last financial year with the acquisition of Food Industry People group and has remained steady over the half with the earnings generated over the half, net debt to normalized EBITDA has reduced to 1.13x. Growth of our group during the half has resulted in the increased utilization of our working capital facility. Continued strong cash flow generation supports that we are still in a position to undertake future acquisitions, and we are confident in our ability to borrow up to $40 million over the coming 12 months for acquisition. This will push our net debt to normalized EBITDA, but within comfort levels. Debtors days has improved by a day to 32 days. We remain laser-focused on debtor collection, which includes client betting prior to onboarding and methodical debt collection procedures. It remains a focus of both operational and financial staff collaborating to ensure that we maintain these exceptional collection statistics. There has been an increase in capital expenditure through this half. This spend has been on the 3 main avenues [indiscernible] Vision Surveys, Queensland business and the most significant being our systems program of works. For the half, we've spent $2.3 million on the systems program of works and $1.7 million for Vision and $1 million on [indiscernible. The amalgamation of the number of brands at head office of Brisbane has been a significant step forward for collaboration, culture and cross-selling for our group. Our investment into our systems and processes to continually improve our service delivery internally has been a major focus over the past 6 months. This program of works will continue into the next financial year as we roll out across the entire group. I'll pass it back to Ross now for an update on M&A.

Great. Thanks very much, Megan, and solid results. So a proven M&A model with a strong pipeline. So Perigon Group and FIP Group joined the family in H2 last year, and their combined EBITDA contribution was $8.3 million. So around 20% up on the future maintainable earnings that we flagged for each of those businesses when they joined the family. We've been able to turbocharge the growth of both businesses with Perigon, and a real focus there on health care. One of the reasons why they joined the business was given our large reach into the health care sector. . And with combining and setting up client meetings, et cetera, they've been able to increase their health care work by providing [ accountants ] and business support service members to those health care companies. And we expect they've had access to a larger and more diverse client base, including in the renewable space as well. So through the Halcyon Knights business, they were able to pick up work on Snowy Hydro, which is fantastic. And again, comes back to one of our key strategic pillars, cross-selling. As Megan highlighted, we've got capacity around $40 million to execute on a strategic opportunity in the second half of FY '23, and that will be debt funded. From a pipeline point of view, highlighted here in the slide the 2 focus areas, which tie back to our 3-year strategy. So the first one establishing that international nursing network. And the second is around increasing our exposure to government contracting, particularly in the defense space. The outlook remains strong. We have diversified sector exposure and client base. We're positioned to support key macro growth areas of health care, professional services, education, and food services, all of which have a long-term demand for talent. Low levels of unemployment, higher wage inflation, and also just employment growth in these sectors support earnings growth for PeopleIN and the business continues to be well positioned to capture market share based on our scale and diversity. We'll leverage our key partnerships. And a couple of weeks ago, we announced our strategic partnership with TAFE Queensland to help bridge that gap between education and employment, but also gave us access to over 120,000 students at TAFE Queensland teaches, educates, upskills every year and we'll become that employment partner for them to help position to find employment for those individuals. The partnership also gives us the opportunity to provide training opportunities to our existing contractor base as well, which is really powerful when we come back to that slide on our competitive advantage, and we're only as good as our employees and candidates. Our international nursing network recruitment is expected to continue to increase. So we saw a pickup, particularly in the second half of H1 and we're expecting that to continue to ramp up throughout H2, particularly if visa processing times improve. And we've also launched our new campaign, which is You+Aus. We're happy to send out a link to anyone that's interested because it's a fantastic website, really good job the team has done there to help us attract more nursing, particularly from the U.K. and Ireland. Technology permanent recruitment is expected to improve. We did see a slowdown in the second half of H1, but we're already seeing that pick up in the early part of H2, particularly in the cybersecurity space and our increased government work with contracting work. We'll continue to drive a strong cash and cost discipline across the business, including leveraging the scale of PeopleIN. And the M&A pipeline remains strong, pointed out earlier in that health care space, and also government contracting with circa $40 million to execute on strategic opportunities. So with all of that, we have confidence in our guidance to $66 million, and we're targeting the upper end of guidance. So now just to book in the key highlights, the key parts of today's presentation. So another record result for PeopleIN revenue up 88.9%, normalized EBITDA 50.5%, outstanding results. Strong organic growth. We're not just a [ rollout ]. We bring businesses into the family and we grow those businesses organically and delivering 21.3% revenue line and 11.8% of the normalized EBITDA line is a solid performance for the first half of the year and bodes well for the next 3 years of our strategic plan. Our performance is underpinned by our diverse reach into high demand and defensive employment sectors, including early learning, food services, infrastructure, health care. Our onshoring of talent is up, which is great to see because I've always been talking about this for about 12 months now. So it's good to see that tick up of 3,200 in the first half of the year, and we expect that to be higher in the second half of the financial year. Industry tailwinds are good for PeopleIN. Low unemployment, wage growth up around 3% and also new jobs being created to 2026, 9.1%. So the business continues to be well positioned to deliver solid earnings. Strong cash flow, as Megan went through, 82.6%. EBITDA, 106.2% normalized NPATA. And we'll continue to drive that strong cash discipline in the business. A great performance from our -- the new brands that joined the family, it just goes to show the solid M&A approach that PeopleIN has, bringing businesses in growing those businesses and therefore, generating a strong return on equity. Strategic review continues to progress well with the goal of maximizing value for shareholders and turbocharging our growth. And we reaffirm our FY '23 earnings guidance range of $62 million to $66 million, normalized EBITDA, and we expect to be at the upper end of guidance. So thank you very much indeed for your time. And I think we will move now to Q&A.

