FLETCHER BUILDING LIMITED — AGM Information 2015

Nov 16, 2015

Fletcher Building Limited 2015 Annual Shareholders’ Meeting 17 November 2015

Fletcher Building Annual Shareholders’ Meeting | © November 2015

Sir Ralph Norris Chairman

Heavy Building Materials WINSTONE AGGREGATES

Directors

Sir Ralph Norris (Chairman) Tony Carter Dr Alan Jackson John Judge Mark Adamson (Managing Director) Kathryn Spargo Cecilia Tarrant Steve Vamos

==> picture [43 x 36] intentionally omitted <==

3 Fletcher Building Annual Shareholders’ Meeting | © November 2015

Meeting Agenda

Chairman’s address

• Overview of 2015 financial performance

• Outcome of strategic review

Chief Executive Officer’s address

• 2015 Operational review • Update on strategic priorities Trading and financial outlook General business Voting on resolutions

==> picture [43 x 36] intentionally omitted <==

4 Fletcher Building Annual Shareholders’ Meeting | © November 2015

Net earnings before significant items rose 10%

Net earnings 270m $ 20%

Net earnings 399m $

10% (before significant items)

==> picture [43 x 36] intentionally omitted <==

5 Fletcher Building Annual Shareholders’ Meeting | © November 2015

Operating earnings before significant items

Operating earnings 653m $

5% (before significant items)

• Operating earnings before significant items up 5%

• Within guidance range of $650m -$690m

==> picture [43 x 36] intentionally omitted <==

6 Fletcher Building Annual Shareholders’ Meeting | © November 2015

Significant items

SIGNIFICANT ITEMS

Goodwill impairment

Site closures

Disposal of businesses

Total

$78m

$65m

$7m

$150m

$126m of significant items non-cash

==> picture [43 x 36] intentionally omitted <==

7 Fletcher Building Annual Shareholders’ Meeting | © November 2015

Cashflow from operations increased by 18%

Cashflow from operations

575m $ 18%

• Cashflow from operations $575m an increase of $86m from FY14 ($489m)

• Increase is due to:

• Growth in operating earnings

• Reduced working capital requirements

==> picture [43 x 36] intentionally omitted <==

8 Fletcher Building Annual Shareholders’ Meeting | © November 2015

New Zealand operating earnings up 24% on prior year

EBIT¹ NZ$m

==> picture [598 x 204] intentionally omitted <==

----- Start of picture text -----

449
362
----- End of picture text -----

New Zealand

12 months to 30 June 14 12 months to 30 June 15

1. Before significant items

Fletcher Building Annual Shareholders’ Meeting | © November 2015

==> picture [43 x 36] intentionally omitted <==

9

New Zealand residential consents up 8%

Total residential consents¹

==> picture [611 x 269] intentionally omitted <==

----- Start of picture text -----

35,000
Peak (2004)
30,000
25,000
Long term average (2001-2015)
20,000
15,000
10,000
Sep-10 Mar-11 Sep-11 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15
----- End of picture text -----

Source: Statistics NZ, Infometrics 1 – Twelve months rolling

==> picture [43 x 36] intentionally omitted <==

10 Fletcher Building Annual Shareholders’ Meeting | © November 2015

Growth in residential consents driven by Auckland region

Change % year on year

==> picture [610 x 326] intentionally omitted <==

----- Start of picture text -----

25%
20%
21
15%
10%
8
5%
4
2
0%
Auckland Canterbury Rest of NZ NZ
Source: Statistics NZ, 12 months to June 2015
11 Fletcher Building Annual Shareholders’ Meeting | © November 2015
----- End of picture text -----

==> picture [43 x 36] intentionally omitted <==

Australian operating earnings down 30%

EBIT¹ NZ$m

==> picture [598 x 193] intentionally omitted <==

----- Start of picture text -----

171
119
----- End of picture text -----

Australia

12 months to 30 June 14 12 months to 30 June 15

1. Before significant items

==> picture [43 x 36] intentionally omitted <==

12 Fletcher Building Annual Shareholders’ Meeting | © November 2015

Rest of World operating earnings fell by 7%

EBIT¹ NZ$m

==> picture [598 x 203] intentionally omitted <==

----- Start of picture text -----

91
85
----- End of picture text -----

Rest of the World

12 months to 30 June 14 12 months to 30 June 15

1. Before significant items

==> picture [43 x 36] intentionally omitted <==

13 Fletcher Building Annual Shareholders’ Meeting | © November 2015

Dividend

Dividend per share 37c 3%

DIVIDEND

Final dividend er share p Total dividend for the year

19 cents 37 cents

Dividend Policy: Target pay-out range of 50 to 75% of Net Earnings

==> picture [43 x 36] intentionally omitted <==

14 Fletcher Building Annual Shareholders’ Meeting | © November 2015

Total shareholder return – average of 17% p.a. over past 3 years

Percentage

==> picture [580 x 210] intentionally omitted <==

----- Start of picture text -----

51
14
9
Jun-11 Jun-12 Jun-13 Jun-14 Jun-15
-3
-27
----- End of picture text -----

