I will now hand the conference call over to Mr. John Lorente. Mr. Lorente, the floor is yours, sir.
Thank you, Mike. And thank you all for joining us today in what I know is a busy period for everyone during reporting season. My name is John Lorente. I'm the CEO and Managing Director, as well as heading the group. Now, you should all have slides on the webcast. I will go through the headlines of our performance, some background at our historical growth and divisional performance. John O'Connor, our CFO, will go through our financial detail, and I'll wrap up at the end with the outlook for the business. So on to page one, performance headlines, which is the third page of the deck. We've continued our growth over the last five years with another solid result for the year.
I'm happy to report that the business is in a strong position, delivering record revenue and profit results, a very strong cash position, and excellent return on funds and returns to our shareholders. Now, on that slide, onto the headline numbers. Our FY23 revenue is up 9.8% - AUD 449.5 million, and that's including 2.8% organic growth and solid contributions from our new acquisitions. Our profit position continued to be strong, as I mentioned, a record result. EBITDA up 7.3% - AUD 51.5 million. We've also maintained a healthy EBITDA sales margin of 11.5%, which is well above our target of 10% average through the construction cycle. The cornerstone of our result is our healthy balance sheet.
Our net working capital to revenue ratio of 15.5% is well within our target range on improved operation performance on our debtors and inventory management. We've continued our growth momentum for our shareholders, with return on funds employed to 28.6%. Again, a record result, up from 26.8% last year. Our strong cash position has us returning a record final dividend of AUD 0.085 and a record total dividend of AUD 0.171 for our shareholders. So on to the second page of performance headlines. Our statutory NPAT, with our minimal significant items, grew 4.3% - AUD 22.1 million. Again, a record position. Onto cash position.
What's most pleasing this year is in a volatile market, a strong cash result achieved through disciplined operations across the business, delivering a cash conversion of 112%. Margin growth over the last few years has also been a highlight, and this year was no exception. In tough market conditions, we grew our gross margins by 55 basis points on favorable product mix, inventory management, and pricing disciplines. The local autonomy and flexibility of our teams held us in good stead through a challenging environment. The teams managed the industry site delays and labor shortages well and delivered consistently for our customers. We had an increased focus this year on debtor management, with a restructured team which delivered positive results that John will go through shortly.
Our two new acquisitions, FA Mitchell in Lidcombe, New South Wales, and Epping Timber in Epping and Beaufort in Victoria, have integrated well into the business and are delivering positive results. Our ability as a business to identify, acquire, integrate, and grow these new businesses profitably has been a highlight of our last five years trading. Supply chains have largely improved during the year as we cycled out of the cost increases post-COVID. Some price deflationary impacts on framing pine, LVL, steel, and shipping from Asia were managed well by the team through prudent stock management and price. Onto page three. The growth momentum continues. We've put in here, as we had last year, a few graphs to show you the growth journey we've been on for several years.
What's a highlight here is obviously the continued growth in top and bottom line, but also yearly increases in profit margins as we improved efficiencies and gained leverage from our scale. I spoke before about our pleasing balance sheet results. On the bottom left-hand side, a strong cash conversion result, continuing to deliver a consistent cash performance, which flows on to gearing well down this year and giving us plenty of headroom for expansion opportunities. And finally, on the bottom right, we've been able to deliver consistent record return on funds employed, which has translated to positive returns for our shareholders. Onto page four, business overview. Now, this is an update on a slide many of you would have seen before.
A few points to note by exception: firstly, I want to note, as we have discussed previously, our geographic market segment and supply chain diversity is a key strategic advantage for our business. This, combined with our local service and national scale, flexibility and autonomy on the ground, and decisions close to customers, positions us well to manage the ups and downs of our industry. On the center left, working through these by exception, our revenue by construction market has changed.... On that continued growth in our detached housing market, driven predominantly by very strong sales in the first five months of the year, and continued strong pipeline of work into the second half. Commercial and multi-res have started picking up in the Q4 of the year.
Also, on the right-hand side, an addition of 3 more sites, taking us to 26 sites across the business, increasing our geographic diversity in Panels in New South Wales and in building trade centers in Victoria. On to page 5, divisional performance. The positive revenue growth across both divisions, both organic and new acquisitions, Epping Timber in Construction and FA Mitchell in panels. Construction led the way, particularly the building trade centers, on strong growth in the first half and delivered a strong profit result on product mix and pricing disciplines. Panels revenue was up 9.7% with 1.9% organic growth. The business was impacted by tough market conditions in our Plytech business in New Zealand, coming off a very high result the previous year.
Pleasingly, still a credible EBITDA sales margin of 14.9% for the division for the year. On to Grafton. The consolidation project we've discussed previously was delayed on acquisition later this year. Lastly, I note the increase in head office costs. This was partly to growth, which we'll discuss later on. I'll now pass it on to our CFO, John O'Connor, to run through the financials.
