Fletcher Building Aktie

Thank you for standing by, and welcome to the Fletcher Building Fiscal Year '26 Half Year Results Briefing. [Operator Instructions]. I would now like to hand the conference over to Mr. Andrew Reding, Managing Director and Group Chief Executive Officer. Please go ahead.

Good morning, everyone, and thank you for joining us for Fletcher Building's half year results for the 6 months ended 31st of December 2025. Turning to the agenda on Slide 3. I will begin with an overview of the first half of financial year '26 and the key themes for the half and then step through our operating performance across the divisions.

Will Wright, our CFO, will follow with a detailed review of the financial results, and I will then return to discuss our outlook for the remainder of the year.

Turning to Slide 5. Overall, conditions remain tough, particularly in New Zealand. And whilst we have some earlier operation -- early operational and efficiency improvements from the implementation of our strategic plan, we still have a long way to go. There are 5 key messages from the half. Firstly, our performance was mixed across the period with quarter 2 volume improvements unable to fully offset quarter 1 weakness.

Secondly, our core businesses demonstrated resilience despite subdued markets. Thirdly, we continue to exhibit disciplined capital allocation. Fourthly, further cost-out initiatives were implemented, and these will increasingly benefit the second half. And finally, we made significant progress on portfolio simplification, including the divestment of Construction. Slide 6 shows the tangible progress we continue to make on our turnaround plan.

Starting on the left-hand side, over recent months, some of the key initiatives we've executed on are the Australian and Steel divisional restructure, the first phase of corporate restructuring, reduced forward capital commitments and implementation of the decentralization restructure. In the middle column, our short-term focus continues to be on key strategic priorities that simplify our business and ensure that we have a more robust balance sheet going forward.

We'll now focus on 3 key strategic priorities, in particular, completing the construction divestment, completing the sale of Felix Street and progressing the residential and development strategic review.

Finally, over the medium term, we are going to continue to embed the new operating model, simplify the portfolio further and reset the dividend policy once we move into the lower half of our net debt target range. Turning to the Construction divestment on Slide 7. You'll already be familiar with the terms of the deal announced last month. This is a major step in simplifying our portfolio and strengthening our capital structure. The headline sale price is $315.6 million, and there is a potential increase subject to contract outcomes of up to $18.5 million.

After adjustments and transaction costs, we expect net proceeds of around $300 million to $315 million, and all of this will be applied to debt reduction. Regulatory approvals are underway, and our current best estimate of completion is during the first quarter financial year '27. VINCI knows Fletcher Construction well and has a deep commitment to New Zealand and the country's infrastructure pipeline. That makes VINCI an excellent long-term owner for the business and its people, customers and partners.

On Slide 8, we have a brief overview of the group financials for the half. Overall, you will notice our performance was broadly consistent year-on-year. This is a creditable performance given the continuing weakness in the New Zealand and Australian building sector, particularly during the first quarter. Revenue was broadly in line with the prior period at $2.9 billion, down just 0.5%. Continuing operations EBIT was $145 million, nearly flat year-on-year. On a like-for-like basis, including discontinued operations, it was $151 million compared to $167 million in the first half financial year '25. Net profit from continuing operations was positive at $45 million, and this is the first positive result since June 2023.

These results are supported by cost-out initiatives and market share gains in key businesses. Net debt increased to $1.16 billion. This is below our internal expectations and reflects disciplined working capital management and capital allocation decisions, partially offsetting historical residential land purchase commitments of $151 million. Cash flows from operating activities improved materially to $156 million compared to $87 million in the prior period. Overall, the core businesses delivered stable performance despite challenging trading conditions in the first quarter.

Moving to Slide 9. Despite the market environment, operational execution across the group remains strong. Firth opened its new flagship batching plant in Auckland. Golden Bay delivered a resilient result and lifted coal substitution. Humes added 3 new branches, enabling a market share growth initiative and Winston Aggregates advanced recycling initiatives and established a quarry joint venture. Winston Wallboards successfully trialed up to 10% recycled content in plasterboard production, and Laminex Australia delivered $14 million of cost out whilst Fletcher Insulation commissioned its new acoustic panel plant.

These actions help demonstrate the underlying operational momentum we're building. I'll now turn to operating performance. Over the next few slides, I'll step through divisional performance and the demand backdrop across New Zealand and Australia. Slide 11 provides a snapshot of performance across the 5 divisions. Overall, a mixed bag. Light Building Products grew EBIT despite the environment. Heavy Building Materials experienced some margin pressure, reflecting softer volumes and cost inflation. Distribution remained challenged with further margin weakness. However, we have seen early signs of stabilization nearing the calendar year-end, and we continue to monitor that closely.

Residential and development volumes were materially lower, owing to phasing of key developments, while product mix changes due to bulk section sales also impacted on earnings performance. Construction now discontinued, experienced reduced activity as key projects completed and pipeline phasing moved out. On Slide 12, we can see that New Zealand demand has remained subdued, especially in the first quarter. Wallboard volumes were broadly flat, and we're seeing very gradual improvement in daily sales. Aggregates volumes were down more than 13%, owing to weak roading activity and further major project delays. Golden Bay volumes were flat year-on-year, but up 4% versus the second half of financial year '25. PlaceMakers frame and truss volumes continued to recover with a strong December.

However, intense competition again means margins are challenging. Humes was materially impacted by civil and subdivision markets, which have remained extremely weak over the last 2 years. In general, competitive intensity remains high across many categories, keeping margins under pressure. In comparison, Slide 13 shows how Australian volumes were more positive. Laminex Australia achieved 6.6% growth, supported by increased activity in residential renovation and competitor supply constraints. Fletcher Insulation volumes improved owing to the shift towards higher density products under updated building codes and Iplex Australia volumes varied by segment, being strong in Electrical and Plumbing, but softer in Civil. Stramit volumes were below the prior corresponding period on a 12-month rolling basis, but when compared on a 6-month basis, have started to show improvement.

Overall, we're seeing a more balanced environment than New Zealand. Also, our ongoing cost-out efforts have positioned the Australian businesses well for operating leverage as volumes recover. Turning to Slide 14. Residential and development volumes were 27% lower than the prior corresponding period with 223 units taken to profit. You'll see in the chart at the right, this was the second lowest half since financial year 2020. Bulk land sales formed a higher proportion of the mix, so margins were lower and thus it's difficult to compare to prior years. Weekly net sign-ups averaged around 10 per week compared to 16 last year, reflecting cautious buyer behavior. I will now ask Will to address the financial results in detail.

Thank you, Andrew, and good morning, everyone. At a high level, this is a result that clearly reflects a challenging operating environment, particularly during the first quarter. While volumes across a number of end markets remain subdued, particularly in residential and distribution, we are seeing meaningful progress on cost reduction, cash generation and transitioning to a more resilient balance sheet. Moving to Slide 16, the income statement. Revenue for the half was $2.9 billion, broadly flat year-on-year. However, the headline number masks some quite different underlying trends. On the positive side, we saw volume and share gains in businesses exposed to renovation-driven demand, such as Winstone Wallboards and Laminex.

These gains were offset by lower residential settlements, weak infrastructure demand and compressed margins in our distribution businesses. Warehouse and distribution and SG&A expenses have seen an annualized decrease in structural costs of $63 million with approximately $31 million of benefit in the first half. Like-for-like EBIT, including discontinued operations was $151 million in the half compared to $167 million in the prior corresponding period due primarily to lower construction earnings. EBIT from continuing operations was $145 million, down just $2 million year-on-year. This is despite significant volume headwinds and reflects disciplined cost management.

Turning now to discontinued operations, which relates primarily to the Construction division. For the half, discontinued operations recorded revenue of $519 million and a net loss after tax of $56 million. EBIT was modestly positive at $6 million, but this was more than offset by $81 million of significant items made up of additional provisions for legacy vertical projects, closure and wind-down costs in the South Pacific operations and legal costs associated with legacy construction claims. The transaction materially simplifies the group, reduces risks and improves the quality and predictability of earnings and cash flows going forward. Any cash flow and cost-out benefits from the divestment are expected to be realized from FY '27 onwards.

Slide 18 illustrates the key drivers of year-on-year movement in EBIT. The most significant headwinds were lower volumes, particularly in residential and development and distribution as well as in infrastructure-exposed businesses, alongside ongoing cost inflation in areas such as energy, labor and leases. These impacts were largely offset by a combination of cost-out initiatives, market share gains in core products and improved operating discipline across the group. Cost out has been broad-based, spanning manufacturing efficiencies, procurement, overhead reduction and simplification of organizational structures.

We have more work to do on underperforming businesses with 8 business units losing money in the first half with a total negative EBIT contribution of $12.9 million.

Turning to the balance sheet. Invested capital is $5.9 billion, down from $6.3 billion at December '24, reflecting portfolio simplification, asset impairments taken in prior periods and disciplined capital deployment. Working capital is well controlled with inventory and debtors both lower than the prior year, reflecting a more balanced and less volatile approach to managing trading cash flow. Residential and development invested capital increased during the half, driven primarily by $151 million of land purchases. We expect a further $65 million of purchases in the second half with additional commitments of $100 million in FY '27 and circa $35 million in FY '28.

Overall, the balance sheet is in a stronger position than 12 months ago, and we remain focused on further simplification, lease reduction and disciplined capital allocation. Turning to Slide 20. Net cash flow from operating activities was $156 million, up from $87 million in the prior period despite a challenging trading environment and significant residential working capital investment as a result of land purchase commitments made several years ago.

This reflects strong EBITDA conversion, disciplined capital management of working capital and legacy construction cash inflows. Investing cash outflows primarily relate to growth projects, which have been in flight for a number of periods, including Taupo OSB plant, new frame and truss capacity and the Auckland first batching plant. Moving to Slide 21. Central costs reduced materially year-on-year, reflecting the actions taken to simplify the organization and decentralized decision-making. Group technology costs reduced following the restructuring and rationalization of digital projects. Corporate overhead costs also reduced, reflecting a smaller head office, lower insurance costs and lower short-term incentive accruals aligned to first half performance.

As the portfolio continues to simplify, particularly following the construction divestment, we expect further opportunities to rightsize central functions. Turning to Slide 23. Working capital volatility has been a key focus area for the group. Over the past 2 years, volatility in trading cash flows has required the group to maintain elevated levels of debt headroom. As you can see on the chart, in the chart on the left, whilst we have more work to do, the actions taken to improve discipline are now delivering more stable outcomes with movements returning closer to long-run averages. As you can see on the chart right, portfolio simplification, including the exit of construction and potential changes in the residential division are expected to materially reduce working capital volatility over time. This will support a more efficient capital structure and reduce reliance on excess liquidity buffers.

Capital allocation remains tightly controlled with a focus on improving ROIC. CapEx and investments totaled $161 million in the half, broadly flat year-on-year. As you can see in the chart, spend was prioritized towards in-flight projects, including continued investment in Taupo -- in the Taupo OSB plant, frame and truss capacity and concrete manufacturing assets. The divestment of construction will result in a meaningful reduction in future CapEx requirements, particularly around asphalt plant renewals previously planned for FY '27 and FY '28. Excluding OSB, stay-in business and growth CapEx was down $17 million versus the prior corresponding period.

We remain committed to disciplined capital deployment and expect overall CapEx to moderate as the portfolio simplifies. We now expect full year CapEx to be approximately $290 million to $310 million, down from the previous guidance of $320 million to $340 million. Moving to Slide 24. Lease management is an important lever in improving ROIC and balance sheet resilience. Continuing operations lease liabilities reduced by $172 million, driven by a reassessment of our lease renewal assumptions and site exits. Construction divestment is expected to reduce lease liabilities by a further $76 million, materially lowering group exposure.

The inclusion of right-of-use assets into ROIC calculations has helped to ensure lease impacts are fully reflected in performance assessment. Turning to funding and liquidity. The group continues to make progress in transitioning to a simpler, lower cost, more resilient cap structure. The USPP debt was fully repaid and canceled during the period with associated break and make-whole costs recognized in funding expenses. The decision to exit the USPP market simplifies the funding mix and covenant package and lowers the effective interest rate. We also established a new $200 million 2-year liquidity facility and extended our $325 million tranche of the syndicated facility to FY '30.

At period end, we had $750 million of undrawn facilities, providing good liquidity headroom for our business. Average debt maturity is 2.3 years. And whilst FY '28 maturities are elevated, this is a reflection of the transition of our capital structure, and we are already working on refinancing options. Pleasingly, Moody's reaffirmed our rating, and we remain committed to maintaining investment-grade credit metrics. Finally, net debt on Slide 26. Net debt increased to $1.16 billion compared to $999 million at June '25. The primary driver of the increase was residential working capital investment, particularly the $151 million of land purchases during the half. Importantly, excluding construction proceeds, we expect full year FY '26 net debt to be broadly flat compared to FY '25, reflecting stronger -- expected stronger operating cash flows in the second half.

Net debt reduction remains a clear priority and underpins our longer-term objective of returning to a more resilient capital structure. I will now hand back to Andrew to conclude on broader outlook.

Thank you, Will. I'll now turn to the outlook on Slide 28. In New Zealand, we think volumes will remain soft and meaningful improvement is not expected until calendar 2027. In Australia, early volume trends in Laminex and [ Setra ] insulation are encouraging, although conditions remain mixed. Margin compression will persist, but our cost-out program will help offset these pressures. As well as the recently announced sale of Felix Street, we also have other sale processes underway for industrial sites that have the potential to generate EBIT.

If achieved, this should offset some of the weakness in residential and development and allow for some further modest improvements to the balance sheet. Portfolio simplification remains on track with the construction divestment currently estimated to complete in the first quarter FY '27, while the residential and development strategic review is ongoing. Please note, we won't be making any comments about the strategic review today in order to preserve the confidentiality of the process. Concurrently to this portfolio simplification, our capital structure simplification has also continued at pace. Overall, we are confident that the changes currently taking place will make Fletcher Building more simple, more resilient and more profitable throughout the economic cycle. With that, we will close the formal presentation and take your questions.

[Operator Instructions]. Our first question comes from Kieran Carling with Craigs Investment Partners.

Just thinking about the balance of the year, you've obviously been fairly clear with your messaging around subdued market activity and margin compression, but you've called out some benefit -- some further benefits to come with cost out in the second half. From what I can tell, consensus EBIT stripping out construction, is it about $350 million for the year, which implies a 10% growth rate in the second half. Do you think cost out will be enough to get you there? And can you maybe just touch on what benefit you expect from further land sales and how that will play into the resi division?

So I'll take the second part first. Look, we have a number of opportunities to maximize the -- or optimize our footprint, both here and in Australia. But we don't have much control over the timing of those and neither do we want to turn around and start putting information into the marketplace that might impact on our ability to negotiate. So we're not going to be saying a lot of those going forward.