==> picture [43 x 36] intentionally omitted <==

15 Fletcher Building Annual Shareholders’ Meeting | © November 2015

Maintaining a strong balance sheet

Debt/Debt Plus Equity Percentage

==> picture [607 x 206] intentionally omitted <==

----- Start of picture text -----

37
34
33
32 32
Jun-11 Jun-12 Jun-13 Jun-14 Jun-15
----- End of picture text -----

• Gearing target range of net debt to net debt plus equity of 30 to 40%

==> picture [43 x 36] intentionally omitted <==

16 Fletcher Building Annual Shareholders’ Meeting | © November 2015

Health and safety performance

Total recordable injury frequency rate*

==> picture [608 x 256] intentionally omitted <==

----- Start of picture text -----

11.10
8.50
6.80
6.40
6.00
2011 2012 2013 2014 2015
----- End of picture text -----

* Total injuries per million employee and contractor hours

17 Fletcher Building Annual Shareholders’ Meeting | © November 2015

==> picture [43 x 36] intentionally omitted <==

Progress on strategic priorities

• Review of business portfolio: divestment of Rocla Quarry Products announced in August

• Identification of a number of opportunities to grow organically:

• NZ residential development business

• Construction in NZ and South Pacific

• Trade Distribution in NZ and Australia

==> picture [43 x 36] intentionally omitted <==

18 Fletcher Building Annual Shareholders’ Meeting | © November 2015

Management changes

==> picture [651 x 199] intentionally omitted <==

Francisco Irazusta

Dean Fradgley

John Bell

CE, Distribution CE, Light Building Chief Information NZ & Australia Products Officer

Matt Crockett

CE, Heavy Building Products

==> picture [43 x 36] intentionally omitted <==

19 Fletcher Building Annual Shareholders’ Meeting | © November 2015

Fletcher Building Annual Shareholders’ Meeting | © November 2015

Mark Adamson Chief Executive Officer

Construction INFRASTRUCTURE

Full year highlights: New Zealand

Volume Growth

• NZ Cement 9%

• • NZ Concrete Products 7%

• • NZ Concrete 14%

• • NZ Steel Distribution 17%

• • NZ Steel Reinforcing 20%

• • Plasterboard 7%

• • Windows & Doors 11%

==> picture [287 x 320] intentionally omitted <==

Golden Bay Cement, Auckland

==> picture [43 x 36] intentionally omitted <==

21 Fletcher Building Annual Shareholders’ Meeting | © November 2015

Full year highlights: Canterbury

Progress

• Over 65,000 permanent repairs completed

• Extension of home repairs programme for a further 12 months from April 2015

Proposed masterplan illustration, Christchurch

==> picture [43 x 36] intentionally omitted <==

22 Fletcher Building Annual Shareholders’ Meeting | © November 2015

Full year highlights: Residential & Construction

• Homes sold 35%

• Concluded 3 development partnerships in Christchurch

• Construction: awarded $1.4bn of new contracts during the year

==> picture [328 x 213] intentionally omitted <==

NZ International Convention Centre

==> picture [43 x 36] intentionally omitted <==

23 Fletcher Building Annual Shareholders’ Meeting | © November 2015

Full year results: Australia

• Iplex impacted by loss of coal seam gas pipe volumes

• • Insulation volumes 22%

• • Laminex Operating Earnings 30%

==> picture [289 x 149] intentionally omitted <==

==> picture [289 x 149] intentionally omitted <==

==> picture [289 x 23] intentionally omitted <==

----- Start of picture text -----

Laminex
----- End of picture text -----

==> picture [43 x 36] intentionally omitted <==

24 Fletcher Building Annual Shareholders’ Meeting | © November 2015

Full year highlights: FBUnite

Further Progress

• $50m of benefits delivered in total to 30 June 2015

• Procurement $35m

• Property $10m

• Financial shared services $5m

• Operational excellence initiatives are expected to offset annual inflation, estimate $50m p.a.

