Thank you, Rachel. [Non-English content] Morning, everyone, and welcome to the presentation of our full year results for the 12 months ended 30 June 2021. I'll start today's agenda on slide three of our results presentation pack. Building on the way we approached our recent investor day presentations, myself and our Group CFO, Bevan McKenzie, will be providing the Group overview. Then each of the dDivisional Chief Executives will be providing a short summary of their division's performance through the year. Then after a short sum-up from me at the end, all of us will be available for Q&A. Turning to slide four and a short summary of FY 2021. Market activity across New Zealand and Australia was pleasingly robust through the year, and our businesses largely enjoyed a more normal trading environment with only minor impacts from COVID-19 disruptions.
We're now three years into our reset strategy for Fletcher Building, and it's pleasing to see the momentum and clear progress that is driving the delivery of both financial and operational performance improvements. This is flowing through to solid margins, earnings, and cash flows, and ultimately, our strong balance sheet position. Against this backdrop, the board has declared a final dividend of NZD 0.18 per share. As you'll be aware, we have a share buyback program which is currently underway. Looking ahead, we continue to see a positive market backdrop, and against this, believe we can build on our present momentum and drive further performance and growth improvements into the future. Moving to slide five, and before I get into the details, you'll see in many slides through the presentation today that we've provided three years of comparison numbers.
We've done this as we felt the FY 2019 year was a more meaningful comparator year than FY 2020, as the FY 2020 year was significantly impacted by COVID-19 restrictions on our business, particularly in New Zealand. Group revenue for the year was NZD 8.1 billion. In New Zealand, our exposure to the strong residential market had a positive impact, and in Australia, the effects of a slower commercial and civil market was a slight headwind. EBIT before significant items was NZD 665 million, an improvement of 12% compared to FY 2019. Our group EBIT profit margins also improved materially to 8.2%.
Finally, on this slide, our returns on funds was up strongly to 18.6%. Slide six shows our very strong performance across all dimensions of cash management through FY 2021. This resulted in group free cash flow in the period, excluding legacy construction projects, of NZD 652 million and trading cash flow of NZD 929 million.
I'd note, however, that we expect cash flows to be lower next year as we replenish our housing stock in the residential development business and inventories generally. Net debt levels at the end of the year were NZD 173 million, and we had NZD 1.6 billion of liquidity. This continues to leave us with a very strong balance sheet position. On slide seven, we show that net earnings for the year were NZD 305 million. This was impacted by NZD 128 million of significant items. These relate to the last phase of our restructuring costs and the final Rocla impairment. Just after year-end, we were pleased to reach an agreement to sell Rocla for AUD 55 million. Earnings per share and pre-significant items, which is the basis upon which we pay our dividend, increased to just over NZD 0.50 per share.
Against this backdrop, the board has declared a final dividend of NZD 0.18 per share to be paid in September. This brings the total dividend for this financial year to NZD 0.30 per share. Continuing with capital returns, we started our share buyback program of up to NZD 300 million in June 2021, and so far, we've purchased and canceled just over 3 million shares for NZD 24 million. On slide eight and nine, I outline some of our key non-financial metrics, starting with our safety performance on the top half of slide eight. Through the year, we made good progress on safety, with 85% of our sites being injury-free through the full year and our overall injury rates dropping to just under five. It's worth pointing out that this is our lowest level ever. We also conducted many hours of development and training across all levels of our business.
This line manager-led training has had the aim of both lifting the skills and changing the culture of our organization. This will be ongoing and should allow us to continue to improve and drive towards our goal of ensuring all our people go home safely every day. Moving to our people more broadly and looking at the bottom half of slide eight, it was disappointing to see engagement levels decline since FY 2019. This was in the context of a very tough period for our teams that included the restructuring program, as well as dealing with the complexity arising from the ongoing COVID-19 lockdowns. Having navigated this difficult period, we're very focused on investing in our people and on raising engagement levels across the business in the future. Moving to sustainability on the top half of slide nine.
We continue to make good progress towards our 30% by 2030 carbon emissions reduction goal with our sustainable carbon emissions now running at 5% below our 2018 levels. Projects are ongoing that will drive this down in future years. To this end, we completed both solar projects across various facilities and our cement plant waste tire project through the year. We also continue to improve on our waste recycling and, through the year, diverted 46% of our waste from landfill. On the bottom half of the slide, you can see that our customer net promoter score increased slightly to 41 through the year. This increase was achieved despite a range of service disruptions due to the COVID-19 pandemic and general supply chain constraints.
While this movement's in the right direction, ongoing investments in technology and data will further enhance our customer service proposition, strengthen relationships, and help us focus on the areas that they value most. I'll now hand over to Bevan, who'll take you through the details of our financial results for the year.
Thanks, Ross. Good morning, everyone. Turning first to slide 11, we show the group income statement for the past three years. Ross has talked to the key drivers of improvement in the group's operating earnings. There's just two additional points to highlight here. Firstly, funding costs of NZD 44 million in FY 2021 have continued to track down materially from the prior years, resulting from a sustained reduction of gross debt levels and in particular, the early exit of our USPP debt in July 2020. Secondly, tax expense for FY 2021 was NZD 116 million, and our effective tax rate, excluding the impact of significant items, was 24%. Going forward, we continue to expect the effective tax rate to track back to around 29%. We also expect to resume cash tax payments with respect to the New Zealand businesses in the second half of calendar 2022.
Turning to Slide 12, we summarize the benefit we're seeing from the group's efficiency programs over the past three years. This program has delivered more than NZD 250 million of gross cost savings, principally in the area of fixed costs in our core divisions. It has been the key driver of the 100 basis points improvement in margins achieved by the group since FY 2019. We consider that our fixed cost base is now broadly right-sized, and while we'll continue to look for efficiencies, our focus now is on pursuing targeted top-line growth so that we can drive operating leverage off this base. We continue to target EBIT margins of around 10% in FY 2023. Slide 13 shows the significant items costs for the year. The top table shows the P&L charges, and the lower table shows the cash impacts.
Restructuring costs relate to the final phase of the group's restructuring program, mainly in the Australian division. These costs and associated cash flows have both been lower than forecast at the outset of FY 2021, mainly due to the improved market environment. On Rocla, a sale agreement was signed in July to divest the business to CPE Capital for AUD 55 million. As flagged at the Investor Day in May, this has resulted in an additional non-cash impairment of the business. Completion of the transaction is targeted for the end of August, with a final working capital washup later in the first half of FY 2022. Reclassification of the foreign currency translation reserve will also take place in the first half of FY 2022 and is expected to result in a non-cash significant item charge of around NZD 35 million-NZD 40 million.
