SHAPE Australia Corporation Limited (SHA) Earnings Call Transcript & Summary

Good morning and welcome to SHAPE Australia's FY '26 Results Webinar for the full year ending 30 June 2026. Presenting today is SHAPE's CEO, Peter Marix-Evans; and CFO, Scott Jamieson. Today's format will begin with a run-through of the presentation followed by Q&A. [Operator Instructions] I'll now pass to Pete.

Thank you, Mel, and welcome to everyone, and thank you for joining us for our FY '26 results presentation today. We've got a slide deck. We'll move through that efficiently. And as Mel said, there's an opportunity at the end for questions, and you're welcome to submit them as we go along. So to start, I'll get Scott started off just with the highlights -- financial highlights for the year.

Thanks, Peter, and welcome, everybody. Good morning. I always have great pleasure in this time of year presenting our numbers. As you can see there, all of those arrows are all pointing north. So this is a testament to, obviously, the great team that we have at SHAPE, all of our clients and all of our subcontractors and all of the broader population that we deal with at SHAPE. So a massive thank you to everyone that's helped to put these numbers together. If we walk through them, revenue of $1.2 billion. So that's a significant increase against FY '25. FY '25 was $956 million. That's up 30%. And that's the first time we've actually gone through the $1 billion mark. So we had an aspiration, obviously, to hit the $1 billion mark, and we've well and truly gone through that mark. EBITDA, $50.1 million. Again, big, big increase, 53% on last year. And of course, the net profit after tax of $31.7 million, up 50%. This has certainly been assisted by margin accretion together with operating leverage, which we'll talk a little bit more about later on and project wins. So project wins are those contracts for which we've secured of $1.3 billion. That's also up 37%. The difference between a project win and the revenue, a project win is when we secure the work, the revenue is then recognized as we complete that work. So that then transforms into the middle there on the backlog orders. So if you look at the backlog orders, that is work that we've secured that we are still yet to do. That's $628 million, again, up from $492 million at this time last year. And the identified pipeline of $4.8 billion, that's up 20%. That's probably a conservative pipeline, to be honest. But what that is, they are real projects. They are projects that we know about. They have a name, they have a size, and if they come to us on the right terms and conditions, and we have the resources available to perform those works, we will certainly tender for that project. Cash and marketable securities, $136 million, also an increase on last year. That is made up of cash and of course, the marketable securities, which totals about $32 million. They are highly liquid investment-grade corporate bonds and the primary reason for having those marketable securities is just to generate some more earnings on our cash. So we look to get an extra up to 2% on our -- the return on that cash. Earnings per share of course, up in line with NPAT. The reason that that's slightly different to the NPAT number of 50% is purely because that's just done on a weighted average of the shares during the year, and it takes account for treasury shares, but up 49%. Very pleased to announce that the dividends that the directors have declared this morning is $0.18 for the final dividend of FY '26, and that brings the total dividend in relation to the performance of FY '26 to $0.32. Thank you, Peter.

