SHAPE Australia Corporation Limited ($SHA)

Good morning, and welcome to SHAPE Australia's webinar on the acquisition of Australian Professional Shopfitters. Presenting today is SHAPE's CEO, Peter Marix-Evans; and CFO, Scott Jamieson. Today's format will run through a brief presentation followed by a Q&A session. I will now pass to Pete.

Thank you, Mel. Good morning, everyone, and thank you for joining us. Obviously, a little bit of late notice. So really appreciate for those that could make it on to the call. There is a Q&A function on the call. So if you do have questions as we go along, please throw them into that and hopefully, we'll have a bit of time at the end. So first of all, yes, I wanted to welcome Australian Professional Shopfitters to the SHAPE Group. So really pleased to be able to confirm this acquisition. It's something we've been working with Sunny and Atinder and the team from APS for a little while now. And we're really sort of -- we are excited about the opportunity that it brings SHAPE coming into the group. So as per the -- you would have seen the slide deck perhaps on -- which will be up on the ASX, established in 1998. So APS is a vertically integrated retail shopfitting business. So they manufacture, they design and install basically shopfitting joinery and the like across Australia, with a particular focus on leading brands for retail, again, across the country. The leading brands, importantly, some really fantastic names that they work with, long tenure, long relationships with those brands, importantly, in the retail sector, keeping things fresh and, yes, best-in-class design and really sort of well-presented materials is very important, and that ties into everything that APS do. So they've got a 5,000 square metre facility in Melbourne. That facility is a fantastic operation, very clean, focus on safety, focus on production, focus on their team there, keeping them both safe and very productive. Experienced in-house project management. So everything is internal. They do have some external subcontractors that they use for skilled labor for installation predominantly. Most of the manufacturing is carried out by APS staff. 80% of projects are valued at less than $500,000. So again, it's in keeping with the SHAPE DNA of shorter duration and a larger number of projects. Strong alignment with SHAPE strategy. So we've talked before about wanting to increase our program -- repeatable and program-based work, which aligns to everything we're doing with modular and with the Arden acquisition that we did as well. So having a larger number of repeatable and again, program-based work with key clients that value quality and value relationships. So APS complements our existing retail capability, and we have talked recently about the Arden Fitout and Maintenance team. And certainly, when we look at, for instance, Oxford economics and those types of data, looking at 3 and 5 and beyond years, the non-residential construction starts looking at where funds and where money will be spent. It certainly sits into that key strategic theme that we've identified there. FY '25 revenue, circa $32.5 million. We expect that to generate a future maintainable EBITDA of circa $5.3 million. And the margins in the APS business, again, similar to the Arden acquisition, very accretive to the SHAPE and enhances the SHAPE group margin profile. Just a few of the fantastic brands that they work with there. Again, I won't go through necessarily the tenure for each of them, but you can see there that our top 5 clients through APS have an average tenure of approximately 12 years or beyond. Again, continual new retail clients coming to APS. And it also introduces SHAPE and the SHAPE Group with Arden as well to a number of additional retail brands with a strong ability to cross-sell across those capabilities and continue to deliver exceptional client service to those clients as well. Strategic rationale, I've talked a little bit about that already. But I guess it does align to SHAPE's growth and strategy -- diversification strategy, which we've talked about for some years now. They have a proven track record of profitable -- profitability, aligning to SHAPE's growth and diversification. They also have exposure to highly repeatable segment of the retail market focused on multi-store rollout. So that's really important in that it's programmatic and it's repeatable. Good line of sight for pipeline across Australia. And again, with those long established tenures and relationships, we get to have a good view of that. It strengthens SHAPE's offering. So it broadens our capability even further across the delivery chain from design, procurement and installation, the vertically integrated manufacturing. And they've got a really strong background in procuring from overseas. So whilst they have full capability to manufacture in Australia, depending on time and number and quantities and that sort of stuff, they also have a very strong ability and good track record of being able to import from overseas, which is very important from a scale point of view. Potential to support growth into programmed and repeatable work across adjacent sectors, and that's across the multifaceted SHAPE businesses. Talk there about the relationships, again, very similar to the SHAPE business, where we really value those established relationships with our clients. APS certainly are well regarded by those -- by Australia's leading retail clients, which is fantastic. Experienced team with a national reach. So whilst the manufacturing facility is located in Melbourne, as we mentioned, in 5,000 square metres there, they also have a trusted nationwide network of skilled subcontractors, again, very similar to the SHAPE business, which is able to meet the clients' needs nationally whilst being managed at Central Point with the APS customer experience sort of banner across. Average tenure for the key management, 15 years. Again, those strong and long tenures indicate the culture and the alignment between SHAPE and APS, which is fantastic. The management team have agreed to stay on. So they will continue to lead both the day-to-day operations and the future. And I mentioned on the last slide that the APS coming into the group will enhance the margin profile for SHAPE earnings and normalized EPS are expected to be accretive immediately, but certainly in the first full year of ownership. A couple of glosses there just to sort of give you an indication across the skill set with design, manufacturing, project management and logistics, even the investment in this best-in-class systems and best-in-class manufacturing equipment. You can see there, with the level of investment that they've got there, even into -- logistically into a fleet so that they're able to, I guess, control their own destiny from a delivery point of view, particularly with those, like I say, those national retail clients where time is of the essence. So yes, strong investment in the business over the years, supported by those long tenures of clients.