Moving to slide 14, we provide the detail on group cash flow performance for the year. As shown in the middle of the table in the highlighted line, trading cash flows excluding legacy projects and significant items were very strong at NZD 929 million. This was driven by a combination of good operating earnings as well as positive working capital cash flows, which I'll provide more detail on in the next slide. Further down the table here, we showed the cash outflows on the legacy construction projects in FY 2021 were NZD 104 million. Our forecast for remaining cash flows on these projects has not changed. These are expected to be around NZD 70 million over the next three years and relate mainly to the completion of the New Zealand International Convention Centre.
Turning to Slide 15, we continue to see good disciplines and management of working capital across the business, which has supported the cash flow results. In FY 2021, as Ross has mentioned, we've also ended the year with lower than normal inventory positions in our residential housing and New Zealand manufacturing businesses. This has been due to a combination of good market demand levels and also supply chain constraints, which have limited stock build in some businesses. This impact can be seen particularly in the top table on page 15 with the NZD 105 million working capital inflow for residential and development. This division's funds ended the year 12% lower at NZD 534 million, and we expect its funds to lift by around NZD 200 million in FY 2022 as we rebuild stock levels and continue to scale the business.
The other point to note in the top table is that in the construction business, there was a working capital outflow of NZD 72 million in the year, which was due to an unwind of prepayment positions on some key projects. Shifting to the lower table, this shows the working capital efficiency metrics for the materials and distribution divisions. Inventory improved by around four days in FY 2021, which is around two days more than we would have considered to be sustainable levels. In FY 2022, therefore, we expect a rebuild of around NZD 25 million-NZD 50 million of inventory in these core divisions. Finally here, payable days have remained flat in FY21, which reflects our focus on ensuring payments of suppliers in line with our credit terms to support overall industry liquidity. Slide 16 shows the capital expenditure for the year was NZD 212 million.
Around 70% of this CapEx was on maintenance investments, mainly on the manufacturing plants in our core products businesses. This year, it also included NZD 78 million for the new Winstone Wallboards plasterboard facility, which we expect to complete in 2023. The remaining 30% of our CapEx in FY21 was on strategic growth and efficiency initiatives. These investments continue to be focused on modern manufacturing, product adjacencies, sustainability, and an acceleration of the program to improve our digital capabilities. On slide 17, as we look ahead, we expect the group's base CapEx envelope to continue to average NZD 200 million-NZD 250 million per year. This base envelope will include around NZD 50 million-NZD 100 million of growth CapEx, as well as up to NZD 40 million per annum as we accelerate our program to improve the group's core system environment.
Outside of our base CapEx envelope, we highlight two additional areas of capital investment.
Around NZD 295 million on the next two years to complete the Winstone Wallboards plant, and as mentioned, around NZD 200 million of investment in the residential housing business as we scale our operations and invest in new areas of growth. Finally here, we highlight that we'll make some focused OpEx spend from FY 2022 to support our growth and system improvement initiatives. I'd note that this spend is factored into our target of around 10% EBIT margins in FY 2023. Turning to slide 18, we show the net debt bridge for the year. Strong underlying trading cash flows, partly offset by the legacy project and significant items cash outflows, resulted in our net debt position reducing materially to NZD 173 million. As we'll see on the next slide 19, this translated to leverage of 0.2x .
This is below the group's target range of one to 2x and supported our decision in June to commence an on-market share buyback of up to NZD 300 million. This balance sheet strength will also support the remaining CapEx on the Winstone Wallboards plant, rebuild of residential land and housing stock, plus the group's targeted investments in organic growth. Slide 20 shows that the group's funding profile remains strong. We've continued to reduce our gross debt while maintaining around NZD 1.8 billion of total credit facilities. These facilities have good tenor with around 90% maturing in FY 2023 and beyond. Our average interest rate on the group's debt reduced to 4% in FY 2021, and at 30 June, our liquidity was NZD 1.6 billion, including around NZD 700 million of cash on hand.
On slide 21, as Ross has noted, the group will pay a final FY 2021 dividend of NZD 0.18 per share, which will be unimputed and unfranked. In total for FY 2021, dividends declared are NZD 0.30 per share, which represents a 60% payout ratio. In sizing the dividend, the board has had regard to the target payout range of 50%-75%, and also the lack of imputation credits currently available to the group. Looking ahead, we do expect to be in a position to impute the FY 2022 final dividend. On slide 22, in summary, FY 2021 has seen good delivery by the group against key financial targets. Our efficiency and growth initiatives over the past three years have resulted in substantial uplift in earnings margins to 8.2%, return on funds to above 18%, good cash generation, and a strong balance sheet.
This performance has enabled the board to declare both an interim and final dividend for FY 2021, alongside a share buyback of up to NZD 300 million, which will continue into FY 2022. While these results are pleasing, we do see a clear path to further performance improvement and growth for the group, targeting EBIT margins of around 10% in FY 2023. In support of this, we will continue to make targeted CapEx and OpEx investments in our organic growth, sustainability, and an acceleration of the program to improve our digital capabilities and backbone systems. I'll now hand back to Ross to provide a summary of the divisional results for FY 2021.
Thanks, Bevan McKenzie. Moving to slide 24, I'll now run through a quick snapshot of the divisional performance in FY 2021 and then cover off the market backdrop before handing over to each of our divisional chief executives. Overall, our divisions performed well during the year. Across our New Zealand core businesses in building products, distribution, and concrete, we saw good volumes from what were very solid market activity levels. While input cost pressures have been a feature through the year, we've generally been able to flow this through to price. This combined with good operational discipline, all these businesses lift both margins and overall profits. In our residential development business, we had an excellent year, which saw us contract all of our housing stock bar one house. On the industrial land side, we successfully completed two large sales in Australia.
Our construction division made good progress returning to profits and continues to re-profile its forward order book to a lower risk and better margins. In Australia, market conditions were mixed year-over-year, but the division delivered a material profit improvement, and this came from a combination of operational efficiencies and product growth strategies. In amongst this, strong performance at Laminex was a particular highlight. Looking at our markets and beginning with New Zealand on slide 25, the New Zealand market continues to look favorable. The economic backdrop remains robust and we're continuing to see strength in both the residential and infrastructure markets. Many lead indicators, such as residential consents and the planned government investment in infrastructure, are at record levels. That said, ongoing supply chain and labor constraints mean that the New Zealand construction sector is currently at or near capacity.