Thanks, Scott. Great set of numbers. And yes, so very pleased to present them to our shareholders. So just a bit of a reflection on SHAPE for some of you who are new to the story. So Australia's leading construction partner, a strong focus on fit-out, but also more and more so diversification through construction services. You see there, we've grown our people up to circa 900 now, 36 years of profitability, over 320 projects, with absolute revenues above $100,000. So just again, a large spread of smaller projects, shorter duration, which really gives us that risk profile that we like. We've maintained our tender conversion rate quite high, so 46%. So that's very important that we don't price for practice and that pipeline that Scott talked about, we can really identify the best projects that suit both our skill set and align with our repeat clients. You'll see there our operations nationally continue to diversify and to spread with both SHAPE operations, Modular manufacturing facilities and also with our new acquisition of Arden. Going on to our business model. So, SHAPE have a resilient business model and I talked a little bit about the profile of our projects. So we've talked there about short duration. You can see there more than 50% of our work is complete within 6 months. So very little exposure to escalation and cost of goods going up. Internal projects, again, typically lower exposure to industrial, to weather and our ability to, I guess, fast track internal works versus external works just allows us to provide more protection against end dates and those sorts of things. That diversified portfolio, and we'll talk a little bit more about that as well going forward, but just a really strong mix across the regions and sectors. And what that does is, one, it grows our pipeline but it also gives us the ability to continue to future-proof that revenue growth and just allow us to continue to grow. Very much part of who we are is a people-focused company culture. So we have a very simple business model in that we hire and attract the best talent in the industry. We look after them and keep them engaged and then they do fantastic things for our clients as referenced by our Net Promoter Score. And that goes into trusted construction partner, you'll see there. Net Promoter Score of plus 86. And very importantly, we have a very strong repeat business with our clients. On to growth and diversification strategy. So we've focused on 3 pillars there, which we've talked about over the last couple of years. You see there, in the center our operational pillars, which is how we run the business. But from a growth point of view, both organic and inorganic. So through sector diversification, and that includes growing outside of commercial office without losing our commercial office market share. We're very, very fond and attached to that. Regional growth, so following our clients and following GDP and population to where we can establish a presence and then capability expansion, which includes things like Modular and even our Arden business with retail and fuel. Inorganic growth, again, pursuing strategic acquisitions, and we'll talk a little bit more about the 2 acquisitions that we've made in the last 12 months. From a sector diversification point of view, you'll see there the commercial office market has not shrunk. In the past, it would have been greater than 50%. Because we're continuing to grow the other parts of that wagon wheel, that commercial office market by percentage will become slightly smaller. However, by number, it continues to increase. You'll see there, hotel revenue increased. There's quite a lot of that, particularly on the back of the development in Queensland and the investment there. Retail revenue increasing up to $40 million. A big part of that is the half year contribution from the Arden Group. Critical facilities, so the data centers and infrastructure. So that's now our third largest sector. Revenue of over $100 million in this period and project wins of circa $120 million. So that includes the 20-megawatt project that we have recently completed for DigiCo, and it also includes a fee there for early contractor involvement for the next stage of the 88-megawatt DigiCo project, which is an ECI services fee at this stage. Social & Institutional. Education revenues doubled. Again, a big part of that is our Modular business. And importantly, our growth into aged care has also continued to gain traction as we continue to focus on establishing a skill set and capability in the aged care. Industrial. Revenue for that, again, continued to double. So you can see there that wagon wheel really starting to become more diversified as we grow the strength of the SHAPE teams, the capabilities and the experience. And that just again allows us to continue to thicken that pipeline to make sure that we can future-proof our ability to continue to grow. And you see the revenue from non-office sector is 57%. And I stress there that we're not moving away from office in any way. We'll continue to focus on the commercial office market across Australia, but we want to make sure that we've got a nice, diversified portfolio. Regional growth, you can see there, we've expanded our footprint. So, over $130 million of revenue from regional branches. So wind the clock back 5 years, we didn't have those branches. Those regions continue to grow with investment from both private and public sector, and we'll grow with that as well. So opened a few new offices again and just combining those regional branches, getting some good traction and being really well received by the communities where we're operating. From a capability expansion, you can see there, new builds expanded -- increased to circa $100 million. That still keeps us around about the 10% or under. So we've always said that we are very comfortable with the skill set and capability and people to carry out new build, providing it's under the right contract terms and conditions and for the right client. However, we will monitor the size of that pie because we have a fascination with our risk profile around predominantly being interiors or working inside other -- inside buildings projects. FY '26, really strong year for Modular. So you can see there the big increase there, which is fantastic, particularly seeing the Modular business does deliver better than BAU margins. So that reflects growing confidence, not just in SHAPE's stability, but also in the Modular -- in the resilience and the ability of the modular construction sector in general, which is just good for Australia and good for the industry. And then finally, the acquisition of the adjacent leased space for our Victorian modular construction facility allows us to continue to be in a position to grow that modular offering in line with the industry.