In terms of cost out, we have, as you know, talked about cost out for quite a long period of time now. When we did the cap raise, we talked about having an annualized total of $200 million of cost out. And of that, we think structurally, there was about $17 million, and we'd expect about $8.5 million of that to come through in the first half of FY '26. In May '25, we talked about a further GBP 15 million out, which is all structural and there's probably about GBP 7.5 million of that comes through in the first half of '26. And on the Investor Day, we announced another GBP 30 million of structural out, which again would probably equate to about GBP 15 million out in the first half. So in the first half, we've got GBP 45 million of cost out, GBP 31 million of which is structural. We've also announced at the ASM that we were looking at a further GBP 100 million cost out with a run rate of around about GBP 50 million. So I think reasonably, we can expect some of that to come through.

But my hesitation on saying it's exactly going to be GBP 50 million is that we are seeing changes in market conditions. And obviously, we will turn around and move or change the nature of our cost out according to what we see in terms of the market activity. And the best example here, I think, is one, for example, like ready-mix concrete where we would be cutting our nose off to spice our face if we were making ready-mix concrete truck drivers redundant when we're actually seeing a lift in some of the volumes there. So it's slightly indetermined exactly how much we'll be taking up in the second half.

The next question comes from Ramoun Lazar with Jefferies. It appears that Ramoun has dropped off the line. The next question is from Rohan Koreman-Smit with Forsyth Barr.

Just on the volumes, it looks like you've done a pretty good job taking market share to offset the cycle, and there's been a bit of a I guess, strategic direction that you've taken. You're talking to some signs of volume improvement in the underlying market now. When do you switch from market share focus to margin focus?

It's a very good question. And I think the trouble is it's very dependent on which business you're talking about. I mean there will be a point in time where if you're using margin to drive market share, you'd want to swap to a higher margin rather than. So it's very business unit dependent.

Do you think you're at the point when you'll soon be switching some business units to more of a margin focus than a market share focus given that you do have some signs of underlying activity picking up?

The answer is yes. But again, it's so much dependent on which business unit. If you take Golden Bay Cement, for example, if we see increases in volumes in cement demand across the market, I would expect to see selling prices rise. In aggregates, if aggregates started to pick up to where our expectations were, one would expect to see average selling price rising. So it is very much dependent on which activity you're talking about.

The next question comes from the line of Brook Campbell-Crawford with Barrenjoey.

Just keen to hear your views around the distribution business. Obviously, had a pretty tough period. But if you look at a couple of years to mid-cycle, how do you think the earnings power of that business now should look like given your position and sort of what's happening across the various players? I guess what I'm trying to understand is sort of EBITDA averaged about EUR 100 million over the last decade. Do you think get back to those sorts of levels? Or has the market changed such that we should think about perhaps a lower level of earnings?

Yes. Look, I'm not really going to comment on what we think those earnings might be in the mid-cycle. What I will comment on is the fact that we've carried out a very deliberate turnaround strategy at our distribution division. So we know that if you get your frame and trust volumes that the value of the balance of house is somewhere in the order of $4 to $1, depending on the precise projects you're looking at. And we know that there is stickiness. So if you've done the frame and trust, you will tend to end up with the balance of house. So we've carried out a very deliberate strategy of being competitive on frame and trust, which is why there's been some margin pressure there.

But we would expect as the balance of house comes through for the mix to margin that's being demonstrated to rise. And that's also been a focus on increasing its market share. So look, we think we have a very strong distribution business, and we think the actions that we've taken will start to come through in the not-too-distant future.

The next question comes from Lee Power with JPMorgan.

Andrew and Will. Andrew, just following on from Rohan's question. Like if I look at your Frame and Truss comments, I guess that the backdrop is not amazing, but improving volumes in December estimation, volumes got positive momentum. You talked about positivity in concrete. Like your share comments notwithstanding, like how much do you think of what you're seeing is share versus early stages of a market recovery? Because I would have thought some of these things would be a decent indicator for resi generally.

Look, because we have such a broad spread of activities here, it's very difficult to turn around and give you a blanket answer across all. So we do know, for example, we've seen residential consent start to pick up towards the end of last year. But we also know that when you get a consent come up, it's 9 months to a year before you see the slab being put down and there being meaningful activity from it. We have seen a bit of an increase in some of the commercial inquiries coming out, and we do have a forward workload of commercial concrete, which is slightly ahead of where we were last year. But each of these activities, you have to look up very much on their own merits. So it is very difficult to turn around and give you a single answer that covers everything.

And then just a follow-up.

I was just going to say, quite pleasingly, in most businesses, we have stopped losing market share, which is really positive. And it is starting to lift in a number of areas. And so when you do see lifting volumes, it tends to be improving market share rather than a broad-based recovery.

And then just a follow-up. You were talking about the -- I think it was $151 million just around continuing to purchase land and development business. Is there any way or ability to change? I guess there's options around that land, but is there any ability that you have to change or flex that spend profile given obviously the business settlements as we see now are not obviously looking amazing.

No, unfortunately not. These are commitments that were signed up to, in some cases, many years ago. And that $151 million is after we have pulled all levers and flex what we can. And so just to sort of reiterate, there's a further $65 million in the second half of this year as well, as well as about $100 million in '27 and $35 million in '28. What we can do about these forward commitments all forms part of the strategic review and process that we're going through on the residential business at the moment.

The next question comes from the line of Grant Swanepoel with Jarden.

On house sales, have you seen a trend pick up? I know you've got some presales on the 10 per week that you were saying to us to try and get some sort of model done for the second half of the year. And then on your ROIC, have any businesses start to line up as not achieving those ROICs you said you would adhere to, to keep businesses or get rid of them?

So I think what you were asking about was residential volumes grow?

Yes, please.

Yes. So -- we are not seeing buoyant residential volumes at the moment. We think that that's partly due to probably some developments which aren't in the optimum places to be like our South Auckland operations. And we may not be putting the right typology in there. So this is probably limited to the number of units that we're selling at the moment, but that is under review, obviously. I think your second question was on ROIC. I didn't quite catch all of it. Will did --.

So Grant, look, as I said in my speaking notes, I don't know if you picked up on it, 8 businesses lost money in the first half. And so that's a good place to start in terms of businesses that we're not happy with the ROIC that they're generating at the moment, and they are certainly under review.

And we want to see a clear path to those businesses returning to achieving ROIC. And where businesses can achieve ROIC, I think we've been pretty decisive as you saw with like the closure of the panelization plant, for example, the closure of Laminex MADE. And so we're certainly being pretty disciplined about that ROIC target for businesses.

But obviously, when we have identified the businesses that are underperforming, what you need to do then is to work out what the improvement plan that you could apply to it would result in and then turn around and strategically decide whether that end result is something that is adequate or not.

The next question comes from Stephen Hudson with Macquarie Securities.

I know you no longer report on this basis, but I just wondered if you can talk through your Aussie dollar sales and EBIT PCP and why they moved as they did in the half?

Yes. We do still report on that basis, Stephen, in segment reporting. So I just refer you to the annual report on Page 17 has our Aussie -- our geographical segments. So EBIT from our Australian businesses before significant items was $53 million.

That -- it was obviously down quite a way and sales were down quite a way. I just wondered if you can comment on what's going on there, which businesses were moving.

Well, obviously, I'm not sure what numbers you're looking at for your comparator. But obviously, Tradelink has come out of the Australian business, which was a significant portion of revenue. I think Andrew gave some good color around what we're seeing in terms of the wider market in Australia. So Australia is obviously a more resilient economy. It's much larger and demand is more broad-based, although we do see state-by-state markets.

And so I think broadly consistent with what everyone else is seeing. We're seeing a reasonably strong market in Queensland and in Western Australia and a slightly more subdued market in New South Wales and Victoria. But what I would say is probably Victoria has surprised us a little bit to the upside, and that's probably more to do with our customer segments rather than the wider market. So we're well positioned with a number of the large volume homebuilders in Victoria. They've recently had ownership changes and those new owners are really swinging into care in terms of ramping up development. So that's been positive for our Victorian business.

And then there's been an increase in the A&A market of the alteration amendments market, which we managed to tap into very effectively through Laminex.

The next question comes from the line of Sam Seow Citi.

Just wanted to lean into that market share question a little bit further. I think on Page 18, you're flagging $15 million in EBIT offsetting market declines. Given that's an EBIT slide, maybe give us some more color about where specifically you're seeing that profitable share growth or maybe how that number is made up or [indiscernible] ?

Just looking through the presentation, [indiscernible] Slide you're referring to.

Yes, absolutely. It's predominantly, the share gains have been in the light building products and in the heavy Building Materials segment. So I think what we're seeing is we are a domestic manufacturer coming up against imported product. We're seeing significant benefit to domestic manufacturing at the moment and seeing share gains in those businesses. And also in product categories where there's a competitor that is struggling financially as well, we're seeing significant share gains.

So I think if we're talking in our heavy building materials distribution -- heavy building materials division, Firth in particular, has seen very good market share gains. And in our Light Building Materials segment, we're seeing good share gains across Winstone Wallboards, Laminex in Australia and New Zealand and Iplex [indiscernible] picked up market share quite significantly as well.

Okay. That's really good and really helpful. And maybe just on distribution. You've called out some competitive pressures. But actually, revenue and gross margin look okay and looks to be more of an overhead inflation issue. Just wondering if there's something there you can kind of change in the second half to get that business profitable again.

There's a couple of aspects to that. Firstly, PlaceMakers have very high lease liabilities. So we've obviously suffered CPI increases on those leases, which we need to understand better as we go forward as to whether we can change that. But the other side of it was I think I've made reference earlier on to there being a deliberate strategy to turn around and capture the frame and trust side of things. What we've done now, I think everybody is aware, we've got the Cavendish Drive Frame and Truss plant, which should be operational come May. But what we've been doing is taking on board significant extra resource around the manufacturing of our Frame and Truss so that we can make sure we can make it as competitively as possible. So that's where a lot of the increase in cost has been.

The next question comes from the line of Harry Saunders with E&P.

Firstly, I know we talked about the second half already. Wondering if we could just think about the bridge from the first half to the second, any benefits or headwinds you anticipate sequentially versus the EBIT you reported, including, I guess, the $11 million gain on the sale of Felix Street or any other likely property sales and what you think the incremental net cost out could be and what seasonality benefit we could see, please?

Yes, that's a very broad question. Look, what we're trying to do is trying to be as open and transparent with the market in terms of what we see today as to how our individual businesses are performing. So look, we'll continue to provide quarterly volume updates that will give you an insight as to how the individual businesses are tracking into the second half. There is generally a second half weighting, but that has historically actually been driven by -- more by our residential and construction businesses and less so by our core light building products and heavy building materials.

The other thing to bear in mind is the cost-out benefit moving into the second half. So we estimate up to $50 million of cost out from the $100 million will benefit will flow into the second half. But as Andrew said, we're just having a bit of a watch on that. What we don't want to do is take cost out and then have to put it in a few weeks later because demand has picked up. And so we're just constantly monitoring where that sort of tipping point in forward orders is that we want to hold on to that cost.

In terms of site sales, we'll continually keep the market informed, just like we did when Felix Street was announced last week. And so if any more happen to fall in the second half, we'll certainly keep the market informed.

Also just wondering if you could give a sense of any mid-cycle margin targets you have across the new operating divisions given we've got a new reporting structure, please?

Yes. Look, we're trying to stay away from this sort of mid-cycle target piece. Fletcher has probably got a pretty long track record of holding out EBIT margin targets and not hitting them or being creative in the way in which they've hit them. So we're firmly focused on ROIC. And our first step on the ROIC journey is to make WACC because on our estimation, it's been a very long time since Fletcher Building has made WACC.

The next question comes from the line of Ramoun Lazar with Jefferies.

Just one on -- if you can comment on the roading market and those project delays. Have you seen any sort of indication of a pickup or change in the market environment there into the second half?

Yes. So what we think happened in the first half was in New Zealand, they have what they call the IDCs and the -- all the roading contracts are under an IDC and they turned down and retendered all of New Zealand all at the same time. And we think that whilst the evaluation of those IDC tenders was underway, they choked back on previous road maintenance work.

So we saw a significant drop off in our aggregates volumes up to Christmas, and that was 13-odd percent. There have been some indications that the aggregates is picking up as we come into the new year. And certainly, those IDCs are expected to be awarded in the very near future, but it seems to be a bit of a moving piece because they want to turn around and do a grand review and name them all at the same time. But certainly, we'd expect in the next few weeks that the IDCs will be announced and that will actually then lead to the roading activity continuing.

I would say, and as much as we don't like to mention the weather, February has been a particularly unhelpfully wet month. And so we would expect when the drier weather comes that we see a bit of an uplift in roading maintenance activity.

Okay. Great. And just one for Will. Thanks for the color around CapEx and how to think about debt into the back end of the year. What -- any sort of changes in the sort of provision cash expense into the second half? And perhaps if you can give us some guide into '27. And maybe if you can include sort of an idea of CapEx into '27 as well, help us just to frame up the cash and the balance sheet.

Yes. There's no sort of acceleration of legacy cash flows into the second half. So the sorts of things we're talking about are a little bit difficult to forecast. But it will continue at a similar run rate as to what we saw in the first half. In terms of CapEx moving into '27, it's probably a little bit too early for us to issue any sort of guidance.

But what I'd say is like we're firmly focused on lowering the forecast CapEx number across the go-forward period across multiple years. And so what we were trying to indicate in that chart in the results presentation is if you actually take out the OSV CapEx that we've actually had a half of pretty low levels of CapEx across the remainder of the business. And actually, within the $18 million of growth CapEx, there's a number of projects that were committed to many years ago as well. And so going forward, we do expect a lower level of overall CapEx.

The next question comes from the line of Keith Chau with MST Marquee.

First question, actually a follow-up on Lee's question earlier about residential investment. So maybe another way for us to ask a question is, as you sell through the residential units, albeit the numbers are lower at the moment, with the release of inventory and working capital from unit sales be enough to offset the costs associated with the pre-committed land purchases such that capital employed declines? Or is the way to think about capital employed in that business still that it is rising from here on a net basis?

No. So you're correct that we will look to release capital employed from that business as we work through the developments. And so it is a little bit hard to forecast in terms of the second half given the uncertain nature of the residential property market at the moment, but we would hope to see an unwind in that funds employed in the second half of this year.

Okay. And then the follow-up to that is outside of residential units, just the potential EBIT from land sales and perhaps, Will, if you can comment on the payables balance as well. It just seemed a bit high to us and it looked like it was high relative -- sorry, it was a bit low relative to our expectations and low relative to consensus as well. So just trying to understand where that payables balance should go in the periods ahead, if possible.

