I would now like to hand the conference over to Mr. John Lorente, Chief Executive Officer. Please go ahead.
Thank you, Vaughn, and thank you all for joining us today. My name is John Lorente. I'm the CEO and Managing Director of Big River, Big River Industries, and joining me is John O'Connor, our CFO. It's my pleasure to present the first half results for FY 2026. I will go through the business overview and business performance on the presentation. John O'Connor will go through the financial detail, I'll wrap up at the end with the outlook for the business before we get to questions. If we move on to slide three, business overview. This is a slide most of you have seen before. It highlights our group's geographic segment and supply chain diversity. I'll focus on the major changes.
We now operate 25 sites, following the acquisition of Johns Building Supplies in Western Australia, and the amalgamation of Breakwater and Beaufort sites last year. That consolidation has strengthened our utilization and improved efficiencies. Queensland remains our largest region, at 33% of revenue, which bodes well given the forecast medium-term population growth and infrastructure activity. Western Australia has been one of our stronger performers to date. The addition of JBS strengthens our presence there and provides additional scale and capacity in that region. From a supply chain perspective, our diversity remains a competitive advantage, with 21% manufactured by Big River, 17% direct import, and 62% sourced from local partners. We can offer a broad, competitive, and differentiated product range while maintaining flexibility in how we respond to market conditions. Across market segments, we maintain exposure to detached housing, multi-residential, commercial, civil, and OEM.
Residential housing has declined from a peak of over 50% of our mix as the market softened over the last few years. That shift reinforces the importance of our exposure across other segments. Overall, this slide highlights the breadth and platform across geography, product, and customer base. We now go to the next slide four on divisions. This slide provides a simple overview of our business structure and operating focus, particularly for those who may be newer to our story. We operate through two core divisions. The construction division generated AUD 139 million in revenue in the half across 16 sites. It is focused on trade customers across residential building, formwork and commercial markets, including frame and truss, building trades and their distribution, and formwork and commercial.
The panels division delivered AUD 67 million in revenue across nine sites for the half. It is positioned as an industry leader in differentiated decorative and technical panel systems, servicing cabinet makers, joiners, fit out trades, and OEM customers. Across both divisions, execution focus is consistent. We are targeting subsegments, and we have a clear competitive advantage, building deep trade alignments and long-term supplier partnerships, and accelerating growth in higher margin, differentiated categories. The objective is disciplined growth, improved returns, and capturing operating leverage as volumes increase. We go on to slide five, investment highlights. This slide sets out why Big River represents a compelling investment proposition. Over the past 18 months, we have done much of the hard work. We've strengthened the operating platform, simplified the network, improved manufacturing efficiency, and embedded cost discipline across the group.
While network optimization will continue, the business today is leaner and more scalable than it was heading into this cycle. That discipline is reflected in margin resilience and strong cash generation. Working capital remains tightly controlled, gearing is well within our target range, and we have extended our banking facilities. This provides genuine flexibility to invest in growth initiatives over the coming period. We operate in structurally supported end markets. Population growth, low vacancy rates, and government housing initiatives underpin medium-term demand. While residential construction remains soft in the near term, commercial and formwork are more resilient, and we are positioned well across both. There is embedded operating leverage in the model. The investment in systems, supply chain alignment, supplier consolidation, and manufacturing capability position us to deliver stronger earnings as volumes increase.
The acquisition of Johns Building Supplies strengthens our position in Western Australia, adds scale and complementary capability, and aligns with our disciplined strategy-led M&A approach. In summary, the platform is stronger, the balance sheet is solid, and the cost base is disciplined, and the business is well positioned to invest and deliver improved results through the cycle, even in a softer market environment. If we go to slide six, the results for the half performance headlines. Group revenue was AUD 206 million, down 2.6% on the prior corresponding period. On a like-for-like basis, adjusting for JBS and for the trading days, revenue declined 1.4%. Importantly, this represents a moderation, the rate of contraction, and is consistent with some early signs of market stabilization. Gross profit margin increased 20 basis points to 26.6%.
That expansion has been achieved despite soft volumes and competitive pricing conditions, reflecting disciplined pricing, improved mix, and closer supplier alignment. Underlying EBITDA was AUD 14.5 million, down 2% year-on-year. EBITDA margin improved 10 basis points to 7.1%, demonstrating operating leverage from stronger gross margins and sustained cost discipline. Operating expenses reduced by 1.5% versus the prior period, or 1.8% on a like-for-like basis. This continues the improvement reported in the second half of FY 2025 and reflects the efficiency initiatives implemented over the past 18 months. Operating cash flow was AUD 13.2 million, equating to a cash conversion of 91%, up from 78% in the prior period. That improvement reflects the quality of earnings and disciplined working capital management.
