Thank you, Ryan, and thank you, everyone, who's joined today's call. My name is John Lorente. Joining me today is John O'Connor, our CFO, and it is our pleasure to present Big River' s results for the financial year 2025. Over the next few minutes, I'll be discussing key highlights for the year, along with some reflections on where we sit in the macroeconomic cycle. I will then hand over to John for a more in-depth discussion on the financial results for the period, after which I'll wrap up with some comments on the outlook, and then we'll head into Q&A. If we turn to slide two for a review of FY 2025. While FY 2025 was characterized by challenging market conditions, in the second half, we really started to see the benefits of some of our cost down and margin expansion programs come through.
This has meant we've entered the financial year on a solid footing, with a more disciplined platform, which puts us in good stead to execute on growth opportunities as the market turns. Stepping through to the metrics on the slide, revenue declined 2.3% across the year due to those challenging market conditions. However, crucially, we did see a clear trend improvement in the second half as the year-on-year decline softened. Our top line continues to be impacted by a soft residential segment in particular, which is circa 30% off its peak and the lowest in more than 10 years. However, we are starting to see growth in our core focus segments. Onto gross profit margins, they improved 20 basis points across the year, reflecting continued discipline on pricing, greater efficiencies out of our supply chains, and closer alignment with our key suppliers.
Given the market dynamics the business was faced with, including ongoing delays on sites and competitive pressures, we are very proud of this result. EBITDA declined 11.9% over the year as margin expansion was outweighed by the decline in revenue and a 2.9% increase in operating expenses for the year on macroinflationary pressures. Importantly, in the second half, EBITDA returned to growth of 10.6%, as efficiency efforts drove a 2.7% year-on-year decline, or minus 5.9% like-for-like, in operating expenses in that period. The balance sheet remains strong, with working capital to revenue and gearing both at comfortable, stable levels. We have the right balance of stock for our customers, a quality debit book, and ongoing investment flexibility. Cash conversion of 100.1% in FY 2025, up from 98% in FY 2024, reflects continued strong cash management and underpins the board's decision to declare a $0.02 final dividend.
This brings the total dividend for the year to $0.04 per share, representing 80% of underlying impact. While market conditions in FY 2025 were challenging, Big River delivered with strong operational discipline and remains well-positioned as the cycle improves. At the same time, we are sharpening our focus on growth in our core segments, ensuring the business is set to capture opportunities as demand strengthens. Turning over, Leif, to slide three. This slide shows the group's diversification across end markets, suppliers, and regions. The group's footprint continues to be refined through network optimization, with 25 sites operating as at July compared to 26 six months earlier. These changes are delivering greater efficiency from our operational footprint, helping to offset rising property costs while preserving the national scale that underpins our growth strategy.
In terms of supply chain attribution, Big River manufactured products accounted for over 20% of revenue in FY 2025, underscoring the strength in our vertical integration. During the year, we deepened alignment with key local supply partners and continued to selectively import product where it provides strategic benefits. Moving to revenue by construction market, detached housing represented 35% of the group's revenue base in FY 2025, down from 39% in FY 2024, reflecting softness in that market segment. The proportional shift was partly absorbed by growth in alterations and additions in commercial activity. Importantly, the group now has stronger diversity across market segments than in previous years, providing a more balanced and resilient revenue base. By region, Big River has a well-diversified presence across Australia and New Zealand.
Queensland is now our largest contributor at 34% of revenue, up from 28% in FY 2024, reflecting the four-year impact of its SLQ and stronger demand relative to other regions. With the largest footprint in that state, Big River is well placed to benefit over the coming years, as Queensland experiences growth from infrastructure investment and housing activity ahead of the 2023-2032 Brisbane Olympics. Across the other regions, Western Australia and South Australia delivered solid performances. Market conditions and new suppliers in Victoria remain soft, though Big River's initiatives are showing early signs of opportunity to support improvement into FY 2026. New Zealand, our smallest market, remains challenging, though initiatives are well underway and progressing well, and it will remain a focus for management. Moving on to page four, this slide provides an overview of our two divisions for investors newer to the Big River stories.
We run two core businesses: construction and panels. The construction division is a leading diversified formwork and building products manufacturing and distribution business focused on trade customers. The majority of our customers are builders, carpenters, and commercial contractors. There are three parts of this business, namely the building trade centres, frame and truss, and formwork and commercial business. This gives us a good diversity across segments, buying power, and technical expertise. The group remains committed to its strategic priorities of driving growth in key differentiated trade market segments, both organic and through acquisitions, while continuing to unlock synergies and operational efficiencies. The panel business is an industry leader in decorative and engineered panels, dealing predominantly with cabinet makers, fit-out trades, and OEMs. We've expanded this business substantially over the past few years, both organically and by acquisition, delivering differentiated high-value offering to the market.