[Operator Instructions] And your first question comes from the line of Liam Scofield from Morgans Financial.

Two quick questions. Just that implied run rate for the second half that's sort of implying nominal growth. Is there some sort of expectation you sort of talked about 10% organic growth going forward that could also occur in the second half? And secondly, just -- sorry, go ahead...

No, no. Sorry, you go with your second question.

And then yes, secondly, just on the -- just the growth, you talked about 20% growth over the underwritten assumptions for Perigon and [ FIM ] and FIP, what's the split there? How is it running as was compared to the underwritten assumptions and likewise, the Perigon.

Yes. So I'll target that. So we flagged $8.3 million. So Perigon was just over $3 million and FIP was just over $5 million there. So we had flagged $9.5 million FME for FIP Group. So they're running above that rate, and we flagged $4.3 million for Perigon. Again, they're running at plus $6 million rate. So again, we're very pleased with the way those acquisitions are performing, which is great. And look, for the full year, we're still continuing to target that 10% plus organic growth for the business.

Right. Perhaps just one other quick question. Can you just maybe comment just on Labor Government, Same Job, Same Pay legislation, how it may or may not impact you guys?

Yes, So a couple of parts for that, Liam. The first is we continue to work with government, which is great given our size and diversity as well. We're a good sounding Board. So that's good. The other thing, and for those that may have had from minister, Burke, talk about good labor hire, bad labor hire. And we've talked about this on previous calls as well. A lot of this IR reform is focused or it is focused on the bad side, those that aren't following processes procedures. As a good company, as a public listed company, we follow process procedures, we offer our contractors upskilling opportunities, et cetera. So we put ourselves in the good can. So we actually think there'll be more opportunity out of this. But again, I know this is all being worked through, and it's something that we will continue to engage with government. And for the likes of a national labor hire agreement, then we would welcome that. And in the past, pre my time, that in the past executives from PeopleIN were part of Queensland developing their labor hire agreement. And again, we would welcome a national agreement.

Your next question comes from the line of Ian Munro from Ord Minnett.

