I would now like to hand the conference over to Mr. Bruce Nicholson, CEO. Please go ahead.
Thank you. I'm pleased to welcome you, our Investor Webinar, to present our Financial Results for the First Half of 2025 Financial Year and share an update on the outlook for our future. Thanks to everyone for joining us today. Just some housekeeping: there will be an opportunity for questions at the end of the presentation for those who have registered for the conference call. We'll do our best to address all the questions today. However, if we do run out of time, feel free to reach out afterwards, and we'll ensure that we get back to you in due course. I'd like to acknowledge the traditional owners of the land in which we meet today. For Cate and myself, it's the Gadigal people of the Eora Nation here in Sydney, and we pay our respects to elders past and present. Let me make some brief introductions.
I'm Bruce Nicholson, the CEO and Managing Director of Fleetwood Limited, and I'm pleased to be here with our CFO, Cate Chandler, today. We will take you through the presentation today and field questions at the end. As you can see from our slide, there are plenty of highlights to talk you through, which have been delivered by our terrific teams right across Australia. A brief but important note of thanks to the 650 people at Fleetwood who are working tirelessly across our three operating segments. Your efforts have led to these significantly improved results, and I look forward to our continued progress for the remainder of FY25 and into 2026. Our people at all levels of the organization are guided by our vision and values in seeking to achieve our purpose.
Our vision to be the leader in reimagining sustainable spaces is underpinned by five core values: zero harm to our people and the environment, collaboration, integrity, accountability, and innovation. These values guide the way we operate on a day-to-day basis and have been integral to creating a positive culture within each of our businesses. This ladders up to our overarching purpose as a company: to create innovative spaces so people can thrive. A well-grounded set of values, an ambitious vision, and a compelling purpose set us up for enduring success. I'm confident this will be a positive impact on the remainder of FY25 and our future years at Fleetwood.
As we review the first half of 2025 financial year and look forward to the coming years in terms of our strategic outlook, I'm proud to report our significant progress on our Build, Transform, and Grow strategy and its positive impact on our performance in the first half. As mentioned previously, our Build, Transform, and Grow strategy provides the roadmap for medium to long-term improvement in the quality and consistency of earnings across all of our operating segments: Community Solutions, Building Solutions, and RV Solutions. The build phase of our strategy has centred on improving our capability, our systems and processes, and lifting our brand awareness to underpin our long-term sustainable growth. This has seen our teams aligning national workflows and developing common processes and procedures to deliver consistently nationwide.
As Australia's largest modular manufacturer, the Build, Transform, and Grow strategy remains our focus in the Building Solutions segment in particular, with ongoing work centered on executing the growth phase of our plan. We've invested in enhancing our capabilities and our focus on building a quality pipeline of work that will drive our future success. Moving to our highlights, here is where we can clearly see the benefit of the Build, Transform, and Grow strategy across our Community Solutions, Building Solutions, and RV Solutions businesses. I'm very pleased to take you through these highlights. In the first half of FY 2024, we saw a half-on-half improvement in revenue, earnings, profit, and cash flow, topped off by a significantly larger dividend to our valued shareholders. Our earnings before interest and taxes surged to AUD 10.1 million, up 65% on the previous half.
Considering the one-off restructuring costs and impairment as part of our strategic alignment for success in RV Solutions, our underlying EBIT reached AUD 18.3 million, reflecting nearly three times the increase compared to the first half of FY 2024. Similarly, our net profit after tax reached AUD 7.4 million on a statutory basis, an increase of 18% on the first half of FY 2024. These results not only demonstrate our commitment to financial growth but also reflect the resilience and dedication of our entire team. In line with our strong performance, we've declared a fully franked dividend in the first half of the year at AUD 0.115 per share, almost five times the dividend paid in the first half of last year, reinforcing our commitment to maximising returns to our shareholders.
The share buyback announced on the 14th of May 2024 resulted in the acquisition of more than 530,000 shares to the end of December. Now, amid this success, we've also taken a prudent approach with regards to the RV Solutions business in an industry which continues to face challenges. Our board conducted a strategic review of RV Solutions as cost-of-living pressures continued to negatively impact consumer discretionary spend right across the segment, resulting in lower demand with direct impact on our margins and profitability. The outcome of this review resulted in a AUD 6 million impairment and a one-off AUD 1.9 million restructuring cost to right-size and reduce our cost base in this business. This has helped to provide a platform for RV Solutions to continue contributing to Fleetwood on a more sustainable basis.