Network and capital to revenue maintained steady at 17.7%, comfortably within our target range, with inventory and receivables well managed. Gearing reduced to 19.1%, despite funding the AUD 13 million cash component of the JBS acquisition. The associated AUD 10 million entitlement offer was oversubscribed with strong shareholder participation. Statutory NPAT improved to AUD 1.4 million, compared to the AUD 17 million loss in the prior period, as last year's impairment was not repeated. The board has declared an interim dividend of AUD 0.02 per share, fully franked, representing an 81% payout ratio on underlying NPAT. The board remains committed to delivering sustainable returns to shareholders, balancing disciplined investment in growth, with consistent capital management. These results demonstrate margin resilience, cost control, strong cash generation, and a solid balance sheet in a still mixed trading environment.
If we go to slide seven, building investment, building for the future. This slide reinforces the work undertaken across the business where we continue to focus. Over the past 18 months, we have done much of the foundation work to improve the quality and resilience of the business. Network optimization, site consolidation, manufacturing efficiency, supplier alignment, and disciplined cost management have strengthened the operating platform. Importantly, we have done this while maintaining the flexibility of our model. Our structure continues to empower front-end teams with autonomy and accountability, allowing decisions to be made close to the customer. At the same time, we leverage the scale of the group across procurement, systems, and supply chain. That balance between local decision-making and group scale remains a clear differentiator for Big River. The work is ongoing. We will continue to execute on these initiatives, particularly through our people.
Leadership capability, frontline accountability, and consistent execution across sites remain central to improving performance. Operationally, ERP alignment and system upgrades are progressing in a staged and controlled manner. Manufacturing efficiencies across Grafton, SLQ, Campbellfield, and the frame and truss sites are being embedded to build upon with continued focus on productivity and workflow improvements. At the same time, we are actively investing in growth. That includes focused business development in higher margin, differentiated categories such as cladding and bespoke decorative panels, deeper trade, customer engagement, disciplined capital and deployment where returns are attractive. We also remain active in pursuing strategy-aligned, value-accretive acquisitions. The acquisition of Johns Building Supplies demonstrates that approach in practice. The objective is straightforward: continue strengthening the platform, preserve the agility of our operating model, and invest selectively to drive sustainable revenue growth and improve profitability through the cycle.
We move to slide eight, divisional performance. Firstly, onto construction. Construction revenue declined 1.1% to AUD 138.7 million. The primary area of pressure remains frame and truss, where residential volumes are subdued and pricing remains competitive. The rate of decline has moderated compared to FY 2025, which is consistent with stabilizing conditions in parts of the market. Importantly, EBITDA increased 20.4% to AUD 12.4 million, with margin improving from 7.4%, with EBITDA margin improving from 7.4% - 8.9%. There are several drivers behind that improvement. Formwork and commercial revenue has grown, supported by stronger project flow and resilient activity in those segments. That growth has contributed positively to both mix and margin.
The amalgamation of Beaufort and Breakwater has improved utilization and reduced duplication overhead. Targeted equipment upgrades at Breakwater and Dry Creek have lifted productivity, improved workflow, and enhanced service capability. Overall, the broader construction platform is performing well and delivering improved earnings quality. Onto panels. Panels revenue declined 5.7% to AUD 67.3 million. The variance reflects competitive pressures across commodity product lines and softer volumes in more cyclical markets. EBITDA declined 25% to AUD 6.6 million, with margin moving from 12.3%- 9.8%. This largely reflects operating leverage on lower volumes and continued competitive intensity in commodity categories. There are, however, important positives. Higher margin differentiated categories such as decorative bespoke panels and cladding, continue to grow and remain central to our long-term strategy.
The installation of our new laminating line at the SLQ expands capability and is expected to support further mix improvement over time. As volumes normalize and mix continues to shift towards differentiated products, earnings performance in this division is expected to strengthen. From a group perspective, it is important to recognize that the different parts of the business sit at different parts of the cycle. Formwork and commercial are typically earlier cycle and are currently demonstrating resilience and growth. Panels, particularly commodity lines, seem to be later in the cycle and are reflecting a lagged impact of softer residential activity. Construction margin expansion reflects earlier cycle strength and operational execution. Panel softness reflects later cycle pressure, with differentiated categories continuing to perform relatively better. Across both divisions, pricing discipline, cost control, and operating efficiency remain strong, providing a solid base as volumes recover through the cycle.
I'll now pass it on to our CFO, John O'Connor, who will run through the financials.
