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DESCR IPT I ON:
PERFORMING
FLETCHER
BUILDING
03
highlights
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HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
Go directly to a section of the
report by clicking on a blue bullet
A FURTHER UPLIFT IN PERFORMANCE,
DRIVEN BY STRONG DEMAND AND INTERNAL
IMPROVEMENTS…
REALIGNMENT OF THE BUSINESS PORTFOLIO
PROVIDES GREATER STABILITYIN REVENUE
AND EARNINGS…
• Net profit after tax and minority interests up
91 percent to a record $168 million pre-unusual items
• Laminex purchase adds a substantial and strongly
performing Australian component to the business
• Operating earnings up 61 percent to a record
• Integration of Laminex and the existing wood panels
$331 million
businesses being achieved
• Improved earnings in all the New Zealand based
• Completion of asset sales in Bolivia, India, Australia
divisions, for the second successive year
and New Zealand
• $44 million of operating earnings from the newly-
acquired Laminex Group
• Operational cashflow up from $187 million to
• The proposed acquisition of Tasman Building Products
further enhances the Australian position and provides
growth opportunities
$276 million
• Economic value added of $65 million
• Total shareholder return of 43 percent
PERFORMANCE EXPECTED TO REMAIN STRONG
IN THE CURRENT YEAR
• A 24.4 percent return on funds employed
• Some softening in demand anticipated in New Zealand
• Interest cover up from 5.8 times to 7.3 times
• Successful refinancing initiatives, including the issue
of new equity at above the prevailing market price
• A lift in the annual dividend rate from 14 to 19 cents
per share with full tax credits
and Australia
• Continued focus on internal performance improvement
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DESCR IPTI ON:
PERFORMING
FLETCHER
BUILDING
03
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CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
Go directly to a section of the
report by clicking on a blue bullet
chairman’s reVIew
HALF YEAR REVIEW
FLETCHER BUILDING HAS BEEN TRANSFORMED... FROM A BUSINESS CAPTIVE TO THE
NEW ZEALAND BUILDING CYCLE TO ONE THAT IS TRULY AUSTRALASIAN AND
PERFORMING AT A HIGHER LEVEL.
Fletcher Building has made exceptional progress in the 2003 year. The company achieved a record profit, and that was reflected
in the 43 percent total shareholder return across the year. Underpinning these results were:
• a major Australian acquisition, transforming the company from one that was captive to the New Zealand market to a truly
Australasian business
• major re-financing, including the issue of new equity at a premium to the then market price
• a capital notes issue at favourable rates
• and further refining of the business portfolio, with asset sales in Bolivia, India, Australia and New Zealand.
Since balance date, a further relevant building products acquisition has been announced, funded in part with another equity issue.
RESULTS
In the year to 30 June 2003, Fletcher Building reported a profit after tax of $168 million, up from $93 million in the prior year. There were
no unusual items. The previous year’s result included a $5 million unusual gain, so the comparable trading profit was up $80 million, or 91 percent.
Further details on operational performance are included in the chief executive’s review and the divisional commentaries that follow.
DIVIDEND
Directors declared a final dividend for the year of 10 cents which, coupled with the interim dividend of 9 cents, provides a total payout
of 19 cents per share. The prior year dividends were 6 cents and 8 cents per share for the interim and final periods respectively, so the
2003 total dividend represents a 36 percent increase. The dividends include full tax credits and, based on the 30 June 2003 share
price, represent a 7.7 percent pre-tax yield.
SHAREHOLDER RETURNS
Earnings before interest and tax of $331 million represent a 24.4 percent return on average funds employed – substantially ahead
of the company’s pre-tax cost of capital, which is about 14 percent. The after tax return on average equity was 23 percent.
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FLETCHER
BUILDING
03
DESCR IPTI ON:
PERFORMING
CHAIRMAN’S
REVIEW
HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
The share price at 30 June 2003 was $3.67, up from $2.75 at 30 June 2002. Total shareholder return (TSR) for the year – that is, the
appreciation in share price plus gross dividends including tax credits – was 43 percent. This follows a TSR of 24 percent in the prior year.
Both of these years were generally unfavourable for global equity markets. Since balance date the share price has traded at a new
milestone of over $4.25.
BOARD OF DIRECTORS
ACQUISITIONS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
As explained in detail in an Information Memorandum and discussed at last year’s annual shareholders’ meeting, The Laminex Group
was selected from a range of potential opportunities as the most desirable Australian-based expansion opportunity for the company.
It was acquired on 13 November 2002. Our initial offer of A$645 million for the business was based on our EBITDA expectations for the
12 months to June 2003 – that is, expectations for earnings before interest, tax, depreciation and amortisation – of A$95 million. The
vendor projected earnings of A$105 million EBITDA, so an “earn-out” was agreed whereby Fletcher Building would pay a further amount of
up to A$20 million based on full year EBITDA earnings above A$95 million, with the full amount payable at A$105 million EBITDA.
The full year earnings were around $103 million, with strong exchange rates impacting on export sales, so subject to some adjustments
provided for in the acquisition agreement, a further sum will be paid to the vendor. Thus, Laminex has more than achieved the initial
earnings expectations we had for it when we decided to acquire it.
Since balance date, the acquisition of a further Australian based company Tasman Building Products has been announced. This acquisition
for A$230 million is expected to be settled on 30 September 2003. It was originally a New Zealand based business and more than 50
percent of its earnings are from its New Zealand operations. Its operating earnings, that is earnings before interest and taxation was
around A$30 million in the 2003 year. It will operate as part of our Building Products division.
DIRECTORATE
At the time of the Laminex acquisition, I advised shareholders that a suitably qualified Australian-based director would be added to the
board. Geoff McGrath, who from 1993 to 2003 was the managing director of GWA International Limited, a very successful publicly listed
Australian building products manufacturer, was appointed from 1 July 2003.
Directors maintained the busy schedule of site visits that has been the norm since Fletcher Building became a standalone company. Most
board meetings are complemented by site visits and presentations from the relevant business units.
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FLETCHER
BUILDING
03
DESCR IPTI ON:
PERFORMING
CHAIRMAN’S
REVIEW
HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
CORPORATE GOVERNANCE
Fletcher Building has always operated with a very formalised and comprehensive set of governance practices. In line with the
increased business community focus on these matters, the board has revised its procedures and adopted the principles identified
by the Australian Stock Exchange Corporate Governance Council. The review included constituting a nominations committee,
formalising the terms on which directors are appointed, and identifying the circumstances in which directors will not be considered
independent. These initiatives are covered in more detail in the corporate governance section of this report, and will be fully reported on
our website later in the year.
DIRECTORS’ REMUNERATION
As directors’ fees have not changed since the company’s establishment in March 2001, a market review process has been undertaken.
Increases of $2,500 per annum in the base fee, and revisions to the fees for work in board committees, have been implemented as part
of the review. In addition, a $10,000 travelling allowance will be payable to Geoff McGrath in recognition of his extra time commitment.
STAFF, SUPPLIERS AND CUSTOMERS
That so much was achieved in the year is a tribute to the management and employees of the company. Fletcher Building was also well
served by its suppliers, subcontractors, bankers, advisors and its loyal customer base. On behalf of the board, I extend our thanks to all of
these stakeholders for their valued contribution to our success.
FINANCIAL REVIEW
OUTLOOK
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
The outlook is for some softening in both the New Zealand and Australian housing markets, which are the main economic drivers for this
company. Despite that, the board expects further improvement and another satisfactory year.
RODERICK DEANE
Chairman
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DESCR IPTI ON:
PERFORMING
FLETCHER
BUILDING
03
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CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
Go directly to a section of the
report by clicking on a blue bullet
chief executive’s review
HALF YEAR REVIEW
OPERATING EARNINGS UP 61 PERCENT, WITH STRONG DEMAND AND A FULL YEAR OF
BENEFITS FROM PERFORMANCE IMPROVEMENT MEASURES.
DELIVERING RESULTS
The $331 million operating earnings – that is, earnings before interest and taxation – was $126 million or 61 percent ahead of the prior
year’s pre-unusual earnings. The result was supported by strong demand throughout the entire year, and by a full year of benefits
from the substantial management changes, asset sales and cost reductions achieved progressively through the prior year.
All divisions lifted their operating earnings for the second successive year. Building Products’ earnings before interest and tax were
$112 million, up from $85 million in the prior year. Concrete earned $83 million, up from $60 million. Construction earned $34 million, up
from $30 million, and Distribution earned $55 million, up from $34 million. Laminex, owned from 13 November 2002, had
earnings of $44 million in the period to the end of the year.
Just prior to the release of the 2002 result, analysts’ forecasts for our 2003 year operating earnings were around $190 million. Excluding
the Laminex contribution of $44 million, as did those forecasts, Fletcher Building earned $287 million for the year to June 2003.
Whilst demand exceeded the expectation underlying the earlier forecasts, it is also the case that the unfavourable New Zealand dollar
exchange rate and the cost implications of electricity shortages in New Zealand were far worse than previously anticipated. Progress
was thus clearly well ahead of what most sharemarket professionals were expecting at the end of the previous financial year.
What was probably underestimated was the operational improvement that has continued to be achieved across nearly all of our
businesses over the past two years. The latest year has seen previously lost market share regained in some businesses, and
improvement of already strong market positions in others.
These market share gains have been delivered largely by better service levels and customer focus, rather than by sharper commercial
terms. Margins have been improved through specific margin management programmes (particularly in the distribution businesses of
PlaceMakers and EasySteel), and through further cost reductions in manufacturing businesses (particularly in Fletcher Aluminium and Dimond).
Major new capital projects that will lift capacity and lower costs were approved for Golden Bay Cement and Winstone Wallboards. In
the spirit of self-sufficiency outlined in the 2001 annual report, both of these multi-million dollar projects are being successfully driven
by internal project managers.
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FLETCHER
BUILDING
03
DESCR IPTI ON:
PERFORMING
chief executive’s
review
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CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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report by clicking on a blue bullet
Some of the most pleasing transformations have come from our smallest businesses. CSP Galvanizing and Fletcher Reinforcing are not
large enterprises; nevertheless, for them to more than double profits from already acceptable levels, while transforming their facilities
into more productive, safer and environmentally cleaner work places, was an excellent achievement and was indicative of what has
occurred across many of our factories over the past two years.
In summary, our profit improvement was across the board, with a capable management team taking advantage of a favourable market
while continuing to challenge their operational teams to exceed the range of key performance indicators on which their performance is
measured internally.
DELIVERING STRATEGIC OUTCOMES
Fletcher Building started to deliver to its true potential in the 2003 year. While there were certainly favourable markets for the entire
year, the company’s earnings and returns were a quantum level above what was achieved when last at the top of a strong building cycle.
There are no unusual item write-offs in the latest results.
There remain two important questions. Firstly, what will happen to the “new” Fletcher Building’s earnings in the event of an economic
downturn? Secondly, given our strong market positions, where will our future growth come from? These are the strategic issues that
have dominated our planning and decision making over the past year.
From late in the 2001 year, we stated the need and the intention to find a suitable business in Australia to diversify our earnings base,
making the company less dependent on the lower-growth New Zealand market while providing a new footprint for growth in a much
larger market. We delivered on that objective with the acquisition of The Laminex Group.
There is a range of opportunities, and carefully constructed acquisition criteria help us differentiate them. To ensure that any major
acquisition has the greatest chance of long term success, we assessed them against four important principles. These are:
• The target must be number 1 or 2 in its market
• It must operate within a good – and sustainably good – industry structure
• It must have a high-quality management team that is prepared to stay on after acquisition
• The price should be such that the acquisition can earn its cost of capital within three years.
While these are not rules that would suit all acquirers, it is a fact that many unsuccessful acquisitions – whether by Fletcher Building
or by others – have failed one or more of these critical tests. In Laminex, now combined with our New Zealand wood panels business,
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FLETCHER
BUILDING
03
DESCR IPTI ON:
PERFORMING
chief executive’s
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CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
Go directly to a section of the
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Fletcher Building has a $1 billion revenue Australasian panels and laminates business ranked one or two in its key market segments.
As a consequence, our earnings will in future be less reliant on any one country’s economic cycle.
Since balance date, the acquisition of Tasman Building Products, a trans Tasman business, has been announced. Tasman has the
leading Australasian position in metal roofing tiles. It is the leading manufacturer of glasswool insulation across Australasia, being the
only New Zealand manufacturer and one of three similar sized manufacturers in Australia. Tasman is one of the two stainless steel sink
manufacturers in Australia and the leader in the small access flooring business.
Tasman has had a record of consistent annual profitability and cashflow generation since it was divested by its former New Zealand
corporate owner to a private equity fund, which now wishes to realise its investment. Tasman has good growth prospects in its major
business sectors and will integrate well with the existing Fletcher Building businesses.
Our best defence against earnings declines in the downward part of the cycle is to improve the efficiency of our businesses. Lowering
fixed costs and improving capital and labour productivity, as we have done, will result in more sustainable profitability in times
when revenue growth is low or negative. Equally important is our ability to maintain prices should less buoyant times ensue.
No one can insulate totally against sharp demand downturns, but all Fletcher Building businesses have a much greater degree of “business
fitness” than they did when demand slowed in the 2001 year. Loss businesses from that year have either been divested or returned to
healthy performance levels, thus improving our sustainable base profitability. Fletcher Building is now far more able to deal with the
economic cycle than it was in the past. In any case, we believe there are no short term prospects of a serious contraction in demand and
there are still good opportunities that could deliver further earnings growth.
Our priority in the year ahead will be smaller acquisitions that will integrate sensibly with existing divisions. To meet our own growth
aspirations it will be necessary to acquire positions in regions where our market shares are below target, or to add manufacturers of
complementary building products, especially if the products can be distributed through PlaceMakers.
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FLETCHER
BUILDING
03
DESCR IPTI ON:
PERFORMING
chief executive’s
review
HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
DELIVERING VALUE TO SHAREHOLDERS
The returns outlined in the chairman’s review are well above the average for similar companies to Fletcher Building. There are few, if any,
that exactly replicate the Fletcher Building model – and this rather unique combination of businesses is a large part of the reason for the
higher returns. Fletcher Building is primarily a building materials and products manufacturer, but with two special channels to market
– those being the PlaceMakers distribution business and Fletcher Construction. A pleasing aspect of the Laminex acquisition is that, like
much of the rest of Fletcher Building, it is in control of the distribution of the products it manufactures. Fletcher Building thus retains
a greater share of margin across the value chain. The returns in excess of our cost of capital are reflected in the share price appreciation over
the past year and the significant dividend increases.
The senior management team is strongly aligned to shareholder interests through their remuneration arrangements. All executives, from
business unit general managers upwards, are required to commit 50 percent of any after-tax variable remuneration, or performance
bonus, to acquiring Fletcher Building shares at market prices. These shares must be retained while employed by the company. This
re-occurs annually until the executive’s holding is equal to 50 percent in value of his or her annual fixed remuneration. Thus, all senior
executives have a significant and increasing degree of alignment with shareholders’ interests.
FLETCHER BUILDING’S PROFILE
DELIVERING TO OUR STAFF
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
The enhanced performance of Fletcher Building has markedly improved the company’s rating as a desirable place to work. This reduces staff
turnover and broadens our recruitment catchment. We have instigated, with the support of the Fletcher Building Employee Educational
Fund, a range of new staff development programmes. Our single biggest disappointment has been in our health and safety statistics.
While these have improved, we fall short of the targets we set ourselves and we have re-doubled our efforts, with the help of
leading international work safety advisors.
The management team places a high value on the support received from employees, co-operation of the unions and the counsel of the
board, and we look forward to continuing to work constructively with all of these parties to further the company’s success.