Yes, sure. Sorry, what was the first part to that question? Payables, second part...

First one was land sales.

Land sales. So I think we're obviously working through as part of the residential strategic review, also looking at our whole wider property portfolio. So we have a number of processes going on at the moment. The level of earnings from those is uncertain as is the timing of those. So sort of the best we can do is kind of keep the market informed at regular intervals as we go through the year if and when any of those happen to look like they're going to fall in the second half.

In terms of payables, what we're really trying to do is move -- and I think Slide 22 sort of demonstrates this is just to a more consistent working capital cycle. And so when you look at historical comparators, there is a lot of noise in those comparators. And so what we're trying to do is move to a more normal cycle where it's a lot smoother throughout the year. So I think this is probably -- December was really probably the first period end where we haven't seen sort of movement in payment timings to try and improve the working capital number.

The next question comes from Daniel Kang with CLSA.

Just with all the announced divestments and you're flagging for more to come, your net debt should comfortably fall back to the target range of $400 million to $900 million. Just wondering how the Board would be thinking with regards to reinstatement of dividends or capital returns?

Well, I mean, that absolutely is up to the Board to decide. What we've already said is that we will consider dividend policy once we get to the lower end of that $400 million to $900 million range. So let's wait for the event to happen.

I'll just probably add to that. Look, free cash flows in the first half wouldn't support any sort of dividend either. So we can't get ahead of ourselves. We've still got a lot of work to do. And what we won't be doing is paying a dividend out of debt going forward.

Yes, makes sense. And just with regards to WA pipes, I know there's a slide there, and good to see that there's no change to provisions. Can you just provide any color on how the whole process is progressing? Any potential for resolution with BGC?

So we think it's progressing well in the sense that we've got over 50 builders now signed up into the industry response. As you know, what we're trying to do is to limit the overall exposure caused by any like peak -- pipe leaks. So we now have -- I think it's 4,188 leak detection units installed. And they are quite a clever little artificial intelligence valves that will turn around and track how your normal pressures flow in the house.

And if anything happens outside that normal, it just cuts off the water to the property, so it prevents any of the damage happening. The reason that's important is because although we've made little progress with BGC in coming in to join the industry response, they are cooperating wholeheartedly on getting LDUs installed into all the houses that they built. So what they are recognizing is that even though they don't -- they haven't yet wish to participate in the IR, they are trying to participate in that mitigation of damage that might be caused by pipes.

And then furthermore, we've carried out, I think it's 1,176 ceiling pipe replacement. And one of the interesting consequences we're seeing of that is that once we've replaced the ceiling pipes, it actually removes pressure from the rest of the system. So as we do a ceiling pipe replacement, it looks as though a full house replacement number is dropping. So all in all, we've got a very good process in place in Western Australia. It's fully staffed. We're in control of understanding the costs and being able to turn around and kick off when people apply for a replacement. And I think all the modeling we're doing at the moment says that the original provision is still comfortably enveloping what we're seeing in practice.

There are no further questions at this time. I'll now hand back to Mr. Reding for closing remarks.

All I'd like to say is thank you all very much indeed for coming along today and listening to us, and we look forward to probably touching base with most of you personally over the next couple of weeks. Thank you very much indeed.

That does conclude our conference for today. Thank you for participating. You may now disconnect.

[Foreign Language] and good morning, everyone. On behalf of the Board, it is my pleasure to welcome you to the Fletcher Building's 2025 Annual Shareholders Meeting.

Today's meeting is being held both in person and online via the Computershare online meeting platform. We therefore, welcome our shareholders, proxies and guests both those here in the room at Eden Park and those joining us online.

Before we start the formal business of the meeting, I would like to address some housekeeping matters. First, can I ask people in the room to ensure their mobile phones are switched to silent? Secondly, in the unlikely event of an emergency, please leave the building by the nearest exit, which is over there.

Please look for Eden Park staff -- members who will direct you safely from the building and to the nearest fire assembly point and that fire assembly points are located on Reimers Avenue, which is over there.

Taking us back to the meeting. As a quorum is present and due notice of the meeting has been given, the meeting is duly constituted, and I declare it open.

I will now introduce my fellow Directors. On my right, which is your left, we have James Miller and Sandra Dodds. And on my left, we have our Group CEO and Managing Director, Andrew Reding; Jacqui Coombes, Tony Dragicevich; and Cathy Quinn; and Company Secretary, Haydn Wong, who's my right-hand man today, is seated to my immediate right. We also have in attendance members of our leadership team and our auditors, EY.

Moving on to the agenda for today's meeting, there is a lot to get through. I'll begin with the financial -- a summary of our financial year 2025 performance and medium-term strategy before handing over to Andrew Reding, our Chief Executive Officer. Andrew will speak to the operating performance, our stakeholders and the turnaround plan for Fletcher Building. You will then have the opportunity to ask Andrew and I questions regarding our presentations.

And after that, we will move on to the resolutions of the meeting as set out in the Notice of Meeting. The resolutions will be decided by poll. Questions specific to the resolution will be dealt with before the resolution is voted on.

At the conclusion of the formal business, there will be another opportunity for further general questions from the floor and online. For shareholders attending online, you can start submitting questions now. Please note that questions will be moderated to avoid repetition and to summarize lengthy questions.

We will not address questions that I consider are not reasonable in the context of this meeting or that repeat earlier questions, which otherwise may restrict the opportunity of other shareholders having a fair chance to have their questions heard.

Finally, for some reason we do not have the opportunity to answer your question, we will look to answer them promptly via e-mail. And at the conclusion of this meeting for those present here in the room, we invite you to stay and enjoy some light refreshments.

Now let's begin with the Board update. The financial year 2025 marked the completion of Board renewal, a process that had been -- that has brought new perspectives and deep sectoral experience to Fletcher Building. I was honored to be appointed Chair in February, and I'm pleased to be working alongside a very capable and diverse group of directors.

We welcomed Tony Dragicevich and Andrew Reding onto the Board in August last year, Jacqui Coombes in April and James Miller in June. Each brings valuable expertise in governance, operations and our industries. Sandra Dodds continues to lead our Audit and Risk Committee; while Cathy Quinn, who chairs our Safety, Health, Environment and Sustainability Committee and our Disclosure Committee, remains a key contributor to our governance and legal oversight, particularly in relation to the legacy issues that we are working our way through.

This refreshed Board is well positioned to support the business through its transformation. We're focused on ensuring strong oversight, strategic clarity and accountability across the group. With the Board now renewed, we are confident we can support management in executing the turnaround plan and delivering long-term value to the shareholders.

Now turning to the numbers. Revenue for the year was $7 billion, which was down 9% on the previous financial year. And earnings before interest and tax, before significant items, totaled $384 million, which was down $125 million on financial year 2024.

Our EBIT margin fell to 5.5%, and we reported a net loss of $419 million, which followed on the $227 million loss reported in financial year 2024. Despite these headwinds, we made substantial progress on strengthening the balance sheet with our net debt reducing from $1.77 billion to $999 million at the 30th of June.

This reduction includes the proceeds from the capital raise undertaken in November 2024, and I want to take this opportunity to thank all those shareholders who supported that capital raise. We also generated $501 million in operating cash flow.

Capital expenditure and investments totaled $313 million, which were down from $420 million in the prior year, reflecting disciplined capital allocation. Return on invested capital was 4.5%, which is down from 5.5% in the prior year. And we remain focused on improving this metric through cost-out initiatives and simplifying our portfolio.

Through last financial year, we made significant progress resolving legacy issues that have adversely impacted Fletcher Building in recent years. The New Zealand International Convention Centre is now effectively completed and acceptance testing and compliance processes are underway, and we expect to hand over this magnificent building to SkyCity shortly.

We've also advised to the market that there are claims related to the convention center, and we intend to vigorously defend ourselves against SkyCity's legal proceedings, and we are confident in our position. Our court proceedings against the roofing subcontractors on the convention center are nearly complete with judgment expected in the second half of this financial year.

In Western Australia, the remediation of the ceiling pipe issues continues to track well. And as of the 30th of June, nearly 1,000 ceiling pipe replacements have been completed, 55 homes remediated -- fully remediated, I should say, and over 2,000 leak detectors units installed. Importantly, costs remain consistent with our estimates and no additional provisions have been required for the West Australian partnership.

The impressive Puhoi to Warkworth motorway project was opened to the traffic in June 2023 and reached full works completion in May 2024. We've now settled all material outstanding claims with the New Zealand Transport Agency and insurers, closing out a complex and long running matter. These outcomes reflect our commitment to resolving legacy issues and in doing so, allowing the company to focus more fully on the future on our operational performance, strategic direction and delivering shareholder value.

So ladies and gentlemen, we've put a lot of noise behind us in the last 12 months. Despite the macroeconomic headwinds on both sides of the Tasman, our operating businesses delivered a number of encouraging results throughout the financial year 2025.

Our first concrete -- ready-mix concrete business increased its national market share to approximately 40% and to over 50% in Auckland. Golden Bay Cement now holds more than 60% market share nationally. And Winstone Aggregates commenced the on-site concrete recycling. This is a step forward in reducing waste and cost, and it's a win-win, if ever there was one.

Winstone Wallboards are achieving significant improvements for the new Tauriko plasterboard plant with A grade recovery yields consistently exceeding 95%. Fletcher Insulation in Australia introduced 16 new products during the year, demonstrating innovation and responsiveness to the market needs. And Waipapa Pine, the operation there is now operating at full capacity, contributing to our manufacturing footprint and supply chain resilience.

These operational highlights reflect the strength of our portfolio and the continuing efforts and dedication of teams across the group. Whilst the result of the 2025 financial year was disappointing to all of us, decisive action has been taken to reset the business. We have enhanced the capability of our Board and senior management team, so we've appointed 4 new Directors and 6 new executives during the year.

We've taken action to address the corporate structure, restructuring from 6 divisions to 5, reducing divisional overhead and bringing decision-making closer to our customers. Approximately $200 million of cost savings were implemented in financial year 2025 and a further $30 million were announced at our Investor Day in June this year with cost reduction remaining an ongoing area of focus.

We achieved a 43% reduction in net debt to $999 million as of the end of June, and we have clarity with regards to our medium-term strategy, which was presented to shareholders in June. And we are developing a culture of accountable, empowered leadership, transparency and performance. I believe we have the building blocks in place.

As we laid out at the Investor Day, the business' medium-term focus remains on manufacturing and distribution of building products and materials. We've implemented urgent actions to stabilize the business and are now focused on embedding a high-performance culture across the group.

Divisional autonomy is being increased with business unit returns being measured against industry-specific weighted average cost of capital targets. Underperforming units are being evaluated, and we are taking steps to decentralize corporate functions and reduce central costs. Dividend payments remain paused until we reach the lower half of our net debt target range, which is $400 million to $900 million.

We are targeting investment-grade credit metrics and a more resilient capital structure. Overall, the construction sector is currently under extreme pressure. However, we have a clear strategy and our renewed management has already been taking bold steps to mitigate the downside and position the business well for when demand does return.

Before I close the section, I wanted to touch on the challenging trading conditions that we've experienced in the first quarter of the financial year. Our quarterly volume update, which was released last week, showed further declines in trading volumes and ongoing pressures on margins.

The primary driver of this continued weak demand and heightened competitor -- sorry, the continued weak demand and heightened competitor activity, particularly in the New Zealand market. Light Building Products volumes were generally below prior corresponding period, so same period last year, but slightly higher compared to the fourth quarter of financial year 2025.

Across the divisions, margins were relatively stable with production efficiencies and cost management offsetting soft volumes. Heavy Building materials experienced some pronounced volume contractions with Winstone Aggregates volumes down 4.1% versus the fourth quarter financial year 2025 and 6.3% versus the prior corresponding period last year, reflecting weaker roading and project activity.

Competition continues to be felt across the group with margins in steel and distribution coming under particular pressure this quarter. To offset some of this impact, we are controlling what we can by taking out another $100 million of cost, which Andrew will discuss in more detail shortly.

On that note, I will hand over to Andrew to speak to operating performance, our stakeholders and the turnaround plan. Over to you.

Thank you, Peter, [Foreign Language]. I would also like to add my welcome to those joining the meeting today, both here in the room and online. Let's begin with a look at where we are in this cycle.

In New Zealand, we have experienced a prolonged period of subdued demand in the residential and commercial construction markets, and we expect that to continue through financial year 2026. Building merchant sales remains a reliable proxy for sector activity, and our current data shows nominal sales across the wider merchant sector tracking below prior year levels even before adjusting for inflation.

This weakness has persisted for the past 18 months with rolling 12-month figures well off the peaks of the last cycle. The softness is broad-based, affecting both residential and nonresidential segments. In Australia, we're seeing early signs that the gap between completions and commencements is beginning to converge, for total dwellings, approvals and commencements are starting to align, indicating a potential stabilization in the pipeline.

New house activity, however, remains slower to respond with commencements still lagging approvals. Australian market conditions remain mixed. While some segments show resilience, others continue to face headwinds from interest rates, labor constraints and elevated input costs.

As Peter mentioned, in the interest of providing transparency and insight to shareholders and analysts, we recently began publishing quarterly volume data. This has been well received, particularly by institutional investors and equity analysts. We announced our quarter 1 financial year 2026 volume data last week.

On the left of the slide, you can see product volumes in New Zealand going back to just before COVID. These show that market conditions remained extremely weak in the first quarter. We experienced a mix of volume outcomes, but across the board, margin weakness continues.

As well as the weak demand across key markets, we are seeing heightened competitive activity, particularly in the New Zealand market. On the right of the slide, you can see the equivalent data in Australia. There, volumes have improved slightly quarter-on-quarter except for Stramit, but remain below financial year 2024. Laminex, Iplex and Fletcher Insulation are adapting to market conditions with targeted product and channel strategies.

We continue to monitor trends closely and adjust operations accordingly. Across both Australia and New Zealand, we anticipate market conditions will remain challenging throughout the remainder of this financial year. There is continued uncertainty on the timing of recovery in the residential sector.

It is worth noting, though, that the recent significant OCR reductions should, in time, support greater liquidity in the New Zealand housing market, and there are some signs of steadying or improving market conditions in Australia. However, we are not standing still waiting for market conditions to improve. We have continued to carefully examine our cost base.

Last week, we announced a further cost-out program targeting another approximately $100 million in annualized savings. Of that, around $50 million in benefits are expected to be realized in the second half of financial year 2026 with full annualized savings expected to be achieved in financial year 2027. This is over and above the $30 million of financial year 2026 cost out that was announced at Investor Day.

