FLETCHER BUILDING LIMITED — AGM Information 2016

Oct 17, 2016

Fletcher Building Limited

~~Working with you~~

2016 Annual Shareholders’ Meeting

18 OCTOBER 2016

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Fletcher Building

Annual Shareholders’ Meeting 2016

~~Working with you~~ Sir Ralph Norris Chairman

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Directors

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

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Meeting Agenda

Chairman’s address

• Overview of 2016 financial performance Chief Executive Officer’s address

• 2016 operational review

• Update on strategic priorities

• Trading and financial outlook

• General business Voting on resolutions

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Fletcher Building Annual Shareholders’ Meeting | © October 2016

Canterbury

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Net earnings

2015 $270m Before significant items: $399m

2016 $462m Before significant items: $418m

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Fletcher Building Annual Shareholders’ Meeting | © October 2016

Operating earnings before interest and tax (EBIT)

2015 $503m EBIT before significant items: $653m

2016 $719m EBIT before significant items: $682m

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Fletcher Building Annual Shareholders’ Meeting | © October 2016

Cashflow from operations

2015

2015 2016 $575m $660m

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Fletcher Building Annual Shareholders’ Meeting | © October 2016

Stronger performance from Australia in FY16

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External Revenue
14
53
33
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New Zealand

Australia

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EBIT¹
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11
23
66
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Rest of World

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1. Before significant items

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Fletcher Building Annual Shareholders’ Meeting | © October 2016

New Zealand residential consents

Total residential consents¹

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35,000
Peak (2004)
30,000
25,000
Long term average (2001-2015)
20,000
15,000
10,000
Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16
Source: Statistics NZ, Infometrics
1 – Twelve months rolling
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Fletcher Building Annual Shareholders’ Meeting | © October 2016

Australian residential consents

Total residential approvals¹

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130,000
120,000
110,000
100,000
90,000
80,000
70,000
60,000
50,000
Standalone Houses Multi Residential & Other Dwelling types
Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec-14 Feb-15 Apr-15 Jun-15 Aug-15 Oct-15 Dec-15 Feb-16 Apr-16 Jun-16
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Source: Australian bureau of statistics, BIS Shrapnel 1 – Twelve months rolling

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Rest of World operating earnings

EBIT¹ NZ$m

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80
67
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Rest of World

1. Before significant items

12 months to 30 June 15

12 months to 30 June 16

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Fletcher Building Annual Shareholders’ Meeting | © October 2016

Dividend

2015 total dividend

37 cents

2016 total dividend

39 cents

Both interim and final dividends are expected to be fully imputed for New Zealand taxation purposes from FY17 to FY19

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Fletcher Building Annual Shareholders’ Meeting | © October 2016

Total shareholder return

Percentage

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51
11
9
-3
-27
Jun-12 Jun-13 Jun-14 Jun-15 Jun-16
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Fletcher Building Annual Shareholders’ Meeting | © October 2016

Total shareholder returns over past 4 years

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+78 %
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2 012
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2016
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Fletcher Building Annual Shareholders’ Meeting | © October 2016

Maintaining a strong balance sheet

Debt/Debt Plus Equity Percentage

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37
33
32 32
27
Jun-12 Jun-13 Jun-14 Jun-15 Jun-16
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Fletcher Building Annual Shareholders’ Meeting | © October 2016

Health and safety performance

Total recordable injury frequency rate*

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57.5
43.9
25.8 25.2
14.0
11.1
8.5 6.8 6.0 6.4 6.7
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
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* Total injuries per million employee and contractor hours

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17 Fletcher Building Annual Shareholders’ Meeting | © October 2016

Portfolio rationalisation completed

Rocla Quarry Products sale completed in January 2016

• Total consideration NZ$212m

• Gain on sale of NZ$85m

Joint Venture between Fletcher Aluminium and Nalco commenced July

Purchase of Higgins road construction and maintenance business completed 29 July 2016

• Purchase price NZ$303m

• Includes NZ quarry assets

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Fletcher Building

Annual Shareholders’ Meeting 2016

~~Working with you~~

Mark Adamson Chief Executive Officer

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New Zealand Building Products highlights

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Volume growth driven by strong New
Zealand cycle:
•
Cement +6%
•
Concrete +7%
•
Plasterboard +11%
•
Insulation +13%
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Distribution highlights

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Strong revenue growth:
•
PlaceMakers revenue +10%
•
Mico revenue +12%
•
Steel Distribution EBIT +22%
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Construction highlights

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Revenue growth of +29%
Revenue exceeded $1.5b for the first
time
Backlog at 30 June 2016 stood at $2.7b
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Residential highlights

Fletcher Living 12% growth in operating earnings Good progress in achieving the land supply needed for next 3 years Earnings include $10m contribution from the development of surplus land holdings

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Australian operating earnings up 31%

EBIT¹ NZ$m

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151
115
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Australia

12 months to 30 June 15 12 months to 30 June 16

1. Before significant items ad excluding corporate costs

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Fletcher Building Annual Shareholders’ Meeting | © October 2016