RALPH WATERS
Chief Executive Officer
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FLETCHER
BUILDING
03
DESCR IPTI ON:
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CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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RODERICK DEANE
PAUL BAINES
RODERICK SHELDON DEANE
PhD, LLD (Hon), BCom (Hons), FACA, FCIS, FNZIM, Independent Chairman of Directors, Chairman of the Nominations Committee
Dr Deane, 62, has had a career in business and in the executive branch of government. He is currently chairman of several organisations in addition to
Fletcher Building and Fletcher Building Finance, including Telecom New Zealand (having retired as chief executive in 1999), ANZ Banking Group
(New Zealand), Te Papa Tongarewa (the Museum of New Zealand), Mayoral Business Advisory Board (Wellington) and the New Zealand Seed Fund.
Dr Deane is a director of the Australia and New Zealand Banking Group and Woolworths, both Australian companies. He also on the Board of
Governance of IHC Inc.
Dr Deane has previously been chief executive of the Electricity Corporation of New Zealand, chairman of Fletcher Challenge and the State Services
Commission of New Zealand, deputy governor of the Reserve Bank of New Zealand, and alternate executive director of the International
Monetary Fund.
PAUL EDWARD ALEX BAINES
BCA, CA, MPP, Independent Non-Executive Director, Chairman of the Audit Committee, Member of the Nominations Committee
Mr Baines, 53, has an extensive background in financial and strategic management and has wide experience as a director of several organisations in
New Zealand. He is a director of Fletcher Building Finance, Gough Gough and Hamer, Greenstone Fund, the Reserve Bank of New Zealand, Telecom
New Zealand and Wrightson. Mr Baines was previously a director of Fletcher Challenge. He was also chief executive of CS First Boston New Zealand
from 1990 until 1993, and prior to that held a number of senior positions in the sharebroking and investment banking firm Jarden & Co.
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FLETCHER
BUILDING
03
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CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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HUGH FLETCHER
GEOFFREY MCGRATH
HUGH ALASDAIR FLETCHER
MCom (Hons), MBA (Stanford), BSc, Independent Non-Executive Director, Member of the Audit and Nominations Committees
Mr Fletcher, 55, has had extensive management experience and now holds a number of directorships and advisory positions. He is chairman
of the Advisory Board for No 8 Ventures. He is a director of IAG New Zealand, VCU Technology, the Reserve Bank of New Zealand, Rubicon,
Ports of Auckland, Fletcher Building Finance and is a member of the Asia Pacific Advisory Committee of the New York Stock Exchange, the Business
Advisory Council of the United Nations Office for Project Services and the Council of the University of Auckland. Mr Fletcher was previously a
director of Fletcher Challenge, and was its chief executive officer from 1987 until his retirement in 1997.
GEOFFREY JAMES MCGRATH
MIIE, Independent Non-Executive Director, Member of the Remuneration and Nominations Committees
Mr McGrath, 61, was until his retirement in 2003, managing director of GWA International, an Australian based manufacturer and marketer
of consumer and building products. Prior that time he held a number of senior management roles in the Fibreboard and Caroma divisions
of United Packages. Following the acquisition of United Packages by GWA International, Mr McGrath was appointed general manager of
GWA Manufacturing Divisions. In 1993 GWA International was floated and Mr McGrath was appointed managing director. He is also a director
of Campbell Brothers (Brisbane) and Fletcher Building Finance.
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FLETCHER
BUILDING
03
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CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
RALPH NORRIS
SIR DRYDEN SPRING
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
RALPH JAMES NORRIS
FNZCS, FNZIM, Independent Non-Executive Director, Member of the Remuneration and Nominations Committees
Mr Norris, 54, is chief executive officer and managing director of Air New Zealand, having been appointed in February 2002 after the New Zealand
Government-led reorganisation of that company.
Before taking up his executive role at Air New Zealand, Mr Norris was head of International Financial Services for the Commonwealth Bank Group,
responsible for operations in New Zealand, the Pacific and Asia; and managing director and chief executive officer of ASB Group. He was also
chairman of Sovereign Assurance and the New Zealand Business Roundtable, and chairman of the New Zealand Bankers Association. He is also
a director of Fletcher Building Finance.
SIR DRYDEN SPRING
DSc (Hon), Independent Non-Executive Director, Chairman of the Remuneration Committee, Member of the Nominations Committee
Sir Dryden, 63, has a long-standing record of success in management and directorship, with involvement in a range of industries. He has also been
deeply involved in New Zealand and international forums relating to agriculture and trade policy issues.
Sir Dryden is chairman of WEL Energy Group, Fletcher Challenge Forests, the Asia 2000 Foundation and the New Zealand APEC Business Advisory
Council. He is a director of Nufarm, the National Bank of New Zealand, Fletcher Building Finance and Maersk New Zealand.
He is a member of the New Zealand Business and Parliament Trust and the Waikato Medical Research Foundation. He is a distinguished fellow of the
Institute of Directors and a member emeritus of the Washington DC based International Policy Council on Agriculture, Food and Trade.
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FLETCHER
BUILDING
03
DESCR IPTI ON:
PERFORMING
board
of directors
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HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
KERRIN VAUTIER
RALPH WATERS
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
KERRIN MARGARET VAUTIER
CMG, BA, Independent Non-Executive Director, Member of the Audit and Nominations Committees
Mrs Vautier, 58, is a research economist specialising in competition law and economics, and has a varied academic and business background with
long-standing experience in directorship. She is chair of the Advisory Board of the New Zealand Asia Institute, and a director of Deloitte Touche
Tohmatsu (NZ), News & Media (NZ) and Fletcher Building Finance.
Mrs Vautier is a lay member of the High Court under the Commerce Act, an External Monetary Policy Advisor to the Reserve Bank of New Zealand,
a senior part-time lecturer in the Department of Commercial Law at the University of Auckland, and a member ofthe International Advisory Group
of PECC’s Trade Forum. She was previously a director of Fletcher Challenge, and Norwich Union Holdings (NZ) and its subsidiary State Insurance. She
is a former member of the New Zealand Commerce Commission and the Board of Trustees of the Asia 2000 Foundation, and previously held the chair
of NZPECC and the New Zealand Institute of Economic Research.
RALPH GRAHAM WATERS
CP Eng, FIE Aust, M Bus, Managing Director
Mr Waters, 54, was recruited as chief executive officer in May 2001 and was appointed to the board in July 2001. Prior to joining
Fletcher Building, Mr Waters was managing director of Email, a major Australian industrial company. In his 18 years with Email, he was general
manager planning, group manager Industrial Products, group general manager Major Appliances, and finally managing director from 1998.
Mr Waters is also a director of Fisher and Paykel Appliances Holdings and Fletcher Building Finance.
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DESCR IPTI ON:
PERFORMING
FLETCHER
BUILDING
03
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HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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concrete
HALF YEAR REVIEW
OPERATING EARNINGS AT RECORD LEVELS, THE SALE OF NON-CORE ASSETS, IMPROVING
MARGINS AND BETTER ASSET UTILISATION WERE THE HIGHLIGHTS FOR THE YEAR.
Activity remained strong through the entire year. Demand for cement, readymix concrete and aggregates was at the highest levels on
record. Higher electricity costs in the second half of the year negated some of the benefits from increased operating efficiencies.
There was record domestic demand for cement for the second successive year. The residential construction markets remained at
exceptional levels throughout the year, and other markets were also strong. Prices were similar to those obtained in the previous
year, but margins were improved by increased volumes and ongoing operational improvements, offset in part by higher electricity
and distribution costs. A major plant upgrade approved in the first half of the year for the cement plant in Whangerei is due to be
commissioned by the end of the 2004 financial year. Further investment is being considered with a view to increasing capacity and
ensuring that our cement business remains internationally competitive.
The company is progressing discussions with the Government regarding a Negotiated Greenhouse Agreement under the Kyoto Protocol.
It has already committed capital expenditure to allow the burning of wood waste in the cement kiln to reduce coal consumption and is
also committed to maintaining the high standard of operation in this area.
The aggregates business recorded a significant improvement in earnings for the second successive year. The business experienced stronger
demand, and also benefited from rationalisation initiatives including the closure of two uneconomic quarries. Revenues rose by
6 percent, due primarily to increased quarry volumes arising from strong demand across all sectors. Prices were similar to those for the
previous year, whilst average production costs declined. Overhead costs were also reduced.
The readymix and concrete products businesses recorded exceptional performances, with operating earnings more than 50 percent
higher than those for the previous year. Record volumes of readymix concrete were sold for the second successive year, and the
contribution per cubic metre increased. The incremental contribution from concrete products was significant, and resulted from
strong trading volumes, some price increases and a number of restructuring initiatives. The pre-cast products business benefited from
restructuring initiatives, some of which were completed and some ongoing, to record its best ever result.
The concrete pipes business benefited from a number of changes made in the previous year, and from strong demand, to record a 33 percent
improvement in earnings. Whilst activity levels were higher than those for the previous year, margins deteriorated as competitive
pressures intensified. Improving margin management and manufacturing performance are key issues for the 2004 year.
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FLETCHER
BUILDING
03
DESCR IPTI ON:
PERFORMING
concrete
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CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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The Peruvian business improved its operating earnings by $3 million, recording positive earnings for the first time since it commenced
operations in 1995. While the building sector of the economy continues to grow, competition has intensified, and the business is currently
operating at around break-even levels. The Fijian business has undergone some operational improvements and is no longer trading
at a loss. The Bolivian business and the investment in India were sold during the year, releasing $19 million in cash.
FOCUS AND OUTLOOK FOR THE 2004 YEAR
Outlook remains positive for at least the first six months of the year. Second half activity levels will depend largely on continued strength in
the residential construction market which in turn is sensitive to interest rates and net immigration numbers. The Concrete division
has a large number of ongoing initiatives that should improve operational performance and asset utilisation further in the 2004 year.
RESULTS
$M
JUNE 2003
12 MONTHS
JUNE 2002
12 MONTHS
Revenue
Operating earnings (EBIT)
Margin
Funds
Return on funds
497
83
16.7%
400
20.8%
470
60
12.8%
416
14.4%
CHANGE
+6%
+38%
+30%
-4%
+44%
Mark Binns
Chief Executive, Concrete
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FLETCHER
BUILDING
03
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concrete
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CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
Go directly to a section of the
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operating earnings
for readymix and
concrete products
increased by 50 percent
DESC RIPTIO N:
TOTAL QUALITY
OUR AGGREGATES, CEMENT, READYMIX AND CONCRETE PRODUCTS ARE INCORPORATED INTO BUILDING AND INFRASTRUCTURE
PROJECTS THROUGHOUT NEW ZEALAND. FIRTH IS THE LARGEST READYMIX SUPPLIER, AND THE ONLY LEADING MANUFACTURER WITH
A COMPLETE RANGE OF CONCRETE PRODUCTS, SYSTEMS AND SOLUTIONS.
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DESCR IPTI ON:
PERFORMING
FLETCHER
BUILDING
03
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HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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distribution
HALF YEAR REVIEW
STRONG GROWTH IN EARNINGS AND FURTHER DEVELOPMENT OF THE PLACEMAKERS NETWORK
WERE THE FEATURES OF A GOOD YEAR’S TRADING.
PlaceMakers had another excellent year, with gains in both trade and retail sales of 20 percent. Margins improved as the result
of better management, such that profit was up by 76 percent over the previous year.
The Joint Venture Partnership structure was reviewed and some amendments made providing a sound basis for future years. This
unique model provides competitive strength at a local level while enabling the business and its customers to benefit from the advantages
of national scale.
Joint Venture Partnerships were re-established in Kaitaia, Huntly and Levin. The two adjacent Hamilton branches were merged and a
new Joint Venture Partnership established there at the end of the year. The upgrade of PlaceMakers’ information technology infrastructure
was concluded, establishing a stable operating platform and an improved point-of-sale system.
The Building Depot continued to focus on the do-it-yourself retail market. Revenue gains were disappointing, but system changes
implemented in the latter part of the year helped lift margins to healthy levels. As the business is not a crucial channel to market for
Fletcher Building products, it was sold in September this year.
Hire A Hubby had a satisfactory year. Growth in this sector is somewhat counter-cyclical to the rest of the building industry, with the
number of individuals seeking franchise opportunities down in a buoyant building market. This business is also non-core and would
benefit from private ownership. Thus it was also sold in September this year.
FOCUS AND OUTLOOK FOR THE 2004 YEAR
Although conditions are expected to ease from the extremely buoyant position of the past year, activity over the next 12 months
should remain high.
PlaceMakers is expected to strengthen its position in the market, with a strong trade focus and an aggressive promotional programme,
supported by trade-related sponsorship activity.
The store network programme will see new stores established in New Lynn, Riccarton and Mount Wellington, whilst a number of upgrades
and relocations are planned for other branches over the next two years.
< back next >
Growth opportunities for PlaceMakers include the acquisition of suitable businesses to add to the PlaceMakers’ chain. The Christchurch business,
Builders Hardware was acquired on 1 August 2003 and others are under consideration.
DISTRIBUTION
$M
Revenue
Operating earnings (EBIT)
Margin
Funds
JUNE 2003
12 MONTHS
JUNE 2002
12 MONTHS
807
55
6.8%
96
57.3%
686
34
5.0%
101
33.7%
CHANGE
+18%
+62%
+36%
-5%
+70%
FLETCHER
BUILDING
03
DESCR IPTI ON:
PERFORMING
distribution
HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
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Return on funds
FLETCHER BUILDING’S PROFILE
David Worley
Chief Executive, Distribution
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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FLETCHER
BUILDING
03
DESCR IPTI ON:
PERFORMING
distribution
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HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
Go directly to a section of the
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control of our
distribution channels
has been critical to
our success
DESC RIPTIO N:
TOTAL QUALITY
Mark Binns
Chief Executive, Concrete
THE DISTRIBUTION DIVISION PROVIDES A SPECIALISED, NATIONWIDE CHANNEL TO MARKET FOR THE COMPANY’S BUILDING
PRODUCTS. PLACEMAKERS HAS MORE THAN 50 STORES OWNED IN PARTNERSHIP WITH LOCAL MANAGERS, SUPPLYING
BUILDERS IN EVERY LARGE POPULATION CENTRE IN NEW ZEALAND.
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DESCR IPTI ON:
PERFORMING
FLETCHER
BUILDING
03
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HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
Go directly to a section of the
report by clicking on a blue bullet
laminates and panels
HALF YEAR REVIEW
THE LAMINEX GROUP PERFORMED AHEAD OF EXPECTATIONS, AND WAS INTEGRATED SUCCESSFULLY WITH THE
NEW ZEALAND WOOD PANELS MANUFACTURING AND DISTRIBUTION BUSINESSES.
The Laminex Group made a significant earnings contribution since its acquisition on 13 November 2002. It has also strengthened the
New Zealand based operations of Fletcher Wood Panels and Scott Panel and Hardware through synergies achieved on the integration of the
three businesses. The results below are for the period since the acquisition of The Laminex Group. They do not include those for Fletcher
Wood Panels and Scott Panel and Hardware.
In Australia, The Laminex Group is the leading manufacturer and marketer of decorative laminates and decorated wood panels. It is also a
major supplier of both raw medium density fibreboard (MDF) and particleboard, and other associated products, to the Australian market.
The Laminex Group operates in the residential construction, renovations and commercial construction sectors, all of which have been buoyant
during 2003. It is also a major supplier of MDF to export markets, mainly in South East Asia. It has large-scale manufacturing facilities
throughout Australia and in New Zealand, and an extensive Australian distribution network.
The Laminex Group’s full year performance was significantly above that for the year to June 2002.
Australian domestic sales were up by 1 1 percent for the year. Export sales were down by 24 percent having been curtailed by the strong
domestic demand and the impact of a significantly stronger Australian dollar. Earnings before interest and tax for the full 12 months
were up 26 percent on the previous year as a result of the domestic activity, improved margins and synergies from the successful
integration of the recently acquired Wesfi and Formica businesses.