Thank you, John. Good morning, everybody. As issues that positively impacted this period. Our gross profit result, at AUD 123.3 million, was a. Looking at the next chart for waterfall, this gives a further breakdown of where the increases in EBITDA came from. So you can see the organic revenue from our existing branches was 2.8%, contributing AUD 3.1 million of that movement. Our margin expansion that I talked about earlier, from those manufacturing efficiencies and mix and pricing benefits, contributed AUD 2.3 million additionally with that. The acquisitions, Epping and FA Mitchell, and then the full year benefits of RWP and UBP from the previous period, contributed AUD 4 million to the full year results.
Our increased operating expenses amounted to AUD 5.5-5.9 million, giving an overall operating EBITDA of AUD 51.5. Looking next at the balance sheet. Again, very pleasing to report that we have maintained a very strong balance sheet, which gives us confidence to continue with the growth and acquisition strategy we have in place. Our inventory levels decreased in the period by AUD 3.3 million. That included AUD 2.2 million... As we focused on reducing residual higher value imports. As John mentioned earlier, we've seen a big improvement in. This was one of the areas where we invested more in people and processes, and that additional strong attention has helped us achieve the very solid result.
And finally, just demonstrating the strong return we got from our recent acquisitions, it is very satisfying to report that continued 100% of the capped amount. Moving next to capital management. Our net debt decreased from AUD 21.2 million to AUD 11.2 million, primarily reflecting the strong operating cash conversion and after cash was paid out for new acquisitions and the cap considerations payments I just mentioned. In terms of our key metrics, the gearing ratio at 8.5 is one of our best ever results and within those historic ranges. It leaves us well positioned for future acquisitions.
Our total working capital percentage of revenue remains a focus as always, and it was pleasing to see this average 15.5% for the year, reflecting the very good year, despite the challenges we had in debtor management and the first year working capital requirements of those two new acquisitions. Just also confirming the borrowing facilities now reflect the AUD 16 million of additional facilities with our main bankers, NAB, which leaves us again, well positioned to fund new acquisitions. Then finally, on this page, confirming our final dividend of AUD 0.085, fully franked, has been determined and is payable on the sixth of October. This brings the full year dividend ratio to AUD 0.171, which is +AUD 0.103 on a year ago, and that delivers a strong payout ratio of just shy of 64%.
Looking at our cash flow, our cash conversion, our ROCE number came in at 112%, which was very, very pleasing, given the challenging environment, as I said, in trade debtor management and those first-year working capital requirements for the new acquisitions. Our key metrics underpinning that are strong. Debtor days are down, inventory turns are good, and we've been very pragmatic in our bad debt write-offs, increasing to AUD 1.6 million from AUD 1.2 million last year. Our overall working capital decreased by 6.2%, which compares very favorably to the total revenue growth of 9.8%. You'll see the proceeds of AUD 2.7 million for the Wagga facility, which were received in the first half of the year. Our Capex was down year-on-year, primarily due to those delays in Grafton equipment coming on site.
We also saw extended delays on securing new vehicles across our car and truck fleet, which impacted those numbers. The additional AUD 5 million for Epping I've already referred to, and then just closing out, confirming the 15.1 was the dividend paid in the year, and then also highlighting those higher tax payments as we settled our FY 2022 tax liabilities. I'll now pass back to John, who will take you through the outlook.
Right. Thank you, John. Now, I'll wrap up with the outlook on page 11. So as the headline says, the group's growth is supported by strong underlying demand in the short, medium, and long term, with a potential uncertainty caused by what I call the three Ls: labor availability, land releases, loans, or funding for consumers and our investors. So given our market segment and geographic diversity, we are best positioned, in my view, to maximize the upside. On the housing pipeline, it's got a lot of press of late. It's been stretched, as we've said previously, by delays. Our pipeline is buoyant and extending into calendar year 2024.
There are strong medium to long-term prospects for the sector, low vacancy rates, immigration growth, and the recent National Cabinet announcement of three point five billion dollar investment to build one point two million houses bodes well for the market moving forward. The commercial market pipeline is at record levels across all states and has now started to be delivered. The build to rent sector will lead multi-residential, albeit cost of construction, labor, and funding will delay in the short term. The medium-density work is looking strong and more promising moving forward. Queensland and Western Australia will lead the way, where we have strong market positions in both states.
Sydney and Melbourne are expected to be softer, but with some upside with immigration, and our New Zealand business is expected to improve on a soft result last year. We go to page 12, again, continuing on with the outlook. Onto acquisitions. As I'm sure you all know, this has been a key part of our strategy and an area where, where I believe we've, we've performed very well. We have several value-accretive opportunities in the pipeline across both divisions that we are working on, and we will inform the market in due course. As I mentioned, Grafton will be completed by the end of the calendar year and is already starting to deliver synergies and unique product offerings to the business. Our margins, which have grown steadily over several years, are expected to be under some pressure over the coming twelve months.
We will continue to maintain our pricing disciplines and are working with our supply partners to consolidate purchasing and improve profit margins. As noted, we've made investments in systems and processes over the past six months, and we will increase these investments to deliver efficiencies and reset the business for long-term growth. Now, I won't be giving a formal guidance today, but to say that we've had consistent daily run rate, daily sales run rate over the past six months to August. Our view is that this will continue into the next calendar year on our strong pipeline, with, of course, the risk being delays in deliveries, as we have already discussed.