I'll jump in there. So the acquisition that Pete mentioned was Arden. This is our second acquisition that we have done in the history of the business. That all happened in December of 2025. And of course, this gives SHAPE the opportunity to get involved in multi-site rollouts for national clients. It expands into retail and the fuel market segments, which is something that we didn't have. We certainly brings with that business a very experienced team. They've got a nationwide reach, having 5 offices across Sydney, Melbourne, Brisbane, Adelaide and Perth. And one of the main driving factors behind that was the earnings profile. So this has the ability to increase SHAPE's gross margin and, of course, flowing that right down to the net margin. They've been in business for 24 years. has 75 to 80 people within the business and there's certainly been very strong cross-business collaboration and there has already been opportunities where we've had some cross-selling between the 2 businesses. They've got a very strong retention rate. So it's very clear that they have a similar culture to SHAPE, a similar client experience that they provide with that retention rate of 100% with customers. And of course, we've also had 100% of the key employees remain with the business. As far as the integration goes, it's fairly light touch. We're not looking to disrupt their business and the way they operate. We bought their business for a reason. That's a very good business. We are looking to enhance a few little things around the finance and safety, but we continue to look forward to the future growth and prospects for this business. This is the third business that we acquired. This was outside of the financial year as we acquired them on the 1st of July 2026, Australian Professional Shopfitters. As the name suggests, they are a shop fitter. They do have manufacturing capability, and this certainly helps support SHAPE's future growth. It also provides more access to the retail market and focusing on multisite rollouts where they have the capability, including design, manufacture and procurement. Again, the same story with Arden, very experienced team, very strong tenure, good culture within their business and again, enhancing the earnings and margin profile. So both of those businesses have the ability to generate gross margin of more than double than our BAU margin. We're also seeing some cross-business engagement and some cross-selling opportunities. So there is the ability there for Arden to pick up some of the SHAPE's work that we do and we undertake, and they also have the overseas procurement capability that can assist SHAPE. Business has been around for 28 years, and they've got about 45 to 50 people, and looking forward to obviously assisting them to continue to grow.

Yes. So a warm welcome to our teams from Arden and from APS to the SHAPE Group and looking forward to working closely with all of the SHAPE Group companies to ensure that we can maximize the profitability of the business. Just moving on to operational highlights. So safety, safety is at the forefront of everything we do, and we've talked a lot about that. We prioritized a proactive safety culture. Really proud of our 23% increase in proactive safety and quality environmental observations. So that's our leaders out there identifying issues, both good and bad before they happen to try and really pursue that resilient safety culture. Strong focus on training, EHSQ training in the SHAPE Business School, and you'll see there that the stats typically and overall are trending the right way. In saying that, there is no level of incident or injury that we accept, and we will continue to really push for driving an incident-free workplace and making sure that all of our sites have a positive impact on those that come into contact with them. From a partnership point of view, I mentioned earlier, 320-plus projects. So that's a fantastic result, even better, plus 86 Net Promoter Score, which, for those who know the Net Promoter Score system, very proud of that. That indicates that we are delivering exceptional customer service for our clients, which is why we have that repeat business. 88% of our projects achieved Perfect Delivery. So Perfect Delivery is our own internal measure of how we deliver customer experience and customer -- exceptional customer service to our clients. So at 88%, again, very strong, however, still shows that we can continue to push and there's room for growth. 3,900-plus trusted subcontractors. That's very important in our ability to grow and to scale, and I've said before, is mainly impacted by our people and how quickly we can identify, hire and retain -- onboard and retain good people, but it also is impacted by our subcontractor base. So that's a very strong and deep subcontractor base across Australia and importantly, across the different sectors and capabilities. So it really allows us to continue to have that growth. From a people and culture point of view, so 30% increase in our total workforce. And again, we've talked about how quickly we can grow that workforce without impacting our culture because we want to make sure that our people get a good employee experience, but also that they come in and they feel supported and trained. On to the training, so 6,000 plus -- almost 7,000 hours allocated to training. So particularly with so many new people coming on board, we want to make sure that we're giving them the skills and the training and the support to be successful. That drives into promotions. So 18% of our employees were promoted. We've got a very strong promote from within sort of culture, and we supplement that with obviously the new people as well. And importantly, from a diversification where female participation remains up very high, particularly for industry, 28% for the company, but importantly, it's on parity for our new entrants into the business. Just a couple of projects there, so you can get a bit of a feel for some of the work that we've done. So I talked earlier about the DigiCo 20-megawatt upgrade in Sydney. So that was a fast-paced large data project for DigiCo. Went really well. We built a team up there and the teams worked hand-in-hand with the client with good relationship and a great outcome. Elysium Resort refurbishment in Noosa, again, another really high-quality hotel project that we delivered up in Noosa. IRT is in the aged care sector. So that was part of our push into aged care. And again, there, you'll see 16 months refurbishment, external and internal, and that's a new client for SHAPE. On the back of the first job, we've also secured a second one with them as well. Moving along, just looking at some of our other projects, St Paul's Technologies in Adelaide; some modular work with the Manor Lakes Reserve Pavilion, Melbourne Man Lakes Reserve Pavilion and then UTAS Australian Maritime College as well down in Launceston. So just a really good diverse range of projects, a diverse range of clients, sectors, et cetera. On to Scott's favorite subject, the financial management.