The group successfully consolidated several independent warehouses in Melbourne into one new distribution centre, and also began
construction of large distribution centres in Adelaide and Sydney that will enable similar consolidations early in 2004. Manufacturing
facilities were also rationalised and upgraded, with completion of the installation of a second paper treater at the particleboard facility
at Dardanup, Western Australia from a closed plant at Wagga. The Wespine joint venture sawmill, also in Western Australia, further
increased capacity through the installation of a new state-of-the-art curved gang saw. The group also successfully integrated its various
Australian computer systems into a uniform platform that will result in benefits for both the company and its customers.
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FLETCHER
BUILDING
03
DESCR IPTI ON:
PERFORMING
laminates and
panels
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HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
Go directly to a section of the
report by clicking on a blue bullet
The Laminex Group has assumed responsibility for the complementary New Zealand businesses, Fletcher Wood Panels and Scott
Panel and Hardware, to form the Laminates and Panels division, which has annualised sales of approximately $1 billion. The integration
strengthens the combined operations in Australia and New Zealand, and will provide a single focus for products sold into export markets.
This new division will trade under The Laminex Group banner.
FOCUS AND OUTLOOK FOR THE 2004 YEAR
The short-term outlook in both Australia and New Zealand remains positive, although a modest reduction in new housing starts in both
countries, but particularly in Australia, is likely in the second half of the year. Commercial and renovation markets are expected to
remain reasonably firm.
Export markets are expected to come under pressure in the early part of 2004 as demand and prices ease. Earnings contribution is also likely
to be reduced by the strength of the Australian and New Zealand dollars against the United States currency.
The focus in 2004 will be on continued development, together with the achievement of further productivity improvements, cost
savings and synergy benefits from the integration of the Australian and New Zealand businesses.
RESULTS
$M
Revenue
Operating earnings (EBIT)
Margin
Funds
Return on funds
* Acquired on 13 November 2002
Jonathan Ling
Chief Executive, Laminates and Panels
JUNE 2003*
7 MONTHS
432
44
10.2%
757
9.3%
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FLETCHER
BUILDING
03
DESCR IPTI ON:
PERFORMING
laminates and
panels
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HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
Go directly to a section of the
report by clicking on a blue bullet
innovation plays
a key role in
developing our
product ranges
DESC RIPTION:
TOTAL Q UALITY
IN AUSTRALIA, NEW ZEALAND AND ASIA OUR DECORATIVE LAMINATES AND WOOD PANELS PROVIDE A BROAD AND
GROWING RANGE OF FASHIONABLE SURFACE SOLUTIONS FOR ARCHITECTS, DESIGNERS AND THE TRADE. FOR CONSUMERS
WE OFFER A RANGE OF BRANDS THAT ARE RELEVANT AND MEET THEIR LIFESTYLE REQUIREMENTS.
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< back next >
DESCR IPTI ON:
PERFORMING
FLETCHER
BUILDING
03
construction
HALF YEAR REVIEW
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HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
Go directly to a section of the
report by clicking on a blue bullet
THE YEAR WAS MARKED BY STRONG TRADING CONDITIONS ACROSS ALL SECTORS OF THE CONSTRUCTION
BUSINESS, THE SUCCESSFUL COMPLETION OF SOME MAJOR PROJECTS AND
THE WINNING OF QUALITY WORK.
The New Zealand residential market was buoyed by high net migration levels, reducing interest rates and a growing preference for housing
as a long term investment. Our residential business recorded an exceptional result, with the benefit of increasing prices and reducing
landholdings. It ended the year with its stock of houses for sale at the lowest level on record.
The engineering division recorded another strong result. The Manukau Waste Water project was substantially completed. The scope
of the Grafton Gully motorway contract was extended, with completion now due in mid-2004. Further motorway work continues to
dominate prospects.
The building division also performed well and made good progress on the Auckland Hospital contract which is expected to be completed
in September 2003. Other significant projects completed were the PwC Tower in Auckland and the Lambton Tower project in Wellington.
The South Pacific market was subdued during the year but has become more buoyant, and a stronger trading performance is expected
in the 2004 year.
The last major contract in Australia was completed on behalf of the company and most of the remaining issues associated with the
withdrawal have been resolved.
FOCUS AND OUTLOOK FOR THE 2004 YEAR
While the housing business is expected to enjoy another strong year, increasing land prices are likely to put pressure on margins.
The construction business has $448 million of backlog, which compares favourably with the levels held at the end of the previous year,
and activity levels are very encouraging. Continuing to deliver good outcomes remains a key focus, along with the replacement of
the backlog.
Attracting and retaining appropriate people is an industry-wide issue that the company is addressing actively. Prospects remain good for
most of our operations for the foreseeable future.
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RESULTS
$M
JUNE 2003
12 MONTHS
JUNE 2002*
12 MONTHS
Revenue
Operating earnings (EBIT)
Funds
618
34
-62
* Includes full Australian income for 2002
871
30
-95
CHANGE
-29%
+13%
-35%
Mark Binns
Chief Executive, Construction
FLETCHER
BUILDING
03
DESCR IPTI ON:
PERFORMING
construction
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HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
Go directly to a section of the
report by clicking on a blue bullet
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FLETCHER
BUILDING
03
DESCR IPTI ON:
PERFORMING
construction
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HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
Go directly to a section of the
report by clicking on a blue bullet
new zealand offers
us a changing
and challenging
construction landscape
DESC RIPTION:
TOTAL Q UALITY
WE CAN CLAIM UNRIVALLED EXPERIENCE IN COMMERCIAL, INDUSTRIAL, CIVIL ENGINEERING, MARINE AND RESIDENTIAL
CONSTRUCTION IN NEW ZEALAND AND THE SOUTH PACIFIC. THE CONSTRUCTION BUSINESS HAS PLAYED A VITAL ROLE
IN MANY LANDMARK PROJECTS, INCLUDING AUCKLAND’S GRAFTON GULLY MOTORWAY EXPANSION.
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DESCR IPTI ON:
PERFORMING
FLETCHER
BUILDING
03
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CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
Go directly to a section of the
report by clicking on a blue bullet
building products
HALF YEAR REVIEW
EARNINGS INCREASED SIGNIFICANTLY IN ALUMINIUM, DOWNSTREAM STEEL, PLASTERBOARD AND WOOD
PANELS DISTRIBUTION. THE WOOD PANELS MANUFACTURING AND UPSTREAM STEEL BUSINESSES WERE
MOST AFFECTED BY THE NEW ZEALAND DOLLAR AND THE ELECTRICITY SHORTAGE, WHICH REDUCED
THEIR EARNINGS.
The year’s results were influenced heavily by the strength of the residential housing market, which continued from the last quarter of
the previous year. The stronger than expected New Zealand dollar, which reduced export revenue, and the electricity shortage in the last
quarter, took some of the gloss off results for the second half.
The plasterboard market continued to grow, with volumes 15 percent ahead of those for the 2002 year. Although prices were flat, an increase
in sales of higher value performance board such as Ultraline and Aqualine contributed to a 30 percent increase in operating earnings.
Wood products revenues were 35 percent ahead of those for the previous year, but the strong New Zealand dollar and significantly
higher than expected electricity charges in the second half reduced operating earnings to a level 10 percent below those for 2002. The
panel and hardware distribution business had an excellent year, with revenues and earnings 10 percent and 28 percent ahead respectively.
These operations were integrated with those of The Laminex Group during the second half and will report in future as part of the
Laminates and Panels division.
Fletcher Aluminium continued to improve its performance despite the unexpected failure of a press cylinder in the third quarter,
which curtailed production for three weeks. Earnings were still more than a sixfold increase on those for the previous year.
The upstream steel operations, comprising scrap collection, the electric arc furnace, the rolling mill and wire-drawing operations,
achieved record production and sales volumes for the second successive year. The trading environment was mixed, however, as record
scrap metal prices and power costs, the very strong New Zealand dollar and a late start to the fencing season coincided in the second
half of the year.
The steel mill changed its operating times to take advantage of cheaper weekend power and the wire mill was reduced from four
to three shifts. Both achieved significant productivity gains. Nevertheless, overall operating earnings for upstream steel were
reduced by 47 percent. The outlook for 2004 is much improved, with acceptable electricity hedges in place and a strong order book.
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FLETCHER
BUILDING
03
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building products
HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
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Downstream steel benefited greatly from improvements initiated during the previous year, and earnings were 66 percent higher. The
continuous coilcoating operation raised operating earnings 33 percent on an already strong result from the previous year, while the
steel distribution business continued to improve with a 62 percent operating earnings increase. The roofing and cladding business
recorded a 60 percent operating earnings lift, the reinforcing placement and distribution business a 118 percent operating earnings gain,
and the galvanising operation an almost fourfold increase as it reaped the rewards of its process improvement plan.
The continuing focus on productivity gains and growth brought several initiatives to fruition. In upstream steel, the company’s electro-magnetic
wiping technology, used to optimise coating weights when galvanising wire, has been on-sold to other users. This is the first of such
sales, and significant interest is being received from potential users around the world.
FOCUS AND OUTLOOK FOR THE 2004 YEAR
Whilst still pursuing gains from internal productivity improvements, the focus in Building Products has widened to include growth – both
organic and through acquisition. This includes the acquisition of the Tasman Building Products business announced in August 2003.
This acquisition supports the goal of continued earnings growth, even if housing starts decline from their present buoyant level, as is
widely predicted.
While the strength of the New Zealand dollar will maintain pressure on domestic pricing for products with import competition, this is not
expected to deteriorate from that experienced in the second half of the 2003 year.
RESULTS
$M
Revenue
CORPORATE GOVERNANCE
Operating earnings (EBIT)
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
Margin
Funds
Return on funds
JUNE 2003
12 MONTHS
JUNE 2002
12 MONTHS
865
112
12.9%
401
27.9%
820
85
10.4%
433
19.6%
CHANGE
+5%
+32%
+24%
-7%
+42%
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Andrew Reding
Chief Executive, Building Products
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we’ve continued
to maintain a focus
on productivity gains
and growth
DESC RIPTION:
TOTAL Q UALITY
NEW ZEALAND’S LARGEST BUILDING PRODUCTS GROUP MANUFACTURES PLASTERBOARD, STRUCTURAL STEEL AND STEEL PRODUCTS
AND IS ONE OF THE COUNTRY’S LARGEST ALUMINIUM EXTRUDERS. FLETCHER ALUMINIUM PRODUCES A RANGE OF WINDOW AND
DOOR SYSTEMS AND ASSOCIATED PRODUCTS, DISTRIBUTED THROUGH A NATIONAL FRANCHISE NETWORK.
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CONCRETE
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CONSTRUCTION
BUILDING PRODUCTS
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ENVIRONMENT
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FINANCIALS
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CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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LAMINATES AND PANELS
MAJOR PRODUCTS
• High pressure laminates
• Low pressure melamine
• Medium density fibreboard
• Particleboard
• Associated products (natural timber
veneer, componentry, edgings, timber
and hardware)
KEY OPERATING STATISTICS
Australia
• 250,000 m3 particleboard capacity
• 380,000 m3 medium density
fibreboard capacity
• 3,300,000 m2 high pressure
laminate capacity
• 19,800,000 m2 low pressure
laminate capacity
• 94,000,000 m2 treated
paper capacity
• 200,000 rolled edge door capacity
• 42 distribution outlets and branches
• Joint venture (50%) softwood
sawmill 360,000 m3 capacity
• Joint venture (50%) resin plant
50,000 tonne capacity
New Zealand
• 3,020,000 m2 high pressure
laminate capacity
• 34,700,000 m2 treated
paper capacity
COMPETITIVE STRENGTHS
• Vertically integrated business
with cost efficient and well located
manufacturing plants capable of
supplying a large range of products
in competitive lead times
• The only nationwide distribution
network which is particularly strong
in regional areas
• The supplier of respected and
strong brands particularly Laminex
and Formica
• A large sales force with a strong
service focus providing
merchandising and product support
as well as a strong customer base
for export
KEY OBJECTIVES THIS YEAR
• Continuous improvement in all
operations
• Finalise integration between the
recently acquired The Laminex
Group and the existing wood
panel and distribution business of
Fletcher Building in New Zealand
• Continue to improve occupational,
health and safety across the business
• Completion of new distribution
centres in Sydney and Adelaide, and
commencement of a new site
in Brisbane
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ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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BUILDING PRODUCTS
MAJOR PRODUCTS
• Plasterboard
HALF YEAR REVIEW
• 160,000 m3 medium density
fibreboard capacity (1 plant)
• Compounds and plasters
• Medium density fibreboard
• Low pressure melamine
• Hardboard/softboard
• Particleboard
• Doors
• Aluminium windows
• Aluminium extruded shapes
• Long and flat steel
• Reinforcing bar
• Merchant bar
• Wire rod
• Pipe
• Painted coil
• Wire
• Long run metal roofing and cladding
• Rollformed structural products
KEY OPERATING STATISTICS
Aluminium
• 9000 tonnes capacity in
2 extrusion presses
• 6500 tonnes capacity in
the remelt facility
• 90 franchised fabricators
Wood Panels & Doors
• 130,000 m3 particleboard capacity
(2 plants)
• 4 million m2 hardboard/softboard
capacity (1 plant)
• 2 laminating operations
• 1 door manufacturing plant
• 4 prehanging plants
• 13 company-owned distribution outlets
Upstream Steel
• 300,000 tonnes capacity mini-mill
steel plant
• 340,000 tonnes capacity rolling mill
(200,000 tonnes bar and 140,000
tonnes rod)
• 1 fully integrated wire mill/wire
products plant
• 1 ferrous and non-ferrous scrap facility
(50% owned)
Downstream Steel
• A 13-branch steel merchandising
business nationwide
• 2 metal processing and 5 reinforcing
fabrication facilities
• 1 continuous paint coating plant
• An 1 1-branch roofing business
nationwide
• 2 galvanising plants
• 2 structural products rollforming
factories
Plasterboard and Building Papers
• 34 million m2 plasterboard capacity
(2 plants)
• 1 building papers production facility
COMPETITIVE STRENGTHS
• Low cost position in New Zealand
board/panel markets
• Respected brands
• Trading skills and customer
relationships in Asia
• Broad distribution network
• New Zealand’s only producer of long
steel products and plasterboard
• New Zealand’s only integrated
producer of wire and wire products
• Ability to supply a large range of
products within competitive lead
times
KEY OBJECTIVES THIS YEAR
• Maintain emphasis on improving
safety and environmental
performance
• Achieve productivity improvements
• Continue margin enhancing product
differentiation strategies
• Develop organic growth opportunities
• Pursue external growth opportunities
as and when they arise
• Successfully complete the acquisition
of Tasman Building Products and
realise planned synergies
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FLETCHER
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LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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CONCRETE
MAJOR PRODUCTS
• Aggregates – building
• Aggregates – roading
• Cement
• Ready mixed concrete and masonry
• Concrete and plastic pipes
and fittings
• Precast concrete products
KEY OPERATING STATISTICS
Aggregates
• More than 100 million m3 of proven
plus indicated reserves
• 17 hard rock quarries, 2 shingle plants
• 6 sand plants, 1 scoria pit
• 2 hard rock quarries (Fiji)
• 2 hard rock quarries (Peru)
CONSTRUCTION
MAJOR PRODUCTS
• Commercial construction
• Industrial construction
• Engineering
• Marine construction
• Interior fitouts
• Refurbishments
• New Zealand residential housing
COMPETITIVE STRENGTHS
• Location and size of aggregate
deposits
• Cement and limestone resource
• World-class dry process cement
plant
• Nationwide distribution network
KEY OBJECTIVES THIS YEAR
• Continue operational improvement
• Improve return on funds employed
• Continued upgrade of cement plant
Cement
• A 650,000 tonnes dry kiln
cement plant
• 1 bulk cement vessel serving
6 customer service centres
• 35 years supply of cement rock
and limestone resource
• A 120,000 tonnes cement plant
(Fiji) (25% owned)
Concrete Products
• 47 fixed and 2 mobile concrete plants
• 7 joint venture concrete plants
• 238 concrete trucks and
18 mobile pumps
• 2 dricon bagging plants
• 6 concrete pipe/castings plants
• 4 masonry plants
KEY OPERATING STATISTICS
Construction
• Largest contractor in the key markets
of New Zealand and the South Pacific
Housing
• Land bank of:
256 developed lots
383 undeveloped potential lots
• Housing activities in Auckland and
Napier
COMPETITIVE STRENGTHS
• Established track record in
New Zealand and South Pacific
• Unrivalled experience at managing
large-scale projects in New Zealand
KEY OBJECTIVES THIS YEAR
• Secure further major infrastructure
projects
• Secure further residential land
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ENVIRONMENT
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FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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DISTRIBUTION
MAJOR PRODUCTS
• Timber
• Panels
• Bathroom and kitchen
• Roofing
• Concrete and masonry
• Hardware
• Paint
KEY OPERATING STATISTICS
PlaceMakers
COMPETITIVE STRENGTHS
• Strong brands
• 42 outlets owned in joint venture with
• National coverage
owner/operators
• 4 company-owned outlets
The Building Depot
• 8 company-owned outlets
Hire A Hubby
• 124 franchises
• Economies of scale
• Franchise structure
KEY OBJECTIVES THIS YEAR
• Develop PlaceMakers’ trade focus with
a number of trade-based initiatives,
strengthened marketing and major
store developments
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people
HALF YEAR REVIEW
WE MADE GOOD PROGRESS ON DEVELOPING AND STRENGTHENING OUR PERFORMANCE CULTURE.