Having said that, we are well positioned for continued growth in the medium to long term, and our market diversity strategy will support us to deliver on the upside and continue to deliver strong returns to our shareholders. Now, the next couple of slides are the appendix, so that's the end of the formal presentation. I'll pass it over to Mike for questions.
Hey, thank you, sir. We will now proceed to the Q&A session. If you wish to ask a question, please press star, then one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star, then two. If you are on a speakerphone, please pick up your headset to ask your question. We please ask you to limit your questions to two per person. If you wish to ask further questions, please rejoin the queue. At this time, we will just pause momentarily to assemble our roster. The first question we have will come from Brooke Campbell-Crawford of Barrenjoey. Please go ahead.
Yeah, good morning. Thanks for taking my question. Are you able to just comment a bit more on the... You said the pipeline's extending into 2024, but what are your home builder customers telling you about sort of on-the-ground demand now for new homes? I guess that will matter once we're through this pipeline and it thins out. Thanks.
Yeah, thank you. Thank you, Brooke. Thank you for your question. Yeah, look, our home builder customers have said that the approvals and new orders have declined significantly, as the press has already... You've seen a lot in the press. So that's why I've said in the announcement that it's more unclear next year as to where that is going. But the pipeline is still strong and been extended really in terms of delays, as we've discussed. And so I think it's pretty clear in that housing space that into calendar year 2024, we've got a strong pipeline.
What happens after that, well, you've seen lots of government announcements around trying to ensure that the build keeps on going. So our view is that the medium to long term is strong. After early next calendar year, it's unclear. But obviously, then we've got the commercial side of our business and civil and medium density, which in my view, is growing and also has a strong pipeline.
... Thanks for that. And just, one other question around pricing. Are you able to, just provide a bit of color around pricing from your vendors in distribution? More for specialty products, not the sort of pure commodity products. Are those price increases still coming through now, or they've settled down? And what are your expectations over the next sort of six to 12 months, just that those vendors to continue to push through prices as, we get through this backlog? Thanks.
Yeah, so look, I discussed the key products earlier. But in terms of in general, we've actually seen a marked decrease in the last, particularly last nine months on price increases. They more or less stopped. We were getting them literally weekly across all suppliers. And they've more or less stopped. And obviously, we've had some price decreases and across the imported products. My view is that there will still be some price increases, but back to normal levels of what we've had, you know, a yearly price increase from suppliers, and a reasonable sort of levels moving forward. That's our view.
So we probably saw a lag for, as I said, 6-9 months, and now people are back to a normal cycle.
That's great. Thanks for taking the questions.
No problems.
Again, as a reminder, if you'd like to participate in today's Q&A, there's star then one to ask a question. The next question we have will come from Matthew Chen of Morgans.
Morning, John and team. Thanks for taking my questions. Just wanted to ask about the continued margin pressure that you might see and the kind of extent of it in your eyes. Also noting the comments that I think you're confident in your strategy to keep delivering EBITDA margins above 10% through the cycle. Thanks.
Yep. Thanks, Matthew. Thanks for your question. Yeah, look, there's definitely more margin pressures or pricing pressures with our customers who are in the market. Now, part of that has been with some of that deflationary impact on pine, LVL, and steel. People who are holding expensive stock, we've done a great job as a business to decrease and get rid of our expensive stock as those prices went down. Part of our stock reduction initiatives were around moving expensive stock, and I think that gave us a great result. But there are some in the marketplace that have got expensive stock, and they're trying to dump it in the market, and that has created more pressures, and I think that will continue.
And the second part of that is, builders are under pressure on cost savings. And again, it's been well documented on fixed price contracts and builders just trying to ensure that they're able to fulfill their obligations. So, my view is that will continue over the next 6-12 months. And we're working to continue the good work we've done in pricing disciplines in the business and then working with our key suppliers. Across COVID, we actually had an increase in supply partners. Part of our strategy was to go to more partners in the marketplace to ensure we got supply, and the strategy worked.
Now that we're on the other side of it, we're looking to consolidate, and we've been working pretty closely with our top 20 suppliers on consolidating supply and with the benefit of some better deals. So my view is that that'll mitigate, and if we do a good enough job, hopefully increase it. But I wanted to, I suppose, flag the risk of there being after three or four years of back-to-back margin increases, there may be a slight correction in the coming year.
Great. Thanks.
Thanks, Matthew.
Once again, if you would like to ask a question, please press star then one on your telephone keypad. Again, we will just pause momentarily to assemble our roster. Showing no further questions at this time, we will now conclude the Q&A session. I will now hand the conference back over to Mr. Lorente for any closing remarks. Sir?
Great. Thank you, Mike. Look, and thank you all for joining us today and taking the time. That's the end of our presentation. I look forward to speaking with you all at the AGM on the twenty-fourth of October. Thank you for joining us, and have a good day.
We thank you, sir, also for your time today. The conference call is now concluded, and thank you all again for attending. At this time, you may disconnect your lines. Thank you. Take care, and have a great day.