Yes, just a little bit more detail on the financial metrics. Revenue that we've talked about there. But I guess, most importantly, that gross margin line item. So we've moved from 9.2% up to 9.8%. Now that's really a combination of, I guess, 3 things. The Modular business is generating a higher margin profile, also the contribution from Arden in the second half. And then, of course, it's the way that we procure and looking at -- and we've always looked at being disciplined around project selection and those types of things. But we always make sure that we're maximizing our entitlements and certainly maximizing the outcome. But I guess if people on the call are then trying to work out H1 to H2, I know in H1, we reported a 9.8%. And then, of course, we've acquired Arden. So the reason that that 9.8% is relatively stable, it's because as a percentage of the revenue in the first half, Modular generated around about 7% of our revenue in the first half. The revenue in the second half jumped up quite significantly, but a lot of that was the BAU -- so Modular wins represented, let's say, 5% of the revenue in the second half, and then that's been replaced by around sort of 2%, 2.5% of Arden's work in the second half. So basically, one has offset the other, and that's given us the ability to maintain the 9.8%. Moving forward, of course, we'll have Arden for a full year, and then we've had the acquisition of APS, and we'll have that also for a full year. So that does provide opportunity for some better margins moving forward. And of course, the EBITDA margin, that's then flowing down from the gross margin. And part of that is also the operating leverage that we're gaining. So if you go down to that bottom line there, you'll see that the operating expenses have moved from 6.7% and have now drifted down to 6.5%. So we're starting to see for every dollar in revenue that we're generating, we're getting a better net return on that extra dollar, which is highlighting the operating leverage. Operating cash flows, though, still very strong, more than 100% conversion rate. And so if you look at the net profit after tax, obviously, that's a function of all of those areas that we've spoken about, which has enabled us to get to a 50% increase on last year. Moving into some points on liquidity. Obviously, our cash position is very strong, and we talked earlier, the breakup between cash and the marketable securities. We look at our high position and our low position, and that's reflected in that right-hand graph, and that just shows a typical monthly cash flow cycle. That's the average daily cash over a 12-month period. So you can see that there's an outflow of cash and then it builds up and then there's a dip and then it builds up again. They correspond with the relevant Security of Payment Act legislation that applies in each of our jurisdictions, and that dictates the payment terms there, and of course, we're collecting every day from clients. And the reason that we do carry a lot of cash, that is primarily due to not only the capital management, but it does support our prequalifications and external financial assessments and there's various ratios that we need to abide by to position us to undertake projects in excess of $100 million. Included in that number, though, is restricted cash of $14.2 million. Now that's not restricted because of any bank covenants or any of those sorts of things. What that is, it's in relation to project trust accounts, project retention accounts, depending on the job. So for example, in WA, in Queensland, we often run these project trust accounts. New South Wales has a retention trust account for any project over $20 million. The subcontractor retention must sit in those accounts. And so what that means is that the money flows in those accounts. And then, of course, we pay the subcontractors and suppliers and our fee comes out of the accounts. But for that reason, it's restricted cash. We still generate interest earnings and things. But just to highlight that it's the reason that we've disclosed that that way. Peter?

