Thank you, and good morning, everybody, and thank you for joining us today. As you just heard, my name's Bruce Nicholson, I'm the CEO of Fleetwood. I'm also joined today by Andrew Wackett, our CFO, and together we'll take you through our results for the first half of financial year 2022. I'll start by providing some introductory comments. Andrew will go into some detail on our financial results, and then I'll talk about the various businesses, the strategy and their outlook. As a point of interest, our cover picture for those of you who are following our slide pack today is the Mackenzie State School in Queensland. This building represents another example of the impressive architectural design that is being incorporated to modular modern buildings today.
These are first-class buildings, and that is why we're seeing an increase in popularity in modular as a high quality, reliable, cost-effective and sustainable building alternative. Moving to slide two. At Fleetwood, we continue to focus on our three core businesses. Our Building Solutions business, where we see the greatest opportunity for long-term growth. Our Community Solutions business, which has been renamed from Accommodation Solutions to reflect the significant opportunities that this business is pursuing in the development of new communities, facilities, community housing and other areas. Our RV Solutions business, which continues to service the growing demand in recreational vehicles, caravans, camper trailers, and the motorhome sector. On slide three. Operationally, our three operating businesses had a mixed start in the first part of the year, combined to deliver an underlying loss of AUD 1.5 million on earnings before interest, tax and amortization.
The result was impacted by cost increases on two major projects and COVID-related disruptions in the Building Solutions business, right up and down the East Coast of Australia. Our Community Solutions business delivered a sound result given the short-term excess capacity in the Pilbara as we had previously anticipated. While our RV Solutions business delivered a strong result on the back of domestic travel and is likely to remain strong in the second half. Importantly, a prudent approach to working capital has allowed the company to maintain a strong cash position of AUD 56.2 million at the end of the period, which has given the board the confidence to declare an interim dividend of AUD 0.02 per share. To drive performance improvements, several strategic initiatives were commenced in the first half.
Among these were the appointment of a national sales manager, Tom Gleeson, a national manufacturing manager, Tara Goldsworthy to drive our diversification of revenue strategy and to deliver on our manufacturing transformation. The second half of Building Solutions is forecast to be stronger, with contributions from contract wins on the Centers for National Resilience in Melbourne, Brisbane and Perth, as well as an increase in demand from the education segment, which we saw a slowing of decisions during the first half on the back of border closures. Demand for Searipple is strengthening, with several major projects in the Karratha region advancing during the half. While cost and price management in our RV Solutions remained strong and led to an exceptional result. On slide four, and speaking specifically to the impact of COVID, the various lockdowns across our country during the first half had a cumulative impact on our operations.
This predominantly had an impact on our Building Solutions business. In the lifting of lockdowns in December, we saw a corresponding rise with Omicron cases introducing a new challenge for us. This was observed most clearly in our higher levels of absentees in the staff members who've either contracted COVID or were deemed to be close contacts during the period. This peaked at around 12% of our workforce on the East Coast of Australia, but thankfully is improving quickly. On slide five, I'll just pass over to Andrew now to focus on more of our financial detail.
Thanks, Bruce, and good morning, everyone. As Bruce mentioned, the positive performance from RV Solutions was unable to offset the underperformance in two major contracts for Building Solutions and the COVID-related impacts on the East Coast. The award of the quarantine center contracts has been a positive contributor to revenue growth throughout the second quarter. Community Solutions has delivered consistent results compared to the second half of FY 2021. Ongoing domestic tourism strength, combined with strong management of raw material and freight costs, has resulted in another excellent half for RV Solutions. As reported previously, the review of the carrying value of the Building Solutions business resulted in significant items totaling AUD 39.8 million. This was non-cash and does not affect the ability of the company to pay dividends in the future. Slide six.
Despite the operational challenges, a disciplined approach to cash flow management has seen a healthy cash balance maintained at the end of the period. Tax payments have recommenced and working capital has been contained despite the growth in revenue. Significant finance and cash flows in the period included the return of a project finance advance in July 2021 and dividend payments of AUD 9.9 million. Slide 7. The balance sheet remains strong. The company continues to carry no balance sheet debt and retains AUD 62 million in undrawn credit facilities. At the end of the period, AUD 23 million withdrawn for performance bonds and guarantees. The reduction in the carrying value of Building Solutions saw a decrease in intangibles of AUD 33.6 million and working capital impact of AUD 6.2 million. In summary, we continue to manage our finances prudently.
We are maintaining the strength and flexibility to invest in the development of the business, especially the manufacturing transformation and Building Solutions. Back to you, Bruce.