Together, these cost initiatives will aid profitability and partially offset the earnings impact driven by market conditions. The program is focused primarily on back-office operations and efficiencies, while seeking to maintain frontline operational capabilities so that our businesses are ready and have the capacity to respond when market conditions improve.

Our customers remain at the heart of everything we do. From Auckland Airport to Christchurch Te Kaha Stadium, our products and people are helping to build the future. These projects showcase the breadth of our capabilities and the trust placed in us by leading developers and contractors.

To give some context to these examples. During Auckland International Airport's Taxiway Mike project, Firth and Brian Perry Civil completed their largest ever concrete pour of 1,300 cubic meters in a single 12-hour night shift.

The NZICC project is nearing handover, and once complete, will be a significant asset for New Zealand, capable of hosting events for up to 4,500 people. Finally, in Canterbury, our GIB products are used extensively throughout the new Christchurch Te Kaha Stadium. We are proud of the role we play in enabling infrastructure, housing and community development across New Zealand and Australia.

We're also proud of our community partnerships. From restoring back country huts to supporting trade academies and local infrastructure, Fletcher Building is committed to making a positive impact. These initiatives reflect our values and our role as a responsible corporate citizen. We will continue to support the communities we operate in and invest in initiatives that deliver long-term social value.

To conclude, we have acted decisively to reshape the business over the past 12 months. We've already implemented many of the key priorities, and we have clear action plans for the short and medium term. In financial year 2025, we implemented $200 million of cost savings and announced a further $30 million at Investor Day, but we haven't stopped there.

Further work in financial year 2026 is targeting another approximately $100 million of cost savings, which will be crucial to our profitability in a challenging market environment. These efficiencies will also improve our performance when we do see demand return.

Our corporate functions are being decentralized to give divisions and business units more autonomy and accountability and the divisional restructures, which are now complete, position us to focus our resources on the divisions and the projects that will generate the highest returns.

We're progressing a number of potential divestments, including our Construction division, CSP and our 13.4% equity stake in the Puhoi to Warkworth toll road. We're also progressing the strategic review of our Residential and Development division. But there is still a lot more work to do. We remain committed to rebuilding to an acceptable return on invested capital.

Over the medium term, we will embed the new operating model and continue to simplify our business portfolio. Once the balance sheet targets are met, we will reset our dividend policy in order to deliver sustainable and growing returns to shareholders.

I will now hand back to Peter to conclude the presentation section of the meeting.

Thank you, Andrew. Governance enhancements have been a key focus in financial year 2025. We've introduced revised financial reporting aligned to the IFRS 18 accounting standard with clearer breakdowns across revenue, earnings before interest and tax and cash flow. The financial results for 2025 -- the financial 2025 annual results presentation included significantly more detail in relation to our strategies and changes, thereby improving transparency for shareholders.

Quarterly volume reporting was introduced in July, providing timely insights into the market, and how the market is performing across the business. In September, we released the stand-alone remuneration report detailing executive and broader workforce remuneration. Our corporate governance statement was updated in August and now acts as a stand-alone document, outlining our frameworks and policies.

The Board's skills matrix has also been refreshed to reflect the new composition of the Board and is published on our website. These initiatives support our commitment to transparency, accountability and best practice governance.

In closing, financial year 2025 was a year of action. We've developed and communicated our medium-term strategy for the group that I think is very clear. We've implemented immediate steps to stabilize the business and reduce costs. Our focus remains on operating performance, customer service and reducing net debt, and we have clear priorities for the financial year 2026.

So while market conditions in New Zealand and Australia are expected to remain soft, we're well positioned to benefit from improved operating leverage when recovery begins.

Thank you for your continued support. That brings an end to the presentations. I'd like to now give any shareholders, both present here and online, the opportunity to ask questions based on what you've heard so far.

Our questions in relations to resolutions will be addressed alongside the relevant resolutions a little later in the meeting. [Operator Instructions] Before you ask your question, we would ask that you please state your name.

Coralie van Camp, shareholder. Mr. Crowley, I'm very pleased that you're chairing the Board. You are the first chair that I can ever recall who has had any experience at all in building and construction. And I think that, that should set a precedent for all future chairs of the Board that they actually understand building and construction from the nuts and bolts from the ground up because a lot has escaped previous Chairs who just came in, chaired the meeting and had absolutely no idea what was happening in the business.

So my faith is in you, Mr. Crowley, to get this company out of a dreadful situation and set a precedent for future chairs and people on the Board have it knowing what they're actually dealing with in this company.

Thanks, Coralie. We really appreciate your vote and thank your vote and confidence. And I think that vote of confidence, I think, extends through to the whole team. So we've got a new team on board. We've got a new management team, a well-led and engaged management team. And I think what we do, as a group, understand our business. And what I think we've got now is real clarity about where we want to take the business.

We're communicating. I think people understand it, our employees understand it. To your point, we've got the capability. We've got people already willing and able with the skills to get stuck into it and do it. And I'd like to think we're really putting in place the right culture for people who understand our industries, our businesses, they're performance oriented and we're open.

So that's what we -- where we want to go, Coralie. And I think it's exciting -- personally, I think it's exciting. I know it's very challenging, but it is an exciting time to be working with good people. So thank you.

My name is Alan Best, I'm a shareholder, and also I carry the proxies for about 330 small shareholders from the New Zealand Shareholders' Association. Last year, a fair amount of time was spent on the regular write-downs, which, of course, significant items. And over the last 10 years, only 2016 was able to manage very small provisions.

The provisions have canceled in the current year. Do you feel now that you have a handle on the claims that are coming forward and that provisions will return to something a bit more manageable and from our point of view, lower?

So Alan, you -- I just want to be clear because I absolutely want to answer your question. So you're talking about provisions against projects or you're talking about significant items?

Significant items.

Okay. Right. That's not -- which involves provisions, I might add. Okay. Thanks for the question. So look, I think what we're trying to communicate is that we're in the middle of a big turnaround of this company. And what you've got as a Board and management team who are reshaping the company, and we roll the sleeves up and we're prepared to deal with the issues.

So what -- in terms of the significant items, there's a lot there. But I think a significant portion of it comes out of the fact that since we last spoke at the meeting last year, we actually did raise the provisions for the West Australian pipes to deal with that, which was $180 million of that $700 million. There are other things that have come into play.

So the other important ones were that Andrew and the team as part of their portfolio, the strategic medium-term strategic review, there are decentralization, there are costs of getting out of businesses, Andrew touched on some of the businesses we exited, which were loss-making businesses. They're better gone than kept, but they cost money to get out of.

We -- as we've moved and Andrew has restructured from 6 divisions to 5, there are costs, there are redundancies involved in that. But more particularly, as we've gone after a more decentralized management style, the IT systems that we had in place were not the right ones to support a decentralized management approach. And the IT write-down to the order of $120 million, okay?

We then -- we also had significant -- we addressed a number of underperforming businesses that we've had on a watch list for some time that we're working to try and improve. The market conditions are such that we were better to take the write-downs of the intangibles, goodwill to brands on those businesses.

So -- and also, we had about a $58 million loss on the divestment of a nonperforming business, which was the Tradelink business, which we sold out of Australia. So they are -- these sort of numbers, they are big numbers, big, big numbers.

But what I want to -- I guess what I want you to take away is these have come out of looking at the business and working out what it is, we want this business to be in the future and positioning it for the future. And that's the work that Andrew and the team have done. They've done really detailed work on this, Alan. So does that sort of answer your question?

Yes, that does answer the question of the significant items. One of the other comments that I've heard in the trade, talking to an Auckland broker was that Fletchers is really too complex. And even for a broker whose business it is to analyze the different divisions and contribution to the whole, he's finding it pretty hard work to get behind the scene.

And I believe that your move to simplify the divisions is the right one, and I've said that to Andrew. So...

Would you like Andrew to comment on that? Or...

Yes. I think...

I would just say, you're right, okay? It's hard work. But I'm sure Andrew could give some more flesh to that if he likes.

I think what he was meaning was that overall, we can always expect some divisions to underperform and drag us back. And that's a problem. So your focus on ROI is obviously the right one. And I was saying to Andrew that the business is like an octopus. We used to say that of Fletchers, it's like an octopus in the trade. But that actually is a huge advantage because we all know and Octopus has 180 million neutrons in the center in intelligence. And then 40 million in every tentacle and we missed out on the 40 million neutrons in the tentacles in the past.

Well, I'm going to -- would you like to respond?

Yes. I think, Alan, you're apparently agreeing with our choice of decentralization. I'm not sure my troops want to be called tentacles, but that's about fine.

Any other questions? I just -- the gentleman up here. Gentleman at the front here. Thanks.

Chairman, my name is [ Sally Chen ]. I have about 3 questions. If the demands for the major products are weak, then do you think there are more resources focused a bit more on the quality assurance to prevent issues or the problem with the leaking products?

The other 2 questions. What do you think about the international competition? For example, do you find consumers or contractors can buy cheaper products from Asia, for example, given the same quality? And last question is, do you think it's too much for Andrew to be both MD and CEO at the same time.

Okay. Great questions. So I think the first question you're asking was about quality assurance and how we make sure that things like the issue in West Australia doesn't happen again.

So I think one of the things we do a lot of work on is QA. So we have registered laboratories in our plants, testing facilities. We test raw materials in, we test product that's going through, we test product coming out. I think one of the learnings -- my personal view with the Iplex situation was that you can have the greatest quality control systems and all the testing on the pipes that went to West Australia they're good.

There's not an issue with the pipes, but there is a risk and we were alert to it around installation, okay? So you can supply a product that fits the bill. If someone misuses it or installs it incorrectly, that's a problem. So that is a big watch out for us that we've got to be more alert as to how our products are installed.

Classic one, concrete -- ready-mix concrete. The truck is loaded, it's loaded to great accuracy in terms of how much cement, how much water, how much materials go in to produce the product. Quality assurance on all the products. You go to a concrete site, someone wants to put more water in the mix because it makes it easier to place, you just can't let that happen. That destroys the integrity of the product.

So again, it's sign offs. It's -- people have got to sign away. They ought to take responsibility for it. So we've got great QA. What we've got to be alert to is how and if our product is misused in the market. And I think that's just a really -- it's a big watch out. It's a big learning, a big risk understanding that we have as a Board these days about that, about installation risk. That to me is the main in the field risk with product.

Second question was about importation of products, so people bringing their own product into the country. Well, the fact is that the markets, the borders are open, we do see imports and things like cement coming. We're the local supplier of cement. We have 60% market share, which is pretty material. We're up against some big, big players in the market.

One of them whom I worked for, for 15 years, including looking around New Zealand, I think our -- how we operate is great. GIB, it's one thing to make a product, another thing to have how you serve your channels, how you add value to customers. And people if they want to come in and do it, they need to incur significant cost of absolutely going to the customer.

And one of the things -- we've competitive advantage with GIB. We don't just deliver plasterboard to the site, we deliver it to the room. That costs money to do. And you've got to have scale to do it. And I guess that's the important part of our value proposition. So you could work your way.

Some areas were a bit weaker, some areas were stronger. I think it's just taking a balanced approach and understanding who your competitors are and being prepared to compete. Third question was with regards to Andrew as Chief Executive and Managing Director. So in that -- it's a governance question. So I'll tell them how good you are.

When we appointed Andrew, we did think long and hard about a fully independent group of Directors. Could we bring in an Executive Director who is non-independent? And what the appeal of having Andrew in the capacity that he has is, yes, he's part of the management team, but he's also tightly involved in the discussions and the thinking of the Board, which is quite different. It's not the same as management.

So he's in a wonderful position to actually understand where we're all coming from and to take it back into the team and explain it. So I think it's a really important conduit that I think works really, really well. Andrew, would you like to add anything on that or...

Look, I think historically, there may have been a bit of a schism grew up between the Board and the direction the Board wants to go in and the management, and I see me sitting as a Director and as the CEO is being able to bridge that gap and ensure that we're all aligned on the direction we want to take the business. And I think that's working well.

Okay. Sorry, gentleman here at the front.

My name is [ Jagan Dev ], and I'm a shareholder through Sharesies. So I was just checking the stock prices. So last year, company issued the capital at $2.4, that was 17% discount. And right now, prices are $3.20. So even after making a loss of around $0.25 per share, the stock price is up.

But when I see the actual numbers of balance sheet overall, like we are reducing our debt. The first line, there were 6 points and majority of them were downside. Like we were reducing everything. We are focusing on cost saving side. So don't you think that the company is much more pessimistic compared to the New Zealand government's idea of pushing for the economy?

Because it looks like that your actions are clearly like you're thinking that our future is not as certain. So let's take everything under control while if we just see the headlines of the NZ Herald and everything, it's like government is saying we'll put $7 billion in infrastructure and everything. So that I think 2 things are at different direction.

Well, I guess the nub of the question is it's not for us to comment on what the government thinks, okay? They've got a view. But Andrew and the team are reacting to the old sporting analogy, you play what's in front of you. What we're seeing is what we're seeing. And I don't think we're alone in seeing how the markets are operating at the moment.

And the statistics of housing starts and work down, that's out there. They are real numbers. So what Fletcher Building has is a significant operating leverage. So in other words, fixed costs. So when the market goes up, you should do really well. When the market goes down, you are in a world of pain.

And we're not waiting for official cash rate benefits to improve. We can't wait for some road to be built. Things like -- we've just got to get on and manage what we're managing. And Andrew and his team, they are running hard at it to make sure we've got a competitive position through the cycle.

Sir, I have 2 small questions. So one question is that it was mentioned that SAP rolled was stopped.

Sorry, what?

SAP rollout is stopped. IT system rollout, SAP. So which system we are rolling it now?

Sorry, we...

What is the new system that we are running?

Yes.

So what was originally planned was that SAP was going to be rolled out across the entire group. And the expenditure on that to date was about $135 million gross. We don't think we need to spend that money in the business. We have IT systems there already that we can turn around and remediate and extend their life. So by stopping this project here, we've saved a large amount of capital expenditure, and we are still confident that we've got no technology debt that we have to make up.

Okay. Then in that case, I see that the auditor remuneration is around $4 million. That was also the same around like last year, around $4 million every year we are paying to the auditors. So to me, it seems that it is because of the complex structure of the company.

You're talking about the audit fees.

Yes, auditor fees.

Yes. Well, I think our auditors work hard as a gentleman. I think it was Alan -- Alan Best was talking about the complexity of the organizational structure. Yet these are real costs. And yes, if we can simplify it, reduce the complexity, you would think there are savings that come from that. I don't think it's -- I don't mean that's lower quality audit. I just mean that it's easy to understand what we've got our hands around.

Now this is surely my last question. On the industry segment wise, on Page #15, it is mentioned that Australia is mentioned with the other segments, but Australia is a country. So why is it mentioned there on Page #15, industry segment's income statement.