SAFETY IS OUR NUMBER ONE PRIORITY.
Fletcher Building recognises that well-managed, motivated people aligned with a strong high-performance culture are key drivers of
corporate sustainability, and so are cornerstones of its success.
The company’s growing reputation as a preferred employer and its focus on high-performing leadership help it to attract and retain an
excellent workforce, enhancing its ability to serve its customers and generate value for all stakeholders.
At 30 June 2003, Fletcher Building Limited employed over 10,000 people, with about 7,000 in New Zealand, making it the country’s
second largest commercial employer. A further 1000 people are employed in the Pacific Islands and South America. Through the
acquisition of The Laminex Group, the company’s workforce grew by 2000 people during the 2002 year. These numbers might be
reduced as the integration process continues.
Management recognises that outstanding leadership; a competitive, balanced and safe work environment; a commitment to diversity;
customer focus; and good corporate citizenship are core characteristics of preferred employers.
Fostering these characteristics across the company was a key area of focus during the past financial year – through programmes to build staff
commitment, develop the leadership group and emerging talent, improve employee benefits and strongly promote workplace health and safety.
HEALTH AND SAFETY
Providing employees with a safe and healthy workplace is the company’s greatest responsibility. We did not meet this requirement during
the latest year – since our last annual report two people lost their lives while working at our sites.
The company deeply regrets these tragic and unacceptable events. The board and management acknowledge their responsibility
to do everything possible, in concert with all employees, to ensure that workplaces are safe.
The company has embarked on a vigorous and urgent campaign to build and entrench a ‘Work Safe’ culture in which there is zero
tolerance of unsafe behaviours. All managers are accountable for leadership on this issue.
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ENVIRONMENT
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Fletcher Building’s total lost time injury frequency rate (LTIFR) improved slightly in the past year – from 9.04 to 8.26 – with most progress
occurring in the Concrete and Construction businesses.
The company is committed to the further rapid reduction of its overall LTIFR through the programme outlined above.
Fletcher Building continues its participation in the Accident Compensation Corporation Partnership Programme. A pilot programme
of voluntary health assessments was carried out during the year, providing employees with an assessment of their individual health risk
factors. The results are being used to develop further health promoting initiatives.
Professional and confidential counselling is available to all employees through an independent employee assistance programme – reflecting
the company’s commitment to providing resources to address all aspects of employee health and safety.
COMPANY CULTURE
Fletcher Building employees work in many different roles and job functions across its 27 business units. All, however, are bound
by the company’s common values which guide the daily attitudes, interactions and decisions of all its staff and support and maintain
the culture to which it aspires.
EQUAL OPPORTUNITY AND DIVERSITY
With a workforce richly diverse in ethnicity and age, but which continues to reflect the gender imbalance historically typical of the
industrial and construction sectors, Fletcher Building aspires to be the employer of choice of all talented people and is committed
to developing an inclusive working environment that promotes business strength through equal opportunity.
LEADERSHIP DEVELOPMENT
Leadership skills are the most crucial determinant of workforce performance and long term sustainability. In the past year,
Fletcher Building conducted a company-wide senior leadership and key talent review and launched two innovative in-house leadership
training initiatives in partnership with the University of Auckland Business School.
A SHARE IN THE BUSINESS
A general staff share scheme was launched last year to align staff and shareholder interests and to encourage employees
to share in the company’s success.
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LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
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ENVIRONMENT
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FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
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INVESTOR INFORMATION
DIRECTORY
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LABOUR RELATIONS
Many Fletcher Building employees belong to labour unions. The company has a good record of labour relations and enjoys constructive
relationships with the labour unions in all its operations, based on partnership and mutual respect.
WORK/LIFE BALANCE
Within operational requirements, the company continues to try to help its employees to balance their work and home lives, and offers
several options and benefits to this end.
Auckland-based employees have access to Kimba Corner, Fletcher Building’s award winning early childhood care and education centre, which
caters for up to 60 children aged from 18 months to five years. They also have access to the company’s fully supervised school holiday
programme, now in its ninth year of operation.
The Fletcher Building Health and Fitness Centre caters to the many staff based around the company’s Penrose hub. Open to all permanent
employees, this facility offers a range of health-management programmes and services at affordable rates.
Fletcher Building continues to offer special benefits to support its employees in time of need. The Fletcher Building Employee Welfare
Fund offers immediate support to employees suffering financial difficulty as a result of unexpected personal hardship, while the
Fletcher Building Employee Educational Fund encourages and financially supports vocational learning among staff and their families.
Both trusts are wholly independent of the company.
Peter Merry
General Manager, Human Resources
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we’re all responsible
for creating a safe
and healthy workplace
DESC RIPTION:
TOTAL Q UALITY
CONSTRUCTION SITES AND MANUFACTURING FACILITIES ARE INHERENTLY HAZARDOUS ENVIRONMENTS, SO ACHIEVEMENT OF
SAFE AND HEALTHY WORKPLACES REQUIRES FULL COMPLIANCE WITH SAFE WORKING PRACTICES. WE HAVE ZERO TOLERANCE
FOR THE TAKING OF UNDUE RISKS OR FAILURE TO MEET SAFETY STANDARDS.
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environment
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FINANCIALS
AUDIT REPORT
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INVESTOR INFORMATION
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WE STROVE TO MAINTAIN A POSITIVE IMPACT ON THE ENVIRONMENT... UTILISING WASTE AND SCRAP PRODUCTS IN
MANUFACTURING, BUILDING ENVIRONMENTAL BENEFITS INTO PROJECTS AND FURTHER DEVELOPING OUR MONITORING AND
COMPLIANCE SYSTEMS.
Fletcher Building recognises that its operations have an impact on the environment. We seek to manage this responsibly, by reviewing
our performance and taking measures to improve it, and by accommodating environmental needs in the design of processes and projects.
Our businesses make significant contributions to the wellbeing of the environment – particularly through the reduction of solid waste
streams in each of our major manufacturing operations. Each year, the company:
• uses 200,000 tonnes of steel scrap
• uses 325,000 tonnes of wood waste as raw material for wood panels manufacturing
• uses just on 5,000 tonnes of aluminium scrap
• uses more than 20,000 tonnes of coal ash
• generates more than 1 petajoule of biomass energy.
Our operations in Australia illustrate the commitment to reducing dependence on external energy and water sources. The medium density
fibreboard plant at Gympie, in Queensland, uses all its waste streams, including wastewater treatment plant sludge, as energy sources.
The construction division continues to develop projects that serve as landmarks for environmental management in New Zealand. The
rehabilitation of the Mangere oxidation ponds, in partnership with Watercare Services Limited, won the Arthur Mead Environmental
Award from the Institution of Professional Engineers for “...engineering activity that best exemplifies sustainable management of
resources and care for and consideration of environmental values.”
The project will result in the return of the Mangere oxidation ponds to the sea, along with the restoration of 13 kilometres of foreshore
area to natural coastline. The improved quality of effluent discharged from the treatment plant has greatly enhanced the foreshore
environment and the water quality of the Manukau Harbour.
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FLETCHER
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PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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Our laminates and panels operations have commenced a programme to achieve ISO 14001 environmental management system
certification at all plants. Their objectives are to improve environmental management and to provide external verification of their commitment
to the environment. The environmental management systems are being integrated with systems for quality management that have achieved
ISO 9001 certification. Plants at Dardenup and Welshpool, in Western Australia, have already achieved the ISO 14001 certification.
All other sites are programmed to do so in 2004.
The company’s medium density fibreboard plant at Taupo, received an Order of Merit Award in the corporate section of the Bay of Plenty
Sustainable Business Awards. This recognised the plant’s achievements in its use of wastes, whereby sawdust and shavings from
Central North Island sawmills are used as a raw material and waste water is used for irrigation on a nearby dairy farm.
Our operations in New Zealand are subject to numerous consents under the Resource Management Act, and all business units have
systems that monitor compliance. There were no non-compliance incidents resulting in prosecution during the 2003 year. Winstone
Aggregates, which is dependent on new consents to develop and extend quarries, received comprehensive consents to operate new
quarries at Pokeno and south of Hamilton.
The company uses approximately six petajoules of energy per year in New Zealand – which is 2.5 percent of the country’s total energy
use. It is thus a large emitter of carbon dioxide. During the past year, the New Zealand Government confirmed that carbon dioxide
emitters would be subject to a tax of up to $25 per tonne from 2007. Energy intensive businesses that manufacture internationally
traded products will be eligible for exemption from this tax, provided that they commit to achieving “...world’s best practice emissions
management.” Exemption will be available within Negotiated Greenhouse Agreements. The company’s initiative to negotiate such an
agreement with the Government is progressing, and an application to enter into negotiations has been submitted to the Government.
We anticipate a successful conclusion to this process during the current year.
The electricity crisis in New Zealand during the second half of the year, the depletion of the Maui gas field, and Government policies in
both Australia and New Zealand to reduce carbon dioxide emissions, are all signals of the strategic importance of secure and affordable
energy sources. The company is developing strategies to manage energy supply issues in the future.
Ultimately, one of our most significant environmental effects is the long-term contribution of products and solutions to the energy
efficiency of buildings and other structures. The company is a shareholder in a consortium of organisations that aims to significantly
improve the energy efficiency of New Zealand’s residential buildings. This consortium believes that appropriate incentives and
programmes could lead to a 40-50 percent improvement in the energy efficiency of all homes built after 2006.
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FLETCHER
BUILDING
03
DESCR IPTI ON:
PERFORMING
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HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
Go directly to a section of the
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excellent business
and environmental
outcomes were achieved
DESC RIPTION:
TOTAL Q UALITY
WITH THE $400 MILLION-PLUS UPGRADE OF THE MANGERE WASTEWATER TREATMENT PLANT CAME A UNIQUE OPPORTUNITY
TO IMPROVE THE SURROUNDING ENVIRONMENT – THE REMOVAL OF ONE OF THE WORLD’S LARGEST SYSTEMS OF OXIDATION
PONDS, AND THE RESTORATION OF 13 KILOMETRES OF FORESHORE TO NATURAL COASTLINE.
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DESCR IPTI ON:
PERFORMING
FLETCHER
BUILDING
03
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HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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DESCRIPTION :
Mark Binns
Chief Executive, Concrete
TOTAL QUALITY
a unique mix of building materials businesses
with two key channels to market
LEADING MARKET POSITIONS IN CEMENT, CONCRETE, PLASTERBOARD, HIGH PRESSURE LAMINATES, DECORATIVE
PANELS, STEEL BAR AND ROD, AGGREGATES AND CONSTRUCTION… A STRONG AND GROWING BASE IN AUSTRALIA,
AND IN ASIA AND THE SOUTH PACIFIC.
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DESCR IPTI ON:
PERFORMING
FLETCHER
BUILDING
03
HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
Financial Review
A SERIES OF INITIATIVES WERE UNDERTAKEN TO RESTRUCTURE THE BALANCE SHEET
CONSEQUENT TO THE ACQUISITION OF THE LAMINEX GROUP. THE COMPANY ENTERED
THE CURRENT YEAR CONSIDERABLY LARGER AND FINANCIALLY STRONG.
RESULTS
Trading revenue increased 9 percent to $3,221 million and operating earnings before unusual items rose 61 percent to $331 million.
Net profit after tax and minority interests increased 81 percent to $168 million. There were no unusual items during the period.
Earnings per share increased to 43.4 cents, representing a return on average equity of 23.0 percent and a return on average
funds of 24.4 percent.
Taxation benefited from the lower rate applicable to the Laminex earnings in Australia, together with the utilisation of some
previously written down tax losses.
FLETCHER BUILDING’S PROFILE
The total dividend for the year was increased by 5 cents to 19 cents per share, with full tax credits available.
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
BALANCE SHEET
Net debt was $858 million at 30 June 2003, compared with $398 million at June 2002. The increase reflects net borrowings
undertaken for the Laminex acquisition.
Fletcher Building remains in a sound financial position, with strong earnings and operating cashflow, and with gearing (net
debt / net debt + equity ) at 49.9 percent. This level of gearing, while higher than the June 2002 position of 40.2 percent, is
comfortably within all relevant debt covenants and below the comparable number in December 2002. Interest cover (EBITDA /
interest) was 7.3 times compared to 5.8 times at June 2002.
REGULATORY DISCLOSURES
The purchase of Laminex was completed in November 2002, for NZ$759 million, and was financed by:
INVESTOR INFORMATION
DIRECTORY
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• the issue of 44 million ordinary shares at $2.95 each – a premium of 5 percent on the pre-announcement closing price
• a further $34 million of equity was raised in November
• a $150 million capital notes issue was completed in December
• and the replacement of the existing bank borrowing facilities with a new $800 million multicurrency syndicated facility.
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FLETCHER
BUILDING
DESCR IPTI ON:
PERFORMING
03
FINANCIAL REVIEW
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CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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BALANCE SHEET CONT.
Since balance date, the company has announced the acquisition of Tasman Building Products for around NZ$260 million.
As part of the funding of this acquisition, an equity placement of 25 million shares was made at an issue price of $4.10 per share.
The balance of the acquisition price will be funded by bank debt. The acquisition will increase the company’s gearing ratio from
the 49.9 percent at 30 June 2003. Assuming the transaction had occurred on 30 June 2003 the gearing ratio would have been
51.4 percent on a pro forma basis, which leaves the company still in a very sound financial position.
During the year, capital notes of $53 million were reset, with investors subscribing for $26 million and the balance held
as treasury stock.
CASHFLOW
Cashflow from operations was $276 million. This followed an increase of $40 million in working capital as a result of the timing
of cashflows on large construction projects, together with the increase in working capital required to maintain the operations
at the current activity levels.
Capital expenditure excluding acquisitions and divestments was $88 million compared with $51 million in the 2002 year.
RISK MANAGEMENT
The company has an integrated programme to manage risks associated with interest rate, commodity price and exchange rate
movements. This hedging programme aims to assure a base level of profitability and reduce volatility in earnings.
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FLETCHER
BUILDING
DESCR IPTI ON:
PERFORMING
03
FINANCIAL REVIEW
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HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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REVALUATION
The directors have adopted a policy to revalue land, buildings and plant and machinery in accordance with
accounting standard FRS3. During the year in review, the carrying values of the steel plant were adjusted by NZ$ 17
million to reflect lower values determined by independent valuation.