We'll be able to provide more detail on this when we dive deeper into the RV Solutions segment shortly. Looking at our half-on-half progress, this graph shows an underlying EBIT over multiple consecutive halves helps to paint a very clear picture of the increasingly important role of our Community Solutions and Building Solutions segments to our business and the relatively smaller role for RV Solutions. As you can see, Community Solutions has been a standout segment for our business in recent halves, and we see this continuing alongside our ongoing growth in Building Solutions, as well as a return to profitability for RV Solutions in the back half of this financial year following the strategic review. I'm now pleased to hand over to our CFO, Cate Chandler, to talk you through some of our financial performance.
Thanks, Bruce, and good morning, everyone. In terms of revenue, in the half, Fleetwood delivered very strong revenue growth of 19%, supported by contract wins in Building Solutions and occupancy of 71% in Community Solutions at the Searipple Village in Karratha. The EBIT in the first half was AUD 10.4 million, up from AUD 6.3 million last year, and the net profit after tax was AUD 4.7 million, up from AUD 3.9 million last year. The step-up in EBIT performance was off the back of Building Solutions revenue growth, improved project execution, and Community Solutions occupancy. Cost-of-living pressures continue to impact RV Solutions as consumers slow their spending on discretionary items, particularly in the OEM caravan segment.
Across the past two reporting halves, RV Solutions reported operating losses due to softer demand, higher input costs, and an inability to pass on price increases to OEMs, resulting in lower margins and profitability.
These factors required an impairment assessment of RV Solutions' current value. As a result, the board has taken the decision to impair the current value of goodwill by AUD 6 million. The impairment of goodwill is not deductible for tax, resulting in a higher effective tax rate and a full 100% impact on the net profit after tax. In addition to this, a strategic review of the RV Solutions business unit manufacturing operations has resulted in AUD 1.9 million in restructuring costs to right-size the cost base. These costs included AUD 650,000 for make good provisions for lease exits as the business reduces the warehousing and factory footprint, AUD 800,000 in redundancy costs as the business moves to a more simplified manufacturing model, and AUD 500,000 in stock obsolescence provisions for raw materials and other stock no longer required as part of this review.
Excluding the impact of non-recurring restructuring costs on goodwill and impairment outlined above, the underlying EBIT was AUD 18.3 million, a AUD 12 million improvement on the first half last year. Turning now to cash flow. Our cash position as a business remains very good, supported by solid underlying earnings and disciplined working capital management, as we've been able to deliver a cash conversion of 98%, free cash flow of AUD 21.6 million, and a closing cash position of AUD 57.5 million. Our net CapEx spend was AUD 3.2 million, with most of the spend directed towards Community Solutions and the Searipple Village, where we upgraded Wi-Fi and kitchen facilities. In the half, we bought 531,000 shares for AUD 1.1 million as part of the share buyback. Turning now to capital management.
Reflective of the significant improvement in earnings, positive outlook, and a strong balance sheet, the company has declared a fully franked interim dividend of AUD 0.115 per share. This is up some AUD 0.09 on the AUD 0.025 per share declared for the first half of last year. Since the commencement of the buyback, we have acquired just under 1.1 million shares to this reporting date, and pleasingly, our share price is considerably higher than when we put the facility back in place in May 2024. Going forward, we continue to maintain our dividend policy to pay 100% of net profit after tax. I will now hand back to Bruce Nicholson, who will take you through the segment results. Back to you, Bruce.
Thanks, Cate. Great, great set of results. With prudent capital management, providing even stronger returns for our shareholders. To help us to continue to provide returns for our shareholders, in Community Solutions, we've once again seen a very strong set of results, where we delivered earnings before interest and tax of AUD 16.8 million on AUD 33.5 million of revenue. Revenue almost doubled in the half and EBIT nearly quadrupled compared to the first half of 2024. Increased occupancy rates, driven by contracted rooms from clients like Rio Tinto and Saipem Clough, have significantly lifted our profitability, and the Osprey Village in Port Hedland remains fully occupied and with a waitlist for potential tenants.