Thanks, Scott.

Just jumping into the pipeline there that we talked about, the $4.8 billion and also the backlog order book. The main thing that we want to get out of these 2 slides is that, as Peter mentioned earlier, with the office sector, we're not moving away from the office sector, but what it is, it's becoming a smaller percentage of a much bigger pie now. So if you look at that backlog order book, the office sector makes up about 41%. The other key component there is education of 23%. If you then look at the pipeline because the pipeline has then grown and you can see those colors are starting to be more dispersed across the wagon wheel. So the office sector is making up about 24% of that. Obviously, there's a bigger chunk there, it's coming through by virtue of data centers. And the data centers, as everyone on this call knows, is far, far bigger than what that pipeline suggests, but it's there for illustrative purposes. Our tender conversion rate still remains very strong at 46%. So, another rule of thumb that we sort of use is that, that pipeline there, we will tender half of that and we will win half of that.

Thanks for that. So just moving on to -- and we're nearly there, so bear with us. Sector diversification from an outlook point of view. So commercial, the widening gap between prime and secondary assets continues to drive a lot of activity there and a lot of inquiry, which is fantastic. And we're seeing even some conversion on commercial buildings, which is good. Hotel entertainment continues to increase. Some of that linked to Brisbane infrastructure investment, certainly providing both opportunities in general, but also for modular as well. From a retail point of view, that exposure to both discretionary and non-discretionary retail spend, Arden and APS really provides us an acceleration into those areas. And as Scott mentioned earlier, we're already seeing some cross-selling between Arden and APS and SHAPE, which is really, really good and our Modular business, which is fantastic to see. Calling out the critical facilities. So data centers, that's a priority sector that we're targeting and growing. So we've built quite a strong team amongst the SHAPE people to be able to deliver on that. So that pipeline has increased significantly. As I mentioned earlier, we've completed the 20 megawatt for DigiCo. That pipeline does include the next stage of the DigiCo project, which is 88 megawatt, which we have not secured that project. We are currently engaged to deliver ECI services. So that will continue to evolve. Should we secure that project, that's a large data center project that we will be able to put the team straight on. If we were not to secure it or it was to delay in any way, then we just put those people on to other projects that are in that $4.5 billion, $4.6 billion, $4.7 billion pipeline. So a really strong growth area. We'll continue to look at it. We've got a lot of inquiry, particularly on the back of scaling ourselves up with the right skill set and capability of people with a track record in data center. Defense is really important. We continue to see work coming back on after the defense strategic review. So our opportunities continue to increase there, both from a government point of view, but also from a public sector point of view that supports the investment in defense. So that's really strong potential for us going forward, and we continue to invest in our defense team as well. Complementary experience enables the transfer of capability between sectors. So by that, we mean, if you look at a hotel, we do a lot of hotel experience and we do health. If you combine hotel and health, that sort of goes into the aged care and social housing and that sort of stuff. So those complementary skill sets allow us to continue to diversify. Modular construction, that capability continues to grow, and we continue to invest in that area. We are strong believers in modular construction and MMC in Australia, and it will be supported even stronger going forward by both government and private sector, and we'll continue to invest in that. From social & institutional; education, social housing & health. the macro trends continue to drive investment in those areas. And that sectors also support a range of the SHAPE business units, including the Modular business. And then finally, on the right-hand side the Industrial. So mining and agricultural selective opportunities. Again, we continue to remain opportunistically in those markets. And again, that industrial sector will support a large number of the SHAPE business units. So from an outlook, really well positioned to capture those opportunities, particularly as we continue to diversify, changing occupier needs, asset repositioning, investment in critical facilities and social infrastructure, just a very strong pipeline of work and holds well for the future. Office remains a core market for us, and we will continue to pursue premium assets