This dynamic means that consent and project commitments will not flow directly into work volumes and is likely to have the impact of extending the higher levels of building activity through FY 2022 and beyond. On slide 26, in Australia, the economic backdrop is also broadly favorable. The outlook for residential remains resilient, particularly across the detached housing and renovation sub-sectors. This is likely to be offset to some extent by the apartment sub-sector, which does remain a bit subdued. While commercial and key civil sectors seem to be stabilizing at current levels. I'll now hand across to Hamish McBeath to cover off the Building Products presentation.
Good morning, everyone. Building Products revenue for the year was up 19%, and our profits were up 126%. Pleasingly, our margins improved significantly to 14.1%. We just see strong demand across the residential and infrastructure sectors with good volumes throughout the year, and increased input costs have been passed through to price. It was good to see a much better contribution from our Steel and Humes businesses come through as we completed those turnarounds. Trading cash flows were also very strong, reflecting working capital disciplines we've focused on the past three years. However, as Bevan has noted earlier, the strong trading performance did overly reduce some inventory levels, and we expect to rebuild these over the coming year as capacity allows. Just moving on to slide 28. There are two highlights I'd point out from the operational side.
In the Products group, our new Winstone Wallboards plant construction is well on track. We are delivering on digital and e-commerce on Winstone Wallboards, we have a new Laminex website which has much better capability to transact online. At the moment, I think we're trading about 22% online now. Meanwhile, our automation investments are ensuring cost pushes are controlled, this has the added benefit of expanding capacity and service improvements. In our pipes category, we have entered the rainwater market through Iplex now, that's proceeding well. With Humes, we have optimized the extensive network that we've got, we are also going through the plant automation upgrades now, which will finish in about 12 months.
In Steel, we took the opportunity to rationalize a number of our South Island sites, and we also relocated our Wellington Easysteel and Dimond plants into a new purpose-built site. We've continued to introduce new products across the businesses, and we're seeing that the customers are showing a preference for locally manufactured product and the more reliable supply chain that that provides. Looking ahead, we'll continue to invest for future growth through automation, with Humes and Laminex being a key focus area. On new products, we expect solid growth from the Winstone Wallboards BarrierLine and WeatherLine, as well as innovating new solutions in line with the new plant capability as that comes online. Iplex now have a polyester long run and coiling solutions, and Steel has improved its solid roofing profiles quite extensively.
We continue to build on our performance improvement and aim to maintain margins at that 14% level, and I believe that's sustainable at the current activity levels. Thank you very much. With that, I'll hand over to Bruce McEwen to cover off Distribution.
Thank you, Hamish. Good morning, everyone. On slide 29, Distribution revenue for the year was up 17% and grew across almost all regions, especially Auckland and the lower North Island. This was underpinned by solid demand across all the residential trade segments in which we operate. Profits were up 49%, the result of scale benefits from revenue growth and really tightly managing cost and efficiency initiatives has delivered an improved EBIT margin of 7.4%. This was despite ongoing competitive pricing pressures in the industry. Trading cash flows were also strong as we managed working capital tightly through the year, balancing inventory levels to ensure we had the best availability of key stock lines as international and local supply lines really came under pressure. On slide 30, operationally, we have continued to focus in the areas of e-commerce and digital, customer fulfillment, and driving efficiencies.
Throughout the year, PlaceMakers released its enhanced e-tools for an improved customer experience with features like live stock availability and personalized pricing. Our delivery track and trace transport management system was embedded across our branch network, and we successfully moved to regional distribution hub structures in Auckland and in Christchurch across the PlaceMakers branches. Looking forward, our focus is to drive profitable market share and earnings growth through innovation and disruption, disrupting ourselves before someone else does. These key initiatives to drive these outcomes are centered around our customers with services and solutions that enable them to succeed in the market. By harnessing technology, we will create digital services that enable integration into our customers' systems. We'll continue to create cost efficiencies through new ways of working to improve both our customer centricity and our performance metrics.
We'll look to improve our sales capability and pricing disciplines to capture more of our customers' share of wallet. We're very much focused on driving convenience and value for our customers, making it easier for our customers to do business with us, and therefore deepening loyalty and engagement. I'll now hand over to Nick Traber, who will cover off Concrete.
Thank you, Bruce, and good morning, everyone. In Concrete, on slide 31, revenue was up 15% on the back of focused volume growth and solid pricing across all businesses. This was driven by our expanded and differentiated offerings, asset renewal, as well as debottlenecking of key operations. EBIT was up 53% and margins improved 3%, driven by the savings from manufacturing and supply chain initiatives, network optimization, and keeping a lean and agile support organization. We experienced, as mentioned before, some impact from higher electricity costs and product purchases caused by the extended shutdown to commission the new waste tire platform at our Golden Bay Cement. Our trading cash flow was strong too, up 62% year-on-year, thanks to the earnings delivery mentioned before, discipline on working capital and CapEx spend. We expect some inventory rebuild in the coming year. Again, this was mentioned before already.
Moving to slide 32 on our operational highlights and outlook. At Fletcher, we have benefited firstly from our enhanced product range, particularly in masonry products. Secondly, reaping the benefits of our asset renewal program, such as the block plant at Hunua now operating at capacity. We have and will further benefit from our initiatives related to footprint and supply chain optimization, while keeping a lean and agile overhead organization. At Golden Bay, the focus has and will be on expanding its service offering and increasing the flexibility to serve our customers. On the cost side, we have seen first benefits from our operational excellence program and the commissioning of the waste tire platform. Scaling alternative fuels and raw materials remains a key priority at Golden Bay. Coming to Winstone Aggregates, we have seen great results there from product portfolio optimization, debottlenecking key plants, and driving operational excellence.
We see further potential leveraging digital technologies as well as fast-tracking recycling in our key markets. As you can see, we are making great progress, particularly in the areas of, first, innovation with our innovative product, services, and solutions. Second, digital, optimizing our operations, supply chain, and providing a more and more enhanced digital customer experience. Third, sustainability, building on and enhancing our leading position in carbon reduction. Based on the initiatives put in place, we are confident that we can sustain the current momentum, driving both further margin expansion and above-market growth. I'll now hand over to Steve Evans to cover off Residential and Development.
Thanks, Nick. Good morning, everyone. As can be seen on slide 33, the Residential and Development division performed very strongly through the year, driven by a strong residential housing market across New Zealand. Against this backdrop, our house sales were up on the previous year to 836, and prices were up on average around 8%. This, in turn, drove strong revenue, profit, and cash performance for the year. As Bevan McKenzie noted earlier, we expect during FY 2022 to lift our funds base by approximately NZD 200 million to replenish our housing stock and to continue to grow the business. In development, we completed the sales of both the vacant Rocla and Crane Copper Tube sites in Australia, which contributed AUD 57 million to our earnings. This is well ahead of the AUD 25 million per annum run rate we guide to for this business.