I'll jump in and talk a little bit about the acquisition overview. Late last night, we entered into a binding agreement to acquire 100% of the issued capital of APS. That was made up of an upfront consideration of $20.4 million, plus the ability for the previous owners to earn up to $9 million in contingent consideration over a 2-year earn-out. As Pete indicated, the acquisition of APS is expected to be earnings accretive in our first year of ownership and delivering what we expect to be an accretion of somewhere between 5% and 7% on a normalized earnings basis. The existing leadership team, as Pete talked about, given their long tenure and key to the functioning of the business, will continue to run the day-to-day operations post transaction. As far as the funding goes, the upfront consideration is broken into 2 components, the first component being a cash component of $17.4 million and $3 million in SHAPE script. The transaction will be on a cash-free debt-free basis, subject to a normal working capital adjustment. So we will be taking on that business with a normal level of working capital within that business. The equity component, that's been calculated on the 10-day VWAP up to and including the date prior to the execution of the agreement. That equates to 396,000 (sic) [ 396,228 ] odd SHAPE shares. These shares will be escrowed for 12 months. The contingent consideration, which is the earnout period, that will operate, as I talked about before, for 2 years. It will be covering the FY '27 and FY '28 years. We do expect to complete the transaction. There's the normal CPs involved that we need to get across the line, one of those being the ACCC with the mergers and acquisitions and the new rules that apply there. The contingent consideration will be split 50-50 by cash and 50% in SHAPE shares. And again, that will be based on a 10-day VWAP, but that VWAP calculation will be utilizing the 10 days prior to the issue of the SHAPE's annual results for each of those FY '27 and FY '28 years. So that means that assuming that they hit the required hurdles and -- the maximum total consideration payable is $29.4 million. And the key with this acquisition, as Pete touched on earlier, is that as we continue to grow our top line, we want to thicken our margins. So we want to thicken those margins from a gross margin perspective, but more importantly, down to the net profit and the net profit after tax line item. I'll pass back to Mel if there's any Q&A online.

Yes, we do. We have a couple of analysts who'd like to ask questions live. So I might start with John Hynd at Petra. John, are you there?

Can you hear me now?

Yes.

Right, we can hear you, John.

Well done with this one. Can we talk about the operations a little bit more? Is it a similar -- I guess, is the duration similar to your current book? Can you talk about average times on site and perhaps the pipeline within APS or work in hand for APS at the moment?

So the size of the projects are less than the size of the SHAPE's BAU project. So 80% of the projects are less than $500,000, as Pete indicated. In saying that, though, the average project size is probably closer to $200,000 to $250,000. They do a range of sizes. Generally, that range is between sort of $50,000 to $800,000. Largest project they've done is about $2.4 million. But then when you talk about duration, so typically, that's sort of 3 to 4 weeks, whereas the SHAPE's are around about 16 weeks. So the projects are smaller, quicker and obviously subject to less volatility as far as any sort of level of price fluctuations go.