Okay. I'm going to -- we've got our CFO over here, Will Wright, he can answer that question for you.

Yes. Thanks for that question. We reported last year's financial accounts on the basis of the old organizational structure. So Australia at that point in time was a division. Moving forward, we'll be reporting on the new organizational structure where Australia is not a division.

Okay. Thank you. Any other questions? Otherwise, we'll go to questions online.

Thanks, Chair. We have 3 questions for this section online. The first one is from [ Evan Wells ]. Given the low comparative share price versus 2 to 3 years ago, what are the chances of a takeover of the whole company and what actions are the Board taking to contend with this?

Thanks, Christian. It's a pretty fundamental question. Look, we know the share price is weak. We have a view of intrinsic value of what this company is worth and therefore, what a share in Fletcher Building is worth. The situation is that the market is really tough. We're doing a lot of work to simplify our structure, our strategy, take costs out. And over time, that will benefit shareholders.

So you can only manage what you can manage. If someone wants to have a look at us, go for it. But we are working on the business to improve the business and to get the shareholder the share price up, working on it with the levers we can pull in this market.

Second question from Stephen Mayne. How many full-time equivalent staff do we currently have? And is this likely to fall over the coming 12 months with the rapid rollout of AI? Which parts of the business and operations are the most prospective for AI productivity gains and how energetically are we embracing those opportunities?

Yes. I think Andrew...

So AI is obviously quite a complex topic, and it's something that you don't do on mass in the sense that it has a whole number of different areas it's applicable to. So it's more like micro initiatives rather than major projects.

So what we do with our GMs is try and expose them as much as possible to what the different sorts of AI initiative might be and then very much in the decentralized model, leave up to General Managers to turn around and decide where they can apply that technique and that technology.

Next question is from [ Scott Earnshaw ]. Is the new panel board plant in Taupo due to be completed and in production by the end of 2025? If not when?

So the panel board plant at the moment is forecast to produce board in July '26.

There are no further questions for this section online.

Thanks, Christian. Ladies and gentlemen, I will now move on to the formal business of the meeting, which is to vote on the resolutions outlined in the Notice of Meeting sent to all shareholders in September.

The resolutions are ordinary resolutions, and to be passed, they will require the approval of a simple majority of votes of those shareholders entitled to vote and who vote on the resolution. As advised at the beginning of the meeting, we will vote on the resolutions by way of a poll.

Any undirected proxy votes given to the Chair of the meeting or any director will be voted in favor of the resolutions. Any directed proxies given by the shareholder will automatically be cast as directed. For eligible online attendees, voting on the resolutions is now open, and you can vote at any time until I declare the voting closed.

For shareholders and proxies in attendance at the meeting, I will invite you to place your completed and signed voting proxy form in one of the ballot boxes which will be passed around the room after all the resolutions have been introduced to the meeting. If anyone in the room is unsure how to complete the voting form, please go to the desk, which is out there where someone will be able to help you.

I will now turn to the resolutions. Now turning to the first resolution. It concerns myself, and I will hand over to Sandra Dodds, who is the Chair of our Audit and Risk Committee to conduct the consideration of this resolution.

Thank you, Peter. It's now my pleasure to move that Peter Crowley be reelected as a Director of the company. Peter was appointed to the Board on the 1st of October 2019 and appointed Chair on 3rd of February 2025. He is the Chair of the Nominations Committee, a member of the Disclosure Committee and is considered by the Board to be an Independent Director.

His credentials are outlined in the explanatory notes to the Notice of the Meeting. The Board unanimously recommends that shareholders vote in favor of the reelection of Peter Crowley. I now extend to Peter the opportunity to speak about his reelection before we proceed to discussion on the reselection.

Thanks, Sandra. Ladies and gentlemen, it's been a privilege to serve as Chair since February, and I stand before you today seeking your support for reelection as a director at an important turning point for Fletcher Building.

When I was most recently elected and reelected as a Director back in 2022, I spoke about the value of combining deep industry knowledge and governance discipline. These themes remain the foundation of how I approach my responsibilities.

I have over 40 years' experience as an executive and director in the building products and construction materials industries across Australia and New Zealand. And I bring to the role a strong mix of operational insight, governance skill and a deep commitment to the people and the communities which we serve.

I've got to be candid, Fletcher Building has not delivered the results our shareholders deserve. Our performance has lagged expectations even as we navigate some extraordinarily challenging market conditions. And it's clear -- crystal clear that a turnaround must be accelerated.

That's why I'm proud of the steps we've taken to refresh and strengthen our Board, bringing in new Directors who had a breadth of experience, sharper perspectives and the resolve to drive change. Leading this team of committed and talented individuals is a responsibility that I take seriously. And together, we are focused on setting the company back on a path to consistent performance and shareholder value creation.

At the same time, we've made important progress in reshaping Fletcher Building to position it for a stronger future. We've reduced net debt significantly, actually. We've improved our balance sheet strength and its resilience. And we've continued to make progress in resolving our remaining legacy issues such as the Puhoi to Warkworth project.

And as we've mentioned earlier, we've set a path for the handover of the New Zealand International Convention Centre shortly. We're simplifying our portfolio to focus on our core strengths around the manufacturing and distribution of building products, and we've taken bold steps to streamline our operations so we can be now more efficient and agile.

Looking forward, my focus as the Chair is twofold. The first is sharpening our strategy and portfolio. We're concentrating on our core strengths in manufacturing and distribution, businesses where we know we can win. At the same time, we are reviewing noncore areas to ensure capital is deployed where it can make the best return.

The second thing I'm focusing on is restoring operational discipline. My own background in building products and wholesale distribution has reinforced for me that efficiency, cost control and customer focus are the foundations of sustainable performance, and we're embedding these disciplines across the group.

Most importantly, we are committed to rebuilding shareholder value. We have a strong financial footing. We've got market-leading and resilient businesses and a refreshed Board and a management team, a clear plan and the people who are ready and willing to deliver it.

While the turnaround might not happen overnight, the steps that we are taking now will put Fletcher Building back on the path to consistent performance and sustainable returns. I really want to take this opportunity, ladies and gentlemen, to acknowledge the resilience and dedication of our people across both Australia and New Zealand.

Over the past few years, I've made a deliberate effort to visit sites across the businesses to maintain a close connection between the Board and our people. I just tallied up just out of interest, so far less than -- in 11 months I've been to 20 sites. And by the end of November, I'll have been to 23 sites. So I'm out and about, and I know my colleagues, we do -- we get out and about.

And we go out and about because we want to see what the assets are, we want to meet our people, we want to understand our customers and we want to interact with them about safety and the operational performance of the business. So we are really active, and we think it's important.

And what you come away with when you see them is that we really have good teams, people committed -- really strong teams. They're committed to safety, they're committed to the customers and they're committed to innovation. That culture of resilience and customer focus is one of Fletcher Building's greater strengths, and it gives me great confidence in the future.

Fellow shareholders, Fletcher Building is not where it needs to be. We're taking the hard decisions, and we are strengthening governance, and we're resetting the business with a renewed sense of direction and discipline.

And with your continued support, I look forward to leading this refreshed Board. We're working closely with management and applying my own experience of over 40 years to ensure Fletcher Building regains its strength, credibility and leadership in our industry. Thank you. Thank you very much.

Thank you, Peter. I now invite discussion on the resolution. Are there any questions that shareholders would like to ask Peter Crowley? If you're in the room, I invite you to raise your hand and a microphone will be handed to you. Before you ask your question, please state your name. Are there any questions? Are there any questions, Christian, online?

We have 1 question online from Stephen Mayne. Is Peter intending to serve a full 3-year term and then recontest in 2028? And as a former building products CEO himself, how does he discipline himself not to overly micromanage the CEO and wider management team? Could the new CEO comment on how hands-on the Chairman has been so far during his time at the company?

That's a pretty good question. I'm just trying to remember all the elements of it. So look, I'm 68 years old, I think it's in the documents that people have seen. This is my third term. I'm not sure I would go around again. It's not because I don't like the business or anything like that, but I want to make sure that the business gets the best of me over the next 3 years.

So I think it's really important that we understand that. So I'm giving it everything I've got. I'm working with a team who are empowered, they can make decisions. I think it's really important to have micro management. What I think the Board's got to be clear on is the management is clear on what they got to do, okay?

If we're clear that they're clear and if we got the systems in place to track performance, monitor performance and the ability through Board meetings to feedback on performance, I think you'll let the management get on with it and get it done. Sorry, Christian, was there a third part...

Could the CEO comment on how hands-on the Chair has been?

I don't think I've ever been micro-managed. So it wouldn't happen.

Just to ask, are there any more questions, Christian?

No further questions online.

Okay. There appears to be no other questions, then I'll hand it back to you, Peter. Thank you.

Thanks, Sandra. Ladies and gentlemen, we'll now move to resolution 2, which is the election of Jacqui Coombes. It is my pleasure to move that Jacqui Coombes be elected as a Director of the company. Jacqui was appointed to the Board on the 14th of April 2025. She is the Chair of our People and Remuneration Committee and a member of the Nominations Committee.

The Board has agreed that she is an Independent Director. Her credentials are outlined in the explanatory notes to the Notice of Meeting. The Board unanimously recommends that shareholders vote in favor of her election. I would now ask Jacqui to address the meeting in support of her election.

Thank you, Peter. Good morning. It's a privilege to be standing before you today seeking your support for election to the Fletcher Building Board. I was appointed in April this year. And while my tenure has been short, I've already seen firsthand the scale of the opportunity we have to restore Fletcher Building's performance and reputation.

With over 30 years of leadership experience in the building industry and retail sector, I bring a wealth of experience and expertise to this journey. My background is rooted in operational excellence, customer focus and people leadership; capabilities, I believe, are critical as we drive Fletcher Building's performance.

For over a decade, I led Bunnings New Zealand, and I later served as Group HR Director for Bunnings across Australia and New Zealand and a team of 55,000 people. I've also worked in operational and retail leadership roles in businesses, including Spotlight, Noel Leeming, Woolworths and Aldi in the U.K.

I joined the Fletcher Building Board because I believe in the potential of this company while recognizing the challenges that we face. I believe you are right in expecting more as shareholders of this business. The company has underperformed and the market has been clear in its judgment. Economic headwinds and legacy issues have tested confidence.

But I also see a business with strong fundamentals, a proud history and a renewed determination to get back on track, including to take the benefit of the market improvement as the cycle turns. As Chair of the People and Rem Committee and a member of the Nominations Committee, I've been focusing on ensuring we have the right leadership, the right incentives and the right culture to drive performance.

Governance matters and so does accountability. I bring a sharp commercial lens, a deep understanding of frontline operations and a belief that culture and performance go hand-in-hand.

Looking ahead, I'm optimistic. I believe Fletcher Building can emerge from this period stronger and more resilient. We're simplifying the business and focusing our strategy. My particular focus is ensuring we have the right people in the right roles supported by a culture that values performance, transparency and customer focus.

To our shareholders, I understand your disappointment with the company's performance, and I share your expectations of improvement. I want to assure you that I am committed to working with my fellow directors and management to deliver the performance needed to rebuild trust and create long-term value.

With your support, I look forward to continuing to serve on the Board and contributing to the company's renewal and success. Thank you.

Thanks, Jacqui. I now invite discussion on the resolution. Are there any questions that shareholders would like to ask Jacqui Coombes? If you're in the room, I invite you to please raise a hand and a microphone will be handed to you. Before you ask your question, again, I'd ask if you please state your name. The gentleman in the front.

My name is Jagan Dev. So my question is, I think around $1 billion was employee cost for a year for this company. Employee cost is $1 billion. Is it right to say? I read somewhere.

My question is about how to motivate the company employees through remuneration? So when the stock price was so low and when we raise the capital at $2.4, how about offering ESOP to the company employees?

And when we say we have strategic business units, we can give the SBU offer to the Directors as well as the SBU heads and if some -- anyone who is at manager level or if the company can create a plan where even the lowest level employee can also think of joining, how about that to motivate the person to stay with the Fletcher for long term?

I'm not bumping your question, but we've got a section that's on the Rem Report and Rem principles. So I'm wondering if I can answer your question once we've done that part of the meeting. And I think that may answer some of your questions, if that's okay?

Okay.

And Jacqui is actually quite -- Jacqui will present on that...

And it's a very important topic. So thank you.

And it's a full presentation which I believe will address your question. So lady just here.

[ Madeleine Gunn ]. A number of years ago, I was at this meeting and the Chair of Board had presented at the very beginning these wonderfully competent Board members and then gave us dreadful results for the year. And I asked the question, did he consider that perhaps they might need more diversity on the Board.

Now because I was a woman asking the question, it was reported in the Herald that the Chair was asked, did they need more women on the Board. And I'm delighted to see that we have 3 women on the Board now, and Jacqui, delighted to support you reappointment.

But it's not just the gender balance that's really important. I, like Coralie at the beginning, really support the fact that we now have people on the Board who have experience in the industry. And I don't think the plethora of accountants and lawyers, however well experienced and well meaning, did an awful lot for Fletcher Building over those years.

So Peter, again, congratulations on the focus of the new Board and lovely to see 3 women on it.

Thanks, Madeleine, I really appreciate your vote of confidence. And I just -- it probably doesn't go specifically to the resolution. But we -- my colleagues, whether they be male or female, have the skills. They got the right skills, the talent.

You've heard just Jacqui talking in her speech that she's run a business with 55,000 people, that's a serious business. And she knows the distribution market in New Zealand inside out. And we need that because we've got a business called PlaceMakers and that is a focus of our -- part of our turnaround.

Just -- well, I've just got to run with this one because I think this is really important. We've got people irrespective of who or what they are that they bring talent, diversity is a good thing. We've got Sandra at the end, Sandra chairs our Audit and Risk Committee meeting.

Sandra actually is a Chartered Accountant, but he's not out of financial services. She worked for Downer she worked for Fulton Hogan in the contracting side of businesses and heavy building materials side, so the industries that we're in, looking at those businesses and how they perform. So it is really relevant experience. She knows what questions to ask in meetings.

And Cathy, as we've been through this raft of legacy work that we've been slogging our way through, which we're getting clear of it, that's the good news, she's been integral to helping us in giving us strong advice in the Boardroom about how we manage these things. So yes, we've got 3 ladies, but what a great 3 ladies. And then we've got the fellows to and they're the right mix.

Tony. Tony and I've worked together years and years and years ago. Tony runs the biggest aluminum extrusion business in Australia. He knows about building products. He worked for Carter Holt Harvey years ago. He ran the insulation business in Australia. His overlap of the businesses we operate is phenomenal.