government-anchored and workplace transformation opportunities, and it really is an area that SHAPE have a very strong DNA and skillset. We'll continue to accelerate the growth of our data center capability and our specialist team, as I mentioned, and to support that growing pipeline. And then diversification reduces our reliance on any one market. So I think the really important thing there is that when data centers booms, we can take some revenue there. When modular is booming, we can take some revenue there. So it really allows the business or the group to pivot not to just follow the money, but to follow the best commercial outcomes as far as where are the best contracts, what's the best risk profile. So that again, we continue to grow that profit, not just at a reasonable rate, but at both a sustainable and a safe rate as well, which is very important to us. Regional growth. So key drivers there. We've established full service branches in Gold Coast, Newcastle, Tasmania. In TAS, we've got Hobart and Launnie, Geelong and Townsville. Continued investment in those local relationships, local supply chain and local teams, which is very important. Also our ability to transfer the teams across not just regions, but across sectors and to suit the local market cycles and a good track record of doing that. And then Modular by SHAPE's portable delivery model strengthens our ability to service that regional and remote work. So again, at the moment, we've got 2 manufacturing facilities, both in Adelaide and in Victoria, and we'll continue to look for opportunities to expand on that as we see the pipeline develop and particularly on the back of government programs where we see the government invest strongly in the market. From an outlook, our regional markets continue to offer targeted growth opportunities. So we are seeing some good strong growth, particularly in areas like Tasmania. And again, with that ability to pivot our teams and our work just allows us to continue to follow where that investment is going. From a capability, so some of the key drivers. For the new build, you can see the project on the right-hand side there, that's the CDU up in Darwin. We just picked up a Master Builders Award for that just this week. So really proud of that for the team up there. But we're targeting new build projects that have shorter duration and typically a simple build. So we put the structure up and then it's all about what's inside, again, with that, I guess, not fascination, but leaning towards a risk profile of shorter duration, faster projects and predominantly internal. Modular by Shape, focus on structural demand across education, living, defense, entertainment. We're continuing to see that demand grow through sectors as people become more au fait and more educated around what modular is and what it isn't. So we'll continue to strengthen on that. And the Arden acquisition strengthens our ability for both facilities maintenance, but also multisite rollout. So that team are used to having longer sort of form MSA arrangements with large suppliers, predominantly fuel and retail, but also in the small format and large-format retail across Australia. So just really well established and having that ability to service regional and remote. And then finally, there, from a market outlook, we will continue to expand capability, selectively aligning that investment with specialist talent and market mapped to that pipeline that we can see coming. So that's the end of our slide deck. So I'll pause there, and I think Mel was going to see if we've got some questions to mediate.

We do, Pete. I might start with a couple of the analysts who have their hands raised. So John Hynd from Petra, I'll ask you to talk.

I've got a couple of questions, but let's start with -- I think you sort of touched on it a little bit earlier, Scott. The core business looks like it's becoming a bit more efficient in terms of the second half. The revenue was up quite strongly half-on-half with Modular contributing less, and then Office being a shrinking -- not a shrinking but a smaller contribution as well. How should we think about the margin going forward here at that 9.8% level?

Yes. So if we try and break it out a little bit. If you look at -- you got your -- sort of your BAU margins that are running at sort of circa 9%, let's say. And then you look at the Modular and then you look at Arden and then you take into account APS, which is, of course, not in our numbers. And then broad terms, they're generating up to twice the margin that the underlying business is generating. So -- and you'll see there that Modular generated about $74-odd million, taking those other businesses into account with the Arden and APS businesses. Again, in round numbers, you're sort of looking at $80 million to $85 million worth of revenue on those businesses. So of course, that will give you a little bit of an insight on what the margin profile potentially can look like moving forward.