Our Searipple facility in Karratha had an occupancy of 71% for the first half, and even with a Category 4 cyclone in December, the site remained fully operational, providing a safe haven for our staff and clients in the region. I'm also very proud to showcase some of the fine examples of our Building Solutions projects that helped to underpin our strong first half results: a great collection of diverse projects right across our great nation. I'd particularly like to highlight the women's shelter project supplied from our Perth facility in Western Australia, which we're incredibly proud of, as it plays directly into our purpose to create innovative spaces so people can thrive. This project not only provides a safe and supportive environment for women and children in need, but also demonstrates our commitment to community and social responsibility.
The shelter is a testament to our dedication to using innovative design and construction techniques to address pressing social issues. Our team worked tirelessly to ensure the facility was completed to the highest standards, reflecting our core values. Our Building Solutions business continues to improve, with EBIT more than doubling in the first half to AUD 7.1 million compared to AUD 3.2 million in the corresponding first half of last year. We maintain focus on delivering quality revenue in modular construction, supported by our education panel-based business and diversifying our revenue streams into health, mining, lifestyle villages, housing, and industrial sectors, whilst targeting sustainable margins. This helps us to exceed our short-term EBIT margin targets.
With an improved order bank and growing gross margins as the business targeted more made-for-modular projects, as well as well-disciplined project execution, delivered a step change in our performance compared to the first half of last financial year. Our current order bank stands at AUD 137 million, up from the AUD 100 million in December 2023, reflecting our steady growth trajectory. Our RV Solutions, as we've said, has faced some significant challenges due to cost-of-living pressures reducing consumer discretionary spending, particularly in the OEM segment Cate referred to. Although the short-term outlook is subdued, we remain optimistic about the long-term prospects. Not shying away from the half-year performance, difficult trading conditions impacted sales to our OEMs, combined with an inability to pass on price increases with those same OEM customers.
As mentioned earlier, a strategic review of RV Solutions business by the board resulted in a AUD 6 million impairment and a one-off AUD 1.9 million restructuring cost to right-size the business and lower our base cost. The plans we have implemented to reduce operating costs and generate return for profitability on the second half of this year are currently well on track. A large fleet of caravans in service across Australia supports ongoing aftermarket demand for our products and services, and we saw this element of the segment hold up well in the first half. Our ability to adapt and innovate will be key as we navigate these challenges.
Despite these challenges, I'm pleased to report that our new product innovations, such as the Invictus Door , our sandwich panel walls, and our aluminium frames, are continuing to show promising growth and continue to offset some of the decline we're seeing in the OEM markets. Now, let's move on to the segment-by-segment strategy update and outlook. Our strategic focus for Community Solutions business in the second half of FY25 and beyond is centred around optimising Searipple Village and leveraging the emerging opportunities in the Karratha market. We're focusing on maximising the potential for Searipple across economic cycle, which involves securing the base contracted business while strategically continuing to layer in additional demand. Following the recent announcement of additional rooms contracted through to May 2025, our Searipple Village now has an annualised occupancy of 80% for FY25, up from the previously announced 72%.
Looking ahead to next year, Fleetwood is set to benefit from a promising outlook, with contracted occupancy already at 73% for FY 2026 and further upside opportunities expected with high project demand in the region. These factors continue to position us well to capitalize on the increased planned projects across the oil, gas, fertilizer, and green energy sectors in the region. The Karratha region continues to benefit from a diverse array of projects and infrastructure requirements utilizing Searipple Village in FY 2026 and beyond. Our Osprey Village continues to demonstrate robust demand for remote worker accommodation and social housing, with a strong waitlist for tenants, highlighting the critical need for accessible housing solutions in the region. We're committed to addressing this demand, ensuring we're not only providing shelter but also fostering community well-being.