We've got James Miller. James brings us -- well, he's going to talk about himself in a minute. So I'm actually going to leave James out because we reckon he's pretty good, but he can sing for his own dinner and then I can recap at the end. But again, with Andrew Reding, an absolute industry veteran in the industries that we operate.

So I'm just really confident that we've got the diversity of -- and I bring heavy construction materials and distribution. So the businesses we're in, we've got expertise. What the gender is, is almost irrelevant, but we got -- but it works really -- it's a good team. And it's a good team that works really well.

So Madeleine, I just wanted to take that bit of time to hopefully address your question and give the shareholders some comfort as to where we're coming from.

Any questions online, Christian?

No questions online.

Right. So let's move on to the third resolution, which is the election of James Miller. And it's now my pleasure to move that James Miller be elected as a Director of the company. James was appointed to the Board on the 1st of June 2025. He's a member of the Audit and Risk Committee, the Disclosure Committee and the Nominations Committee.

The Board has agreed that James is an independent director. His credentials are outlined in the explanatory notes to the Notice of Meeting. The Board unanimously recommends that shareholders vote in favor of his election. I'd now ask James to address the meeting in support of his election.

Thank you, Peter. Good morning, shareholders and colleagues. And following my recent appointment to Fletcher Building, I'm now seeking shareholder support for my election. I spent my career at helping businesses navigate complexity, unlock value and earn trust. From leading investment firms to chairing listed companies, I've seen what good governance looks like and what happened when it's missing.

I joined Fletcher Building because I believe in its significant potential. Also I believe in accountability. This is a business that has faced tough questions from shareholders, from the market and from within and quite rightly so. Performance has lagged expectations and confidence has been tested.

But in my short time on the Board, I've seen all of the ingredients for a turnaround, strong core businesses, very capable management team and a refreshed Board and a clear appetite for change. I bring to the table experience in capital markets, audit and risk and governance.

I'm currently the Board Chair of Channel Infrastructure, Director of Ryman Healthcare and Vista Group. I previously chaired the NZX and served on the Board of Auckland Airport and Mercury and led the investment strategy for Craigs Investment Partners.

Since joining the Fletcher Board, I've been actively involved in audit and risk disclosure and nomination committees. We're simplifying the business, reviewing our portfolio and taking significant costs out.

While these are all the right moves, I do caution New Zealand is in a recession creating significant headwinds for the company with high operating leverage such as Fletcher Building. However, I'm confident the business will come out the other side well positioned for the future.

As shareholders, I know your patience has been tested. I know your expectations are high. That's how it should be. And as a Director of a company -- of your company, I will continue to bring an independent, commercially grounded voice to the Board, one focused on restoring performance, rebuilding trust and delivering results.

Shareholders, it's a privilege to stand here today seeking election as a Director on the Board of Fletcher Building, and I ask for your support. Thank you.

So thank you, James. I now invite discussion on the resolution. Are there any questions that shareholders would like to ask to James Miller? If you're in the room, I invite you to please raise your hand and the microphone will be handed to you. As I said before, before you ask a question, we'd appreciate if you could say your name. Any questions? Alan Best.

Thanks, Mr. Chairman. I'm wondering whether Mr. Miller could tell us a little about the internal reporting systems. We all know that in a decentralized system, you need really immediate, timely and very sensitive reports. We've just seen cost savings or we're seeing cost savings in the IT area. What I would like to know from Mr. Miller is whether he's satisfied that the reporting back to the Board and through the management team is timely and sensitive to his way of thinking.

In fairness, I'm still doing my induction. So it would be hard to know that in detail. But everything I've seen to date would lead me to say there's just a complete level of professionalism on delivering those reporting through to the Board and through to shareholders. So I think it's actually first class.

Any other questions from the floor? Christian, do we have anyone online?

We have a question from Stephen Mayne. Could our 2 new directors up for election today, Jacqui Coombes and James Miller, please comment on their experience of the recruitment process? Did either of them know any of our Directors before engaging with the recruitment process?

I think I welcome you both to respond. Jacqui first.

I think New Zealand is a very small place, and I've heard of most of my fellow directors, but never actually worked directly with anyone from the Board. And I guess just to comment on that further as well, when I was approached about the Fletcher Building Board and was doing my due diligence and met all the Directors, one of the key reasons that was my decision for joining the Board was the experience that we've got on this Board table and what I felt that I could add.

Yes. Again, I've never served with any Director on the Board, but I obviously knew number of them, some of them I know quite well. The process was just the normal process that a Director would go through. So very professionally run. And, yes, what was the other part of the question?

I think that was the question.

No further questions online.

Thanks, Christian. Ladies and gentlemen, we'll now move to the fourth resolution. I now move that the Directors be authorized to fix the fees and expenses of the auditors. EY is the company's auditor and is automatically reappointed under the Companies Act. This resolution authorizes the Board to fix the fees and expenses of the auditor. EY audit partners are present at the meeting should shareholders have any questions of them concerning this resolution.

I now invite discussion on the resolution. Are there any questions in the room? No, doesn't look like it. Okay, Christian, any questions online?

No questions online.

Thank you. So we will now move to the fifth and final resolution of the company's remuneration report for the year ended 30th of June 2025 as detailed on the company's website be adopted. Before the vote, I'd like to ask Jacqui Coombes, the Chair of our People and Rem Committee -- Remuneration Committee, to provide some further details around the remuneration principles and framework.

Thank you, Peter. Whilst Peter said the rem report is online, we've just pulled out some key points that we thought you might like to discuss or to highlight for you today. In terms of our rem principles, the Board believes that it's critical to align exec remuneration outcomes to driving performance and creating value for shareholders.

Our exec framework is, therefore, focused on building a strong culture of ownership, accountability, everything that sits across our exec team. We want to attract and retain the best people and drive them to deliver sustainable performance and growth.

The Board uses four guiding principles to focus senior management rem frameworks. Shareholder value. We want our most senior execs to have a true ownership mindset, created through share ownership, so skin in the game; and strong alignment with shareholder value creation in the short and long term.

Our people. We want our rem structures to attract, motivate and retain high-caliber employees. We are aware of the highly competitive talent market, and we need to be competitive across all our rem elements.

Strategy. Our rem frameworks drive both long-term sustainable earnings and the in-year performance of the company with our most senior people aligned to these outcomes. The frameworks recognize that we're driving growth and we'll incentivize and reward our execs for delivering it.

And risk. Senior execs need to be accountable and take ownership for outcomes with consequences both good and bad. Our rem framework supports our principles through 3 main rem components: fixed rem, short-term incentives and LTI, long-term incentives. Taking fixed rem first. This is key to attracting and retaining high-caliber leaders and skills in a competitive Trans-Tasman market for talent.

Turning to our incentive schemes. These are designed to focus on both in-year performance through the STI component and a long-term sustainable earnings through the LTI component. With short-term incentive, we balance both financial and nonfinancial goals. Having nonfinancial goals means we can set targets for our exec to continue to make progress on the most critical areas of the group's long-term health.

Given the group's recent financial underperformance, the Board have taken 2 immediate actions in relation to financial year 2025 STI. Firstly, we applied the Board's discretion to forfeit all 2025 incentives, even where business units performance hurdles were met, achieved or exceeded.

Secondly, we weighted the financial goals for financial year 2026 at 80%. This reinforced accountability for financial outcomes whilst ensuring we preserve a focus on critical safety and nonfinancial priorities, which we weighted at 10% each.

In relation to the long-term incentive, in financial year 2025, we adopted a shareholder return measure to align with shareholders' financial outcomes and a return on funds measure. There was no payout for LTI in financial year 2025. With the strategic review now completed, we are reviewing how our incentive frameworks can best support our new strategy and operating model going forward.

Turning to the Managing Director and Group CEO. Andrew's rem package has a strong emphasis on long-term performance and is tightly tied to share price performance. As shown by the chart, Andrew's fixed rem is $1.5 million, with approximately 3/4 of the total package at risk through performance-based short- and long-term incentives, 71% at risk at target and 75% at maximum.

If the CEO performed strongly, over half the package would be paid in equity, which would vest over a period of time. This creates tight alignment between the CEO and shareholders, 57% in equity at target and 56% at maximum. I hope the additional background has been helpful for shareholders. I'll now pass back to Peter.

Thanks, Jacqui. Ladies and gentlemen, I now invite discussions on this resolution. Are there any questions that shareholders would like to ask about the remuneration report? If you're in the room, I invite you to please raise your hand and a microphone will be handed to you, and we ask that you state your name. Any questions?

So how many employees will be eligible for this type of remuneration structure?

This is Andrew's structure.

Okay. But -- so is this point almost only for the Board of Director's remuneration or for the other employees also? It's only for Andrew. It seems to me that I'm confused that this question is only for the Andrew's remuneration, right?

Yes, that's right.

Right. Okay. Because I was actually comparing with the SkyCity's annual report where they gave a breakdown based on the salary slab, till $50,000 to $1 million.

So in our rem report there is a structure -- sorry, I don't know the page number off-hand. We don't talk about individual employees and team members, but we do give a range of what our payments look like overall. Page 83 of the annual report. But if you have further questions, feel free to come...

Thanks, Jacqui. Any other questions in the room? Christian, online?

We have a question from Stephen Mayne. Many thanks for once again, voluntarily putting the remuneration report up for a vote today, unlike the vast majority of New Zealand registered companies. Last year, we had an 11% vote against the rem report. Did any of the proxy advisers recommend against our remuneration report this year and has it led to another double-digit protest vote? If so, what was the issue investors were concerned about?

I'm very happy to take that question. First of all, just on why we put this up for a nonbinding vote is we don't have to do this, and I'm not presuming to drive policy in New Zealand as to the other companies. Sure, this is something we choose to do. We think it gives pretty good transparency about what our pay structures are and I guess, the decisions we make and why with regards to pay.

But it's also a really good way of getting feedback from shareholders, so I think we've got it right or we've got it really wrong. In terms of proxy advisers, they've all voted in support or their reports indicated support for our remuneration report. So I think that's -- it's certainly a very helpful thing.

Was there another part to the question, Christian?

If so, what were the issue investors were concerned about with the rem report?

This year?

Yes.

Well, they voted and supported, so there's no issues. But I just actually -- we've got to be alert and awake to -- things change over time. We've got to be working and evolving and modifying how we conduct business. But I think the proxy advisers, and I think the shareholders generally think we got it pretty right.

So no other questions?

No further questions.

So ladies and gentlemen, we'll now vote on the resolutions. I invite you now to cast your votes on the 5 resolutions as displayed on the screen. Please now cast your votes. The voting will close shortly.

Please ensure that you've cast your vote on all 5 resolutions. We'll take a few minutes break now to allow you time to finalize your votes. For those in the room, please place your completed voting proxy forms in the ballot boxes that will be handed around.

[Voting]

Ladies and gentlemen, I think the voting on the resolutions is now closed. Postal and proxy votes received. You'll now see the votes in the screen -- you will now see on the screen the results of postal voting received ahead of the meeting for the resolutions that we put forward.

These postal votes do not include discretionary proxies held and these will be voted on at the meeting. The company's auditor, EY, will act as scrutineer for the polls. The final results of voting on the resolutions will be advised to the NZX and the ASX this afternoon, which will obviously incorporate anybody that voted just now.

So we now turn to the last part of the meeting where shareholders have the opportunity to raise any final questions. I would now like to give any shareholders both present here and online the opportunity to ask questions. Can I ask our shareholders to avoid taking us back on matters that have already been fully discussed already? We'll now answer any questions starting with questions from the floor here. Gentleman here.

[ Kevin Palmer ], shareholder. Given the liabilities of the SkyCity conference center issue, if the court case is successful, does the roofing company have the assets or liability to cover -- to settle that claim? Or is there a risk they will simply go into liquidation and the Fletchers with the cost liabilities but winning the case? And how much would that potential liability be?

Would you like that? Or would you...

So I think you're asking whether the court actions taken against the subcontractors at the SkyCity, whether there's any debt to it. They have a third-party liability insurance policy, which we went into the court stating that it was getting access to that insurance policy that we are after. So yes, they do have some debt.

And does it fully cover the potential liabilities?

I'm not quite sure what you mean by the potential liabilities.

Whether you have a sum in mind of how much you will try to claim off them?

Yes.

So does that liability insurance cover that full amount?

Yes. And just to add, we have taken no recognizance of any possible settlement on that policy into our books at all.

Any other questions from the floor? All right. Christian, online?

Two final questions online. First one from Stephen Mayne. There was a 22.7% vote against the reelection of Independent Director Cathy Quinn at last year's AGM. What was the issue? Has there been any more director election protests today?

Well, I think you can see from the votes that we put up that shareholders have very kindly been supportive of the Board. So I think those issues are behind us.

Final question from Stephen Mayne. Why is the Chair referring to postal voting? Surely, the vast majority of proxy votes were done online? Also, could the Chair please release the headcount data in the poll showing how many shareholders voted for and against?

Well, I guess it's my bad on I'm talking postal not online. Yes, what was the second question?

Could the Chair please release the headcount data and the poll showing how many shareholders voted for and against?

No, I don't think so. I don't think we don't have to do that. I don't see any upside to that at all. It's clear that shareholders have voted and a lot of shareholders have voted. I think that's a really important thing. It was a big -- it's a big turnout in the room. There's a big turnout in the online voting and it's supportive. And I think that's -- the big takeout for us is our shareholders are supporting us getting on with the strategy we've developed and taking the business forward.

No further questions online.

Thanks, Christian. So ladies and gentlemen, I now declare the meeting closed. I want to thank you for your attendance and participation today. And we'd be delighted if you join us for some light refreshments just down there. Thank you very much, and have a great day. Thank you.

Thank you for standing by, and welcome to the Fletcher Building FY '25 Full Year Results Briefing. [Operator Instructions] I would now like to hand the conference over to Mr. Andrew Reding, Managing Director and Group Chief Executive Officer. Please go ahead.

Good morning, and welcome to the presentation of our full year results for the 12 months ended 30th of June 2025. And I must firstly apologize if I cough and splutter a little bit, as I picked up an allergy overnight. And if you're in this room, you'd notice everybody is at one end and I'm at the far end.

So moving to the agenda on Slide 3. I will provide an overview of FY '25 as well as the operating performance of our divisions, and then Will Wright, our Group CFO, will talk through our financial performance. I'll then cover the stakeholders that are so important to our business and close with how we are planning and thinking on the year ahead, and we'll take questions after that, but please keep these to 2 each. Though you are welcome to send through any more or additional questions to the media team.