As you'll recall, the CCT sale was delayed in the prior year due to COVID-19. On slide 34, the housing market in New Zealand remains strong and our residential business is continuing to deliver. Our price point is proving popular across the board, and we continue to optimize our communities to meet a variety of customer price points. The business is extremely well-positioned for the future with around 4,000 lots under our control and around 950 units confirmed in our FY 2022 pipeline, of which over 30% of these are already sold. At Clever Core, our off-site manufacturing business, we've continued to make design and installation improvements throughout the year, and we continue to ramp up with approximately 200 homes forecast for delivery in FY 2022.
During FY 2021, we've also put our dedicated apartments team in place, and we're working on scaling this up the business with hundreds under construction in FY 2022 and about 40 apartments of these being completed by year-end. Our future pipeline is already over 500 homes. Meanwhile, we've announced our retirement market proposition at the Investor Day, and we have a number of sites underway already with the first of these delivering homes in FY 2022.
Underpinning this is our investment in a large and long-dated pipeline of land held both on and off balance sheet that will ensure we have the ability to deliver homes and apartments in our residential business into the future. Finally, our industrial business will continue to transition from selling legacy Fletcher Building sites in both New Zealand and Australia to one that's focused on developing New Zealand sites from raw land and consistently delivering NZD 25 million of EBIT per annum. I'll now hand over to Peter Reidy to cover off construction.
Thanks, Steve. Good morning, everyone. Construction gross revenue was NZD 1.5 billion and reflects solid construction activity levels, particularly in the transport and water infrastructure sectors. Profits were NZD 31 million for the year. This was supported by strong margin performances in Higgins and Brian Perry Civil, and was partly offset by the historic legacy infrastructure and building projects, which are flowing through at nil margin. Our trading cash outflows were NZD 123 million, and this reflected a solid earnings from Brian Perry, Higgins, and our South Pacific businesses, which were more than offset by legacy project outflows and the unwind of working capital across some contracts. During the last 12 months, we've invested in our digital project management construction platform and focusing on our contract project controls and our field productivity tools to improve efficiency.
We've also significantly reshaped our forward order book to a lower risk profile, which I'll cover on the next slide. During the year, we handed over three major legacy B&I projects, namely Commercial Bay, the new Te Nīkau Grey Hospital and Health Centre in the South Island, and the Biolabs research facility in Wellington to our customers. We continue to progress our major legacy roading projects in line with their completion dates through calendar 2022. In Brian Perry, we delivered a strong turnaround performance during the year. Activity levels were generated through our water and marine sector capability, mainly in the central and lower North Island regions. Looking ahead, we will invest in our self-performed technical capability and specialized assets. Meanwhile, in Higgins, we saw strong volumes of asphalt during FY 2021, and we expect this to continue through into FY 2022.
We have new plants in Auckland and Napier to supply major roading projects and will continue our focus on road maintenance contract performance, growing our business in Fiji, and invest in smart road asset management systems and partnerships. As I highlighted, our forward order book June 2021 was NZD 3 billion, and we have a further NZD 300 million in preferred works for the Auckland Eastern Busway Alliance project. Over the past two years, we've successfully reshaped our order book to a much more balanced risk profile. About two-thirds of the order book is lower risk, smaller, self-perform work in Higgins and Brian Perry Civil, and this comprises national and local maintenance contracts, multi-year framework and alliance agreements with larger customers such as Watercare, Kāinga Ora, Waka Kotahi NZ Transport Agency , and Auckland Transport. Overall, 77% of our current work book is with local and central government clients.
This reshapes the lower risk order book will support the construction business returning to a 3%-5% EBIT margin as the nil margin legacy projects complete. In FY 2022, we'll continue to focus on our three-stage strength and build and growth strategy. We enter the FY 2022 year with a secured order book of 75% budget of revenue. As with normal contracting businesses, our focus will be to secure the remainder order book within one year of operation. I'll now hand over to Dean Fradgley to cover off Australia.
Thank you, Peter. Good morning, everyone from Australia. On slide 37, our revenue was about 2% lower as the overall residential market was broadly flat while civil and infrastructure projects continued to be delayed. This had a direct impact on our pipes businesses. Pleasingly, however, our share gains in most businesses were able to offset some of those market headwinds. Profits grew significantly year-on-year to NZD 103 million, and EBIT margins lifted to 3.7%. This was achieved by an improved performance across all businesses with a key focus on three things. Gross margins with strong procurement and pricing initiatives, improved product vitality as evidenced by revenue growth in new products, and finally, continued improvements in our cost base evidencing operational leverage. Pleasingly, trading cash flows were at NZD 136 million, reflecting ongoing improvements in inventory management and good debtor controls.
Slide 38 covers our building products businesses, where highlights of the year included Laminex market share gains in decorative categories. We introduced new ranges, we pushed on in digital sales, which are now sitting at over 25% of all Laminex transactions. We launched Haven Kitchens joinery offer, which is now live in Metro Melbourne. As we travel into this year, Laminex will be bringing more product innovation to market. A good year at Fletcher Insulation, where we completed the optimization of the network and grew share in its supply and install offer. We saw strong revenue growth and margin growth in our core segments, increasing market share. In FY 2022, we will see further automation in manufacturing and continue to grow in key margin-accretive segments and new products like FirmaSoft. At Iplex, whilst the project market was slow, our simplified business model drove better earnings and margin improvement.
In FY 2022, we will see further maturation of that strategy and growth in the civil sector. The business is digitizing well, and that will continue this year. On slide 39, we see Tradelink strategy continue to grow sales in the key small to medium enterprise plumber segment, with the revenue now lifted to 46% of total sales. Its own brand performance is strong. 35% of all front-of-wall sales are now own brand. This has helped the business grow market share and lift gross margin. We successfully launched our online retail offer, which is now delivering well ahead of plan. In the year ahead, Tradelink will continue to accelerate its digital program and drive further growth and share. The performance at Stramit was a key highlight of the year, with the business achieving share growth in its core categories.
Our performance in the margin-accretive sheds and door segments, particularly pleasing, and this year the business will continue to drive automation and customer solution through its digital program. We're making pleasing and sustainable progress. We are confident we are driving performance and are on track to deliver margins in the 5%-7% range in the medium term. Thank you. With that, I'll now hand you back to Ross.
Thanks, Dean. Moving to slide 41, I'll briefly sum up the outlook across our markets and for our business. Looking ahead, we expect an ongoing solid market in New Zealand with an extended period of building activity in the residential sector in particular. In Australia, we see the overall backdrop remaining supportive for growth. Supply chain disruption and input cost inflation will continue to be a feature, but we're managing this and our cost base well. We remain confident in our ability to continue to drive both performance and growth from here through the year. Major COVID-19 lockdowns, however, remain a risk. The Australian businesses have been experiencing impacts for the last six weeks, and in New Zealand, with a lockdown commencing today, the ultimate impacts will depend on how long it takes to get the virus under control.