Thank you, Andrew. Over to slide eight now. I'll now walk through the different businesses, the strategy and the outlook for each of those businesses. In Building Solutions, we recorded significantly more revenue compared to the previous corresponding period. As I mentioned, this revenue was driven by the award of the Centers for National Resilience contracts in Melbourne, Brisbane and Perth. The image on page eight reflects one of those units being delivered out of our Derrimut facility down in Melbourne. As flagged, cost increases on two unrelated contracts and the cumulative impact of COVID affected the profitability of the business during the half. The future impacts due to the cost overruns of these two projects have been contained, and the business has completed a detailed review of lessons learned to ensure we don't repeat those mistakes.
While cost increases have also been observed on smaller projects, the short term nature of it, the majority of our order book will allow for the cost increases to be accounted for moving forward. The order book currently stands at AUD 189 billion, which has grown from AUD 103 million in the previous half. The appointment of the National Sales Manager and the National Manufacturing Manager brings capability to the business, which will assist us in the drive of our transformation for greater revenue diversity and delivering efficiencies on the national manufacturing footprint. Moving to slide nine and looking forward to the Building Solutions business. The strategy continues to lead the Australian modular industry by diversifying and growing our revenue base and leveraging the benefits of modular as an alternative to in situ building.
Secondly, to transform our building business to a manufacturer to improve customer outcomes, reduce costs, and to increase our productivity and efficiency. We continue to see reductions in absenteeism related to Omicron and the impact from lockdowns. Underperformance from two contracts has been identified and contained in the first half. The larger order book, with substantial work still to be completed on the Centres for National Resilience in Brisbane and Perth and the improved cost controls, should see a stronger second half for our Building Solutions business. However, it's important to note the company remains alert to the risks of ongoing disruptions to supply chain, where we've seen cost increases, materials rationing, and certainly labor shortages. If I move to slide 10. As expected, our Community Solutions business returned a similar result to the second half of FY 2021 ahead of major project demand.
The COVID-19 rosters in place in the first half of FY 2021 were not repeated in this half. As we've said previously, our Osprey Village in Port Hedland remains fully occupied. Going forward on slide 11, the strategy for Community Solutions is to continue to target multiple sectors for the build, own, operate and transfer opportunities across Australia. The expertise and capability of Fleetwood to competitively build new villages means we are ideally positioned to meet the growing demand for community scale solutions. The company is seeing demand in the resources sector as well as residential, aged care, and affordable housing sectors right across Australia. Demand for Searipple was expected to strengthen, with several large projects progressing across oil and gas, furthering the green energy sector in the Pilbara. If we go to slide 12, our RV business.
The performance of RV on the back of the continued domestic tourism strength has really been a highlight for our first half. Lockdowns during the half had a limited impact on the ongoing demand for our OEM and aftermarket trade. The business managed the rising costs of materials, freight and other operating costs to record a strong lift in EBITDA compared to the previous corresponding period. On slide 13, RV Solutions will continue to expand the aftermarket offering and the OEM market target commercialization of our sandwich panel walls and our aluminum frames. The outlook remains strong for domestic travel and with international travel still uncertain, the ongoing excellent management of price and cost should see continued strong margins in the second half.
However, as I've said, as with the other Fleetwood businesses, potential risks including product sourcing, freight and labor shortages are common, although common across the entire industry. On slide 14, the overall business is well positioned for the second half and beyond. All three businesses have clear capture for future opportunities. Clear plans, I'm sorry, for the capture of future opportunities to increase utilization, manage costs and in doing so improve our margins. These plans aim to return the company to profitability in the second half of FY 2022. The company is becoming more adept at identifying and managing challenges, and I'm confident that the team will continue to find ways to identify and successfully navigate these challenges as they occur. As we have said, our balance sheet remains strong and will be prudent in the way that we leverage the strength to support our growth.
I'd like to thank all of our shareholders for their understanding during these difficult times and from here on, we're happy to take any questions.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question, please press star and one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star and two. If you're on a speakerphone, please pick up the handset to ask your question. First question comes from Sean Kirwan from Moelis Australia. Please go ahead.
G'day, Bruce and Andrew. Thanks for taking my question. I've got a couple. Just on the Building Solutions. Can you just talk about those two underperforming contracts? What the sort of drivers for the underperformance was and if they have been completed in the first half? Yes. Sean, thanks for the question. Clearly I can't tell you which projects they were, they're commercial in confidence. I'll say that upfront. There's a multitude of reasons, I guess, across the two key projects and have been, as difficult as it might sound, they've been good lessons learned for the organization, Sean. Some of them relate to scope gap that wasn't identified during the project.