Another key pillar of our strategy is the commercialisation of our Glyde technology platform, a digital and ESG market leader. Glyde not only enhances operational efficiency but also strengthens our relationships with our new and existing customers. By extending and enriching these partnerships, we can provide innovative solutions that address the evolving need of our clients, ensuring we're at the forefront of our industry. In addition, we continue to prudently explore, build, operate, and transfer or build-to-rent opportunities in the mining, residential, and key worker segments. These strategies will allow us to balance the cyclical nature of our business, creating stable revenue streams whilst also supporting community development. For our Building Solutions business at FY 2025 is to maintain our momentum and expedite our transformation efforts, innovating and evolving from builder to manufacturer.
As we've said, the build, transform, and grow strategy is the roadmap to drive improved quality and consistency of earnings, especially in the Building Solutions segment. The continued focus on build, transform, and grow strategy will help us to reach the medium-term 15% return on capital employed hurdle, now expected to occur 12 months ahead of schedule, through a more simplified business model focused on improving utilization and productivity across our factory network. Our clear vision is to establish ourselves as a leader in modular manufacturing, specifically by winning made-for-modular projects that exemplify our commitment to innovation and excellence. We're already seeing growth in the acceptance of modular construction as a quality, cost-effective, and timely solution. This trend is driving growth to our brand recognition and opens new opportunities across various sectors, including lifestyle housing, villages, new worker accommodation, and even education expansions.
As a leader in modular, we're actively collaborating with various levels of government, community housing organisations, and industry partners to demonstrate the benefits of modular construction. Our commitment to this is reflected in our current order bank, which has grown significantly. The outlook for Building Solutions continues to improve, with a current order bank of AUD 137 million, up 37% from the first half of last financial year. In addition to the order bank, Building Solutions derives approximately 50% of its revenue from repeatable long-term panel agreements in the education and housing sectors across three states, positioning it to generate a 20%-30% revenue uplift in the second half compared to the second half of last financial year. Together, these initiatives are positioning us not just for immediate success, but for long-term growth and leadership in the modular manufacturing space.
While the RV Solutions sector is facing headwinds over the next year, the RV Solutions business is expected to return to profitability in the second half of this year on a lower cost base. This directly reflects a strategic review of the business and the right-sizing of our cost base to ensure we'll maintain resilience through this economic cycle. Our ability to adapt and innovate is key as we navigate the current economic challenges while positioning ourselves for future success. In light of the current economic pressures impacting consumer discretionary spending, we will continue to implement further targeted price increases to help recover costs. To support our segment strategy, we're undertaking a digital refresh of the Camec brand. This includes simplifying our sales process through digital commerce platforms, which will enhance our online and retail sectors at our branches and our dealer network.
By making this easier for customers to engage us, we'll drive sales and improve our overall customer experience. On other areas of focus, we continue to be developing structural product solutions such as the sandwich panel walls, doors, and aluminium frames. By enhancing our capabilities in these areas, we aim to increase profitability and deliver superior products that meet the evolving needs of customers in this segment. We'll also continue to introduce new products and accessories for both OEMs and the aftermarket segment, as this is vital for keeping our offerings fresh and relevant, ensuring we capture the attention for both existing and new customers. In conclusion, we are very pleased with our financial results for the first half of the financial year and the outlook.
Looking ahead, we are confident that the growing acceptance of modular construction, coupled with our strengthening order book and forward contracted rooms in Community Solutions, will drive continued earnings growth momentum in FY 2025 and beyond. Our commitment to innovation and sustainable practice positions us well for future opportunities. We remain focused on quality of revenue through diversification, generating sustainable margins, increasing utilisation and reducing overheads to improve our earnings. This is underpinned by our capable leadership across the business to successfully execute our strategy. As Cate said, the company's dividend policy remains to pay at 100% of net profit after tax. Our balance sheet is very strong, and we'll be prudent in the way that we leverage this strength to support our growth. In wrapping up and before we open for questions, I want to thank you, our valued shareholders, for your ongoing support and trust in our vision.
Together, we'll continue to build, transform, and grow, ensuring that Fleetwood remains a leader in modular constructions and Community Solutions while supporting the RV sector. As a result, we're confident we've established a solid foundation with growing momentum to deliver sustainable earnings and shareholder returns. Thank you, and we're now happy to take 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're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Matthew Chen from Moelis. Please go ahead.