Lifting performance in our Australian businesses

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• Business returned to profitability in the second half

• • Improvement driven by increased efficiencies, improved customer service and cost reductions

• Earnings doubled over the past year

• Re-opening Rooty Hill plant in Sydney

• Significant gains in markets share

• Operating earnings up 43%, and driven by restructuring and cost out programmes

• • Focus on customers and delivering on the Customer Service Promise

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International businesses

	June 2015	June 2016	%
EBIT (NZ$m)¹	12 months	12 months	change
Formica North America	49	56	+14
Formica Asia	19	23	+21
Formica Europe	0	-17	N/M
Roof Tile Group	14	14	-
Laminex	81	80	-1

1. EBIT: Operating earnings before interest, tax and significant items

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Strategy priorities

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Target organic growth
•
Residential: New Zealand
•
Construction: New Zealand and South
Pacific
•
Distribution: New Zealand and
Australia
•
Manufacturing: Growth through
innovative products & services
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Lift the performance of
underperforming businesses
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Deliver sustained uplift in
performance of all
businesses, leverage centres
of excellence established
with FBUnite
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Build people capability, grow
leadership base and develop
talent pipeline
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Fletcher Building Annual Shareholders’ Meeting | © October 2016

Profitable Growth: Residential

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Goal to increase historical average of
300 homes p.a. to 1,500 homes p.a.
•
Continue to buy completed lots from
developers
•
Purchase bare land for development
•
Partnerships with government to develop
existing land
Expect to invest a further $160m in 2017
financial year
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Profitable Growth: Construction

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Contracted order book $2.7b as at 30
June
Higgins contracting business
acquisition completed in July
Key contracts won include NZ
International Convention Centre and
Commercial Bay
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Profitable Growth: Distribution

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Distribution portfolio has 11 businesses across New Zealand and
Australia which are well recognised within their markets
1st or 2nd in their markets
Well established brands
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Efficiency: Work smarter together

Accelerate programme leverages capability of FBUnite

Commercial Cost reduction Manufacturing and operational efficiency

• Revenue growth

• • Product margin growth

• • External expenditure

• • Overhead costs

• • Manufacturing products

• • Distribution costs

• • Construction delivered margins

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Fletcher Building Annual Shareholders’ Meeting | © October 2016

People: Building our people capability

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Continued investment in our people and
capability
Continued mission making Fletcher Building a
great company to work for
Build capability across all levels of the
organisation
1,200 Higgins employees joined at the end of
July
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32 Fletcher Building Annual Shareholders’ Meeting | © October 2016

Outlook FY17

New Zealand

• Residential consents expected to peak in FY18, but lag could mean peak activity occurs after this

• Non-residential activity forecast to remain steady at elevated levels

• Infrastructure work undertaken expected to continue to grow

Australia

• Residential activity expected to gradually decline following peak in 2016

• Little growth forecast in non-residential activity

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Outlook FY17

Rest of World

• Asia: moderating growth in China, modest growth in Taiwan and SE Asian markets

• North America: relatively low growth, USA higher growth than Canada

• Europe: mixed outlook for Continental Europe, UK expect to grow modestly

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Financial Outlook FY17

• Operating Earnings (EBIT) expected to be in the range of $720m to $760m

Earnings from Higgins acquisition should offset the impact of discontinued operations:

• Pacific Steel

• Rocla Quarry Products

• Fletcher EQR

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Fletcher Building

Annual Shareholders’ Meeting 2016

~~Working with you~~ Sir Ralph Norris Chairman

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General Business

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Fletcher Building

Annual Shareholders’ Meeting 2016

~~Working with you~~

Electronic voting instructions

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Handset instructions - inserting your smartcard

• The smartcard should be inserted into your handset

• If the smartcard is not inserted into your handset please do so now

• Make sure the chip at the bottom of the smartcard is inserted and facing you

• A welcome message will briefly appear when the card is inserted correctly

• You will then be returned to the holding screen where your name will now appear at the top of the display

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39 Fletcher Building Annual Shareholders’ Meeting | © October 2016

Handset instructions - casting your vote

When the poll opens, the handset will display the voting options

Press:

• Button 1 to vote For the resolution

• Button 2 to vote Against the resolution

• Button 3 to Abstain your vote

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Fletcher Building Annual Shareholders’ Meeting | © October 2016

Handset instructions - casting your vote

• Confirmation that your vote has been received will appear on the screen

• To change your vote, simply enter your new choice (1, 2 or 3) to overwrite your previous selection

• If you wish to cancel your vote, press the ‘X’ button

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Test resolution Morning tea is served after the meeting

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Fletcher Building

Annual Shareholders’ Meeting 2016

~~Working with you~~

Resolution voting

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Resolution 1 Re-election of Antony John Carter

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Resolution 2 Re-election of Dr Alan Trevor Jackson

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Resolution 3 Re-election of Sir Ralph James Norris

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Resolution 4 Auditor’s remuneration

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Fletcher Building Limited

~~Working with you~~

2016 Annual Shareholders’ Meeting

18 OCTOBER 2016

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