Yes. Okay. And what about -- culture is obviously pretty important at SHAPE across all of your offices. How did you assess how compatible you were with APS? And then also, can you talk through employees on site -- but you're obviously employee light, subcontractor or contractor light. How does APS compare?

Yes. So I'll start with the culture piece. And rightly, as you mentioned, culture is very important to SHAPE. We -- our only asset is our people. So we're very conscious of employing the right people, keeping them engaged and then they go and do amazing things for our clients, and it's a fairly simple profit service chain in -- hire great people and keep them engaged. So it started off by meeting with Sunny and Atinder, the owners, the way that we ask some questions, the way that we talk about their team. If you look at the tenure of their employees and just the way that they talk about their employees and the remuneration structures that they're on, it's fairly easy to identify quite quickly as to whether or not there's any care from the owners to the employees. So we established that very quickly, and we're able to get down there. Scott and myself, Kate, our Head of PCT and Marketing and Comms, spent a bit of time with the owners. And obviously, we go through a full DD process, both from an employment, financial, legal, et cetera, et cetera. So that's on that side. And yes, we're very comfortable that. And culture fit, you can't -- you can change revenue, you can change clients, you can change a lot of things, but the culture is a difficult thing to change. So that fit is very important. So we're very comfortable with that. From an employee basis, typically, as I mentioned, they've got project management in-house, estimating in-house, BD in-house, all the way through to the skilled tradespeople in the manufacturing facility. And outside of that, there's sort of supervisors that supervise nationally, but again, similar to the SHAPE business, rely on a national network of trusted subcontract providers. Again, similar to SHAPE, those relationships with those subcontractors are long-term relationship and very sort of transparent and that APS are able to share with those installers their upcoming pipeline. One of the good things about the sort of working with the brands that they work with is that they don't decide to do a fitout next week from today, they have a planned rollout of stores, which has a level of transparency around it. A lot of those clients for the logos that we put up earlier, APS are pretty much sole sourced to do all of their work because they're that trusted provider. So yes, again, it's similar in many ways to both the SHAPE business and also the Arden business from that point of view.

Got it. Did -- probably for Scott, did the -- does it come with -- there's obviously a reasonable asset base. Does it come with land as well or...?

No. So what they've got is they rent a 5,000-metre facility in Melbourne. So there's no land. There's property, plant and equipment, you're looking at sort of $1.82 million. That's primarily made up of -- so there's motor vehicles, and you saw on the slide there, they do have some trucks which they use for logistics. Then there's the -- some of the equipment that they have inside of the factory. And of course, then there's the office equipment and desks and bits and pieces. So it's not actually that capital intensive. Some of those machines that they have -- they've recently acquired a new machine to increase efficiencies, and that machine is about $260,000. So it's not -- it's certainly not capital intensive.

Yes, right. So what D&A change or addition of sort of $400,000 to $500,000 a year or...?

Well, that depends if you're just including the P&E. Yes, so from a normalized point of view, you're taking up the D&A. Those numbers aren't too far off. The other thing for consideration, which obviously, there's no cash flow impact, but of course, as part of the PPA or the purchase price acquisition. When we look at the intangibles and the allocation thereof in relation to customer relationships and things like that, there will be some amortization in relation to that, too.

Right. Sorry, last one from me. I'm not sure if you sort of answered the previous one. But how does this change your pipeline with retail? I think it was about 2% in first half '26. I guess it just reflects -- more reflective of the work in hand and I mean, how they recognize the pipeline as well. It sounds like it's quite drawn, like it's long-term and transparent?