Thank you, John. Good morning, everybody. Just starting on slide nine, the profit and loss. As mentioned previously, revenue was down 2.6% on the prior comparative period, and like-for-like, 1.4%, as the general market remains highly competitive with challenging market conditions. Our gross profit result was AUD 54.8 million, a 1.6% decline on first half FY 2025. Pleasingly, the gross profit margin expanded by 20 basis points, reflecting that ongoing pricing discipline, supply chain efficiencies, and that tighter alignment with key suppliers. This is a small but important improvement, given how contested the market remains.
Our operating expenses reduced by 1.5%, continuing the improvement we reported the second half last year and reflecting that sustained cost discipline, alongside the benefits of the efficiency initiatives that have been implemented over the last couple of periods. The impact of these revenue and cost movements over the year was an EBITDA of AUD 14.5 million, down somewhat on the prior comparative period of AUD 14.8 million. We saw a marginal improvement in the EBITDA margin from 7.0% - 7.1%. Looking at our depreciation and amortization line, we did get some benefits in the period from site consolidation activities last year, with an overall increase of only 1.2%.
However, underlying commercial rent increases are still a watch-out for us, and we are continuing to review our portfolio to ensure we get optimum utilization of the sites, while ensuring we maintain and give that top-quality service to our customers. The resulting NPAT before significant items was AUD 2.3 million, AUD 0.2 million decrease on the prior comparative period. Just looking finally at significant items in this page. As John said, in late December 2025, the group acquired Johns Building Supplies for a total consideration of AUD 17 million. The related acquisition costs of AUD 0.9 million were recognized as a significant item in the first half. A large part of those acquisition costs related to stamp duty costs payable in WA. Moving to slide 10, our waterfall chart.
This gives a further breakdown on where the reduction in EBITDA came from relative to the prior comparative period. In summary, given we've achieved a further improvement in our margin with continued good cost management, the EBITDA decline has been primarily caused by declines in revenue, given those market conditions we've discussed previously. Moving on to the balance sheet on slide 11. We can once again 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. Balance sheet remains strong, with gearing of 19.1%, reflecting the cash consideration portion of the JBS acquisition and related, of AUD 13 million and the related equity entitlement offer of AUD 10 million.
The improvement over the period reflects solid cash generation across the business, gearing remains well within the group's target range, providing that ongoing investment flexibility. Our net working capital to revenue of 17.7 remains unchanged against the prior period and is comfortably within that target range, with our inventory and receivables well managed. The increase in intangibles and contingent consideration is largely due to Johns Building Supplies acquisition and the timing of those final payments. Looking at cash flow on slide 12. Our cash conversion of 91.1% reflects that continuing strong cash generation across the business, this was underpinned by maintaining those strong metrics on working capital that I mentioned earlier. We continue to fund our capital expenditure through a mixture of cash and asset financing facilities, we've also focused this investment on site improvement initiatives across the network.
As mentioned earlier, it was just great to successfully complete that AUD 10 million renounceable entitlement offer in December. Finally, on slide 13, capital management. Since we last presented, we just confirmed the extension of the existing bank facilities negotiated with NAB at the end of August 2025. The group remains with a strong balance sheet position, with gearing of 19.1%, net working capital of 17.7. Then declaring a fully frank dividend of AUD 0.02 per share that will be paid on the 2nd of April. I'll now pass back to John, who will take you through the business direction and outlook.
Great. Thank you, John. On to slide 14, macroeconomic drivers. The macro conditions remain mixed. Housing completions continue to be subdued, while dwellings under construction remain elevated following the approval peak in late 2021. Delays in delivery on the ground continue to impact the timing of completions, with labor availability, supply chain bottlenecks, and site sequencing all contributing to slower project flow. At the same time, inflated land and labor costs and ongoing regulatory complexity continue to weigh on affordability, which is tempered by confidence in new project commencements. Approvals have begun to rise, which is encouraging. However, interest rate expectations have shifted over recent months. The path forward remains uncertain with that, and that continues to influence demand and project timing decisions. There are also clear regional differences. Western Australia and parts of South Australia remain comparatively strong.
Queensland remains structurally attractive over the medium term, despite near-term competitive intensity. Victoria and New Zealand remain softer. Against that backdrop, we are focused on what we can control. Network optimization, supply chain alignment, manufacturing efficiency, and logistical and cost management have strengthened the platform and improved earnings quality. We have deliberately positioned the business to perform through variable conditions. Importantly, the medium-term fundamentals remain positive. Population growth, low vacancy rates, and government housing initiatives, including the National Housing Accord, underpin structural demand across our core markets. As mentioned earlier, we will continue to invest in targeted growth opportunities, both organically and through disciplined acquisition, while continuing to improve the back end of the business and strengthen operational capability. We go into the financial ambition and growth slide on page 15.