We now have nine sites, including four manufacturing sites across the East Coast of Australia and New Zealand. Turning over to slide five on divisional performance. Starting with the construction division, revenue declined 5.4% over the year on reduced residential volumes and decline in frame and truss from historic highs. Pleasingly, we were able to somewhat limit the resulting impact on earnings, with EBITDA margin expanding slightly relative to FY 2024, as targeted cost controls and other operational improvements came through in the second half of FY 2025. Both gross profit and EBITDA improved in the second half, supported by targeted initiatives. Growth also came through the commercial pipeline as projects progressed to delivery, despite a competitive market. Lightweight cladding remained a standout, with Big River continuing to grow share year- on- year in this expanding segment.
The construction division is expected to show the first signs of volume recovery as the market begins to turn. Moving on to panels, the overall division rose 5% over the year on the addition of a full year of SLQ. In like-for-like terms, revenue was down 9.4%. The panels division was stronger in the first half on solid decorative and specialist panel demand. However, conditions softened in the second half, being later in the building cycle, impacting group mix and subsequent margins. Volumes were impacted by continued weakness in Victoria and New Zealand. However, Queensland remained comparatively stable. SLQ volumes were impacted by softness in the RV market and the wardrobe door business, which is closely tied to residential activity.
To offset this, the business is focused on expanding its decorative panels offering and lifting manufactured volumes across the group, supported by the installation of a new PUR laminating line to increase production of high-end decorative panels. Early signs from this initiative are encouraging, with momentum building into FY 2026. An important call out across both divisions is increasing traction of our differentiated product categories, including lightweight cladding, high-end decorative panels, and engineered timber. These products are central to Big River's core strategy, providing clear differentiation in the market and supporting both margin expansion and long-term growth. Now on to slide seven, macroeconomic drivers. This is a new slide that we hope gives some additional context to market trends we have touched on previously. The chart shows interaction between three key data points for our business: housing approvals, housing completions, and housing under construction.
As most of us are aware, housing completions have remained relatively subdued for some time now, with a number of delays seen. Housing under construction remained elevated for the past three years following a surge in housing approvals in late 2021. The key dynamic is that while pent-up demand for housing remains, delivery is still constrained by infrastructure capacity, funding, including builder and developer cash flow, and the availability of skilled labor. While improvement has not yet flowed through, the uplift in housing approvals, falling interest rates, and government initiatives to boost supply are expected to support stronger delivery in the second half and beyond. In the short term, conditions remain soft, but the medium-term outlook for Big River' s end markets is increasingly positive, particularly as our capability builds in our core focus sectors. Onto slide eight, strategic priorities, which provides an overview of the group's strategic priorities.
Our strategy remains unchanged and is built around five key pillars. They are the safety and development of our people, growth both organically and by acquisition, delivering synergies across the group, improving operational efficiencies which drive better service for customers, improve the cost base, brand which represents the one Big River approach we have spoken to previously and goes beyond marketing. This is ultimately focused on our company culture and market position for our customers. With an experienced and energized leadership team, we are delivering strong execution and momentum across these priorities. While market conditions have been challenging, we remain focused on growing the business today and making the right decisions to build for the future.
In the second half of FY 2025, we advanced several initiatives, including targeted site consolidation to lift efficiency, improving and upgrading manufacturing assets, such as the commissioning of a new PUR laminating line at SLQ, and continued rollout of our ERP program and data capability. Alongside these, we undertook cost out measures through team restructuring and tighter expense control to right-size the business. Collectively, these initiatives have reduced overheads, lifted productivity, and supported an improved customer service model through more efficient and scalable operations, positioning the business well as the market tells. I will now pass over to our CFO, John O'Connor, to run through the financials in more detail.
Thank you, John. Good morning, everybody. Starting off in the P&L on page 11. As mentioned previously, revenue was down 2.3% on our prior comparative period and like-for-like 6.6%. As we did not see any major improvements in our key markets, the nearer-term conditions continue to remain uncertain. Our gross profit result was $106.2 million, a 1.6% decline on FY 2024. Pleasingly, our gross profit margin expanded by 20 basis points, reflecting that ongoing pricing discipline, the supply chain efficiencies, and tighter alignment with key suppliers. This is a small but important improvement given how contested the market remains. Our operating expenses grew by 2.9%, primarily on the inclusion of SLQ.