Yes. So I think that will continue to change. And probably, I mean, the last wagon wheel graphs the -- we have produced have predominantly been either revenue and/or FY '26 first half. So when we put out the full year, you'll see a bit of a change in there just with -- obviously, because Arden have a lot of retail as well. So yes, that will continue to grow that piece of the pie, particularly like the key clients being Adairs, Bed Bath & Beyond, Forever New, Kathmandu, OPSM, Samsonite, Shaver Shop, there's some sort of large brands there that have just a continual both rollout of new stores, but also a refresh. So...

Yes. Can you just [indiscernible] -- you want to quantify that right now, Pete?

Well, I guess if we look at the pipeline, we call from what we can see right here right now, there'd be $13 million to $20 million in pipeline of those projects just with APS, but then when I add that to the SHAPE retail and then to the Arden retail, that will sort of expand again.

We have Eric Roles from Moelis. Roles, are you there?

Yes. Can you hear me?

Yes.

Yes.

Yes. Can I start -- Can you talk a little bit about -- you've sort of alluded to in the slide deck the offering that APS brings to the adjacency that you did with Arden and how you envisage that offering to be once the 2 businesses are potentially aligned and integrated in the SHAPE business. Where do you see this business in 12 months' time as part of SHAPE, as part of Arden?

Yes. So I think it's a really exciting opportunity because the -- I mean, if we just take APS by itself, a fantastic client base, good strong track record of growth organically just by themselves. A strong focus on -- able to produce joinery, but a strong focus on shopfitting. If you look at what Arden do, again, heavily focused on the fuel retail, but a lot of shopfitting as well. So the ability to cross-sell between just those 2 groups represents a good opportunity for the group. In saying that, APS couldn't possibly satisfy all of either Arden's or SHAPE's requirements. So we need to maintain our current relationships with both joinery and manufacturing subcontractors. But also, if you look at from a SHAPE point of view, we spend circa $80 million on joinery across the country every year, and that continues to grow. So there will be, again, potential depending on APS workload for some cross-selling there to be able to support the SHAPE around the country. APS are already manufacturing in Victoria or in Melbourne and transporting across the country to satisfy all of their clients, basically wherever their clients are is where they go and their clients and national businesses. So yes, there's a strong opportunity for cross-selling there. As far as where they are in 12 months, it's again, fairly similar to the SHAPE business. And anyone that's been on the call with me would have heard me say that our ability to grow is mostly restricted by our ability to hire, onboard and retain fantastic people. And again, the APS will fall into that category. With manufacturing, as we've with the modular business that we acquired and the modular business we started in SA, it's all about how do you maximize throughput through that factory. So I think there's a strong ability within the group to assist APS in keeping those throughput levels and manufacturing levels very high. So a good opportunity.

Good. Can you talk about -- sorry, you talked about organic growth of APS. What has that historically been?

The revenue for APS, I mean, even if you just go back over the last 3 years, so FY '23 was about $27 million, FY '24, $28 million, the most recent full years as we disclosed, $32.5 million. So it's steadily increasing. But I think now with -- obviously, with the backing of SHAPE and the assistance and support and the opportunities and the cross-selling that Pete's talked about, obviously, the idea of that is to increase the throughput in the factory there. They're currently running at about 45% of capacity. So there's opportunity within that factory. So we'll look to -- obviously, next steps are how do we continue to diversify and grow the business with the support of the previous vendors and their broader team.

And I think just to jump on the back of that, it's worthwhile acknowledging Sunny and Atinder, the vendors that we have joined forces with here. Both Sunny and Atinder have developed a really strong understanding for manufacturing. When I talk to them, they sort of -- both sort of interact over each other, talking about how to get efficiencies. The new machine is a Woodtron flatbed CNC. That doesn't mean a lot to me yet, but I'm sure in coming months, it will. But just their forward thinking and because that was part of their growth strategy regardless of an acquisition that they've purchased it and looking to -- looking for continual ways to be more efficient and to produce more out of that facility. So as Scott said, at circa 50% capacity, it's pretty rare you get a manufacturing facility up to 100% because if you do, then you're probably in the wrong location or the wrong facility. But there's certainly an opportunity to enhance that.