Congrats on the results. Just a couple of questions for me, please. Just firstly, with the health care billable hours. It sounds like there's some decent momentum coming through for the second half. Is it logical that we'll get above the second half FY '21 levels, which I think were 1.1 million to 1.2 million billed hours? And secondly, just interested in where you sit on the submissions for the insourcing of the PALM scheme? Obviously, that's going on at the moment. How does that potentially impact PeopleIN? And then thirdly, just on the CapEx intentions for the second half that [indiscernible] systems upgrade is complete, just interested in how that's progressing?

Ian. So yes, the expectation is will be up on billed hours for health care and community. There's definitely some momentum building there in Q2. These processing times are improving, and federal government committed significant dollars to work through the backlog there. So we're seeing that. And also with the launch of our new marketing campaign as well, we expect all of that to pick up. And -- the demand is there and will continue to be there from any years yet, so it is really about supply. And I'd say we're addressing that. With regard to the PALM scheme, so the in-sourcing, any particular point there in your -- want to cover off?

Yes. So Yes. As I understand that there are some submissions due to the government with respect to the in-sourcing and there's been some revisions as to the department that the PALM scheme law is under. So just trying to understand whether there's any potential implications, positive or negative for PPE.

Yes. So that's -- you talked about [indiscernible] there. So look, it's still a key focus for government, the PALM scheme. So I don't -- from a scheme point of view, I think very much committed to continuing to drive that and diversify that, which is probably the biggest opportunity for us. We've talked before about our aged care proposal. And the fact that, that was endorsed and is something we're continuing to work through. So any change there, I don't think we'll have a material or have an impact given the overall intent is to still focus and drive forward the PALM program and diversify it as well. And then CapEx, I hand over to Megan on CapEx.

So obviously, we've got that big program of works continuing. That will continue over into FY '24 as well. So leading into the full year. We're expecting that, that will be up around the $5 million for the full year, including the $3 million that we spent in this half. And then into FY '24, there will be an additional $3 million spend. The remainder of the CapEx for Vision. It is dependent on the surveyors and their growth. They have experienced significant growth -- so that will probably peak off and slowed. And then the remainder of the CapEx is quite in line of and minimal and will remain consistent with what it has historically.

Your next question comes from the line of Elijah Mayr from CLSA.

Ross and Megan. Congrats on the results. Just a couple for me. Maybe just firstly on Food Industrial People -- on FIP. Can you maybe sort of just talk through, I guess, the exit run rate? I mean, it seems like that business was -- or has performed a lot better than originally sort of expectations. I'm just sort of interested to note, I guess, what sort of exited the half and what should we expect going into second half and how much that should continue to grow?

Good. So FIP Group. So yes, I've said before, we flagged at $9.5 million. So it puts it in the sort of $10 million run rate mark. So it ends up and we're expecting that business will continue to perform, looking at the individuals that they brought in from the Pacific during H1 was around 1,500 people. So when we acquired Food Industry People or FIP Group, they had 4,700 workers. They've now got 5,500. I know my math is off because we've had some leave. We brought 1,500 in and now about 5,500. So the business is growing nicely and also benefiting from having access to a more diverse client base as well. So our expectation is that at least continue on the run rate that it's done in the first half is not slightly up on that.

No problem. And then maybe just on the professional segment, maybe there is some margin compression there. I was just wondering if you could sort of talk through, I guess, the mix shift on some of maybe the permanent placements and what you sort of expect the margin to recover to in the second half?

Yes, absolutely. So it went from 13% to 10%. And part, there's 2 elements to that in quarter 2 particularly November, December. We did see a slow and permanent recruitment in the tech space. And -- so that brought down the margin slightly. We have seen a tick up coming into the new year and as I flagged earlier, so cybersecurity roles are coming -- starting to flow through. The other thing we've seen is that move from permanent recruitment to contracting. So contracting is -- or permanent recruitment is around that 13% margin. Contracting is more around 10% to 11% margin. But it's longevity of earnings. Once you get a contracted in, particularly into government market, maybe 6, 12 months that individual is working on a particular contract. So those are the 2 elements that impacted on the H1 results.