Thanks, Bruce and Cate. Well done. Just a couple of questions, if I could. Just around the Searipple margin, how should we think about the second half?
Because the occupancy is going to be pretty close to full. It's going to step up again from that first half. How should we think about that in terms of the margin? Thanks.
Thanks for the question, Matthew. You're right. We do talk about a large proportion of costs at Searipple are fixed, and therefore, as occupancy increases, we do have a spread. A combination, as you say, we're at about 90% occupancy with the second half with the new contracted rooms. We would expect our EBIT margin to be expanded in the second half over the first half.
Great. Just on the modular, can I just clarify—sorry, Building Solutions, I meant—that 15% return on capital target, that's come 12 months early, which is great. That is expected to be achieved through FY 2025.
Can you just remind us the capital base for that is AUD 70 million?
Matt, it can vary. That's a guide. I think it's sitting higher than that at the end of first half. If you have a look at note three in the account, you can form a view, and you can potentially look at year-end position, which is slightly lower, and maybe take a blended view of those two points.
I think where Cate's going with that is we do have working capital shifts in that business. Month on month, the working capital does move, and it can move quite materially.
We do it in a very targeted way. We might have additional inventory that we might build that we know that we are going to get an order from a government department.
It can move by AUD 5 - AUD 10 million dollars.
Okay. Great. I might leave it there and jump back in the queue.
Thanks, Matt.
Thanks, Matt.
Thank you. Your next question comes from Caleb Weng from PAC Partners. Please go ahead.
Hi, Bruce and Cate. Congrats on the results. Just on, I guess, Building Solutions, given that second half is traditionally a bit seasonally weaker, how much of the margin expansion this time around was from increased utilization in the factories versus the efficiency gains?
You're right. We seasonally do have a little bit softer second half because of just the timing of the education spend. We are in that ebb right now. A bit hard to guide you without sort of being too specific, and I'm not trying to be smart here, Caleb, so thanks for the question.
It varies, and it is a bit of a state-by-state thing. I'd like to say we just look at it at a national basis. It does depend on where the work is and how we move the work around in the business, Caleb. Without answering the question directly, because I don't know the full answer to that question, Caleb, we do expect a slight softening in the revenue outlook. Our GPs are holding up very strongly in the Building Solutions business. We have no projects in that business that are currently losing money or that are of great concern to us at all. The portfolio of projects in there is quite good. You're right, there'll be a softer revenue, and I'll sort of let you work out what that might look like in terms of margin.
We are aiming to hold our margin, but of course, revenue does play into that a bit.
Yep. Gotcha. Thank you.
Caleb, just building on that, I think the mix of work, so in one of the outlook slides, we've indicated that we'll be doing more installation work in our education business, less manufacturing, and that can be slightly lower revenue and more in and out. It is revenue in any case.
Yep. Gotcha. Thank you. Maybe I think you guys mentioned that New South Wales government is also looking to do something similar to the QBuild program in Queensland. I guess progress there and what are you guys seeing on the ground?
Sorry. The New South Wales government has a modular task force. We have not seen great progress or traction in that space. It is not a high focus for us at the moment.
We sort of will put attention where we think there's real opportunities. We do think there is an opening opportunity in School Infrastructure in New South Wales. You may have seen in the Sydney Morning Herald a couple of weeks ago, the desperate need for classrooms as 90,000 students come into the New South Wales education system. We're re-engaging with School Infrastructure in New South Wales around the education offering. I think it would be wrong to think that New South Wales is going to follow QBuild with the MMC housing projects in Queensland. I think they're still a little way off that. As I said, there is a task force, and they've had a handful of very small tenders go out, two or three houses. We don't think that's going to land a big volume of work for us in the next 12 months.
Thank you. Helpful. And last one from me, just on the Searipple contract with Saipem and Clough. So the options to take on additional rooms, is that fixed price, or can you guys negotiate on price there for the options?
It's tied into their contract, Caleb. So under their contract, they have the optionality to take additional rooms, and we have the optionality only if they're available. So it does have pricing built into the structure. I won't disclose what that pricing was or how it's structured, but ostensibly, once they contract further rooms, they become part of the take or pay.
Gotcha. Thank you, guys.