Got it. Sorry, final question for me, Scotty. You're just spending $17.5 million out of existing cash reserves. So where does that leave the balance sheet and the cash position of the company and the ability now to go forward to do -- you've done Arden 3 months ago, you've done APS, the ability of these bolt-on acquisitions going forward, given where the -- how the balance sheet looks like, can you just comment on that a bit?

Yes. So this is aim to go through on 1 July or thereabouts, certainly post 30th of June, then we would look to -- look at other facilities or forms of facilities. Purely, as you talk about with the balance sheet and the support of the balance sheet, primarily, that is just for certain ratios and liquidity and those sorts of things to support the criteria for external financial assessments and prequalifications and the like. As you know, we do carry a large cash balance. We're -- at any given time at the end of the month, generally, we're sort of around about $120 million, $130-odd million. That does fluctuate through the course of the month through the payment runs. The lowest we got in the -- this financial year is circa $60 million. So we've got $60 million there of funds that we could use. And if we took that out of the business, it actually wouldn't change the operations and the way the business functioned. What it would do, though, it would restrict our ability to tender for certain projects because there's all of those ratios that need to considered. So that's something that's a work in progress at the moment, which will be all sort of set up and a few little things done there on the -- at start of the next financial year.

Guys, we have [indiscernible] from E&P.

Can you hear me, you guys?

Yes.

Just got some quick housekeeping questions. You've given us the EBITDA margin. Do you mind sharing the gross margin? I might have missed it in the opening remarks.

Yes, I don't think we necessarily talked about gross margin. But basically, the gross margin will be double of our BAU in round numbers.

Got it. And the BAU of the SHAPE's business alone, I assume, not the Arden piece?

Yes, that's right. Look, I mean our BAU is sort of circa 9%. So we are expecting that to be at least double that.

Yes. And you made a call out for the top 5 customers. Do you mind sharing what percentage of, I suppose, revenue they account for? Is that meaningful?

Top 5's 40-odd percent of the revenue.

And your agreements with your -- with the customers, are they over several years? Or do you have to retender every year for their upcoming fitout and so on?

Yes. So the agreements are -- so obviously, a lot of them are negotiated single select. Some of them, they're on a panel. Some of them, they are tendering. So it is a combination.

It's a real combination. But for some of those clients, they're just going through the facility, I mentioned the clients, but they'll have manufactured items stored there for the clients that they haven't actually sold yet, but they just know because there's a rollout of 50 stores or whatever it is, and they do all the work, and they can sometimes get programs brought forward because, again, it's similar to the SHAPE business, we respond to the clients' needs very quickly. So there's sort of a strong confidence level, I guess, from the team in that pipeline that is coming up.

Yes. Awesome. And you mentioned about the pipeline being about $20 million. Is that the same as backlog? Or is the backlog a lot smaller than that number?

Backlog is probably half.

Yes, the backlog is small. So I mean, look, they're working on projects of sort of circa $8 million as we speak now. But given that the velocity of them, that the actual backlog is what we would classify for SHAPE is probably closer to $3 million of backlog. But given the velocity at which they turn that over, it's obviously significantly different to the way SHAPE works. So I mean, obviously, you're not going to be applying the same multiples to backlog on the future 12 months of revenue. We talk about sort of 1.8 to 2 in this business, you're sort of up there at double digits.

Yes. Makes sense. And I suppose lastly from me, you called out joinery part of your cost of goods accounting for $80 million or so. Is the potential to bring that all in-house through the acquisition by expanding their manufacturing capability? Or buying those machines that are [indiscernible] on now?

Yes. I wouldn't -- so there is certainly an ability to enhance the throughput from SHAPE revenue into the business. From a business strategy and risk management point of view, we wouldn't look to bring that all in-house because we need to have national providers. And there's different joineries that operate at different levels, whether it be executive client-facing, heavily timber veneer or solid timber versus your back of house. So it will be a real combination and similar again to the SHAPE sort of ways of working, where it's live environment, technically complex, that's where APS will really sort of come into their own -- similar to the SHAPE and the Arden businesses. So again, that DNA sort of threads its way through the group.