Turning to Slide 5, a summary of our financial performance. F '25 was a challenging year across all sectors with revenue and margin for the group, both down. Net loss for the year was $419 million, which includes $702 million of significant items, and Will is going to speak about these in more detail shortly. On a more positive note, we made substantial progress on our balance sheet reset including net -- reducing net debt to $999 million following the successful capital raise and divestment of Tradelink. CapEx was down, reflecting on our disciplined approach to capital allocation and although net cash from operating activity was down, it was still robust given the trading environment. While the macro backdrop remains tough, we are positioning the business for the realities of the current market.

Moving to Slide 6, our medium-term strategy. At our Investor Day in June, we presented a clear focused strategy to improve performance and deliver sustainable shareholder returns. This outlined a medium-term focus on manufacturing and distribution of building products and materials. The strategy rests on 4 key pillars: Firstly, taking immediate action and executing our turnaround plan to restore profitability and cash flow to target levels; secondly, ensuring high performance in every part of the organization; thirdly, empowering our leaders to make faster and more effective decisions closer to the customer; and fourthly, ensuring we have a resilient capital structure that supports investment while protecting against volatility. This is a deliberate and disciplined road map that will lead to a more focused, profitable and resilient Fletcher Building.

Moving to Slide 7. Over the past 12 months, we have acted decisively to reshape the business with many key priorities already implemented and clear actions for the short and medium term. In Australia, steel and corporate, we've undertaken structural changes that will deliver around $15 million a year in annualized savings. We have closed underperforming operations, halted the SAP rollout and reduced forward capital commitments. Our corporate functions are being decentralized to give divisions and business units more autonomy and accountability. While the divisional restructures, which are now completed, position us to focus our resources on the divisions and the projects that would generate the highest returns.

We are progressing a number of potential divestments, including our Construction division, CSP and our 13.4% equity stake in the Puhoi to Warkworth toll road. Today, we are also announcing that we're moving to undertake a strategic review of our Residential and Development division, which could result in divestment options being presented to us. We still have more work to do. Over the medium term, we will embed the new operating model and continue simplifying the portfolio. And as balance sheet targets are met, we will reset our dividend policy in order to deliver sustained shareholder returns.

Slide 8, operational highlights. To now look at some highlights from the year, which illustrate the underlying operational strength of the group. First, has grown its ready-mix market share to approximately 40% nationally and more than 50% in Auckland, a position that will be further strengthened when our new 882 Great South Road batching plant comes online in FY '26. Winstone Wallboard's Tauriko plant has consistently achieved A-grade recovery yields above our 95% target. And Waipapa Pine is now operating at full capacity and is demonstrating the benefits of vertical integration with place makers. These achievements demonstrate that despite market challenges, we are holding operational momentum.

Slide 9, progress on legacy risks. In parallel with improving our day-to-day performance, FY has been closing out historical legacy issues that have consumed management attention and balance sheet capacity. While some process are ongoing, during FY '25, we have materially reduced the number and scale of legacy risks, allowing us to focus more fully on the future. At NZICC, construction works are effectively complete. Acceptance testing and compliance processes are well underway with client handover expected during calendar year 2025. We intend to vigorously defend ourselves against SkyCity's legal proceedings and are confident in the position that we hold. And court proceedings against the roofing subcontractors on NZICC are nearly complete with judgment expected in the second half of FY '26. No benefit has been assumed for this.

On the Western Australia pipe matters, the industry response has made meaningful progress and the remediation work of the around 40 participating builders is starting to build momentum. As at 30th of June, 996 ceiling pipe replacements were complete, 55 homes had been fully remediated and over 2,000 homes had leak detector units installed. Costs remain consistent with our provision estimates.

For the Puhoi to Warkworth project, full works completion was approved in May 2024, and we've now settled our COVID-related claims with NZTA and the weather-related in landscape events with insurers.

Slide 10. Moving to Slide 11, divisional performance. There are a lot of numbers on this page, so I won't talk to this slide as I will be covering the divisions individually later in the presentation, but it should be a useful dashboard going forward and also 1 that will get smaller as our divisional structure simplifies. The number of red arrows highlight just how widespread and difficult the current stage of the cycle is for the building and construction industry.

Moving to Slide 12, Building Products. The Building Products division was impacted by cost inflation, softer residential demand and lower volumes, but key business units still maintain high operational performance. EBIT for Winstone Wallboards held up well with tight pricing controls and a well-executed plant production ramp-up. Laminex New Zealand maintained resilient sales in Melteca and particleboard and Comfortech saw solid demand for Pink Batts and PinkFit though challenged by higher energy costs and competitive import pricing.

Moving to Slide 13, concrete. Concrete delivered a resilient result given the market backdrop and Golden Bay MVAC breakdown. Golden Bay's EBIT was impacted by both logistics challenges and lower pricing, but asset reliability remained high and cost control was strong. Winstone Aggregates delivered a stable performance despite weather and project disruptions. First was able to make market share gains with demand from the Auckland Airport expansion and other major infrastructure projects, providing solid volume support in the second half.

Moving to Slide 14, distribution. Distribution delivered a disappointing result with a general market decline in historic loss in share impacting volumes, while intense price competition has compressed margins. Frame and Truss volumes did see positive momentum, rising nearly 5% on last year, and PlaceMakers and Mico maintained strong customer engagement and service levels. By year-end, we had largely implemented an operating model adjustment and cost out program, which are aimed at footprint optimization, better cost efficiency and restoring margins in FY '26. Pleasingly, both PlaceMakers and Mico grew their market share in the latter half of the year.

Slide 15, Australia. Australia experienced mixed performance. Laminex Australia achieved strong growth in premium product categories, particularly the next-generation wood grains range. Fletcher Insulation delivered record monthly output and launched 16 new products. However, Iplex Australia and Stramit faced headwinds from declining activity in their respective markets and pricing pressure.

Slide 16, residential and development. F '25 saw the Residential and Development division navigate persistent demand headwinds, cautious buyer behavior and pricing pressures. Major milestones included the completion of Matai Springs in Canterbury and the launch of The Hill, in Auckland, which has achieved strong pricing for its flagship Belvedere apartments. Three Kings also reached a major transformation milestone with new housing, sports fields and roading network now opened. Lastly, the exit from Clever Core is now complete with over 50% of its staff redeployed into PlaceMakers new Frame and Truss plants.

Slide 17, Construction. The Construction division delivered a meaningful improvement in FY '25, driven by successful delivery of key projects, disciplined cost management and resolution of legacy issues. Higgins contributed material to margin growth and is meeting or exceeding NZTA KPIs, while Brian Perry Civil worked on critical infrastructure projects at both Auckland Airport and Seaview Wharf in Lower Hutt. Major projects continue to deliver the Eastern busway project with the critical Ra Hihi flyover 5 months ahead of schedule, and they also secured the Riverlink Alliance project in Lower Hutt during the year.

And just to recap on divisional changes on Slide 18. As many of you will recall, we announced in May FY '25 that from FY '26 onwards we will report under a simplified divisional structure. There will be 5 divisions: Light Building Products, Heavy Building Materials, Distribution, Residential and Development, and Construction. The new structure better reflects how we will operate today, focuses more accountability and increases transparency for investors. It also aligns our reporting more closely with how capital is allocated and performance is measured internally.

Now I'll hand over to Will Wright and ask Will to make some comments.

Thank you, Andrew, and good morning, everyone. It's been a year of significant challenge and change. While market conditions remain tough, we've taken decisive action to reset the business, strengthen our balance sheet and position ourselves for long-term performance.

Moving to Slide 20, let me begin with some updates to our reporting framework. These changes improve clarity and comparability between periods and better reflect how we manage the business. This year, we've enhanced our segment reporting to provide greater transparency. You'll see clearer breakdowns across EBIT and cash by segment and revenue, and this can be found on Note 2.2 of the annual accounts. We've also moved to align our cash flow presentation with IFRS 18, providing additional detail on operating, investing and financing activities. In particular, we are now clearer on where interest paid, interest received and dividends received fall within the cash flow statement.

Turning to the income statement. Revenue for the year was $6.99 billion, down 9% from FY '24 with the largest decline in the Residential and Development division, which was down 30% from FY '24. Gross margin held relatively steady at $1.95 billion, supported by cost-out initiatives, including changes to shift patterns and procurement savings. The results benefited from a total of $200 million in gross cost-out initiatives, including a net $75 million reduction in SG&A and warehouse and distribution expenses year-on-year.

There was also a series of negative impacts above the EBIT line, which will not continue into FY '26. These included the settlement of the historic P2W claim with NZTA for $16.4 million less than previously recognized, $9 million in losses relating to the Clever Core panelization facility, and $6 million of costs relating to the MVAC breakdown. Significant items from continued operations totaled $644 million, primarily driven by impairments, restructuring costs and legacy project provisions. These are covered in more detail on Slide 32.

Turning to Slide 22. This waterfall chart illustrates the key drivers of EBIT movement year-on-year. As you can see, while cost initiatives delivered meaningful savings, they were not enough to fully offset the impact of lower volumes and cost inflation. The key driver of EBIT decline was volume contraction. In our manufacturing businesses, this was most pronounced in Laminex Australia and Humes, whose volumes were down 10.6% and 15.1%, respectively, in the June quarter relative to 12 months earlier on a rolling 12-month basis. And similarly, our steel businesses contracted between 10% and 15% on a rolling 12-month basis. There were some positive signs with Iplex New Zealand seeing improved volumes off the back of strong rural sales and PlaceMakers' Frame and Truss volumes improving over the last 6 months due to improving market share.

Balance sheet strength was improved by the capital raise, but we have more work to do. The normalization of working capital is ongoing. However, we saw less volatility at 30 June than in prior years. Net debt fell to $999 million, down from $1.77 billion with the proceeds from the equity raise used to repay $680 million of debt. We remain above our target net debt range of $400 million to $900 million. However, we have several levers to reduce debt over time and move towards our target range.

Firstly, shareholder distributions, we will use retained earnings to pay down debt. The dividend will remain suspended until we reach the lower half of our target range. Secondly, our ongoing optimization of capital expenditure, ensuring it is rightsized and not based on peak volume assumptions. We continue to review projects from across the portfolio for lower cost solutions or better phasing of expenditure. Thirdly, land. We're actively managing our portfolio of sites to release capital from underutilized or inefficient sites. This includes not only our manufacturing and distribution sites, but also our land bank within the Residential and Development division. And lastly, as Andrew has discussed, we're pursuing strategic divestments.

Operating cash flow was $501 million, down from $588 million in FY '24, largely due to lower earnings. However, the impact of this was partially offset by reduction in legacy construction cash outflows and reduced cash flows relating to significant items.

Investing cash flow improved significantly year-on-year, even as adding back the impact from divestments of Tradelink and the 50% share of Construction Fiji. Net outflows of $61 million compared to $398 million last year, this reflected a strong focus on disciplined capital allocation, including the scaling back of a number of projects and/or improved phasing of those projects through time.

On Slide 25, you can find a breakdown of our central costs. As discussed at Investor Day, we will provide greater transparency on the quantum and nature of corporate costs moving forward. We see corporate overhead as a key medium-term opportunity for us to remove structural cost from the business. As signaled at Investor Day, we have taken approximately $30 million of structural central costs out of the business late in FY '25. This will flow into FY '26. However, much of the central costs relate to longer-term contracts and licenses that will take longer to unwind.

Working capital is an area where we see significant opportunity for improvement. While we've traditionally focused on year-end cash flows, we're now shifting to a more proactive year-round approach. Our working capital cycle is too wide with too much volatility throughout the year. This leads to us having to carry greater levels of headroom in our banking facilities. And this ultimately comes at a cost. FY '25 year-end removed the volatility that has been by design. For example, we ensured all of our suppliers were paid in June. The Residential and Construction divisions have also been large drivers of near volatility. In many ways, this cycle is tied to the industries in which they operate, and this will be harder to address in the short term.

Moving to Slide 27. In FY '25, we invested $313 million in CapEx and investments, down from the $420 million spent in FY '24 as we continue to focus on the scale and phasing of expenditure. $5 million of investments relates to contributions into construction JVs and the final purchase price adjustments on Waipapa Pine. $16 million was spent on stripping costs in Winstone Aggregates, which are capitalized into stock and amortized as the resource is sold. Other growth CapEx relates predominantly to the new first batching plant at 882 Great South Road and the new PlaceMakers Frame and Truss plant. The OSB plant under construction in Taupo is progressing well and remains on track for initial production mid next year.

We continue to work closely with the business on the scaling and phasing of CapEx. At this early stage, we expect FY '26 CapEx to be between $320 million and $340 million. This includes $130 million on the OSB plant. Additionally, we expect to invest approximately $30 million in quarry stripping and land acquisitions and approximately $13 million on the construction of retirement village units.

Moving to Slide 29. We continue to manage our lease portfolio actively with a focus on reducing liabilities and ensuring lease impacts are reflected in divisional return on invested capital calculations. Lease liabilities totaled $1.5 billion at year-end and represented 57% of group gross debt. Land and Buildings accounted for the majority of leases with plants and machinery responsible for the remainder. The increase in lease liabilities year-on-year primarily related to 2 transactions: the sale and leaseback of Steel division land and buildings at Hunua and Laminex Australia entering into a new warehouse lease agreement in Victoria. We will be more active in managing lease liabilities moving forward with an understanding that these place debt-like obligations on the business.

We remain focused on reducing leverage and simplifying our funding mix. This will allow us to maintain investment-grade credit metrics and lower funding costs which currently average around 5.6% pre-line fees, down from 6.1% at the half year. The current group funding profile as at 30 June 2025, had circa $2.1 billion of total credit facilities, a reduction from $2.8 billion from a year earlier. During the first half of the financial year, the group repaid and canceled $569 million in borrowings. Additionally, in the second half of the year, we elected to redeem $80 million of capital notes that fell due in March.

We have $1.1 billion in liquidity, including $916 million in undrawn credit lines. The average maturity of our debt is 2.2 years. Pleasingly, Moody's reaffirmed our credit rating in July. Moving forward, our future capital structure will focus more on domestic senior funding sources and will likely include a mix of bank, wholesale and listed debt.

Slide 31 has a chart showing the components of the reduction in net debt from FY '24 to FY '25. The capital raise was the primary driver but we also saw $88 million in additional deleveraging from operating cash flows and assets. As discussed earlier, ongoing debt reduction remains a key focus.

Moving to Slide 32, significant items. There are significant items of $702 million for FY '25. In the first half of the financial year, we reported $251 million in significant items. This primarily related to the joint industry response in Western Australia, which will translate into cash over a number of years and the Tradelink disposal. The NZICC additional cost to complete announced in June added another $15 million. From the strategic review, there is $380 million in noncash items and $44 million in cash items. These cash items include onerous contract provisions for SAP licenses and the costs associated with cost out and site closures.