No problem. And maybe just one final one, if I could. Just on potential acquisition. I mean you've been quite open in sort of stating, expecting something can help in U.K. in June. Do you guys have, I guess, something already in mind, I'd expect. And how far has this progressed? And -- or is there a couple of options on the table?

Yes. We've got a good pipeline. So looking at a number of organizations there, and we want to make sure it's back up against the strategy and everything is right. But there's a level of confidence there. Obviously, it's never a done deal, but a level of confidence there that we'll be able to execute as long as everything stacks up and is aligned with our strategy moving forward. Yes. Elijah, probably worth noting on that as well. The question may come still around that 3 to 5x valuation range as well. So we haven't seen any pickup in that space, which is good. So you've been able to acquire created deals, obviously a focus for us as well in deploying that capital correctly and strategically.

[Operator Instructions] And your next question comes from the line of Ben Wilson from Wilsons Advisory.

A lot of more questions have been asked already, but just interested Ross in -- sorry, Ross, just interested in the number of overseas nurses you've currently got on your books. So I think at the Investor Day, you mentioned you're at about 400. So it's still improving, but still well below your pre-COVID levels of sort 1,500 just that's increased further.

Absolutely, Ben. So I think we flagged just over 300 at the full year, and now we're over 700 that we brought in. So we're slightly up from where we were at the full year. And pre-COVID it was around that 1,200 figure. So we're getting back there. So we're hopeful for H2 that we'll be able to increase that further.

Great. Ross, and then just interested more on the macro picture and picking up on the professional services margin compression question you spoke to. One question I get a lot is whether in a downturn contracting positions will actually be the first one to be let go by employers. Whereas, I think, you've often spoken to moving from permanent positions to contracting. Judging from your answer before, it sounds like that may be what happened in Q2 with your professional services vertical, in particular, in IT. Can you just speak of that a little bit as if the unemployment rate does continue to tick up a little bit. Are you confident that your contracting base won't get too impacted and that, if anything, it may see a bit of a benefit from employees moving away from permanent hiring?

Yes. We expect that to continue to grow, and we're focused on those areas where there's money. So whether that be in Burke's federal government, et cetera, but also with the banks another big clients, blue-chip clients for us. So yes, we expect that to grow, and that's what the business is I've seen in the past, whether it be GFC, et cetera, that's a shift to contracting, which is 1% to 2% drop in margin, but then you get that longevity of earnings. And it's something we've been focused on for over 12 months is growing that contracted base and organically pushing into the government area as well, but we've also flagged as part of the M&A pipeline, if there was a good business that could turbocharge our exposure into federal government, particularly defense, then that's something we would be interested.

Your next question comes from the line of Ron Shamgar from TAMIM.

Just a couple of questions. In terms of that PALM, Pacific workers program, there's been some news in the media about a lot of these sort of workers, they be 1 in 5 sort of fleeing their workplace because of sort of poor conditions and so on and I guess, it's something that the government might look at. And I'm just wondering whether it's something that you're seeing and whether implications for PeopleIN whether good or bad.

Yes. Thanks for the question. I think it was a couple of weeks ago, it was in Australian, very much focused in on the agri space. With regard to the PALM, most of our workers are in the meat space, so a different sector. And also from our side, we don't see that level at all, the single digits for us. And we're very focused on before individuals jump on a plane to come to Australia, just set expectations about what it's going to be like over here, the changes and how everything is going to work. So that before they fully commit, which is when you jump on a plane that you're managing those expectations, and it's a really good experience for them when they get to Australia. And I think some other businesses and maybe smaller businesses unable to invest that time, and therefore, there's a bit of an expectation mismanagement when they get here and results as what they reported it on in the paper about higher absconding rates. But it's something that doesn't -- isn't significantly impacting on PeopleIN.