Thank you. Your next question comes from Charlie Kingston from K Capital. Please go ahead.
Yes. Well done on the cash flow in particular, but just around that, please.
If you're guessing one off, can you just run through the—sorry if I missed it, if I jumped on late, but the tax inflow and then working capital benefit that you had in the half, how should we think about that for the full year? I suppose I'm just trying to get a sense of, yes, what the free cash flow looks like going forward. Clearly, it's helping you pay a very large distribution of dividend. Well done. Clearly, the market is very happy with that, just trying to get a sense as to how to think about that cash flow going forward. I suppose your occupancy is going to increase, so you're going to get a benefit in that division with Searipple. Yes, just appreciate any thoughts on the free cash flow going forward. Thank you.
Thanks, Charlie. I'll take this question, Bruce, given that it goes to cash. On the cash flow slide, if you just take a quick look at it, we've been targeting a cash conversion of between, I guess, 90% and 100%. We won't always get there, but when we make deliberate decisions to hold more inventory for another time, we may not hit that, but we are targeting between 90% and 100%. We expect a similar CapEx number next half, going to free cash flow because we've got some things that we want to do to shore up Searipple into the future, which are a little bit on the strategic side, but not large, but sub AUD 1 million. We expect it'll be sort of an AUD 5 million-AUD 6 million full year CapEx number. In terms of interest, roughly the same.
There's a one-off item there we can probably see. We've got an inflow of tax refund from the ATO. Since coming on board a year ago, I've been working to finalize previous tax returns, and that's potentially a bit of an abnormal for the period, so that's not really working capital. That has been partly why we've been able to generate such good free cash flows. There's AUD 4.5 million net there. At some point on these fabulous earnings, we will need to start our reinstallments again with the ATO. Our lease repayments of minus AUD 4.3 million in the half, you could more or less expect to see that every half because that is our lease footprint. Of course, it will shrink ever so slightly with the two leases that we are exiting in RVS, but look, it's not going to be material.
Based on that and your view on our EBITDA, I'll leave you to reflect on how you think how much cash you might generate next half.
Very good. That was all from me. Thank you.
Thanks, Charlie.
Thank you. Your next question comes from Gavin Allen from Euroz Hartleys . Please go ahead.
Bruce and Cate, hello. Thanks for that great result. Just a couple for me, just fleshing out some of the questions with a bit more of a bigger picture view, I guess. Building Solutions, great turnaround there. Any particular regions that are doing better than others, perhaps? The flip side of that, other regions that you can see improvements in continuing over the next year or so? First one.
I can answer that. Thanks, Gavin. Good question. Look, Queensland and Western Australia continue to perform very, very well, very strongly, both those segments.
As you would have seen, the AUD 40 million for 60 homes in Queensland has been good in the first half. That has carried into the second half, and there is more work in that pipeline. Queensland continues to be strong and strengthening. Western Australia has had a significant improvement as well. Actually, New South Wales, Victoria, and South Australia have actually all grown year on year. They have actually all done better. Each business has actually done better year on year. I am actually quite pleased there. If you were to sort of get really granular, Victoria is probably one of the softer markets, but underpinned by we have a very strong position with government work down there with the education sector. Again, we have a great cornerstone business down there to grow from. Again, all five of the businesses have grown year on year, Gavin.
I guess that's my call out there.
Yeah, that's good. It probably leads me to the next question because one of the things you do point out in your summary is that you expect to deliver a 15% return on capital employed by the end of FY 2025, which is great. I guess the natural question that then occurs is what's next? It just occurs to me that Vic, having been a bit softer in more recent times, maybe there's improvements there out of point. How to think about that in terms of what was previously the capital employed in a business that's had a bit of impairment over the journey?
Yeah, look, I think I am quite comfortable that the balance sheet is very, very clean. I think that's not the issue.
If you just focus on the look, you'd expect we're trying to grow this business. A 15% ROCE at the end of this financial year is not the end of the game for us, Gavin. We want to grow the business well beyond that. I would take this position. We have done a fair bit of work right-sizing our Victorian business because it has been softer, and that has benefited the business and will benefit the business going forward. We're not seeing any decline in the education spend down there. In fact, we're seeing that holding well, and we think there's going to be an increase. We have seen some slowing in the new work. There was a whole kindergarten program supposed to kick off in Victoria that has slowed right down now. That hasn't affected our internal VSBA and relocatable schools program.