PENSION PLAN
The company operates a number of defined benefit pension plans for its employees. The largest of these is the
New Zealand plan which has been closed to new members for some years. These schemes are accounted for in
accordance with United States accounting standard FAS-87 which has the effect of smoothing the volatility in
returns earned by the scheme by amortising the difference between expected returns and actual returns over the
remaining working life of the members. At balance date some NZ$83 million of net losses are to be expensed in
future periods. The New Zealand scheme is currently funded to 107 percent of the projected benefit obligations and
no contributions were made by the company in the current year with respect to these obligations.
Bill Roest
Chief Financial Officer
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FLETCHER
BUILDING
DESCR IPTI ON:
PERFORMING
03
FINANCIAL REVIEW
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HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
Go directly to a section of the
report by clicking on a blue bullet
KEY RATIOS
RETURN ON AVERAGE FUNDS*
RETURN ON AVERAGE EQUITY*
%
30
25
20
15
10
5
0
-5
-10
JUN 01
DEC 01
JUN 02
DEC 02
JUN 03
%
30
20
10
0
-10
-20
-30
-40
-50
JUN 01
DEC 01
JUN 02
DEC 02
JUN 03
* EBIT pre-unusuals/(Average net debt+equity+capital notes
* Net earnings after capital notes interest/shareholders funds
– deferred tax asset)
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FLETCHER
BUILDING
DESCR IPTI ON:
PERFORMING
03
FINANCIAL REVIEW
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HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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KEY RATIOS CONT.
INTEREST COVER*
DEBT/DEBT PLUS EQUITY
%
10
8
6
4
2
0
%
60
50
40
30
20
10
0
JUN 01
DEC 01
JUN 02
DEC 02
JUN 03
* EBITDA pre-unusuals/interest paid including capital note interest
JUN 01
DEC 01
JUN 02
DEC 02
JUN 03
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FLETCHER
BUILDING
DESCR IPTI ON:
PERFORMING
03
FINANCIAL REVIEW
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HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
Go directly to a section of the
report by clicking on a blue bullet
KEY RATIOS CONT.
TOTAL SHAREHOLDERS RETURN (TSR)*
%
50
40
30
20
10
0
JUN 01**
JUN 02
JUN 03
* TSR calculated (Gross Dividend Paid + Movement in Share Price)/
Opening Share Price
** June 01 is the return for the 3 months from separation date
DIVIDEND
CENTS PER SHARE
12
10
8
6
4
2
0
INTERIM
01
FINAL
01
INTERIM
02
FINAL
02
INTERIM
03
FINAL
03
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FLETCHER
BUILDING
DESCR IPTI ON:
PERFORMING
03
Financials
STATEMENT OF FINANCIAL PERFORMANCE
FOR THE YEAR ENDED JUNE 2003
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HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
Go directly to a section of the
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NOTE
3, 5
4, 5
6
7
Operating revenue
Operating expenses
Operating earnings
Funding costs
Earnings before taxation
Taxation expense
Earnings after taxation
Minority interest
Net earnings
Net earnings per share (cents)
9
Basic
Diluted
Weighted average number of shares
outstanding (millions of shares)
9
Basic
Diluted
Dividends declared per share (cents)
FLETCHER BUILDING GROUP
YEAR ENDED YEAR ENDED
JUNE 2003 JUNE 2002
NZ$M NZ$M
FLETCHER BUILDING LIMITED
YEAR ENDED
JUNE 2002
NZ$M
YEAR ENDED
JUNE 2003
NZ$M
57
57
(42)
15
13
28
28
62
(2)
60
(46)
14
10
24
24
3,221
(2,890)
2,966
(2,756)
331
(59)
272
(85)
187
(19)
168
43.4
39.9
387
469
19.00
210
(51)
159
(54)
105
(12)
93
27.0
25.1
345
430
14.00
The accompanying notes form part of and are to be read in conjunction with these financial statements.
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FLETCHER
BUILDING
DESCR IPTI ON:
PERFORMING
03
Financials
STATEMENT OF MOVEMENTS IN EQUITY
FOR THE YEAR ENDED JUNE 2003
HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
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NOTE
FLETCHER BUILDING GROUP
YEAR ENDED YEAR ENDED
JUNE 2003 JUNE 2002
NZ$M NZ$M
FLETCHER BUILDING LIMITED
YEAR ENDED YEAR ENDED
JUNE 2003 JUNE 2002
NZ$M NZ$M
Total equity
At the beginning of the year
Net earnings – parent interest
Net earnings – minority interest
Revaluation of investments
Revaluation of fixed assets
Taxation on revaluation
of fixed assets
Movement in currency
translation reserve
Total recognised revenues
and expenses for the year
Movement in minority equity
Movement in reported capital
Movement in capital notes
Restatement of capital notes
as debt
12
14
12
12
12
12
14
11
591
168
19
(17)
6
(3)
173
(9)
173
(68)
860
790
93
12
(11)
(5)
(19)
70
13
6
(20)
(230)
(38)
591
564
28
126
154
173
(68)
823
788
24
34
58
6
(20)
(230)
(38)
564
INVESTOR INFORMATION
Dividends and distributions
10
DIRECTORY
Total equity
Go directly to a section of the
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The accompanying notes form part of and are to be read in conjunction with these financial statements.
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FLETCHER
BUILDING
DESCR IPTI ON:
PERFORMING
03
Financials
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2003
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HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
Go directly to a section of the
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NOTE
FLETCHER BUILDING GROUP
JUNE 2003 JUNE 2002
NZ$M NZ$M
FLETCHER BUILDING LIMITED
JUNE 2003 JUNE 2002
NZ$M NZ$M
Assets
Current assets:
Cash and liquid deposits
Stocks
Debtors
Contracts
Provision for current taxation
Total current assets
Non current assets:
Fixed assets
Goodwill
Intangibles
Investments
Provision for deferred taxation
Advances to subsidiaries
Total non current assets
Total assets
15
16
17
18
25
19
20
21
22
25
34
36
448
537
(66)
(1)
954
969
53
145
155
105
59
318
405
(86)
12
708
666
3
5
72
96
1,427
2,381
842
1,550
1
13
13
27
1,338
1
313
1,652
1,679
9
6
6
21
1,019
1
290
1,310
1,331
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FLETCHER
BUILDING
DESCR IPTI ON:
PERFORMING
03
Financials
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2003
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HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
Go directly to a section of the
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Liabilities
Current liabilities:
Short-term loans
Accruals and provisions
Creditors
Capital notes
Term debt
Total current liabilities
Non current liabilities:
Capital notes
Term debt
Advances from subsidiaries
Total non current liabilities
Total liabilities
NOTE
FLETCHER BUILDING GROUP
JUNE 2003 JUNE 2002
NZ$M NZ$M
FLETCHER BUILDING LIMITED
JUNE 2003 JUNE 2002
NZ$M NZ$M
23
24
26
27
26
27
34
2
127
500
60
20
709
296
516
812
1,521
3
101
401
53
25
583
177
199
376
959
1
3
6
60
10
80
146
160
470
776
856
2
3
8
53
66
177
190
334
701
767
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FLETCHER
BUILDING
DESCR IPTI ON:
PERFORMING
03
Financials
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2003
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HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
Go directly to a section of the
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NOTE
FLETCHER BUILDING GROUP
JUNE 2003 JUNE 2002
NZ$M NZ$M
FLETCHER BUILDING LIMITED
JUNE 2003 JUNE 2002
NZ$M NZ$M
Equity
Reported capital
Revenue reserves
Other reserves
Shareholders funds
Minority equity
Total equity
11
13
13
14
628
166
29
823
37
860
455
66
43
564
27
591
Total liabilities and equity
2,381
1,550
628
(48)
243
823
823
1,679
455
(8)
117
564
564
1,331
The accompanying notes form part of and are to be read in conjunction with these financial statements.
On behalf of the Board 13 August 2003
RODERICK DEANE RALPH WATERS
Chairman of Directors Managing Director
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FLETCHER
BUILDING
DESCR IPTI ON:
PERFORMING
03
Financials
STATEMENT OF CASHFLOWS
FOR THE YEAR ENDED 30 JUNE 2003
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HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
Go directly to a section of the
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FLETCHER BUILDING GROUP
YEAR ENDED YEAR ENDED
JUNE 2003 JUNE 2002
NZ$M NZ$M
FLETCHER BUILDING LIMITED
YEAR ENDED YEAR ENDED
JUNE 2003 JUNE 2002
NZ$M NZ$M
Cashflow from operating activities
Receipts from customers
3,193
2,972
Dividends received
Interest received
Total received
19
3
3,215
Payments to suppliers, employees and other
2,840
Interest paid
Income tax paid
Total applied
Net cash from operating activities
Cashflow from investing activities
Sale of fixed assets
Sale of investments
Sale of subsidiaries
Total received
Purchase of fixed assets
Purchase of investments
Purchase of subsidiaries
Net debt in subsidiaries acquired
Total applied
Net cash from investing activities
54
45
2,939
276
8
4
15
27
85
3
759
2
849
(822)
12
2
2,986
2,723
53
23
2,799
187
12
42
54
50
1
14
65
(11)
52
6
58
9
45
54
4
4
41
19
64
13
48
61
3
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FLETCHER
BUILDING
DESCR IPTI ON:
PERFORMING
03
Financials
STATEMENT OF CASHFLOWS
FOR THE YEAR ENDED 30 JUNE 2003
HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
Cashflow from financing activities
Net debt drawdowns/(settlements)
Issue of shares
Advances from subsidiaries
Issue of capital notes
LAMINATES AND PANELS
Total received
FLETCHER BUILDING GROUP
YEAR ENDED YEAR ENDED
JUNE 2003 JUNE 2002
NZ$M NZ$M
FLETCHER BUILDING LIMITED
YEAR ENDED YEAR ENDED
JUNE 2003 JUNE 2002
NZ$M NZ$M
309
154
153
616
27
16
49
92
524
(22)
59
(1)
36
(179)
(179)
20
14
32
66
(245)
(69)
132
(4)
59
(21)
154
(72)
3
64
27
49
76
(12)
(8)
9
1
(200)
226
26
20
32
52
(26)
(23)
32
9
Purchase of capital notes
Distribution to minority shareholders
Dividends and distributions
Total applied
Net cash from financing activities
Net movement in cash held
Add opening cash and liquid deposits
Effect of exchange rate changes on net cash
Closing cash and liquid deposits
The accompanying notes form part of and are to be read in conjunction with these financial statements.
•
•
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CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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FLETCHER BUILDING GROUP
YEAR ENDED YEAR ENDED
JUNE 2003 JUNE 2002
NZ$M NZ$M
FLETCHER BUILDING LIMITED
YEAR ENDED YEAR ENDED
JUNE 2003 JUNE 2002
NZ$M NZ$M
FLETCHER
BUILDING
DESCR IPTI ON:
PERFORMING
03
Financials
STATEMENT OF CASHFLOWS
FOR THE YEAR ENDED 30 JUNE 2003
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CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
Analysis of subsidiaries disposed 1
Proceeds from sale of subsidiaries
Fixed assets
Current assets
Current liabilities
LAMINATES AND PANELS
Net assets of subsidiaries disposed
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
Gain on disposal of subsidiaries
Analysis of subsidiaries acquired 2
Fixed assets
Goodwill on acquisition
Intangibles
Investments
Tax assets
Current assets
Cash in subsidiary
CORPORATE GOVERNANCE
Outstanding consideration
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
Current liabilities
Cash paid to date for subsidiaries acquired
42
17
22
(3)
36
6
15
17
4
(9)
12
3
357
53
139
65
18
257
(2)
(26)
(102)
759
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FLETCHER
BUILDING
DESCR IPTI ON:
PERFORMING
03
Financials
STATEMENT OF CASHFLOWS
FOR THE YEAR ENDED 30 JUNE 2003
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HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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1 During the period the Bolivian operations of Fletcher Challenge Industries S. A. were sold for a profit of $3 million.
In June 2002 subsidiaries disposed were Varnsdorf Pty Limited, for a profit of $14 million, the rural business of Cyclone,
a division of Fletcher Steel Limited, at book value, and the construction activities in Australia upon which a loss of
$8 million was provided.
2 Cash outflow on purchase of subsidiaries is $759 million for The Laminex Group in November 2002.
The accompanying notes form part of and are to be read in conjunction with these financial statements.
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FLETCHER
BUILDING
DESCR IPTI ON:
PERFORMING
03
Financials
RECONCILIATION OF NET EARNINGS TO NET CASH FROM OPERATING ACTIVITIES
FOR THE YEAR ENDED 30 JUNE 2003
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CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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FLETCHER BUILDING GROUP
YEAR ENDED YEAR ENDED
JUNE 2003 JUNE 2002
NZ$M NZ$M
FLETCHER BUILDING LIMITED
YEAR ENDED YEAR ENDED
JUNE 2003 JUNE 2002
NZ$M NZ$M
Cash was received from:
Net earnings
Adjustment for items not involving cash:
Depreciation, depletions, amortisation
and provisions
Taxation
Minority interest in earnings of subsidiaries
Non cash adjustments
Cashflow from operations 1
Less (gain)/loss on disposal of affiliates
and fixed assets
Cashflow from operations before net working
capital movements
Net working capital movements
Net cash from operating activities 2
1 Includes loss on disposal of affiliates and fixed assets.
2 As per the statement of cashflows.
168
93
28
93
40
19
152
320
(4)
316
(40)
276
93
31
12
136
229
(16)
213
(26)
187
(2)
(13)
(15)
13
13
(9)
4
24
(3)
(10)
(13)
11
11
(8)
3
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FLETCHER
BUILDING
DESCR IPTI ON:
PERFORMING
03
Financials
RECONCILIATION OF NET EARNINGS TO NET CASH FROM OPERATING ACTIVITIES
FOR THE YEAR ENDED 30 JUNE 2003
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CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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Net working capital movements:
Debtors
Stocks
Contracts
Creditors
FLETCHER BUILDING GROUP
YEAR ENDED YEAR ENDED
JUNE 2003 JUNE 2002
NZ$M NZ$M
FLETCHER BUILDING LIMITED
YEAR ENDED YEAR ENDED
JUNE 2003 JUNE 2002
NZ$M NZ$M
3
(14)
(20)
(9)
(40)
54
19
7
(106)
(26)
(7)
(2)
(9)
(3)
(5)
(8)
The accompanying notes form part of and are to be read in conjunction with these financial statements.
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FLETCHER
BUILDING
DESCR IPTI ON:
PERFORMING
03
Financials
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CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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STATEMENT OF ACCOUNTING POLICIES
FOR THE YEAR ENDED 30 JUNE 2003
BASIS OF PRESENTATION
The financial statements presented are those of Fletcher Building Limited (the company) and its subsidiaries (the group).
Fletcher Building Limited is a company domiciled in New Zealand, is registered under the Companies Act 1993, and is an
issuer in terms of the Securities Act 1978 and the Financial Reporting Act 1993.
The financial statements comprise statements of financial performance, movements in equity, financial position,
cashflows, and significant accounting policies, as well as the notes to these financial statements.
ACCOUNTING CONVENTION
The financial statements are based on the general principles of historical cost accounting, with the exception
of investments and specific fixed assets as noted below. These financial statements have been prepared in accordance
with generally accepted accounting practice (GAAP) in New Zealand. Where no financial reporting standard
or statement of standard accounting practice exists in New Zealand in relation to a particular issue, the accounting
policies adopted have been determined having regard to authoritative support. These policies have been applied on
a consistent basis except as disclosed in note 1, on changes in accounting policies.
ESTIMATES
The preparation of financial statements in conformity with GAAP requires the directors to make estimates and
assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
BASIS OF CONSOLIDATION
The consolidated financial statements comprise the company and its subsidiaries and the group’s interest in associates,
partnerships and joint ventures. Inter-company transactions are eliminated in preparing the consolidated financial
statements.