==> picture [89 x 90] intentionally omitted <==

People

==> picture [89 x 89] intentionally omitted <==

Performance excellence

==> picture [90 x 90] intentionally omitted <==

Innovation and growth

==> picture [90 x 89] intentionally omitted <==

Efficiency

==> picture [84 x 78] intentionally omitted <==

25 Fletcher Building Annual Shareholders’ Meeting | © November 2015

We are focused on 4 strategic priorities

==> picture [76 x 253] intentionally omitted <==

==> picture [75 x 74] intentionally omitted <==

==> picture [43 x 36] intentionally omitted <==

26 Fletcher Building Annual Shareholders’ Meeting | © November 2015

==> picture [95 x 101] intentionally omitted <==

Organisational Leadership Talent Design

Culture

• Simplified organisation structure: fewer, larger business units

• Delivered a learning curriculum to over 7,000 employees globally

• Talent regeneration has created strong succession pool for leadership roles

• Women in leadership – a 73% increase in female GM’s since 2012

• Annual employee engagement survey completed by over 17,000 staff

==> picture [43 x 36] intentionally omitted <==

27 Fletcher Building Annual Shareholders’ Meeting | © November 2015

Vision and values launched in 2015

==> picture [405 x 302] intentionally omitted <==

==> picture [43 x 36] intentionally omitted <==

28 Fletcher Building Annual Shareholders’ Meeting | © November 2015

==> picture [95 x 101] intentionally omitted <==

• Focusing on providing complete, end-to-end solutions

• Product innovation a key growth driver

• Increased use of online tools for pre-purchase decisions & custom design

• Sales and marketing excellence programme

==> picture [196 x 329] intentionally omitted <==

==> picture [43 x 36] intentionally omitted <==

29 Fletcher Building Annual Shareholders’ Meeting | © November 2015

==> picture [95 x 101] intentionally omitted <==

• FBUnite programme established core capabilities

• Management has scoped out the potential of each business unit

• External diagnostic “top-down” assessment undertaken

• Identified further opportunities to drive value from the core

• Programme will exceed the $100m in benefits originally in scope with FBUnite

==> picture [242 x 305] intentionally omitted <==

==> picture [43 x 36] intentionally omitted <==

30 Fletcher Building Annual Shareholders’ Meeting | © November 2015

==> picture [98 x 98] intentionally omitted <==

==> picture [619 x 364] intentionally omitted <==

----- Start of picture text -----

•
Record year with operating
earnings of $66m
•
Goal is to increase new homes
sold to 1,500 p.a. over next few
years
•
Stonefields
Increasing focus on master
planned community with mix of
apartments, terrace and stand-
alone houses
•
Expect to invest $160m (net) in
land urchases in FY16
p
Greenhithe
----- End of picture text -----

==> picture [43 x 36] intentionally omitted <==

31 Fletcher Building Annual Shareholders’ Meeting | © November 2015

==> picture [98 x 98] intentionally omitted <==

• Number of new contracts secured, with a contracted order book now standing at $3.4 billion

Cancer Treatment Centre, Tauranga

==> picture [224 x 60] intentionally omitted <==

==> picture [267 x 145] intentionally omitted <==

==> picture [267 x 21] intentionally omitted <==

----- Start of picture text -----

Sir John Guise Stadium, PNG
----- End of picture text -----

==> picture [43 x 36] intentionally omitted <==

32 Fletcher Building Annual Shareholders’ Meeting | © November 2015

==> picture [98 x 98] intentionally omitted <==

• PlaceMakers achieved record retained earnings

• Mico plumbing & bathrooms: loss making 2 years ago, strongly profitable this year

• Excellent progress in lifting performance in Tradelink

• Growth from customer solutions focus and expanded product ranges

• Investment in online and omni-channel latforms p

==> picture [256 x 180] intentionally omitted <==

==> picture [258 x 178] intentionally omitted <==

==> picture [43 x 36] intentionally omitted <==

33 Fletcher Building Annual Shareholders’ Meeting | © November 2015

Fletcher Building Annual Shareholders’ Meeting | © November 2015

Sir Ralph Norris Chairman

Heavy Building Materials WINSTONE AGGREGATES

Outlook FY16

New Zealand

• Residential construction activity expected to continue at above average levels

• Net migration and Auckland housing demand key drivers

• Commercial construction should track the upward trend in consents

• Government infrastructure spending expected to remain at current levels

Australia

• Residential activity may slow from recent peak levels especially in the multi-dwelling segment

• Non-residential expected to remain subdued, especially mining, resources and infrastructure sectors

==> picture [43 x 36] intentionally omitted <==

35 Fletcher Building Annual Shareholders’ Meeting | © November 2015

Outlook FY16

North America

• Activity levels in residential and commercial should remain broadly consistent with prior year

Europe

• Continued mixed conditions expected with a weak economic outlook

Asia

• Further growth in South-East Asia, China to likely remain highly competitive

==> picture [43 x 36] intentionally omitted <==

36 Fletcher Building Annual Shareholders’ Meeting | © November 2015

Financial Outlook

• Earnings before interest, tax and significant items expected to be in the range of $650 million to $690 million

• First half earnings likely to be lower than the prior corresponding period due to:

• Timing of construction earnings recognition

• Lower residential earnings, and

• Restructuring costs in Formica Europe and Tradelink

==> picture [43 x 36] intentionally omitted <==

37 Fletcher Building Annual Shareholders’ Meeting | © November 2015

General Business

==> picture [326 x 215] intentionally omitted <==

==> picture [329 x 222] intentionally omitted <==

==> picture [43 x 36] intentionally omitted <==

38 Fletcher Building Annual Shareholders’ Meeting | © November 2015

Fletcher Building Limited 2015 Annual Shareholders’ Meeting 17 November 2015