However, despite this, the group achieved a 5.9% like-for-like decline in our second half of 2025 OpEx compared to the prior comparative year on those targeted efficiency initiatives implemented in late first half of 2025 and early second half of 2025. The impact of these revenue and cost movements over the past year was an EBITDA of $28.7 million, 11.9% decline on EBITDA for FY 2025. Looking at the rest of the P&L now, the D&A, $1.6 million impact there. SLQ was part of this as they came on board, but we continue to see increases in the right-of-use building assets where we are really seeing no let-up in that double-digit increase coming through. We do see some sort of tightening of the market, they continue to come through and will do for the next couple of years as those leases renew themselves.
As John said, we merged a number of sites this year, and we will continue to look at opportunities as they arise in the future. Our finance costs showed a marginal increase against the prior comparative period, which was after the additional borrowing we took on due to the SLQ acquisition. We offset that with continued efficient cash management in the period. The resulting NPAT before significant items was $4.3 million, a 48.6% decrease on the prior comparative period. Looking next at our significant items, as announced at the half-year following a sustained market downturn and challenging trading conditions, the group conducted a comprehensive review of the carrying value of its assets. As a result, a non-cash impairment charge of $20 million in relation to intangible assets was recognized in the first half of this reported period.
The fair value recognized is in relation to SLQ and Epping as those businesses did not achieve their growth targets for their earnout periods. Looking next at the waterfall chart, the waterfall chart gives a further breakdown of where the reduction in EBITDA came from relative to the prior period. In summary, given we've achieved a slight positive impact from margin uplift, coupled with strong cost savings and full-year earnings contribution from SLQ, the EBITDA decline has been primarily caused by declines in revenue, given the market conditions we have discussed previously. Looking next to the balance sheet on slide 12, we once again can report that we have maintained our strong balance sheet, which provides confidence we can continue with our organic growth plans and our longer-term acquisition strategy.
We have maintained our strong financial discipline in terms of working capital management, with core working capital declining 1.1% from the prior year. This reflects well-managed inventory, stable receivables, and a quality debit book. While inventory levels are effectively flat in year-on-year terms, this reflects our continued proactive focus on maintaining a capital-efficient position while also ensuring we have sufficient stock availability for our customers, which is a very important element of our competitive advantage. The reduction in intangibles is largely due to the non-cash impairment recognized in the first half, while the $4.6 million decline in contingent consideration relates to the final Timberwood payment plus SLQ. Moving next to cash flow, key points to highlight here, our cash conversion, as John mentioned earlier, 100.1% reflects strong cash generation across the business. This was underpinned by maintaining those strong metrics on working capital that I mentioned earlier.
The contingent consideration paid from cash generated predominantly relates to the final Timberwood payment. As I noted six months ago regarding our taxation payments, we have cycled out of the higher years now. We continue to fund our capital expenditure through a mixture of cash and asset financing, and we have also focused this investment on site improvement initiatives across the network. Finally, looking at capital management, our net debt reduced by $2.1 million across the year due to an increase in cash driven by that high cash conversion and a stable borrowing balance. As previously flagged, our gearing ratio of 20.1% remains within acceptable levels and provides investment flexibility, while our net working capital to revenue of 17.7% remains within our target range. A fully franked dividend of $0.02 per share has been declared, bringing the FY 2025 total dividend to $0.04 per share.
The final dividend will be paid on the 7th of October, and the DRP remains active. I will now pass back to John, who will take you through the Big River investment highlights and outlook for the group.
All right, than`k you, John, for turning on to slide 16, which details the Big River investment thesis. In summary, Big River is a diversified, vertically integrated manufacturer and distributor operating in a large and highly fragmented market. Our strategy is to focus on growth segments so we can deliver a clearly differentiated offering. Our financial profile is strong, supported by stable gearing, strong cash generation, and disciplined cost-out initiatives. Importantly, there remains further opportunity to unlock operating leverage across our acquired businesses, positioning us well to benefit as end market demand recovers. We have a solid footprint across Australia and New Zealand, with around 600 experienced, dedicated staff with long tenure to consistently deliver leading expertise and service to our customers. A diversified and differentiated product mix provides an enduring competitive advantage.
We are seeing and expect to continue seeing improvement in relevant policy settings, including a strong focus on increasing housing supply, the key constraint in recent periods, infrastructure investment in the lead-up to the Brisbane 2032 Olympics, and the benefit of falling interest rates. Finally, Big River offers shareholders a unique list of exposure to the Australian property, building, and construction industries, with significant earnings growth potential as the market turns. We are also proud of our track record of paying fully franked dividends through the cycle. Turning to the outlook statement on slide 17. While market conditions remain challenging, Big River is well positioned for growth. Residential market activity remains soft in early FY 2026, though early indicators suggest a modest recovery is likely to emerge through the year. Looking ahead, lower interest rates, sustained housing demand, and ongoing stimulus measures are expected to support an eventual rebound.