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FLETCHER
BUILDING
DESCR IPTI ON:
PERFORMING
03
Financials
STATEMENT OF ACCOUNTING POLICIES
FOR THE YEAR ENDED 30 JUNE 2003
HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BASIS OF CONSOLIDATION CONT.
Subsidiaries
Subsidiaries are included in the consolidated financial statements using the purchase method of consolidation. The company
has revalued its investment in subsidiaries to net asset backing.
BOARD OF DIRECTORS
Associates
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
The equity method has been used for associate entities in which the group has a significant but not controlling interest.
Goodwill on Acquisition
Fair values are assigned to the assets and liabilities of subsidiaries and associates of the group at the date they are acquired.
Goodwill arises to the extent that the fair value is determined to be less than the purchase cost, and this goodwill is amortised
to earnings on a systematic basis over the period in which it is believed benefits will arise.
The period of amortisation is generally 20 years, however in individual cases may be less than this. The period of amortisation of
any goodwill is regularly reviewed and, if it is believed that the amount remaining to be amortised will not be recovered by future
benefits to be realised, the unrecoverable amount is written off to earnings and the balance amortised over the period in which
it is believed benefits will be realised. Negative goodwill on acquisition arises to the extent that fair value is determined to exceed
the purchase cost. This surplus is applied to reduce the book value of non-monetary assets acquired and, to the extent there are
insufficient non-monetary assets, taken to earnings.
Joint Ventures
Where the ownership interest in the joint venture is in the net residue of the business and does not give rise to an economic
or controlling interest in excess of 50 percent, the share of the net assets and liabilities and earnings of the investment is
included on an equity basis. If the interest does give rise to a controlling interest in excess of 50 percent, the investment is
consolidated.
Joint ventures in which the ownership interest is directly in the assets and liabilities, rather than the net residue, are included
on a proportional basis with assets, liabilities and earnings based on the group’s proportional interest.
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FLETCHER
BUILDING
DESCR IPTI ON:
PERFORMING
03
Financials
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HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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STATEMENT OF ACCOUNTING POLICIES
FOR THE YEAR ENDED 30 JUNE 2003
FOREIGN CURRENCY
Translation of the Financial Statements of Foreign Operations
The assets and liabilities of the group’s overseas operations are translated into New Zealand currency at the rates of exchange
ruling at balance date. The revenue and expenditure of these entities are translated using an average exchange rate reflecting an
approximation of the appropriate transaction rates. Exchange variations arising on the translation of these entities are recognised
directly in the currency translation reserve.
Exchange Differences
Monetary assets and liabilities in foreign currencies at balance date, not covered by forward exchange contracts, are translated
at the rates of exchange ruling at balance date.
Monetary assets and liabilities in foreign currencies at balance date, covered by forward exchange contracts, are translated
at the exchange rates specified in those contracts.
Non-monetary assets and liabilities in foreign currencies are translated at the exchange rates in effect when the amounts of
these assets and liabilities were determined. If a foreign currency liability is designated as a hedge of a foreign currency non-
monetary asset (or vice versa), both the asset and the liability are translated at the closing rate and the exchange difference
taken to the currency translation reserve.
VALUATION OF ASSETS
Land, Buildings, Plant and Machinery, Fixtures and Equipment
Initial recording
The cost of purchasing land, buildings, plant and machinery, fixtures and equipment is the value of the consideration given
to acquire the assets and the value of other directly attributable costs which have been incurred in bringing the assets to the
location and the condition necessary for their intended service.
The costs of self constructed assets include, where appropriate, the costs of all materials used in construction, direct labour on the
project, site preparation and installation costs, costs of obtaining resource consents, financing costs that are directly attributable to
the project, variable and fixed overheads and unrecovered operating costs incurred during planned commissioning. Costs cease
to be capitalised as soon as the asset is ready for productive use. All feasibility costs are expensed as incurred.
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FLETCHER
BUILDING
DESCR IPTI ON:
PERFORMING
03
Financials
STATEMENT OF ACCOUNTING POLICIES
FOR THE YEAR ENDED 30 JUNE 2003
HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
VALUATION OF ASSETS CONT.
Revaluations
Land, buildings, and plant and machinery are revalued by independent registered valuers on the basis of fair value.
The revaluations are conducted on a systematic basis across the group so that each asset is revalued at least every five years.
The values are reviewed annually to ensure that no asset is held at a value materially different from fair value.
Fixtures and equipment are valued at cost. Land, buildings, plant and machinery, fixtures and equipment are stated at cost
or valuation, less accumulated depreciation.
Investments
Investments are valued at historical cost. Impairments in the value of investments are written off to earnings as they arise.
Stocks
Trading stock, raw materials and work in progress are valued at the lower of cost or net realisable value, determined principally
on the first-in-first-out basis. Cost includes direct manufacturing costs and manufacturing overheads at normal operating levels.
Construction Contracts
Earnings on construction contracts (including sub-contracts) are determined using the percentage-of-completion method.
Earnings on residential contracts are recognised on settlement. Earnings are not recognised until the outcome can be reliably
estimated. Provision is made for estimated future losses on the entire contract from the date it is first recognised that a
contract loss may be incurred.
Debtors
Debtors are valued at estimated net realisable value. The valuation is net of a provision maintained for doubtful debts.
All known losses are written off to earnings in the period in which it becomes apparent that the debts are not collectable.
INVESTOR INFORMATION
Cash
DIRECTORY
Cash and liquid deposits comprise cash and demand deposits with banks or other financial institutions and highly liquid
investments that are readily convertible to cash.
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FLETCHER
BUILDING
DESCR IPTI ON:
PERFORMING
03
Financials
STATEMENT OF ACCOUNTING POLICIES
FOR THE YEAR ENDED 30 JUNE 2003
HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
VALUATION OF ASSETS CONT.
Impairment
Impairment is deemed to occur when the recoverable amount falls below the book value of the asset. The recoverable amount
is determined to be the sum of expected future discounted net cashflows arising from the ownership of the asset. Future net
cashflows take into account remaining useful life and the expected period of continued ownership, including any intended
disposals, and any costs or proceeds expected to eventuate at the end of the remaining useful life or the end of the expected
period of continued ownership.
For the purposes of considering whether there has been an impairment, assets are grouped at the lowest level for which there are
identifiable cashflows that are largely independent of the cashflows of other groups of assets. When an impairment loss arises
the impairment is measured as the amount by which the book value exceeds the recoverable amount.
Brands
Brands are held at cost and are not amortised, but are subject to an annual impairment test.
FLETCHER BUILDING’S PROFILE
VALUATION OF LIABILITIES
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
Derivative Financial Instruments
Derivative financial instruments including foreign exchange contracts, interest rate swaps, currency swaps, options, forward
rate agreements and electricity price swaps are utilised to reduce exposure to market risks.
Group policy specifically prohibits the use of derivative financial instruments for trading or speculative purposes. All derivative
financial instruments are held to hedge risk on underlying assets, liabilities and sales and purchases. For a derivative instrument to
be classified and accounted for as a hedge, it must be highly correlated with, and effective as a hedge of the underlying risk
being managed.
Derivative financial instruments are reported in the financial statements on a basis consistent with the underlying hedged item.
The fair value of derivative financial instruments, as disclosed in the financial instrument note, is estimated based on quoted
market prices.
The group holds instruments until expiry except where the underlying rationale from a risk management point of view changes,
such as when the underlying asset or liability which the instrument hedges no longer exists, in which case early termination occurs.
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FLETCHER
BUILDING
DESCR IPTI ON:
PERFORMING
03
Financials
STATEMENT OF ACCOUNTING POLICIES
FOR THE YEAR ENDED 30 JUNE 2003
HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
VALUATION OF LIABILITIES CONT.
Taxation
The provision for current tax is the estimated amount due for payment in the next 12 months by the group. The group’s
provision for deferred tax is the liability for taxation that has been deferred because of timing differences, less taxation benefits
which will offset the deferred liability as it arises. The provision for deferred taxation has been calculated using
the comprehensive basis under the liability method.
In the group, the future tax benefit of past and current tax losses, to the extent they exceed related deferred taxation
liabilities, is not recognised unless recovery is considered certain.
LAMINATES AND PANELS
Finance Leases
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
Finance leases are capitalised to reflect the term borrowing incurred and the cost of the asset acquired. Such obligations
are classified within term debt. The finance cost portion of lease payments is written off to earnings. The leased asset is
depreciated on a straight line basis over the estimated useful life of the asset with regard to residual values.
INCOME DETERMINATION
Revenue Recognition
Operating revenue is recognised in accordance with the terms of sale when the benefits of ownership and risk of loss passes to
the customer.
Investment Revenue
Interest income is taken to earnings when received or accrued in respect of the period for which it was earned. Dividends and
distributions are taken to earnings when received or accrued where declared prior to balance date.
Depreciation
Depreciation of fixed assets is calculated on the straight line method. Expected useful lives, which are regularly reviewed, are
on a weighted average basis:
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Buildings 30 years
Plant and machinery 13 years
Fixtures and equipment 5 years
Leased assets capitalised 10 years
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FLETCHER
BUILDING
DESCR IPTI ON:
PERFORMING
03
Financials
STATEMENT OF ACCOUNTING POLICIES
FOR THE YEAR ENDED 30 JUNE 2003
HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
INCOME DETERMINATION CONT.
Leasing Commitments
Expenditure arising from operating leasing commitments is written off to earnings in the period in which it is incurred. Purchased
head leases are valued at cost and amortised over the unexpired period of the lease.
BOARD OF DIRECTORS
Pension Plan Expense
The actuarial cost of providing pension plan benefits in respect of services provided by pension plan members to the group is
expensed as it accrues over the service life of the employees, taking account of the income earned by the income generating
assets owned by the plan. Any over or under accrual of expenses or income from previous periods is amortised to earnings
over a maximum period of the remaining average service life of plan members employed by the group.
Share Options Granted
Share options have been granted under a senior executive option scheme. The fair value of the option is recognised as an
expense over the restricted period provided by the executive and a corresponding amount is recognised in shareholders funds.
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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FLETCHER
BUILDING
DESCR IPTI ON:
PERFORMING
03
Financials
NOTES TO THE FINANCIAL STATEMENTS
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CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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1 CHANGES IN ACCOUNTING POLICIES
There have been no changes in accounting policy in the year ended 30 June 2003, however certain comparatives were restated
to conform with the current year’s presentation.
2 ACQUISITION OF LAMINEX
The Laminex Group was acquired on 13 November 2002 for NZ$785 million (A$690 million). If Laminex’s earnings before
interest, tax, depreciation and amortisation (EBITDA) for the 2003 financial year equals or exceeds A$95 million, Fletcher Building
has agreed to pay the vendor a further A$6 million. If Laminex’s EBITDA for the 2003 financial year equals or exceeds A$98
million, Fletcher Building will also pay the vendor A$2.00 for every dollar of EBITDA above the $98 million threshold, but only up
to a maximum amount of A$14 million. The June 2003 financial statements assume that Fletcher Building will pay an amount
of A$20 million. In addition, an estimated final working capital payment of A$3 million is outstanding. A formal fair value
exercise was undertaken which resulted in the fair value of the assets and liabilities as described in the statement of cashflows.
YEAR ENDED
JUNE 2003
NZ$M
FLETCHER BUILDING GROUP
YEAR ENDED
JUNE 2002
NZ$M
FLETCHER BUILDING LIMITED
YEAR ENDED
JUNE 2002
NZ$M
YEAR ENDED
JUNE 2003
NZ$M
3 OPERATING REVENUE
Operating revenue includes:
Trading sales to external customers
Equity earnings
3,204
17
2,955
11
Dividends received from subsidiary companies
Interest received from subsidiary companies
3,221
2,966
2
41
19
62
52
5
57
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FLETCHER
BUILDING
DESCR IPTI ON:
PERFORMING
03
Financials
NOTES TO THE FINANCIAL STATEMENTS
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CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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FLETCHER BUILDING GROUP
YEAR ENDED YEAR ENDED
JUNE 2003 JUNE 2002
NZ$M NZ$M
FLETCHER BUILDING LIMITED
YEAR ENDED YEAR ENDED
JUNE 2003 JUNE 2002
NZ$M NZ$M
4 OPERATING EARNINGS
Operating earnings includes:
Net gains on disposal of fixed assets
Amortisation of goodwill
Amortisation of intangibles
Depreciation and depletions:
Buildings
Plant and machinery
Fixtures and equipment
Resource extraction assets
Leases assets capitalised
Total depreciation and depletions
Net periodic pension cost/(benefit)
(4)
5
2
6
63
19
1
2
91
(1)
(2)
4
3
5
54
20
1
2
82
(8)
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FLETCHER
BUILDING
DESCR IPTI ON:
PERFORMING
03
Financials
NOTES TO THE FINANCIAL STATEMENTS
FLETCHER BUILDING GROUP
YEAR ENDED YEAR ENDED
JUNE 2003 JUNE 2002
NZ$M NZ$M
FLETCHER BUILDING LIMITED
YEAR ENDED YEAR ENDED
JUNE 2003 JUNE 2002
NZ$M NZ$M
•
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HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
4 OPERATING EARNINGS CONT.
Unusual items:
Impairment 1
Other (gains)/losses 2
PlaceMakers joint ventures three month
income to 30 June 2001 3
Research and development
FLETCHER BUILDING’S PROFILE
Bad debts written off
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
Directors fees
Donations
Maintenance and repairs
Operating lease expense
Auditors’ fees and expenses payable for:
Statutory audit
Other services 4
11
(12)
(4)
2
7
1
1
54
38
1
1
2
6
1
1
73
35
1
1
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BUILDING
DESCR IPTI ON:
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03
Financials
NOTES TO THE FINANCIAL STATEMENTS
•
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HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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4 OPERATING EARNINGS CONT.
1 The impairment in June 2002 relates to the overseas concrete operations of $11 million.
2 Other gains in June 2002 relate to the $14 million profit on sale of Varnsdorf Pty Limited, a gain on sale of land at Lunn
Avenue of $6 million, and a loss of $8 million relating to the sale of the construction activities in Australia.
3 In the year ended June 2002, changes in the ownership percentage for the PlaceMakers joint ventures made it
appropriate to recognise earnings on a consistent basis with the rest of the group. Previously income was recognised on
an April to March year, in line with the joint venture companies balance date. The June 2002 earnings include 15 months
of the joint ventures earnings from 1 April 2001 to 30 June 2002.
4 Fees paid to the auditors for other services consist mainly of the half annual review and taxation work in overseas jurisdictions.
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FLETCHER
BUILDING
DESCR IPTI ON:
PERFORMING
03
Financials
NOTES TO THE FINANCIAL STATEMENTS
•
•
•
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•
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•
HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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5 DISCONTINUED OPERATIONS
During the year ended June 2003, the group disposed of its Bolivian concrete operations by way of sale. During the
year ended June 2002, the group disposed of Varnsdorf Pty Limited, an Australian co-generation power business,
the group’s Australian construction business, and the rural business of Cyclone, a division of Fletcher Steel Limited.
The impact on the 2003 and 2002 financial years of the discontinued operations is shown below.