Yes. Okay. So there's definitely scope for some further expansion. What about the order book? I mean, it looks like it's timing. It does move around period to period. And is this also the Sydney, one work coming or being completed or coming out of that as well?

Well, that certainly makes a difference. If you took the point in time when you're saying coming off a little bit, you're obviously referring to the 31st of December because we had, I think, from memory, that was $686 million. Of that, we had circa $100 million in there from the DigiCo project that you're referring to. The majority of that has been turned over during H2. So you're quite right that the backlog in relation to that project has obviously thinned it. But really, it is the composition of what's making up those numbers at the 31st of December versus the 30th of June. So if you look at the 31st of December, we had -- there was 3 projects in the backlog that had more than $50 million of work to do. So that was $247 million worth of work. There was also 3 projects over $20 million that totaled about $80 million. Whereas you roll that forward now to the 30th of June '26, we don't have any projects that make up the backlog component of the projects that are over $50 million. And we've got about 6 projects that are over $20 million, totaling just over $200 million. So what that actually says is that if you start to try and apply different ratios and get a forward look of what the revenues might be, we've always historically talked about if you're taking the backlog position and you try to apply a multiple to that backlog to look at what the future 12 months might look like, we sort of -- we talked in the range of 1.7x to 2.5x. If you go back to 30 June '25, just looking at that composition there, I mean, we had no projects basically over $20 million in the backlog. So therefore, you look at -- that was probably closer to mid-2s as far as the run rate goes. You then come to the 31st of December and you look at that composition, and we were sort of saying, well, maybe it's high 1s. Now we're looking at 30th of June '26, and we're probably early 2s. The other thing, if you want to start to look at future revenues, you've obviously got that backlog, you apply a ratio of early 2s. In addition to that, though, of course, we've got the Arden business and we've got the APS business. Their profile of projects and the rate at which they turn over is much more significant than that of SHAPE. So therefore, you have to apply a different position. You almost have to take an estimate of revenue to put on top of everything that we just spoke about.

Yes. No, that definitely makes sense, especially, I suppose if you are using my words, becoming more efficient with BAU work and you're looking at something over 2x, that's a pretty strong indication with that backlog for the second half. Okay. Can you just give us some color on D&A as well, please? I mean, obviously, you've sort of consolidated Arden properly now. You've had some time to look at how things move around and you've got APS as well. I mean I'd love a hard number, what it might look like in '27 just for ease's sake.

I'll give you a general sort of split out of that. So the D&A -- I guess the D&A is broken up into, I guess, it's 3 main components. So of course, you've got your AASB 16, which is basically your depreciation on your office leases. So there's that component. Then you've got your depreciation on your normal PP&E. And then, of course, you've got your amortization on your PPA, which is your purchase price allocation. So that's the intangibles that when you acquire the business, there's a certain amount that's allocated to intangibles. Part of the allocation that goes to intangibles, of course, is in relation to the customer relationships and that customer relationship is then amortized. Roughly speaking, I think the Modular business as far as the PPA amortization goes, that's a couple of hundred thousand. The Arden at 6 months is about $400,000. If you look at underlying PP&E, you're probably around the $3 million. And then, of course, you've got your AASB at about $2 million. That's pretty high level. I can certainly catch up with you over a beer, mate, and give you the exact numbers, if that helps and on the breakdown last year.

Yes. No, that's pretty good. So there's not much movement really from an annualized perspective as we look forward there into...

Yes. Well, of course, you'll have more D&A, of course, with the new acquisition. So that will obviously be added on top.

Yes, that's right. Okay. Look, 1 or 2 more, sorry. With Arden, it looks like you've broken out, maybe some of it in the notes, and I think in Note 2. Can you give me some color on what's exactly in that number? Because I think it's a $50 million top line annually, and you've only sort of shown us about $4 million in that number. So what exactly is in that $4 million in note 2? And then I'm assuming the rest rolls up into the core business revenue.