We'll have a better fix on this in a few months and be able to provide a further update on market activity and trading performance at our annual shareholder meeting in October. With that, I'd now like to hand back to the moderator to allow us to take questions.
Thank you. Your first question comes from Lisa Su from Citi. Please go ahead.
Hi. Morning, all. Thanks for taking my question. I guess I had a question in terms of capital management. Just given leverage remains quite low at the moment, notwithstanding some of that investment you've talked about in working capital and CapEx next year, just given the strong balance sheet position, can you just talk about how you're thinking about further capital management and whether there's scope to expand the buyback?
Lisa, I'll hand over to Bevan to get us out of the blocks with the first question. Bevan?
Good morning, Lisa. I think we'd say we think about it consistently as we always have. Given the low leverage at the moment, that's what led to the initial buyback. On an ongoing basis, we'll continue to assess our investment opportunities. We've highlighted we think we have a good number of those organically within the group, but if we're at sustained leverage rates below the bottom end of the range, then we'd need to reassess that and look again at capital management. That's just the consistent approach we take to ensure we're balancing investments in the business with potential returns to shareholders.
Okay, sure. I guess in terms of cost inflation, that'll remain quite topical for the rest of this year. I guess from a cost perspective, at the investor day, you called out a NZD 10 million-NZD 15 million impact from steel and energy inflation in the second half. Can you just talk about where this ended up settling us at? Are these kind of the key cost items we should be keeping an eye on into the next year?
Look, yes, that is broadly where those input cost impacts landed for the second half, Lisa. Obviously, there's an ongoing inflationary environment, as has been pointed out across the sectors. You're seeing some input cost benefits coming through. Steel's obviously come off a bit. On the flip side, resin and coal have headed the other way. That, alongside wage inflation, is the other key thing that we are keeping a lookout on. I'd say that at the moment, we are confident that we are able to recover those cost increases through price. It's a very dynamic environment, you're seeing regular price rises coming through from our suppliers and likewise us into the market. Certainly for the moment, the businesses are doing a good job in ensuring that we've got that price recovery, and we don't expect that cost environment to change in the near term.
Okay, sure. Just, I guess the last one from me in terms of Australia, it looks like you're making good traction with growing share of the SME client base. That's at 46% now of Tradelink's revenue. I guess, how much did that contribute to the earnings improvement in Tradelink? Is it still relatively small growth off a lower base?
I'll let Dean go to that one, Lisa.
Hi, Lisa. Thank you for your question, and thank you for your positive comment around Australia. We feel we're making good progress. Look, for several years now, the SME category has been a key focus for us. We know it delivers a chunk of gross margins. It's crucial to margin performance, and it's actually lifting two things for us, both gross margins and EBIT as we wash through. The caveat to that is, Lisa, we have to make sure we control costs at the same time. It is a principal driver of our EBIT, and I think that's what's helped us improve performance last year and into this year. That combined with our own brand is giving those SME customers reason to choose us, and that's what's lifting market share. I think the short answer is yes, it's a principal driver of profit.
Okay, that's helpful because I guess if I think about in the context of the SME builders' overall basket, how much of that do you think you're capturing? Or are they still kind of shopping around as well?
Yeah. Look, I've been in the plumbing industry long enough to know that all types of SME plumbers will have multiple accounts. I think the question is, are we becoming a destination of choice more so than before? I think when you see above-market share gains in the SME plumber, we're starting to win them back. That said, Lisa, one of our key focuses is to digitize an offer for them this year. I think that's the next step of the journey for us to push on again. Of course, we'd like to keep accreting that market share performance in SME as we go. The builder also influences that.
Luke, the general manager, will tell you that we're also focusing on servicing the builder market because of the subcontract ry and our own brand has really opened doors for both SME plumbers and builders to give them a choice to potentially drive past our competitors and come to us. We've still got heaps more opportunity to go, Lisa, as I'm sure you'd expect from us.
Yeah. Awesome. That's good color. Okay, thanks, guys. I will leave it there.
Thanks. Thanks for your question.
Thank you. The next question is from Keith Chau from MST Marquee. Please go ahead.
Good morning, Ross, Bevan and team. Thanks for taking my questions. The first one just on the outlook. Supply constraints and labor constraints are both things that have been called out by several companies. Perhaps, Ross, if you could maybe characterize what the prospect is for volume growth going into FY 2022, given these volume constraints. I know theoretically we should actually see some pretty punchy growth, but because of the supply constraints, it might throttle it back a bit. Is it at all possible in New Zealand that you'd see volume growth somewhere in the mid-single digits? I don't want to put numbers to you, but, yeah, if you could perhaps give us a few more comments on that, please.
Yeah. Keith, look, I think the way you're characterizing is correct. With the sort of background consenting levels, whether it's residential and other projects, there's no way the market will ramp up to mirror that. I think that overall volume there will cause us to see, it'll be flat, but you might get sort of as you sort of said, mid-single digits work put in place growth through the year is sort of the way we're thinking about it as we sit here. Look, the market will continue to add capacity and respond to it, but that just takes a little while to do that, and border restrictions and shipping constraints and all those sorts of things and just commodity environment, just put a lid on how fast you can chase that.
That's why I think the way you're thinking about it is you might be flat to some growth, and then I think the other thing we're thinking is that it just will probably extend it a little bit longer. I think the way you're thinking about it's about right.
On the pricing front, Ross, several pricing notices published by Fletcher Building over the last 12 months. Is the business seeing any real price increase, or is it a matter of cost recovery at this point?
Look, I think there's two themes going on. A margin improvement that you've been seeing in our business has been a result of what we've been doing to ourselves, efficiency programs, but also what I call better pricing disciplines, just how we're controlling our own pricing. That's the environment that we've got ourselves into and the skills we've sort of been pushing on, which is what's seen driven our 100 basis points improvement to date. That's work in progress and will continue. As we look forward and we talk about ongoing margin improvements as we look forward, there sort of is that dynamic won't stop.
The other dynamic that's come into here is sort of the input cost pressures and the beauty of having got fighting fit with our pricing disciplines as they come in, we're very effective of then passing them on and the markets actually accepting of taking those in this present environment. I think you'll still see an element of what I call real price, but that's less about us being opportunistic with price increases and more about our own disciplines continue to improve. I think we feel very confident at this stage that we continue to deal with input price pressures by price increases that relate to those. That's how I'd characterize it. Yeah.