Operating revenue
Discontinued operations
Continuing operations
Total group
Operating earnings
Discontinued operations
Continuing operations
Total group
FLETCHER BUILDING GROUP
YEAR ENDED YEAR ENDED
JUNE 2003 JUNE 2002
NZ$M NZ$M
FLETCHER BUILDING LIMITED
YEAR ENDED YEAR ENDED
JUNE 2003 JUNE 2002
NZ$M NZ$M
11
3,210
3,221
2
329
331
272
2,694
2,966
5
205
210
57
57
57
57
62
62
60
60
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FLETCHER
BUILDING
DESCR IPTI ON:
PERFORMING
03
Financials
NOTES TO THE FINANCIAL STATEMENTS
•
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HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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FLETCHER BUILDING GROUP
YEAR ENDED YEAR ENDED
JUNE 2003 JUNE 2002
NZ$M NZ$M
FLETCHER BUILDING LIMITED
YEAR ENDED YEAR ENDED
JUNE 2003 JUNE 2002
NZ$M NZ$M
6 FUNDING COSTS
Interest payable on:
Term debt
Short term loans and bank overdrafts
Capital notes
Interest paid to subsidiary companies
Income from short term deposits
Plus share registry and issue expenses
28
2
28
(2)
56
3
59
28
3
22
(2)
51
51
12
1
20
8
(1)
40
2
42
24
22
46
46
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FLETCHER
BUILDING
DESCR IPTI ON:
PERFORMING
03
Financials
NOTES TO THE FINANCIAL STATEMENTS
•
•
•
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•
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•
•
•
•
•
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•
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•
•
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•
HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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FLETCHER BUILDING GROUP
YEAR ENDED YEAR ENDED
JUNE 2003 JUNE 2002
NZ$M NZ$M
FLETCHER BUILDING LIMITED
YEAR ENDED YEAR ENDED
JUNE 2003 JUNE 2002
NZ$M NZ$M
7 TAXATION EXPENSE
Earnings before taxation:
New Zealand
Overseas
Taxation at 33 cents per dollar
Adjusted for:
230
42
272
90
Benefit of lower tax rate in overseas jurisdictions
(1)
Impairment
Non assessable income
Non deductible expenses
Taxation charge from overseas jurisdictions
Other permanent differences
Current taxation
New Zealand
Overseas
Deferred taxation
New Zealand
Overseas
(5)
4
(3)
85
82
6
(2)
(1)
85
154
5
159
52
4
(9)
4
2
1
54
44
5
3
2
54
15
15
5
14
14
5
(17)
(15)
(1)
(13)
(13)
(13)
(10)
(9)
(1)
(10)
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FLETCHER
BUILDING
DESCR IPTI ON:
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03
Financials
NOTES TO THE FINANCIAL STATEMENTS
FLETCHER BUILDING GROUP
YEAR ENDED YEAR ENDED
JUNE 2003 JUNE 2002
NZ$M NZ$M
FLETCHER BUILDING LIMITED
YEAR ENDED YEAR ENDED
JUNE 2002
NZ$M
JUNE 2003
NZ$M
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HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
INVESTOR INFORMATION
DIRECTORY
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8 SHAREHOLDER TAX CREDITS
Imputation credit account
Imputation credits at the beginning of the year
Taxation paid
Imputation credits received
Imputation credits in subsidiaries and available
to shareholders at year end are:
Dividend withholding payment credit account
Dividend withholding payment credits
at the beginning of the year
Taxation paid
Dividend withholding payment credits received
Transfer to conduit tax relief account
1
16
17
17
(10)
25
(33)
(18)
1
1
1
(7)
20
(7)
(16)
(10)
(10)
25
(33)
(18)
Dividend withholding payment credits
in the parent and available to shareholders
at year end are:
(18)
(10)
(18)
CORPORATE GOVERNANCE
Dividend withholding payment credits
REGULATORY DISCLOSURES
attached to dividends paid
(7)
20
(7)
(16)
(10)
(10)
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FLETCHER
BUILDING
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03
Financials
NOTES TO THE FINANCIAL STATEMENTS
•
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•
•
•
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•
•
•
•
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•
HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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FLETCHER BUILDING GROUP
YEAR ENDED YEAR ENDED
JUNE 2003 JUNE 2002
NZ$M NZ$M
FLETCHER BUILDING LIMITED
YEAR ENDED YEAR ENDED
JUNE 2003 JUNE 2002
NZ$M NZ$M
8 SHAREHOLDER TAX CREDITS CONT.
Conduit tax relief account
Conduit tax relief credits
at the beginning of the year
Transfer from dividend withholding
payment credit account
Conduit tax relief credits attached
to dividends paid
(3)
7
(4)
(3)
7
(4)
Fletcher Building Limited has until March 2004 to fund any deficiency in its dividend withholding payment credit account.
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FLETCHER
BUILDING
DESCR IPTI ON:
PERFORMING
03
Financials
NOTES TO THE FINANCIAL STATEMENTS
HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING GROUP
YEAR ENDED YEAR ENDED
JUNE 2003 JUNE 2002
NZ$M NZ$M
FLETCHER BUILDING LIMITED
YEAR ENDED YEAR ENDED
JUNE 2003 JUNE 2002
NZ$M NZ$M
9 NET EARNINGS PER SHARE
Diluted net earnings per share uses the weighted average number of shares used for basic net earnings per share,
adjusted for dilutive securities. Capital notes and options are convertible into the company’s shares, and are
therefore considered dilutive securities for diluted net earnings per share.
Numerator
Net earnings
Numerator for basic earnings per share
Dilutive capital notes distribution
168
168
19
Numerator for diluted net earnings per share
187
FLETCHER BUILDING’S PROFILE
Denominator (millions of shares)
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
Denominator for basic net earnings per share
387
Conversion of dilutive capital notes
82
Denominator for diluted net earnings per share 469
10 DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions paid to holders of:
Shares 1
Conduit tax relief paid
Refund of conduit tax relief
68
68
93
93
15
108
345
85
430
41
4
(7)
38
68
68
41
4
(7)
38
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1 No final dividend for June 2003 was provided for in the June 2003 financial statements. On 13 August 2003 the directors
declared a final dividend for the 2003 year of 10 cents per share. This will be paid on 13 November 2003.
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FLETCHER
BUILDING
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03
Financials
NOTES TO THE FINANCIAL STATEMENTS
•
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•
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•
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•
•
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•
•
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•
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HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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FLETCHER BUILDING GROUP
YEAR ENDED YEAR ENDED
JUNE 2003 JUNE 2002
NZ$M NZ$M
FLETCHER BUILDING LIMITED
YEAR ENDED YEAR ENDED
JUNE 2003 JUNE 2002
NZ$M NZ$M
11 CAPITAL
Reported capital:
Reported capital at the beginning of the year
Issue of shares
455
173
628
449
6
455
455
173
628
449
6
455
All ordinary shares carry equal rights in respect of voting, dividend payments and distribution upon winding up.
FLETCHER BUILDING GROUP
YEAR ENDED YEAR ENDED
JUNE 2003 JUNE 2002
FLETCHER BUILDING LIMITED
YEAR ENDED YEAR ENDED
JUNE 2003 JUNE 2002
Number of ordinary shares:
Number of shares at the beginning
of the year
Issue of shares
346,560,826
344,540,655
346,560,826
344,540,655
53,466,850
53,466,850
Shares issued under the dividend
reinvestment plan
5,903,137
2,020,171
5,903,137
2,020,171
405,930,813
346,560,826
405,930,813
346,560,826
Share options:
On 13 June 2001, the company issued 1,000,000 share options under the executive option scheme. The exercise price
of the share options is $2.28. The restrictive period is until 16 May 2004 and the final exercise date is 13 June 2007.
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FLETCHER
BUILDING
DESCR IPTI ON:
PERFORMING
03
Financials
NOTES TO THE FINANCIAL STATEMENTS
HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
•
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11 CAPITAL CONT.
On 8 October 2002 the company issued 1,368,500 shares for $3,202,290 pursuant to an employee share purchase
scheme complying with section DF7 of the Income Tax Act 1994. Each New Zealand based employee was eligible to
subscribe for a maximum of 1,000 shares for an issue price of $2.34, which represented a 18 percent discount to the
market price on 19 August 2002, being the date of announcement. As required by the Income Tax Act the consideration
for the shares was funded by an interest free loan to each employee, which will be repaid over a three year restricted
period. At 30 June 2003 the total receivable owing from the employees is $2 million. The shares are held on behalf
of the employees by the Trustee which is Fletcher Building Share Schemes Limited and have been allocated to the
employees who are entitled to receive the dividends. Voting rights on the shares are exercised by the directors of the
Trustee company on behalf of the employees. The directors are appointed by the company and are Martin Farrell,
Peter Merry and Bill Roest.
12 RESERVE MOVEMENTS
Reserves at the beginning of the year
Net earnings
Investment revaluation
Revaluation of fixed assets
CORPORATE GOVERNANCE
Taxation on revaluation of fixed assets
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
Net currency translations
Dividends and distributions
FLETCHER BUILDING GROUP
YEAR ENDED YEAR ENDED
JUNE 2003 JUNE 2002
NZ$M NZ$M
FLETCHER BUILDING LIMITED
YEAR ENDED YEAR ENDED
JUNE 2003 JUNE 2002
NZ$M NZ$M
109
168
(17)
6
(3)
(68)
195
89
93
(11)
(5)
(19)
(38)
109
109
28
126
(68)
195
89
24
34
(38)
109
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Financials
NOTES TO THE FINANCIAL STATEMENTS
HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
13 RESERVE BALANCES
FLETCHER BUILDING GROUP
JUNE 2003 JUNE 2002
NZ$M NZ$M
FLETCHER BUILDING LIMITED
JUNE 2003 JUNE 2002
NZ$M NZ$M
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
Reserves comprise:
Revenue reserves
Asset revaluation – land and buildings
Asset revaluation – plant and machinery
Investment revaluation
Net currency translation
14 MINORITY EQUITY
Share capital
Reserves
166
13
33
(17)
195
21
16
37
15 CASH AND LIQUID DEPOSITS
Cash and bank balances
Short-term deposits
36
36
66
13
44
(14)
109
21
6
27
51
8
59
(48)
(8)
243
195
117
109
1
1
1
8
9
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•
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$2 million of the cash at 30 June 2003 is held on behalf of former divisions of Fletcher Challenge Limited (June
2002 $2 million). The liability to these other parties is included within other liabilities in creditors.
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FLETCHER
BUILDING
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03
Financials
NOTES TO THE FINANCIAL STATEMENTS
•
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HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
16 STOCKS
Raw materials
Work in progress
Finished goods
Consumable stores and spare parts
17 DEBTORS
Trade debtors
Contract debtors
Less provision for doubtful debts
Other receivables
CORPORATE GOVERNANCE
18 CONTRACTS
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
Gross construction work in progress
Progress billings
Work in progress
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FLETCHER BUILDING GROUP
JUNE 2003 JUNE 2002
NZ$M NZ$M
FLETCHER BUILDING LIMITED
JUNE 2003 JUNE 2002
NZ$M NZ$M
89
29
319
11
448
412
77
(14)
475
62
537
606
(672)
(66)
45
20
247
6
318
298
75
(14)
359
46
405
793
(879)
(86)
13
13
6
6
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FLETCHER
BUILDING
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03
Financials
NOTES TO THE FINANCIAL STATEMENTS
HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
19 FIXED ASSETS
FLETCHER BUILDING GROUP
JUNE 2003 JUNE 2002
NZ$M NZ$M
FLETCHER BUILDING LIMITED
JUNE 2003 JUNE 2002
NZ$M NZ$M
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
Valuation
Land
Buildings
Plant and machinery
Cost
Fixtures and equipment
Resource extraction assets
Leased assets capitalised
Total cost or valuation
Accumulated depreciation
Buildings
Plant and machinery
Fixtures and equipment
Resource extraction assets
Leased assets capitalised
Total accumulated depreciation
68
139
795
186
8
17
1,213
(12)
(95)
(126)
(2)
(9)
(244)
55
79
513
175
7
18
847
(5)
(51)
(116)
(2)
(7)
(181)
•
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•
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03
Financials
NOTES TO THE FINANCIAL STATEMENTS
HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
19 FIXED ASSETS CONT.
FLETCHER BUILDING GROUP
JUNE 2003 JUNE 2002
NZ$M NZ$M
FLETCHER BUILDING LIMITED
JUNE 2003 JUNE 2002
NZ$M NZ$M
•
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•
•
•
•
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•
•
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•
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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Net book value
Land
Buildings
Plant and machinery
Fixtures and equipment
Resource extraction assets
Leased assets capitalised
Total fixed assets
68
127
700
60
6
8
969
55
74
462
59
5
11
666
All land, buildings, plant and machinery were revalued to fair value at 30 June 2001. The values were determined by
independent registered valuers, Beca Valuations Ltd, who are registered and chartered engineers and a member of
the New Zealand Institute of Valuers.
Assets held in South America were revalued at 30 June 2002 by independent valuers and $11 million was written off
to the asset revaluation reserve. The directors then wrote down the value of the assets by a further $8 million to
recognise the impairment on assets available for sale. These assets have a total net book value of $8 million at 30
June 2003 (June 2002 $33 million).
The steel plant and rolling mill in New Zealand were revalued at 30 June 2003 by Beca Valuations Ltd and $17
million has been written off to the asset revaluation reserve.
During the year $2 million was capitalised to the cost of fixed assets (June 2002 $2 million). This represents
employment and overhead costs arising from the construction activities undertaken by The Fletcher Construction
Company Limited for another group subsidiary. No interest costs were capitalised.
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FLETCHER
BUILDING
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Financials
NOTES TO THE FINANCIAL STATEMENTS
HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
20 GOODWILL
FLETCHER BUILDING GROUP
JUNE 2003 JUNE 2002
NZ$M NZ$M
FLETCHER BUILDING LIMITED
JUNE 2003 JUNE 2002
NZ$M NZ$M
Goodwill acquired at cost
Accumulated amortisation
Goodwill at the end of the year
Goodwill at the beginning of the year
Acquired during the year
Charged to earnings
Goodwill at the end of the year
60
(7)
53
3
53
(3)
53
8
(5)
3
7
(4)
3
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
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FLETCHER
BUILDING
DESCR IPTI ON:
PERFORMING
03
Financials
NOTES TO THE FINANCIAL STATEMENTS
HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
21 INTANGIBLES
FLETCHER BUILDING GROUP
JUNE 2003 JUNE 2002
NZ$M NZ$M
FLETCHER BUILDING LIMITED
JUNE 2003 JUNE 2002
NZ$M NZ$M
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Brands
Intangible assets
Brands at the beginning of the year
Acquired during the year
140
5
145
139
Foreign currency translation movement to reserves
1
Brands at the end of the year
140
Intangible assets acquired at cost
Accumulated amortisation
Intangible assets at the end of the year
Intangible assets at the beginning of the year
15
(10)
5
5
2
(2)
5
5
5
13
(8)
5
6
2
(3)
5
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
Arising during the year
Charged to earnings
INVESTOR INFORMATION
Intangible assets at the end of the year
DIRECTORY
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FLETCHER
BUILDING
DESCR IPTI ON:
PERFORMING
03
Financials
NOTES TO THE FINANCIAL STATEMENTS
HIGHLIGHTS
CHAIRMAN’S REVIEW
FLETCHER BUILDING GROUP FLETCHER BUILDING LIMITED
JUNE 2003 JUNE 2002
NZ$M
JUNE 2003 JUNE 2002
NZ$M
NZ$M
NZ$M
22 INVESTMENTS
CHIEF EXECUTIVE’S REVIEW
Investment in associates
BOARD OF DIRECTORS
Investment in other companies
Pension plan surplus
Other investments
Investment in subsidiary companies 1
76
2
75
2
155
17
1
53
1
72
1,338
1,338
1,019
1,019
1 The principal subsidiaries included within net investment in subsidiary companies are disclosed in note 35, principal operations.