We've actually got a very solid base to build from. How do I think about it? I think we've got to find other opportunities in Victoria to prosecute on top of that building block. Brendan and the team down there are doing a pretty good job of that at the moment. New South Wales is strengthening every month for us. WA continues to have a very solid order bank, and Queensland a very solid order bank. South Australia is a little bit patchy, but it's a very small market and not a significant issue for us in terms of distraction. Again, you would have seen in the pictures there, we did a great job with Discovery Parks down in South Australia, a good quality pipeline coming through. We've just got to land some of those in the next month or two.
Does that sort of answer your question, Gav?
Yeah, 100%. I mean, I just think it sort of talks to the potential opportunity beyond that sort of 15% on the current capital employed. That's great. Just one other one. We've talked in the past a fair bit about opportunities in villages around build-own-operate opportunities. How would we think about that suite of possible opportunities in your mind? Do you have to make your own weather there, or are there clear and present opportunities that are presenting to you?
You may have seen if you've been looking, and we didn't make a big song and dance about it. We actually brought Marnie in to head up the Community's business because she has a different set of skills in this area coming back from her background.
Why we did that and why that's important, Gavin, is that we are seeing a lot of opportunities potentially coming through the Building Solutions business, whether it's for key worker accommodation or social housing. We feel that we could actually play a more active role in those. I would say right now there is not something in our immediate vicinity to target. As I said in the presentation, we will always be very prudent with that. We're not going to rush in and do something silly. We understand that the company has previously made mistakes. We don't intend to do that. Marnie is currently working, and she's been here about six months now. Marnie is currently working on a list of projects that are at very early stages. She's talking to a number of key clients.
Tends to be the ones we're focused on right now are government-led type projects. There are community housing ones that are emerging, and there are others in the energy transition sector that are emerging. Right now, the immediate stuff that she's focused on is in the government sector. Oddly enough, in your part of the world, Gav, over in WA. I wouldn't say there's anything in the immediate future that we'd be taking to the board in the next three to six months. We've had a look at M&A. We don't know that there's anything of good value out there at the moment. That can change. We aren't necessarily, that isn't certainly something we're prosecuting in an aggressive way in any way. If something comes to us that we see value, we'll have a look at it on a case-by-case basis, Gav.
Understood. We'll stay tuned. That's plenty for me. Thanks, guys. Congratulations once again.
Thanks, Gav. See you next week.
Thank you. Once again, if you wish to ask a question, please press star one on your telephone. Your next question comes from Matthew Chen from Moelis. Please go ahead.
Hi, again. Just wanted to double-check on the payout policy going forward. I think there's a reference in some of the materials that policy is to pay 100% of NPAT remains unchanged for FY 2025. Just early indications of how you're kind of thinking about that into 2026 and 2027. Thanks.
That's actually a board call, Matthew. The board discusses it at least quarterly, what we want to do. I would argue that—not argue. I would declare that's a watching brief for the board. As we just talked about, there's nothing in our immediate future.
One of the positives is the Building Solutions business strategy is not capital-intensive. If you think back a few years ago, there was this plan to do automation and spend large money on automation factories. That plan has emerged, and we have not got a capital-intense issue there. We are also, as I said, quite prudently looking at Community Solutions. If a really valuable, a value-accretive opportunity came to us in that business, then clearly we would have to consider our dividend policy at that point. As I said, there is nothing in the immediate future in the next six months, but things change, Matthew. I cannot speak for what the board chooses to do, I am sorry.
We have just kept it on the agenda for the board such that if there is an opportunity or we need cash, remember, we do not have any drawn debt either, Matthew. We do have a very strong balance sheet.
Thanks.
Thank you. There are no further questions at this time. I'll now hand back to Mr. Nicholson for closing remarks.
Thank you very much. I'd like to thank everybody for joining us today. We're very, very pleased, as you can tell, with the results. We look forward to the roadshow next week. If investors need to speak to us, please let us know. Take care. Thank you.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.