Others were things that had not been procured in a timely fashion that meant that we incurred higher costs on those materials. In particular, some areas around contracts that weren't secured with our downstream business that had contracting costs were higher than anticipated. There was also some disruption, partially from COVID in terms of accessing the projects and having cross-border management of those projects that meant things weren't accounted for in a timely fashion and therefore we had unexpected costs came through to us from one or another part of the business if that's sort of hopefully that describes it for you, Sean. There wasn't one single thing, and they were quite different between the two projects.
No, that makes sense. Thanks, Bruce. Presumably your comment before about shorter nature of work, you know, sort of contracts and work that you're kind of bidding going forward sort of has provisions to account for some of these challenges.
Yeah. Certainly I can say that when we bid for the quarantine facilities, we built risk into those project bids because we knew there was risk to supply chain and risk to cost, and that it's sort of playing out as we'd expected with those Centers for National Resilience. They are large and more complex projects, so I think we've been quite prudent in that point. I will just add, Sean, if it's all right, that whilst we have contained the large swings in the first half, those projects aren't quite complete yet. They've still got a couple of months to run, and they'll be running out at lower margins than they had previously booked at. But we won't be having the significant swings in terms of our costs that we've
We have contained those in the first half, Sean.
Understood. Thanks, Bruce. Just last one from me. With accommodations, which is now Community Solutions, can you maybe just talk about the dynamic, you know, sort of northwest of WA, just given, you know, major projects being given approval, what sort of, I guess, inquiry levels are you seeing, you know, from people looking to secure little rooms, you know, over the next few years?
Again, commercial in confidence, I'll let you draw your own conclusions, but certainly we are seeing strong demand and strong inquiry, and we are negotiating with several parties up in the Pilbara right now, for actually medium to long-term demand. It's not short term at all, Sean. Very strong demand.
Okay. Does that sort of suggest we can expect, you know, assuming all going well, some news flow on the outcomes of those negotiations over the coming months?
Over the coming months, you will, yes. I think it's important to note that the peak of demand doesn't sort of come in till around 2023 if the FIDs are approved and if the projects go to plan, Sean.
Got it. Thanks for taking the questions, Bruce. I'll jump off now.
No. My pleasure, Sean.
Thank you. The next question comes from Gavin Allen from Euroz Hartleys. Please go ahead.
Hi, guys. Just a quick one from me. The timing of the contracts in relation to Searipple, I think you just covered off there with Sean. Just perhaps on the Building Solutions thing again. Clearly every arrangement is commercial and confident, and I get that. Just on in terms of a journey, thinking outside of the underperforming contracts, how might we think of that journey? I mean, 1H was difficult. 2H, we might expect to be better, recognizing that there is the impact of those underperforming contracts. Can we look at 2023 as potentially, you know, back to sort of more normal margins, or is there more legacy do you think to, you know, to work through in terms of 2023?
That's a great question, Gavin, and one that's a bit hard for a person who's been here just under seven months, most of it in lockdown, to answer. I'm not trying to dodge the question. I might see if my compadre, Andrew, would like to answer that first, and then I might try and round it out, Gavin, if that's all right.
Absolutely.
Yeah, sure. Thanks for the question, Gav. Look, I think, look, you know, we've dealt with the legacy issues as much as, you know, we're capable of in the first half. I think we've been consistent in our messaging that the turnaround to realize the potential out of this business is gonna be a multiple year journey. I think we should expect to see some improvement in FY 2023 in margins, but certainly I don't think in FY 2023 we'll be at the margins in that business that we're targeting over the longer term. It's gonna be a multi-year journey to get there. As Bruce was alluding to in his presentation, it's gonna come from a manufacturing transformation.
It's gonna take a few years to implement fully and a better balancing of our sales efforts. They're the two key executive appointments that Bruce has made during the half.
Right. Got it. Yeah.
Yeah. Look, Gavin, if I can just add to that. I think, you know, we are widening out. I think there's been some key learnings on those two projects, but as I said, we went in with our eyes wide open on Centers for National Resilience. We built risk into that project. We built margin that we think was accepted in that project. It is a difficult and challenging project, but it's delivering to plan at the moment. I think we're still a learning organization. As we get away from our high dependence on the education sector and move into these sectors, we just need to plan and prepare, and that's what we're setting up for to have our eyes wide open going to these projects moving forward.
Very good. Understood. That's it from me, guys. Thanks very much.
Thank you, Gavin.
Thank you. Participants, to ask a question, you may press star and one. 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 now hand back to Mr. Nicholson for closing remarks.
Well, we thank you for that. Look, if there's no further questions, I do look forward to the investor roadshows we'll be getting underway next week, and I would like to pass on our sincere thanks for everybody taking the time to join us this morning on this conference call, moving forward. Thanks for that and, speak again soon.