Just talking to the shopfitting sector, Pete, Scott, Matt from Moelis has asked, can you talk to the competition in that space? And how APS are winning?

So the way APS win is very similar to, again, the way SHAPE win, which is basically repeat business. So when they go down, like say, their top clients, like Bed Bath N' Table, they've got 15 projects in the pipeline for them. OPSM5, [indiscernible] just a number of repeat business. So the way they win is by doing a fantastic project and reacting very quickly for clients that basically it's a revenue gain for them because they need these shops -- retail facilities open. If you look at clients -- sorry, top competitors, you've got people like Ramvek, the Johns Lyng Group, their shopfitting arm, 168[indiscernible] projects, associated projects. So that would be probably the top 5. But again, it's very, very fragmented across all of those. And certainly, APS have focused on Australia's leading retail brands, predominantly not just because of the quality, but also because of that repeatable program, which just sort of gives them that good transparency of pipeline.

And I know you've touched on this. Could you just maybe let us know of your joinery's spent at SHAPE? How -- what percentage could be manufactured internally at APS given the spare capacity you flagged?

That I could talk to -- I don't actually have it on hand. But if I -- if you think about it logically, probably 60% of our joinery is upper end. We're talking timber, veneer again, we SHAPE work predominantly for ASX 100, 200 clients. But when I say that 60%, the internals of all of those joinery carcasses, et cetera, are generally metal mine and so low-cost framework. So if you look at what could be throughput, we would probably add reasonably easily $5 million to $10 million of revenue through that business without impacting our existing supply chain. Again, that's not something you can just do tomorrow because you can't just run the machines overnight without people. So again, it comes back to that, how quickly can we grow the employees and the trades people in that business.

Scott, Phil from Shaw just has a few questions on the transaction. Could you talk to us about -- the D&A looks to be about $2 million. Is that correct?

The D&A, No, I think that's a little excessive. So there's going to be the PP&E component of the D&A. Then, of course, there will be the -- I mean, depending on how you want to treat AASB 16. So if you take AASB 16 into account, yes, you're probably closer to 1.5 or thereabouts. Obviously, still to be determined exactly what those numbers are through the purchase price allocation.

And then just on the earnouts, what are the hurdles KPIs there?

So the earn-outs will kick in slightly above where the current EBITDA is. And then it will be a pro rata through to a maximum earnout, which is significantly above where the current EBITDA is.

And we've just got a question. The cash pro forma after the acquisition, what would that look like?

When you talk about the cash pro forma, I mean, it's basically straight after initially out of the acquisition, $7 million, $8 million will come out basically straight out of the cash at bank.

And then Philip Shaw has asked, what was the completion date?

We're aiming for the 1st of July. That's all subject to the conditions precedent and all of the -- there's a bunch of conditions precedent. And of course, there's the ACCC that we need to get across that line, which we couldn't start that process until we have the executed agreement.

This is the first time we've been through the ACCC's new M&A requirements, which appear to be we're getting through it.

So when I say we couldn't start, we've done -- we couldn't lodge. So we've done all of the work, and that will be -- that's in a position now that we can lodge that. So we're certainly hoping that the ACCC will turn that around relatively quickly. So we are cautiously optimistic that everything will be all done ready for the 1st of July.

Okay. And Pete, Ben from [indiscernible] is just asking what's the typical cycle of retail fitout? Is it, for example, 5 years?

It's very different for each of them, but it's far less than the commercial office. If you think about commercial office leases, they're generally 7 plus 3. People that walk into a retail shop like yourself and myself, we're very easily distracted. And so these leading national brands are constantly refreshing their -- not just their store, but their offering. So for instance, they'll change what they're selling and a lot of what APS do relates to showcasing product. So if they're changing a certain type of equipment or item that they're retailing, that will have bespoke joinery and cabinetry made for that item. So there's sort of a constant refresh. I couldn't necessarily put a time on it, but the leases are shorter than commercial offices. So that drives that, but also the product is constantly changing.

And then John Hynd has a few more questions.

So guys, were these -- were APS a subcontractor of yours before? You've worked together previously?