Commercial market activity remains comparatively stable, with solid project pipelines extending into FY 2026. Queensland is expected to be the group's fastest growing region, underpinned by investment linked to the Brisbane Olympics. As Big River's largest market, this positions the group strongly to capture growth. Key priorities for FY 2026 include growing market share in differentiated segments, further margin improvement through pricing mix and supplier alignment, ongoing operational improvements across the network, continued ERP rollout and SAL system integration, and disciplined capital allocation to support selective growth. The business will also continue to pursue targeted value-acquisition opportunities, entering FY 2026 with a leaner cost base, clear strategic priorities, and a strong platform. Big River is well placed to respond as conditions improve. Its diversified network, trade-aligned segments, and focus on higher margin categories provide a solid foundation for medium-term growth.
We have reaffirmed our long-term financial ambitions, which set clear targets for the business. These include revenue above market growth, gross profit margin growth, EBITDA margins above 10% through the cycle, working capital to revenue below 20%, and finally, fully franked dividends at a payout ratio of 50%- 70%. Every decision we make as a management team is aligned to achieving these outcomes. The broader Big River team has shown tremendous commitment in ensuring the business operates as efficiently as possible and is well positioned to benefit from an improvement in market activity. I want to thank our dedicated staff for their hard work and our shareholders for their ongoing support. We are excited about the future, and now hand back to the moderator for any questions.
Thank you. If you wish to ask a question, please press Star, one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press Star, two. If you are on a speakerphone, please pick up the handset to ask a question. Your first question comes from the line of Matthew Shen from Molise, Australia. Please go ahead.
Morning, John. Morning, John.
Morning, Matthew.
Thanks for taking my question. Just wanted to ask, have you got a sense of, you know, in terms of your pricing mix and supplier alignment, how much you can kind of get in terms of a margin improvement and then working up towards that kind of through cycle target and a bit of a sense of a timeframe for that? Thanks.
Yeah, thank you for the question, Matthew. Good question. We haven't given a target to the market. We do have a target internally, so I won't give the target. Our view is that if you look at our P&L, our cost base is actually quite low compared to peers as a percentage of sales. Obviously, we want to continue to grow the sales. The gross profit margin is an area for improvement. We're looking for modest year-on-year improvement in gross profit margins, somewhere near what we've done and a little bit higher than that year-on-year. I won't give a target specifically. What I can say is that the market has been tough and pricing pressures. I think you've heard from others announcing the market, the pricing pressures as the market's been soft have been more pronounced. I think we've done a good job in that space.
I think the work we're doing will ensure that we're able to continue to grow. I think it's threefold. One is working with suppliers, and we have been consolidating suppliers as we've talked about previously, working on our pricing disciplines internally and ensuring that we price things correctly to customers. Third, and probably most importantly, is the mix in products, ensuring that we've got a higher value mix in what we offer to customers. If we do all those three, we should see a year-on-year increase in gross profit margins.
Thanks, John.
Thank you.
Thank you. Your next question comes from the line of Nick from Keeley. Please go ahead.
That's close. Any comments on how you think the pause in the National Construction Code will give you any wind assistance?
Sorry, the pause?
Pause in the National Construction Code.
Thank you, Nick. I think it impacts the builders a little more than it does us. For us, it's supplying the right products that meet the National Construction Code. My concern when the new code came out was that there were a number of products that could possibly become obsolete. For instance, stores became wider, and then how do you have the right products on hand and how do you get rid of slow stock? I think we've managed that pretty well. I think maybe it'll make it a little easier for builders to build, and hopefully it'll deliver a bit more speed in terms of the delivery of housing. It's not something that I'm seeing will make an enormous impact directly to our business, maybe indirectly.
Okay. Just in terms of M&A, is it, I mean, you've actually got anything on your desk at the moment looking there?
Yeah, look, the answer is yes. We've been continuing, even though we haven't done any for maybe 18 months or so, we haven't delivered one for 18 months or so. We've been consistently talking to potential vendors. We did slow down the process a bit as we really focused internally on running our business more effectively and efficiently. There's definitely some good opportunities, and we'll continue that direction. The answer is yes, but nothing we're ready to announce yet.
Thanks, John Lorente and John O'Connor.
Great. Thank you, Nick.
Thank you. Once again, if you wish to ask a question, please press Star, one on your telephone and wait for your name to be announced. There are no further questions at this time. I'll hand back to Mr. Lorente for closing remarks.
Thank you, Ryan, and thank you all for joining us today and your interest in Big River Industries. We have our Investor Roadshow on the week of the 15th of September. I'd invite you to please reach out to us if you would like a one-on-one meeting at that time. Thank you all and have a good day.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.