This slide sets out our long-term financial ambition, which many of you will be familiar with. On the left are the metrics we've consistently spoken to: revenue growth above market, gross profit margin expansion, EBITDA margin above 10% averaging 10% through the cycle, working capital below 20% of revenue, and paying sustainable, fully franked dividends. While we are operating near the bottom of the residential cycle, we are making solid progress against these ambitions. Gross profit margin continues to expand, now at 26.6%, reflecting pricing discipline, improved mix, and supplier alignment. EBITDA margin has increased year-over-year despite softer volumes, demonstrating the benefit of operating leverage from the work undertaken across the business.
While working capital remains firmly within range at 17.7%, supporting strong cash conversion, and we continue to pay fully franked dividends, reflecting the board's commitment to sustainable shareholder returns. Turning to capital management on the right-hand side, earnings, quality, and disciplined working capital management have produced consistent cash generation. Gearing remains well within target at 19.1%. As John mentioned, we've extended our banking facilities, strengthened equities through the entitlement offer, and maintained balance sheet flexibility. This flexibility is important. It allows us to pursue further strategy, align value-accretive acquisitions, it allows us to invest organically in higher-margin categories, network optimization, and capability uplift, and it allows us to continue returning capital to shareholders in a disciplined manner. The objective is balance, invest for future growth, maintain financial strength, and deliver sustainable returns.
As the cycle turns, the work done across the platform positions us to convert revenue growth into improved margins and stronger returns. Finally, if we go to slide 16, the Group outlook. As I mentioned, market conditions remain variable entering into the second half. Residential housing is expected to remain uneven over the next 12 months, differing by geography and segment. Commercial and formwork activity remains comparatively resilient. Western Australia continues to perform strongly and remains our standout region. The JBS acquisition strengthens our position and provides a platform for continued growth. Queensland offers attractive medium-term fundamentals despite near-term competitive intensity. South Australia remains positive. New South Wales is mixed. Victoria and New Zealand remain softer. Their consolidation and margin discipline are supporting improved performance.
We enter second half financial year 2026 with a more efficient and scalable operating platform, resilient margins and strong cash generation, and a strong balance sheet. We will continue disciplined investment in targeted growth initiatives where we have a clear competitive advantage. The business remains well positioned to capture operating leverage as volumes increase, and to deliver sustainable earnings growth through focused execution and emphasis on higher value segments. There is additional detail in the appendices for those who would like further analysis on historical performance, cash flow, and capital metrics. With that, I'll hand it back to the moderator, and I'll let us open it up for 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 your handset to ask your question. Our first question comes from Toby Goldschmidt with Ord Minnett. You may proceed with your question.
Hello, guys, thank you for that update. Toby Goldschmidt here from Ord Minnett. You've mentioned opportunities in targeted growth initiatives and market verticals. Could you give us a bit of color here on where you're seeing the opportunities?
Yeah. Yeah, thanks. Thanks for the question, Toby. Look, we've pointed out a couple in particular, but the cladding market is growing, so that's one market vertical, and we've been growing above market in that market for now several years. Our belief is we've got a competitive advantage, and that market will keep on growing over the next few years. We will continue to invest in that cladding space. There's decorative and technical panels. We've been developing new products, as I've mentioned, SLQ in particular, but our Timberwood Campbellfield factory as well, and our Grafton factory have been developing new products and delivering more products to the market over the last 18 months.
Our view is that there's good opportunities there to differentiate. Those in particular, there's opportunities to grow organically and invest further in some of those growing markets, and there's also opportunities to selectively acquire some businesses that are strong in those regions, in those segments.
Just as a second question, could you give us a bit of an update on how JBS is integrating and if any synergies have presented themselves?
Yes, JBS has integrated very well. Their culture is very similar to ours. We've already got some, we already had two sites in Perth. Perth is very far away, we've got some good team in Perth, and they've been working very closely with JBS. The integration's gone very well. We are identifying synergies. There are definitely synergies, and I think we've pointed them out, some procurement synergies. There'll be some of those.
We're probably not in a position to give you a quantum of that, but there are some procurement synergies, and in the medium term, there'll be some synergies around our operations and, particularly around the frame and truss side. We've got a small frame and truss site over there, and how we expand that as well. That's working well. It's only been a couple of months, so literally they came on board on the 15th of December. I think it's right on sort of two full months, so we're finishing up now. Progressing well, and there's, and we'll be able to give you more color over the next six or 12 months.
Thanks, guys. That'll be one to watch, and well done on the result.
Great. Thanks, Toby.
There are no further questions at this time. I'll now hand back to Mr. Lorente for closing remarks.
Great. Thank you all. Thank you all for jumping on the call. We're doing a roadshow to both brokers and fund managers and investors over the next two weeks, looking forward to meeting everyone. Thank you for your time.