They have worked with us, but not for some time.

Okay. So who -- you have a specified subcontractor for this sort of work now? Or how does it all work now?

So we've got over 1,700 subcontractors across the country. So it depends on the level of joinery, like I said. If we're doing an executive front of house for a law suite versus a call center, they're completely different subcontractors that we would use. In talking to the APS team around, why haven't you done more work for SHAPE? The answer was that SHAPE are too hard to work for because we keep asking them for pricing versus their current clients who understand the pricing and value and time is actually more important, not to say that price is not important. But -- so yes, like I say, there's a huge opportunity there to cross-sell.

Right. You mentioned a few times as well, I think in the presentation that they've got a good supplier base. Does that mean like the particle board that, that comes out of China or Asia? Or are you sourcing that domestically? What are you trying to tell us there?

So the particle board comes from wherever the particle board comes from and they buy in bulk and get whatever appropriate deals. When we're talking about the offshore and the manufacturing and ability to import, it's more around products. So for instance, they might -- if it's -- say, it's a Kathmandu store, they will create in-house the unit that's going to showcase that particular hiking boot or whatever it is that Kathmandu sort of focusing on. And then depending on the number of stores, so they'll make -- if it's 1 to 10, they'll make it here in Australia. If they're going to then order 200 of them, they'll actually send a couple of prototypes over to their factory in China. And when I say their factory, they don't own it, they just have long-standing relationships because importing from China, there's China imports and there's China imports. And the quality level can vary. So it's key to have those relationships with the appropriate quality of manufacturer over there. So yes, they can build it here, but they can also -- when it's on scale and you're doing it at 200 units, they can create some significant efficiencies in their costing by pulling it in from overseas.

Okay. Last one for me. Why this one and why now? I mean you are -- you seem to be doing quite well building into retail. You talk about your calls and you talk about the inroads you're making with Arden. This is -- it sounds like it's adding a little bit of complexity to the -- probably to your day, Pete. Is it -- what's the lever that this is pulling? Is it essential to help you grow into the retail space and add critical mass?

Within -- I mean there's organic growth. And so you can build or buy. And we're doing both. If you look at the modular, we bought one business, we built one business. You get earlier traction when you buy. Obviously, you pay for goodwill and different things that will sit on the balance sheet, but it's around that different traction. So if you look at how -- and what really attracted us to APS was the fact that it could cross-sell into SHAPE, but also into Arden because if you look at what a lot of the stuff that Arden do, it is shopfitting. However, they use external shopfitters as a large part of their spend. So when I talk about the joinery spend for SHAPE, I haven't even mentioned the joinery spend for Arden, which I don't have at hand. So the why now is we've been talking to this business for probably 12 months at least. So we -- like everything, SHAPE do, it's considered -- We don't rush into things. We -- the DD process needs to be the DD process. So I guess, we're constantly -- as I've sort of mentioned to many of you, we're constantly assessing potential opportunities for how they might fit into the SHAPE group to continue that expansion. So this just gives us another footprint into the retail sector, which we see as a strong growth for the future, and particularly when like I say, we look at non-residential construction starts over the next 3 to 5 years and ongoing and repeatable and all those sorts of things, short duration, generally carried out inside. So it's got all the sort of like I say, the DNA aspects that we like.

Scott, we have one last question. What's the lease repayment for APS?

The total repayment at the moment for that facility outgoing is circa $600,000.

That's the last of the questions. If anyone needs any other questions answered, my details are at the end of the release. Pete, I'll pass back to you for final comments.

No worries. Thank you, Mel, and thank you for hosting us. Thank you to everyone who joined us on the call. No doubt Scott and I will catch up with many of you in the near future. I would like to, again, offer another warm welcome to the APS team, Sunny and Atinder, and thank them for their patience. Really excited about the transaction and how this fits into the SHAPE group with SHAPE and Arden and APS and how that will enhance our ability to continue to service our clients and expand that footprint to -- again, continue to allow us to diversify and continue to grow the business. So again -- thanks again, and we'll catch up soon.