Yes, that's right. So, the majority of Arden's work is actually fit-out work. It's obviously in a different segment and a lot of that work is in retail. But in addition to that, they obviously do also a lot of maintenance work. So that line item that you're referring to is just the maintenance work to which Arden does, which is only a small component of Arden's overall revenue. And of course, it's only for 6 months.

Yes. So there's no other -- you've got another facilities, small facilities business. So there's none of that in that line?

No. Well, the same thing with that. I mean that's what we call AFM, which has a facilities maintenance component in there. But they've also been undertaking some small works, which we've actually allocated to the fit-out or the construction revenue side of things. They have recently picked up about 8 buildings for maintenance for Charter Hall. And of course, that will then be recorded as maintenance revenue rather than what we have been calling it, which is construction revenue. So that business, there's no split out. So that line item is solely related to Arden and Arden's maintenance component, which is a small component of their overall revenue.

Yes. Okay. Remiss of me to not ask about DGT, the next stage. I mean, it looks like it's pretty big at sort of $900-odd million, if you could break out the percentages you've given us today. When do you expect to hear if you've been successful on that one, [ guide ]?

So we're still working with DigiCo to provide them with a firm pricing program. So that is moving along. I would anticipate it to be in the next month or 2. It does depend, I guess, a lot on DigiCo and what they're doing with a tenant or tenants and how that -- what their time line is. As I've always said, that's a fantastic project. We'd love to be a part of it. We'll only be a part of it if it's under the right terms and conditions and it suits to SHAPE business as well because, again, if you look at that pipeline, it's a very robust pipeline, and we'll continue to make sure that we won't sort of get too starry-eyed. But yes, we've got a good relationship with them. The Stage 1 handed over really well. So yes, by all means we should have -- we should be moving on in the next month or 2.

Yes. Okay. And you're geared up sufficiently for that. You've got the right -- I mean, I assume you do with -- you've already done Stage 1. You've got the right staff, you've got the...

That's right. I mean we're already doing early works there to prepare. So regardless of whether it's us or whether they ran a different process, we've already started -- already assisting the client with some early works and that sort of stuff. Regardless of that, like I say, the revenue that's coming through in data centers is attractive. The type of work is suitable, particularly with the brownfield projects that are coming up because with this AI data center versus the traditional data halls, a lot of the existing facilities will require densification. So what that does is put into a live environment, and that really suits our SHAPE skill set. So, regardless whether it's DigiCo or another DC, we will be pursuing data center work going forward, and we have skilled up a team and continue to build that capability so that we are able to pursue that revenue stream for the next period.

Yes. Okay. Sorry, one more, Scott. Cash conversion has softened a fair bit in '26 versus '25. Was '25 just an anomaly? Like was it just a very good year? And like have you -- are you sort of normalizing with your days payable and your days receivable now?

Yes. Well, yes, firstly, I'm not concerned because it's still a very strong cash conversion. Yes, last year was obviously very high. But then if you start to look into things like the reconciliation of the cash flow, you'll notice that you're looking at the change in receivables versus the change in payables back against last year, and there was more of an increase in the payables last year. So it's purely a timing thing. There has been some small movements around the Security of Payments Act and the legislation there. For example, Victoria used to be on a 30-day regime. And now they have moved into a 20-day regime. But again, there's just some timing differences, and we always see it. And again, it depends on the size of different projects that are happening. And one day can make a big difference, obviously, when you're looking at a set of financials over a financial year. So if someone pays on the 30th of June versus someone paying on the 1st of July and if you've got a progress claim there that's north of $10 million, then that can obviously move your operating cash flows around a little bit. So still strong, and if you average it over the 2 years, very good position, very comfortable and absolutely no concerns.

We've also got Ben Yun from Ord.

Just on that order book, if we look at the first half number of $686 million, did that include Arden?