Yes. Okay. And then just last question. In terms of the strategic review, that's been going on for 3.5 months now. And, I guess, you delivered a good result. You're still trading on a cash NPAT of 8x. Just trying to understand what you're trying to get out of this strategic review? I mean, if you can multiple if you're sort of buying businesses at close to 5x EBITDA, it's not too accretive and your debt levels are beginning to get a bit stretched. So I mean, what's the -- are you trying to basically get someone to acquire you? Or how -- if you can't find someone to acquire you, how do you -- how does that strategic review help the business?

Yes. And the review is a full review. So an outright sale is an element of that, but it's not the only element of the review. It's all about looking for opportunities to turbocharge our growth, which comes back to capital. We've highlighted $40 million which we've got comfort in order to deploy that $40 million using debt and where that would land our debt levels. So this comfort there. But there's a hell of a lot more we could be doing. We could really turbocharge that we had access to capital. So we're looking at other options that they may be in order to deploy -- source capital and turbocharge our growth. So as I said, there's a number of options to it. We did announce in November -- we knew Christmas was going to be in the middle of that, which really writes off a month up to the Australia Day holiday when people start coming back. So we're at the 2 months mark, but we are conscious that you don't want reviews going too long. But as said, it's progressing well at this point, which is good and -- but it's a bit premature for us to disclose any specific details related to the direction, if any, that will take the company at the conclusion of the review. In the meantime, we really are just focused on business as usual for the team and continuing to execute on our 3-year strategy.

Yes. Okay. So I mean, at what point do you sort of come to a conclusion. I mean just from a time line perspective, so you give it another 2 months and then...

I won't commit to it. As I said it's progressing well that there's a number of options that we're looking at. We don't want to delay this beyond the point of -- we're not getting value out of that review. But at this point in time, we're still getting value. We're still working closely with Luminis, our adviser, on the review looking at a series of options. And then at the right time, we will inform the market.

And your next question comes from the line of Ken Wagner from Petra Capital.

Look, just 3 questions for me around EBITDA margin. It looks like it's progressing really well. But looks like EBITDA margin is sort of around about the mid-2s for that. Is that where you thought it would be when you acquired it? And are there some perhaps early stage or start-up costs involved in that? Do we expect to see better margins on that going forward?

Ken, I might address that one. So yes, it is performing as we expected and we were expecting in the mid 2 to 3. And that is where it is performing. As for improvement in margin, it probably will stay around that where we'll see improvement for margin is the mix of the group and the health and community starting to fall out.

Yes. Okay. I think the strategy -- are you targeting a medium-term 7% EBITDA margin. Is that still the case? Or is -- have you needed to modify that given perhaps the shift from perm to contract or in tech or anything else that's having any impact there?

No. 7% is still our target.

Ken. And that's over the 3-year period of our strategy. So with the focus on government and the focus on health, we've got confidence we can return the business to those levels. But FIP Group had an impact also our industrial business to [indiscernible] as well, which again is around that 3% to 4% margin.

Yes. No, I noted that did have a terrific half by the looks of it. Just on the last thing on the organic growth for the half and the revenue at 21%. Could -- what's the split across the segments on that? Or you just mentioned ISS. I assume that did most of it. Is that right?

Yes, that's right.

Any more color on that? Or is that all I'm going to get?

Well, most of it is in the industrial. Remember, it's got specialist services. So we have seen growth in the education business in there, the early learning and also in the hospitality, both of those have performed really strong and the surveying business is up there, too. So it's the specialist services as well as the industrial. So it is predominantly that business. And then -- so that's the organic part. And in the professional services, it's really Perigon that's outperformed.

As there are no further questions, I would like to thank our speakers for today's presentation, and thank you all for joining us. This now concludes today's conference. You may now disconnect.

Thanks. Thank you. Cheers.