Okay. That's great, Ross. Maybe that's a good segue into my next question. Clearly a positive that the company is maintaining a 10% group EBIT margin target for FY 2023, particularly in a cost inflationary environment. We've got flatline. Sorry, top line flat to slightly up. Maybe you get some price recovery. The cost base is reset from where it is now. If you just look at it on this year's revenue number, the implied step-up in EBIT has to be around NZD 150 million or thereabout to get to that 10% group EBIT margin target by FY 2023. Outside of Australia and construction, is it merely continued efficiency gains within the New Zealand benefit that will get you to that target?
Yeah. We've laid it out. The simple thing is exactly the way you're going. It's Australia gets up into the 5%-7% construction, clears its legacy, and moves towards the 3%-5%, and then we get a bit more out of the core. That doesn't all just come from efficiencies. Across all those businesses, we're looking at products, we're looking at adjacencies. Some of it will come from just entering into new areas as well and driving that performance. Yeah, the characterization, think of the third Australia, third construction, third core in New Zealand.
In the products and adjacencies, what kind of contribution do you think the business can achieve to revenues from new products and adjacencies in the coming period?
We haven't guided to all that. We tried to. We laid that out. What we're focused on is I think there'll be growth from there. We haven't actually tried to guide to that, and there's so much guidance out there in the market right now, I'm not sure I want to add to it particularly. Part of it's what does the market do over the next two-three years? I think we'll grow market shares and add products. I think we'll make some progress there. You've seen our aspirations around that laid out in a number of businesses. I talked to residential business that Steve's running. We talked apartments. We talked about growing our number of houses. We've talked about off-site manufacturing. You've seen Dean talk about how he's thinking about what Laminex can move into Haven Kitchens.
We've talked about a number of businesses through our investor day. We've laid out some of those pathways, and we also know we have got enough going on there that they won't all work, but a big chunk of them will. I think you're going to see the feature of improving profitability and growth beyond what the market's doing, and we've pointed to that, but we haven't quantified it yet.
Thanks, Ross. Just the final quick one from me before I turn it over. USG Boral's clearly announced it's going to exit the market in mid-November for plasterboard. It certainly sets Fletcher Building up to take some of that share, if not the bulk of it. Is there anything the business is doing proactively to try and capture those volumes? From a pricing discipline standpoint, it being a headwind or importers being a headwind over the last few years, do you expect pricing discipline to improve from here on in?
I'll get Hamish to answer that one for you.
Thanks, Hamish.
The USG Boral piece, look, to be honest, we pretty much had seen them declining a bit in the market probably this calendar year. We believe we've actually picked up majority of this year in the last six months of the last financial year and where we're seeing now. We don't see material lift from where we're trading now. We'd be able to absorb that within our capacity. Really, it's just focusing on that we offer the best quality product that Winstone Wallboards and a strong service model, which I think everyone's pretty aware of. A bit confident that we'll pick that up, and we were focusing on that one. The question was around pricing, was it?
Yeah.
Which I think Ross has pretty much covered off, really. Yeah. We've got perfect price rise coming to offset the inflation pressures. Yeah, we're not being opportunistic and that sort of things.
Fantastic. Thanks very much, gents.
Thank you. The next question is from Simon Thackray from Jefferies. Please go ahead.
Thanks. Good morning. Thanks, Ross. Thanks, Bevan. I'm actually going to ask three questions. One of Steve Evans, one of Dean Fradgley, and one of Nick Traber, if I may.
Hey, Simon. I'm supposed to be chairing this. God, gee whiz. You're just ignoring me.
Sorry. I should ask permission.
No.
Ross, may I?
Knock yourself off, Simon.
Thank you, Steve. Thank you. First of all, Steve, thanks for the update. As always, very helpful. New Zealand house prices, they're rising at a continuing dizzying rate notwithstanding the implication for central bank and government policymakers. Noting the comments Ross made about capacity constraints in the construction market, can you just give us a little bit more of a feel for your mix of low-rise multi versus detached in helping to solve this supply shortage in New Zealand? What do you think the mix implies for the maximum number of dwellings that the business can deliver in any 12-month period?
Thanks, Simon. Look, starting with the general approach we take, which is that within the communities we develop, we deliver a range of typologies. There's no doubt that over the last five years, we've seen a greater influence, a greater move towards higher density product. You go back to 10 years ago and all the standalone houses, now the dominant product we deliver is terrace homes. We're seeing probably 70% of our product come through in that type of home in the residential business. Obviously, starting the apartment business creates a little bit more of a mixed variance. That also allows us to introduce more density into some of the existing developments that we do.
I can see that like we have always done, we'll continue to master plan communities with a variety of house types, and we'll continue to build density where we think that the consumer wants it in those communities.
That's helpful, Stephen. The pricing differential between the low rise and an apartment, just for high-level purposes?
Look, there's no doubt that general market pricing for apartments is higher than that in the residential. As you look at terrace to walk-up apartment, it's probably one and a half times the cost to build for it on an area basis. As you go to high-rise apartments, it's a little bit higher than that.
Got it. Thanks, Steve. I might jump to Nick Traber.
Yeah.
Thanks, Nick. Just wanted to talk about the industry cement pricing announcements that we're hearing about, whether they're real or illusory like they've been in so many years past. Then you made a comment about electricity costs, just your expectation for those costs given BlueScope's comments this week, said they expected some abatement in those electricity costs as we move through FY 2022.
Yeah. Thanks, Simon, for the question. I'll start with the pricing environment. You're certainly right that we've come out of, basically, a decade since the financial crisis of historically low cement prices, but not just the material was cheap, also the shipping was cheap. We cannot really predict the future sitting here, but we believe there is a fundamental change going on, as more and more countries start to price CO2 like we do here. That obviously makes clinker cement exports basically not any more a viable business model. On top, second element, shipping, we know that shipbuilding has been very limited. We also have the new emission regulations kicking in. We would expect there also to see rates going up from the historically low levels.
At the same time, we are doing our homework in terms of getting higher prices versus just cost inflation. I think that what we see in the numbers coming through. Moving to electricity, we have seen quite a unusual development. We believe it's temporary. It's mainly caused also by some low levels in the hydro dams over the last couple of months. We have been also cautious on hedging there. We believe it should normalize again. As I've said, we are partially already covered by our hedging.