There is an additional $12 million in nonstrategic review items from the second half. This relates to legal costs incurred from legacy construction projects and the WA pipes matters. These numbers are substantial, but they reflect our commitment to reshaping the business for long-term success. The strategic review is not just about cost. It's about clarity, focus and positioning ourselves for sustainable growth.

I'll now hand back to Andrew.

Thank you, Will. Our success depends on our stakeholders, our people, our customers, our communities and our shareholders. In FY '25, we worked hard to strengthen these relationships, not just through a financial lens but through a consistent commitment to safety, environmental leadership and community engagement and we'd like to enlarge on these in the coming slides.

So moving to Slide 34. First, I want to acknowledge the tragic loss of Max, a team member who passed away following a crane incident in Vanuatu at the start of FY '26. This event and the 15 high-potential incidents we see each month reinforce that we can never be too comfortable. Safety remains our highest priority, and we continue to work towards our promise that everyone goes home safe every day. In FY '25, our TRIFR was 2.9%, the lowest ever recorded for Fletcher Building. Leaders completed over 19,000 critical control verifications and 25,000 leader walks. We were proud to be named Safety Leader of the Year by the Australian Institute of Health and Safety and who have been finalists in 5 categories at the National SafeGuard Awards.

Amongst the many initiatives focusing on operating more safely while outstanding action is the piloting of AI technologies to improve dynamic exclusion zones around mobile plant with PlaceMakers and EasySteel achieving significant reductions in breach rates.

Our people. Our people are at the heart of Fletcher Building. In FY '25, we provided 45 welfare grants, supported diversity initiatives such as Girls in High Vis and women in construction and celebrated the achievement of our Whakatupu graduates. We also launched the Sonder app across New Zealand businesses, doubling the number of employees accessing 24/7 medical, safety and mental health support.

Moving to Slide 36, our environment. We have reduced scope 1 and 2 carbon emissions by 24% compared to FY '18 with 78% of our revenue now coming from sustainably certified products. Initiatives such as Plasterboard recycling with local councils, coal substitution at Golden Bay and renewable energy generation in Australia demonstrate our commitment to supporting the environment and leading in sustainable building practices.

Our community. We are proud to support the communities we operate in. Across our business units, there are a wide range of grassroots sponsorships, donations and volunteering initiatives that can't be encompassed on a single page, but we've included some examples here where our teams have helped make a difference in their local communities.

Slide 38 and 39, our customers. We are proud of the products and people that help our customers build New Zealand and Australia's future. Again, these are just a snapshot of the work we do every day. At Auckland Airport, Firth and Brian Perry Civil completed their largest ever concrete pour. The NZICC will be a meaningful asset for both Auckland and New Zealand, bringing large numbers of convention attendees from 2026. Humes and Iplex supported the White Kainga Ora link road project securing long-time water and power infrastructure in Eastern Porirua. At Christchurch Stadium, we supplied the full spectrum of GIB products.

Iplex supplies modular form maintenance holes to new Western Sydney International Airport. And at the Te Waka Aorangi Child Wellness Centre, Laminex products were used to create durable, high-performance spaces for children with complex needs. These projects reflect the strength of our customer partnerships and the quality of our products.

Now a few words about the outlook going forward. Slide 41, where in the New Zealand cycle are we? Looking ahead in New Zealand, we expect a prolonged period of subdued demand in the residential and commercial construction markets. Building merchant sales remain a reliable proxy for the sector activity and our current data shows nominal sales have fallen across the wider merchant sector tracking below prior year levels, even before adjusting for inflation. This weakness has persisted over the past 18 months with monthly rolling 12-month figures well off the peak of the last cycle. The softness is broad-based affecting both residential and nonresidential segments. We are planning on the assumption that these lower levels of activity will continue through FY '26. So our operating model, cost structure and capital plans have been set with this conservative view in mind, ensuring we remain resilient if the downturn endures while also positioning us to move quickly should demand recover.

And Slide 42, where in the Australian cycle are we? In Australia, we're seeing early signs that gap between completions and commencements is beginning to close. For total dwellings, approvals and commencements are starting to align, indicating a potential stabilization in the pipeline. New house activity, however, remains slower to respond with commencement still lagging approvals. Market conditions remain mixed, while some segments show resilience, others continue to face headwinds from interest rates, labor constraints and elevated input costs. Against this backdrop, we maintain a cautious outlook and are focused on driving operational efficiency and product-led growth across our Australian businesses.

So moving on to the outlook. As we look ahead to FY '26, the operating environment remains challenging, and our plans reflect that reality. In New Zealand, we expect volumes to remain low and demand subdued. While in Australia, there are some early positive indicators, it is too soon to say whether they will translate into materially higher activity or volumes. We will continue to execute our cost reduction initiatives, which will provide important support to profitability in the face of these volume headwinds. These are not just short-term measures, they're designed to structurally improve our cost base, giving us lasting efficiency gains.

Our portfolio simplification work is progressing with divestments and strategic reviews underway. While these will strengthen our balance sheet, the full cash flow and cost out benefits are more likely to be realized in FY '27.

Slide 45, conclusion. As we close, I want to leave you with 5 key messages. We have taken immediate action. We have renewed our focus on our operating performance and customer needs. We are on track with net debt and have clear priorities for FY '26. While the New Zealand and Australian markets are likely to remain weak in FY '26, our focus is for disciplined actionable execution, maintaining cost discipline, protecting margins, delivering operational excellence and positioning the business to accelerate when market conditions improve.

Thank you for your time, and we're happy to take any questions you might have, remembering that we would like to restrict it to 2 per person.

[Operator Instructions] Your first question today comes from Kieran Carling with Craigs Investment Partners.

Andrew, well, thanks for the presentation. First question is just around the outlook statement where you've said the construction sale process and residential strategic review unlikely to result in any cash flow or cost benefits until '27. Can you just elaborate on that point? And talk us through why the construction sale process could take that long, given the inbound inquiry seem to be quite strong?

Look, it's a very complex transaction that we have to go through. So first of all, we need to engage with parties who are showing interest. And secondly, there is a lot of details that have gone through here in due diligence and so on. So I think it's quite realistic to assume that the timetable is going to push out somewhat.

Okay. And is it fair to assume that you're more looking down the path of divestment for the residential business as opposed to more of a JV model?

So it's -- we don't know the answer to that yet. So we're carrying out a strategic review. The reason we're undergoing this is because -- as we've said, the aim for the business going forward is to be the manufacturing distributor of building materials and products, and patently, residential and development doesn't fit within that model. So what we're doing is just trying to find out what options we have for the business going forward. And that, again, could be quite a complex exercise and take a period of time.

Your next question comes from Rohan Koreman-Smit with Forsyth Barr.

Thanks for the additional color in the presentation and annual reports, very helpful. Just on your outlook slide as well. The third bullet down, you talked about cost initiatives continuing and will help support profitability within operating leverage impacted by current run rates. If you add up all the kind of things that you've done so far, Aussie divisional restructure, Clever Core gone, there's the cement issue. There was a subsidiary closure in Laminex, Puhoi to Warkworth. That gets still a pretty decent number. And I guess you're expecting all of that kind of to be offset by, I guess, lower exit run rates from this year than on average. And does that mean that you're kind of suggesting here that earnings will be broadly flat despite all the cost gains?

Yes. Look, it's still pretty early in the year for us to be making a call on year-end. The outlook and environment are still very uncertain. And so what we're doing, trying to do is focus on the things that we can control. And so we're taking cost out where we can. We're getting our businesses operating as efficiently as possible and pulling all the mitigants to make sure that we've got a strong balance sheet that will see us through the cycle as well.

And then maybe just on that balance sheet, net debt was a little bit lower than you suggested a couple of months ago. Can you just talk us through what other capital calls there are in FY '26, the remainder of the legacy projects, how much you expect to come out of WA land that you need to buy, et cetera. Just want to get an idea of the kind of other headwinds that there are there in terms of pulling that number down further?

Yes, sure. So we're still working through a lot of that. So we've given a good update in the appendix to the presentation on just the run rate on WA Pipes. And we expect that to continue to gain momentum. It had a slow start but we think that will continue to gain momentum. Construction legacy cash outflows are reducing through time. We've put some photos in the results presentation, which you can have a look at, which is all of what I would call a completed building at the convention center. There's not a road cone or piece of scaffolding and site. And so they will reduce as we go through the year.

We're still working through some of the residential land payments that are due. So as you can imagine, we have a number of commitments to purchase land that we're committed to in prior periods and also deferred settlement as well. So we still have some of The Hill, for example, to pay for in this financial year. We're still working through the exact timing of those payments and what can be deferred and what we can potentially move on, that will be well north of $150 million this year as well.

Your next question comes from Stephen Hudson with Macquarie Securities New Zealand.

Andrew and Will. Just a question on the Sig items. Can you give us the cash outflow that you're expecting for FY '26 from the provisioning that you made and to what extent you'd expect further provisioning to occur in '26 on Sig Items?

Yes, sure, Stephen. So I think of the restructuring cash costs, which were about $44 million, a large chunk of that relates to SAP licenses. And most of those don't actually hit the financials until FY '27, '28 and '29. So the cash component of that $44 million will flow predominantly in those years. There will be about 10 to 15 of those restructuring costs that flow in both the tail end of FY '25, a small amount and FY '26.

I'll just sneak in another 1 because I think that was 1 question. Just on consensus, I guess, there was an earlier question on whether or not a flat outlook looks a bit more realistic. The Street's got you at close to $450 million for next year and $547 million of EBIT the year after, so 42% increase over a 2-year period. Can you just give us a sense how realistic do you think that is as a management team?

Yes. Look, I think what we're seeing right now, Stephen, is a very challenging market. And so what we've undertaken to do is release our quarterly -- our volumes of our key products on a quarterly basis, and that should help to inform the market on a go-forward basis as to the situation as we see it. You would have seen in the June quarter that volumes continue to decline across a lot of our businesses. And where they didn't like in PlaceMakers Frame and Truss, it was really share gain and not market. And so I think we're still seeing a pretty tough market at the moment, and we're not seeing anything different in this quarter as it's tracking so far. But obviously, we'll provide that update in sort of early to mid-October. So pre-AGM, you'll have a pretty good read on where we see this year tracking as well.

Your next question comes from Dylan Adrian with JPMorgan.

Andrew, Will. Just on Building Products, how did margins shape up in that division on sort of an exit run rate basis? Because I know you called out an improvement as you exited the period, please?

Can you repeat your question? We didn't quite catch that.

Just on Building Products, how did margins shape up on sort of an exit run rate basis? Because I think you called out an improvement as you exited the period, as you exited FY '25?

Yes. Look, I think again, margin improvement is hard one in that business at the moment because you're seeing reductions in operating leverage, right? And so where we're seeing margin improvement, it's things like reductions in shift patterns, it is procurement savings and then also being really smart about our pricing as well. And so making sure that we're not offering unnecessary discounts, making sure that we're recovering our freight. And so it's a range of things that the team are doing. It's quite a different story across the different businesses as well. So margins are certainly not growing in all of the building products businesses, but we are seeing some positive momentum in some and some compression in others, and it's kind of a net benefit, I suppose.

Your next question comes from Ramoun Lazar with Jefferies.

I guess just a follow-on from the question earlier just around the expectations into '26. I guess second half EBIT was about $220 million, which includes more of those cost reductions through the June half. I guess to what extent do the remainder of the cost out annualized into the first half? How should we think about that? And then also, if you could just touch on the typical seasonality you think we should expect first half compared to second half, just given the timing of some of those residential developments.

Yes. Good question. So I think, look, the cost out wins are hard fought. So you were seeing we've got a net $75 million benefit in SG&A and warehouse and distribution, but you're constantly having to take cost out to fight inflation in this business. And inflation hasn't really gone away. We're continuing to see inflation pressure across the business. So we're continuing to take cost out. And in particular, we've got that $30 million of structural cost out that will flow into the business this year from the removal of corporate overheads, which I think is an important inflation mitigant and also will help operating leverage as the volumes come back.

In terms of first half, second half split, we generally see a second half waiting within this business on a historical basis. I think looking at the residential business and the construction business, they're probably the ones that have the most volatility on half-on-half earnings historically. And I think as we sit here today, we think both of those businesses will be second half weighted. The construction, just in terms of where their projects are at, they've got a number of projects starting in this first half, and you have to get quite away through those projects before you start to get certainty enough to recognize earnings. And so that will probably be in the second half for the Construction division.

And then in the residential business, it's more around the earthwork seasons and when you get completions of houses in New Zealand. And so that's why that tends to be a second half weighted business in Auckland, which is really the bulk of the residential business. And you can really only do earthworks between October and maybe April, maybe May, if it's a really sunny year. And so what that means is you tend to get all your sections at 1 point in time, you tend to be built on them and then deliver them into that second half of this year.

Okay. Got it. So just a point of clarification. So that you expect to hold on to the depressed volume environment, do you expect to hold on to those cost reductions that you've achieved today plus the $30 million given the comment on inflation? Or should we expect that there will be some offset from inflation as a result?

Yes, there will be some inflation, and I think we'll fight hard to find more cost to offset that inflation as well, right?

Next question comes from Grant Swanepoel with Jarden.

First question, a follow-up for lot of the others. If this year pans out the way you're expecting it and you do get this construction sales somewhere in what your invested value of $303 million, I think you put in your presentation today. It means that your balance sheet could come into that zone where you'd be at the bottom end or the bottom half of your debt range. Would the Board consider resuming dividends second half of the year if that did occur?

Yes. Sorry, Grant, I think I caught most of your questions. It's not -- most of your question, it's not a great line. But I think what we have said is we won't resume and we're in the bottom half of the net debt range. And then at the point in time where we're in that position, we will do a dividend policy review. And so we will go out and talk to shareholders about what they think is an appropriate capital return policy. And ultimately, any resumption of dividend is not Andrew and my decision, that's 1 for the Board. And so probably just leave it at that.

Okay. And just a quick 1 on metals contribution. You normally give that as a subset of building products. What was it for the full year was $7 million at the half year?

I couldn't catch that, Grant. Sorry, can you repeat?

The metals division or steel within Building Products, you don't seem to disclose that at this end period with $7 million at the half year, was it at the full year?

Yes, sure. Sorry, Grant. I will just -- make sure I give you the right number. Steel, so the second half was minus $6.5 million, and what was the old steel division.

There are no further questions at this time. I'll now hand back to Mr. Reding for closing remarks.

Well, I'd just like to say thank you all very much indeed for coming along today. And if you do have any other queries, don't hesitate to reach out to our comms team and we will endeavor to answer them. Thank you all very much.

That does conclude our conference for today. Thank you for participating. You may now disconnect.