Excellent, Nick. Thank you so much. Finally, across to you, Dean, this side of the pond. You make use of the term maturation of programs in Australia on at least four occasions in your presentation. Just to confirm, are we at the end of the program here that we've been following very closely, and are we waiting for the cycle to deliver the operating leverage to get you to the targeted margin targets? Within that, just following back to Lisa's line of questioning and inquiry on SMEs. I'm just a bit cautious or a bit conscious that we've got so many detached houses here that can't move from slab to frame. Is there a risk there in that SME market with the constraints that we're seeing, particularly around timber framing and moving from slab to frame, that the margin targets are actually harder to achieve?
Hi, Simon. Thanks for the question, and I hope you're safe and well this side of the pond. Look, Simon, let me say first that our programs are still maturing, so we don't need the economic cycle to get us to 5%-7% returns. That's self-help and that's operational discipline, and I think we're performing well in that area. I think, Simon, as said at the investor day, if the market warms up any more on top of that, subject to industry capacity, then that'll be a bonus. Those maturation of programs, mostly on growth now, are continuing to mature and will continue to do that. No, the short answer is we don't need the economic cycle to then kick us on. We're quite confident about that.
On your other question, it's quite close to home for me, as I'm in the midst of a house extension right now. I imagine the subcontract tree. What does that mean for Tradelink? Look, Tradelink share can still kick on irrespective of supply and industry constraints, Simon. The bit for me is particularly for A&A, and whilst there will be some variation by state on labor capacity, on frame and truss, bear in mind, let's not forget we do have steel structures people can move to. I think there's more than enough opportunity for us to go outside of that new start build and create value. When you look at that really stagnant NZD 1.5 billion per year A&A market, that's stable through an economic cycle. We can still grow in that. You know we've launched our B2C retail offer. That's well ahead of plan and is margin accretive.
They're the things that I talk about maturating that should really offset. Repairs and maintenance, whether the housing starts are slower or faster, if a heating hot water system breaks down, it's got to get repaired. We're actually quite positive, and I think our performance by quarter in Tradelink evidences that, and the products that we're bringing to market are margin accretive as well. Again, that gives us a boost. I hope that answers the question, Simon.
Yeah, it does, Dean. Appreciate that. Thanks to Ross and Bevan as well. Appreciate it.
Thank you. The next question is from Peter Wilson from Credit Suisse. Please go ahead.
Thanks. Morning. I might also ask one of Dean for the Australian business, just on the profitability of Iplex. I think it did lose money in the first half. Just wondering how it fared in the second half and what the run rate might be for profitability there.
Hi, Peter. Good morning. I actually want to start with a positive because I think that industry in which Iplex then did it tough last year, obviously, when you look at the delays in those large projects around COVID. I'm really pleased that we essentially got good exit run rate. We essentially broke even in Iplex considering the market was materially suppressed. If I look at our performance in the first month of the year, we're really pleased with where we've gone with that early door. We improved earnings in H2, we improved quality of underlying earnings, we improved gross margin. That new simplified strategy, Peter, the swim lanes that we focus on water security, on civils, they really do set us up well.
I'm quite confident and optimistic about the run rate for Iplex moving forward, obviously, subject to any restrictions of trade as we travel through COVID, but quite upbeat.
Okay. The improvement into this year, does that come through market growth, so improvement in civil, or is that continued self-help like you said in the answer to the past question?
Yeah. Look, Australia can't keep holding back on these large projects. Some have to land. We've won the job to replace the power station down in Victoria that was underwater, and Iplex did really well to win that at a healthy margin. The market will help. We've got to see that come back. I think it's focus on its segmental economics, where it's chosen to play, where it's chosen not to play is really what's driving the underlying performance. I'll give you one quick example without going too micro. We've chosen to master distribute piping solutions for customers in W.A. now as opposed to a manufacturer. That's materially changing the shape of our EBIT in W.A.
Nicole and the team, I think are doing a great job in choosing where we manufacture and where we distribute, and essentially by solving the customer's problems for value, whether we manufacture or distribute is what's creating, I think, the underlying improvement in earnings.
Good. Thank you, Dean. Also one to Steve, just on the apartments business. I think you mentioned there's hundreds under construction or at least under development. Can you just remind us to what extent are some of those apartments pre-sold? Just, I guess, give us some idea of what the increase in dwelling prices, I guess, what the increase in prices is going to have on the expected margin per unit.
First of all, let's talk individuals. When we've got apartments at Three Kings, we've got apartments down in Tamaki, and we've got ones that we're delivering out at Northcote and Hobsonville. A number of those have already a pre-commitment in terms of a KiwiBuild price point that means that we have to sell 50% of them at or below KiwiBuild price points. Whilst that doesn't guarantee sales at the rates that they're selling at compared to open market, they're virtually pre-sales. On the other ones, we are being slightly conservative in terms of not chasing the market uplift in prices that we've seen on some of the developments. We've been cautious in terms of our forecasts. We see positive growth in terms of the areas in which we've chosen to deliver those apartments, Peter.
Okay. What does it mean when you say you don't chase it? Does that mean you're not selling these apartments, you're just letting it float or?
Well, traditionally, we've always waited. Traditionally, we've delivered houses at the end of development. A little bit different with apartments. We'll sell throughout the construction period. What I was meaning by that is that when I look at an apartment, I don't go, well, sites such as Remuera, which is getting NZD 20,000 a sq meter, I'm not going to budget that through in terms of my forecast. I'll forecast what we think is relatively conservative and trust that we will get some upside as we go through the project.
Okay, got it. Thanks for that. I'll leave it there.
Thank you. Your next question is from Stephen Hudson from Macquarie Securities. Please go ahead.
Good afternoon, guys, thanks for the presentations. My questions are mainly for Ross and Bevan, I think. Just in terms of some of the book borrowing mechanics for next year, land development. Bevan, you seem to be pointing to that normalized number of NZD 25 million. Secondly, I think you've already talked about corporate costs are going to be about NZD 5 million higher. I just wondered if you could confirm that is the right number. Depreciation, I think you said was going to be higher, you hadn't disclosed by how much, that would be useful. Just lastly, in terms of the borrowing bridge, the NZD 30 million of growth OpEx, are you expecting that to have a payback, a partial payback next year, or is that more of a FY 2023 kind of prospect?
Stephen, and if I miss anything, remind me. Corporate costs, yes, we continue to guide to about NZD 5 million higher. We've pointed a t the end of today to the Residential building supplies market study that we'll expect to lean into in the later part of this calendar year. Depreciation, Stephen, will probably be about NZD 5 higher, so from NZD 360-NZD 365, including right of use, and it's mainly the right of use which is changing that, but broadly in line. In terms of the NZD 30 million-NZD 40 million OpEx that we've highlighted, we would see the growth portion of that. Excluding the systems development piece, it'll have a similar returns profile to our CapEx investment. We'd be targeting reasonably rapid paybacks on that, but much more in FY 2023 than in FY 2022, Stephen.
That's helpful. Then, maybe one for Ross. I think you talked, or at least in the commentary there was some discussion that the payout ratio for this year of 60% had kind of been held back by the lack of imputation credits. Where do you think the board would have landed in that range based on EBITA run rates and their confidence on executing coming into 2022, do you think?
Stephen, you're going to be disappointed that I'm not going to try and second-guess the board. We've obviously got to buy back. Capital management, we're thinking of dividend and buyback, and I think that combination is where we ended up. I think the board had a discussion and we've got the dividend where it is, and I think it's at the right sort of level, and I'll leave it at that. I won't speculate what they may or may not have done in an imputation world, but it would certainly make us think about the buyback maybe, yeah.
Yeah. Maybe I'll reload, just very quickly if I could.
Yeah. If you might try, yeah.
Another question for you, Ross. Reload after being battered back. It's interesting, in the last sort of 12 months, we've seen a number of heavy industry participants in New Zealand either close or convert to import terminals. Many of them citing climate change policies, uncertainties around the costs relating to those policies. I just wondered if you could talk to that, and how you're sort of seeing both the risks and the opportunities across your manufacturing footprint in New Zealand. I don't want you to go through the entire plant. There's some obvious ones. Related to that, I wonder maybe if you can just discuss where we're going to get our bitumen from once they have refinery shuts as well. Maybe that's a question more for one of the divisional guys.
Yeah, I might let Peter pick that up because he's obviously been wearing that issue. I'll answer your first one, this general question first, Stephen. I think there's a couple of combinations. You got a bunch of what I call international companies, which might have a small New Zealand footprint, and they basically are getting busier around the world, and they actually think about where they consolidate manufacturing to. I think you're seeing a number of those sorts of companies where New Zealand's not one of their main markets, consolidating elsewhere with their manufacturing. I think that's part scale, part their own thinking. That's not a new feature particularly, but the environment of late's probably accelerated a bit of that activity.
If I think about ourselves, in the last two or three years, we've put ourselves through a real discipline in Australia and New Zealand of who are we competing with, what do the imports look like, and where can we be competitive in country with manufacturing versus not? You've seen us go through a very large, what I call exiting some businesses, rationalizing some businesses in terms of to one manufacturing footprint. That's both Australia and New Zealand. We keep a very solid eye on it. I think we've got ourselves nicely positioned, and we've made those calls pretty well. That's a big part of what you're seeing flow through to our own margin performance and operating performance.
As you look forward, I think there's some risks in terms of some of the steps that might be made in New Zealand around its carbon. We're leaning into the decarbonization. We think it's critical. I think the New Zealand government's sort of watched what they loosely call leakage. You can end up having a situation where you're putting tariffs or impulses on local companies and then not making those apply equally to imports. That's our main concern, and we're actively discussing that with government. I think if they get those settings wrong, you could end up with the wrong answer, where we're already 20% better in our carbon embedded in cement in New Zealand than any import.
You don't want to sort of overshoot on the leakage issue and make it hard for us to manufacture and force us into an import model, because it's actually worse for the world and worse for New Zealand in jobs and carbon. I don't think that'll happen. I'm hopeful that that'll work. I'm just comfortable with the way we've got our business positioned, comfortable with our in-country manufacturing positions, and hopeful that we're on top of the carbon trajectory ourselves, and that sanity will prevail on that journey. That'd be my answer. I'll pass over to Peter to just talk briefly about how he's thinking about bitumen.
Thanks, Ross. Thanks, Stephen. Look, you're right. New Zealand is moving to a sort of a new model in terms of bitumen. There's three key players in New Zealand, Downer, Fulton Hogan, and ourselves. Look, in the last year, we've invested a new modified bitumen plant in Napier.
As we go through our thinking, and we're doing a lot of work in this area, obviously now Z Energy, through the change of the shareholding, have decided that they're keen to import, and they are talking to players. There's a model that we could look to import ourselves. We have storage capacity in Napier. The other model is, do we work with other players? There's certainly other players that come into the market, for example, Shell and others. It's opening up a bit. I'm confident that Z are keen to retain a position, but we are looking at the options in terms of how we maintain that supply position. Also, we've got to be thinking through the longer lead times now in terms of the freight environment and shipping environment.
That's all in the model, and I've got a team right now progressively working through that, working with the market. Also, Waka Kotahi NZ Transport Agency have been talking with the players to see whether or not they want to play in that model as well. Lots of options, and we're progressing through that. We hope to be in a position in the construction business and with Higgins later this year with some confirmed options to talk with our team about.
Super helpful. Thanks, Peter, and thanks Ross and Bevan.
Thank you. The next question comes from Rohan Koreman-Smit from Forsyth Barr. Please go ahead.
Hi, Ross, Bevan McKenzie, and team. Hopefully just a couple of quick ones from me. First, one for Steve Evans. I was just wondering, you got 20% like-for-like price appreciation in the Resi Business. Can you talk to what the like-for-like cost increases are to complete a home at the moment?
Yeah, look, we're seeing that the overall differences are between 2% and 5%. That's the historical over the last probably six months, 12 months.
Cool. Thanks. One that may be a bit more wide-ranging. Obviously, New Zealand's now locked down. Is there any more clarity from the government about what operations can run in terms of the manufacturing side? Are there any kind of points where you'll have to do some costly shutdowns? A cement kiln can't be cheap to shut down and restart, just given our notoriously inflexible government and hard levels of lockdowns.
Yeah, look, the answer is we would ideally keep it on and not shut it down. We're basically responding to that and we're looking for those. There's probably four or five bits of kit that we'd rather not turn off. How well we go with that remains to be seen, to be honest. As you alluded to, it was a pretty blunt axe last time, and so we're hoping we can get some nuance in at this time. Particularly if, say, Auckland stays locked down and other regions open up, there's also the manufacturing question. A lot of the goods come out of Auckland. There's a few nuances in all this, which we just need to prosecute, and we're actively talking to government through today. As you can imagine, everyone's scrambling, so it's hard to answer.
The theme you're talking about, we're trying to manage and hopefully get a satisfactory answer, but it's just too soon to make a call on it, Rohan.
Okay. Thanks for that. Cheers.
Look, Rachel, if you don't mind, I might wrap up, if that's okay. Is that allowed under the protocols of this call?
Yes. Thank you. There are no further questions.
Perfect. It's a great confluence of things. Those that are still left on, thank you. Sorry we went a bit longer, but I thought it was worth answering the questions. I appreciate you joining our call and look forward to talking with many of you over the coming days. Thank you.
Thank you. That does conclude the conference for today. Thank you for participating. You may now disconnect.