Carrying amount of associates
Carrying amount at the beginning of the year
Acquisition of associates
Sale of associate
Equity accounted earnings of associates
Amortisation of goodwill in associates
Impairment of overseas assets
Dividends from associates
Carrying amount at the end of the year
17
65
(2)
17
(2)
(19)
76
21
11
(3)
(12)
17
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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FLETCHER
BUILDING
DESCR IPTI ON:
PERFORMING
03
Financials
NOTES TO THE FINANCIAL STATEMENTS
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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FLETCHER BUILDING GROUP FLETCHER BUILDING LIMITED
JUNE 2003 JUNE 2002
NZ$M
NZ$M
JUNE 2003 JUNE 2002
NZ$M
NZ$M
22 INVESTMENTS CONT.
Equity accounted earnings comprise
Surplus before taxation
Taxation
Net surplus
Included within the carrying amount of associates is:
Goodwill acquired at cost
Accumulated amortisation
Unamortised balance of goodwill
20
(3)
17
52
(2)
50
11
11
As part of the Laminex acquisition, the group acquired 50 percent of Wespine Industries Pty Limited and Dyno
Industries W.A. Pty Limited, companies incorporated in Australia. As a result of the fair value exercise (refer note 2),
the assets have been recorded with a carrying value of $65 million, inclusive of $52 million of goodwill. $2 million of
the goodwill has been amortised during the year ending 30 June 2003. The principal activity of these companies is
the operation of a saw mill and the manufacture of building products, respectively.
During the year the group disposed of its interest in Fletcher Pioneer Mauritius Limited, which operated a readymix
plant in India.
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FLETCHER
BUILDING
DESCR IPTI ON:
PERFORMING
03
Financials
NOTES TO THE FINANCIAL STATEMENTS
HIGHLIGHTS
CHAIRMAN’S REVIEW
FLETCHER BUILDING GROUP
JUNE 2003 JUNE 2002
NZ$M NZ$M
FLETCHER BUILDING LIMITED
JUNE 2003 JUNE 2002
NZ$M NZ$M
CHIEF EXECUTIVE’S REVIEW
23 ACCRUALS AND PROVISIONS
BOARD OF DIRECTORS
Employee entitlements
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
Construction, property and product
warranty provisions
Other accruals
Construction, property and product
warranty provisions
67
37
23
127
FLETCHER BUILDING’S PROFILE
Carrying amount at the beginning of the year
47
Charged to earnings
Settled or utilised
Released to earnings
(7)
(3)
37
3
3
3
3
39
47
15
101
52
5
(7)
(3)
47
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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The group has provided for various obligations. The provisions are expected to be utilised over the next six years.
24 CREDITORS
Trade creditors
Accrued interest
Other liabilities
424
10
66
500
359
6
36
401
5
1
6
6
2
8
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FLETCHER
BUILDING
DESCR IPTI ON:
PERFORMING
03
Financials
NOTES TO THE FINANCIAL STATEMENTS
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
25 TAXATION ASSETS
Current taxation asset
Deferred taxation asset
Provision for current taxation:
Opening provision for taxation
Taxation in the statement
of financial performance
FLETCHER BUILDING’S PROFILE
Transfer from deferred taxation
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
Intercompany payment
Consolidation of PlaceMakers
Acquisition during the year
Minority share of taxation expense
Taxation in reserves
Net taxation payments
FLETCHER BUILDING GROUP
JUNE 2003 JUNE 2002
NZ$M NZ$M
FLETCHER BUILDING LIMITED
JUNE 2003 JUNE 2002
NZ$M NZ$M
(1)
105
104
12
(88)
20
(1)
9
2
45
(1)
12
96
108
1
(49)
29
2
7
(1)
23
12
13
1
14
6
13
6
1
7
5
9
(6)
(6)
(2)
6
13
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FLETCHER
BUILDING
DESCR IPTI ON:
PERFORMING
03
Financials
NOTES TO THE FINANCIAL STATEMENTS
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
25 TAXATION ASSETS CONT.
Provision for deferred taxation:
Opening provision for taxation
Taxation in the statement
of financial performance
Transfer to current taxation
Acquisition during the year
Taxation on asset revaluation
Taxation in reserves
Provision for deferred taxation
Provision for deferred taxation comprises:
FINANCIAL REVIEW
Provisions
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
Provision for doubtful debts
Depreciation and amortisation
Other
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FLETCHER BUILDING GROUP
JUNE 2003 JUNE 2002
NZ$M
NZ$M
FLETCHER BUILDING LIMITED
JUNE 2002
NZ$M
JUNE 2003
NZ$M
96
3
(20)
19
6
1
105
49
4
46
6
105
136
(5)
(29)
(5)
(1)
96
31
5
58
2
96
1
1
1
1
1
1
1
1
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FLETCHER
BUILDING
DESCR IPTI ON:
PERFORMING
03
Financials
NOTES TO THE FINANCIAL STATEMENTS
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
26 CAPITAL NOTES
Capital notes Coupon Election date
Series 2002
11.75%
15 December 2002
Series 2003 8.55%
15 June 2003
Series 2003
10.80% 30 November 2003
LAMINATES AND PANELS
Series 2004 8.50%
15 April 2004
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
Series 2005
10.50% 30 April 2005
Series 2006 8.75%
15 March 2006
Series 2006
7.90%
31 October 2006
Series 2006
7.30%
31 October 2006
Series 2006 8.30%
31 October 2006
Series 2008 8.60%
15 March 2008
Series 2010
8.85%
15 March 2010
Capital notes due for election within 12 months
Capital notes due for election after 12 months
FLETCHER BUILDING GROUP
JUNE 2003 JUNE 2002
NZ$M
NZ$M
FLETCHER BUILDING LIMITED
JUNE 2002
NZ$M
JUNE 2003
NZ$M
28
25
17
43
68
33
16
230
53
177
230
17
43
68
33
19
12
14
206
60
146
206
28
25
17
43
68
33
16
230
53
177
230
17
43
68
33
19
12
14
113
37
356
60
296
356
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BUILDING
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03
Financials
NOTES TO THE FINANCIAL STATEMENTS
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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26 CAPITAL NOTES CONT.
Capital notes are long-term fixed rate unsecured subordinated notes. On each election date, the coupon rate and term to
the next election date of that series of the capital notes will be reset. Holders may then choose either to keep their
capital notes on the new terms or to convert the principal amount and any accrued but unpaid interest into shares, in
the prescribed ratio at approximately the current market price. Instead of issuing shares to holders who choose
to convert, Fletcher Building may, at its option purchase or redeem the capital notes for cash at the principal amount
plus any accrued but unpaid interest.
Under the terms of the capital notes, non-payment of interest is not an act of default although unpaid interest is
accrued and is interest bearing at the same rate as the principal of the capital notes. Fletcher Building Limited has
covenanted not to pay dividends to its shareholders while interest that is due and payable on capital notes has not
been paid.
The capital notes do not carry voting rights and do not participate in any change in value of the issued shares of
Fletcher Building Limited.
If the principal amount of the capital notes were to be converted to shares, 99 million shares would be issued
at the share price as at 30 June 2003, of $3.67.
27 TERM DEBT
Loans subject to the negative pledge
The group borrows funds based on covenants and a negative pledge and guarantee arrangement. The principal
borrowing covenants relate to gearing, interest cover and minimum net tangible assets and at 30 June 2003, the
group was in compliance with all its covenants. The negative pledge ensures that external senior indebtedness ranks
equally in all respects and includes the covenant that security can be given only in very limited circumstances.
Loans not subject to the negative pledge
Loans not having the benefit of the negative pledge are secured against the subsidiaries’ own statement of financial
position or finance leases against specific assets.
Unused committed lines of credit
At 30 June 2003, the group had $817 million of committed bank facilities of which $280 million was undrawn
(30 June 2002 $614 million; $385 million).
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FLETCHER
BUILDING
DESCR IPTI ON:
PERFORMING
03
Financials
NOTES TO THE FINANCIAL STATEMENTS
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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FLETCHER BUILDING GROUP
JUNE 2003 JUNE 2002
NZ$M
NZ$M
FLETCHER BUILDING LIMITED
JUNE 2002
NZ$M
JUNE 2003
NZ$M
27 TERM DEBT CONT.
Floating loans subject to the negative pledge
Fixed loans subject to the negative pledge
Floating loans not subject to the negative pledge
Fixed loans not subject to the negative pledge
378
142
8
8
536
84
106
22
12
224
28
142
84
106
170
190
Summary of repayment terms and interest rates by repayment period
Due for repayment:
within one year
within two years
within three years
within four years
within five years
after five years
JUNE 2003 JUNE 2003
NZ$M INT. RATE %
JUNE 2002 JUNE 2002
NZ$M INT. RATE %
FLETCHER BUILDING GROUP
20
2
302
1
210
1
536
6.7
9.0
5.5
9.0
5.5
9.0
5.6
25
2
2
192
1
2
224
8.1
10.6
10.6
7.0
10.5
10.5
7.2
The amount due for repayment within one year relates to the current portion of the group’s syndicated loan, and to
the facility for the PlaceMakers joint ventures which is renewed annually.
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FLETCHER
BUILDING
DESCR IPTI ON:
PERFORMING
03
Financials
NOTES TO THE FINANCIAL STATEMENTS
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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27 TERM DEBT CONT.
Summary of repayment terms and interest rates by repayment period
JUNE 2003 JUNE 2003
NZ$M INT. RATE %
JUNE 2002 JUNE 2002
NZ$M INT. RATE %
FLETCHER BUILDING LIMITED
10
95
65
170
6.1
6.2
5.9
6.1
190
190
7.0
7.0
Due for repayment:
within one year
within three years
within four years
within five years
Credit rating
The company has not sought and does not hold a credit rating from an accredited rating agency.
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FLETCHER
BUILDING
DESCR IPTI ON:
PERFORMING
03
Financials
NOTES TO THE FINANCIAL STATEMENTS
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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28 FINANCIAL INSTRUMENTS
Exposures to currency, interest rate, and commodity risks arise in the normal course of the group’s business. To
manage and limit the effects of these financial risks the group operates within the following policies and utilises the
following financial instruments.
Management policies
The group does not enter into derivative financial instruments for trading or speculative purposes.
Currency balance sheet risk
It is group policy to hedge the foreign exchange exposure to balance sheet currency risk by borrowing in the
currency of the asset in proportion to the group’s debt to equity ratio. Where the underlying debt in any currency
does not equate to the required proportion of total debt, currency swaps are entered into. The only significant
unhedged assets are in South America where it is not practical to manage the currency exposures. Net assets in
South America at 30 June 2003 total $19 million (30 June 2002
$30 million).
Currency trade risk
It is group policy that no currency exchange risk may be entered into or allowed to remain outstanding should it
arise on trade transactions. When exposures are incurred by operations in currencies other than their local currency,
currency forwards, swaps, forward rate agreements and options are entered into to eliminate the exposure.
Interest rate risk
It is group policy to manage the fixed interest rate ratio on its debt and capital notes portfolio within the range of
40 to 60 percent. The position in this range is managed depending upon underlying interest rate exposures and
economic conditions. Interest rate swaps, forward rate agreements and options are entered into to manage this position.
Commodity price risk
It is group policy to use commodity price swaps and options to manage the market price risk of a commodity. The
group manages its commodity price risk depending on the underlying exposures, economic conditions, and access to
active derivatives markets.
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FLETCHER
BUILDING
DESCR IPTI ON:
PERFORMING
03
Financials
NOTES TO THE FINANCIAL STATEMENTS
HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
28 FINANCIAL INSTRUMENTS CONT.
Off balance sheet risk
Financial instruments are used as a means of reducing exposure to fluctuations in foreign exchange rates, interest
rates and commodity prices. While these financial instruments are subject to the risk of market rates changing
subsequent to acquisition, such changes would generally be offset with an opposite effect on the items being hedged.
The principal or contract amounts of forward exchange contracts and financial instruments with off balance sheet
risk for the group are as follows:
FLETCHER BUILDING GROUP
JUNE 2003 JUNE 2002
NZ$M
NZ$M
FLETCHER BUILDING LIMITED
JUNE 2002
NZ$M
JUNE 2003
NZ$M
Principal or contract amount:
Foreign exchange
FLETCHER BUILDING’S PROFILE
Currency forward exchange contracts
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
To pay
To receive
Currency options purchased
Interest rate swaps
Electricity price swaps
174
(174)
5
144
12
106
(107)
(1)
109
13
50
(50)
144
109
The cash settlement amounts of these instruments, if they had settled on 30 June 2003, approximates the principal
or contract amounts, except for interest rate swaps, currency options and commodity price swaps for which the cash
settlement is limited to the fair value.
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
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FLETCHER
BUILDING
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03
Financials
NOTES TO THE FINANCIAL STATEMENTS
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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28 FINANCIAL INSTRUMENTS CONT.
Credit risk
To the extent the group has a receivable from another party there is a credit risk in the event of non-performance by
that counterparty. At balance date there were no significant concentrations of credit risks in respect of trade receivables.
The group enters into financial instruments with various counterparties in accordance with established limits as to
credit rating and dollar limits and does not require collateral or other security to support the financial instruments.
In accordance with the established counterparty restrictions, there are no significant concentrations
of credit risk in respect of financial instruments.
Interest rate repricing
The following table sets out the interest rate repricing profile and weighted average interest rate of the group’s
term debt, capital notes and interest rate hedges:
Interest rate repriced and average interest rate:
within one year
within two years
within three years
within four years
within five years
after five years
FLETCHER BUILDING GROUP
JUNE 2003 JUNE 2003 JUNE 2002 JUNE 2002
NZ$M INT. RATE % NZ$M INT. RATE %
450 6.0 218 7.9
70 10.5 63 9.2
107 7.0 70 10.5
91 6.6 84 7.5
136 8.1 17 8.0
38 8.9 2 10.0
892 7.0 454 8.4
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FLETCHER
BUILDING
DESCR IPTI ON:
PERFORMING
03
Financials
NOTES TO THE FINANCIAL STATEMENTS
HIGHLIGHTS
CHAIRMAN’S REVIEW
28 FINANCIAL INSTRUMENTS CONT.
CHIEF EXECUTIVE’S REVIEW
Interest rate repriced and average interest rate:
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
within one year
within two years
within three years
within four years
within five years
JUNE 2003 JUNE 2003 JUNE 2002 JUNE 2002
INT. RATE %
NZ$M INT. RATE % NZ$M
FLETCHER BUILDING LIMITED
90 8.8 194
68 10.5 61
105 6.9 68
90 6.5 82
23 5.4 15
376 7.8 420
8.0
9.2
10.5
7.5
7.9
8.4
FLETCHER BUILDING’S PROFILE
The net effective interest rate for cash and liquid deposits and bank overdrafts as at 30 June 2003 is 2 percent.
Debtors and creditors are not interest rate sensitive.
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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FLETCHER
BUILDING
DESCR IPTI ON:
PERFORMING
03
Financials
NOTES TO THE FINANCIAL STATEMENTS
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CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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28 FINANCIAL INSTRUMENTS CONT.
Fair values
The gain/(loss) of the estimated fair values of the group’s and parent’s financial assets and liabilities compared
to their carrying values are as follows:
FLETCHER BUILDING GROUP
JUNE 2003
CARRYING VALUE
NZ$M
Currency forward exchange contracts
Interest rate swaps
Electricity price swaps
JUNE 2003 JUNE 2002
FAIR VALUE CARRYING VALUE
NZ$M NZ$M
FLETCHER BUILDING LIMITED
JUNE 2002
FAIR VALUE
NZ$M
1
(1)
2
1
(1)
The carrying values in the fair value table include interest accruals which are included within current assets
and current liabilities. Term debt of $536 million (refer note 27) includes cross-currency and interest rate swaps and
currency forward exchange contracts. The fair value of derivative financial instruments is estimated based on the
quoted or estimated market prices of those instruments.
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BUILDING
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03
Financials
NOTES TO THE FINANCIAL STATEMENTS
HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
29 CAPITAL EXPENDITURE COMMITMENTS
JUNE 2003
NZ$M
JUNE 2002
NZ$M
FLETCHER BUILDING GROUP
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
Approved by the directors but uncommitted at year end
16
Committed at year end 32
48
30 LEASE COMMITMENTS
The expected future minimum rental payments required under operating leases that have initial or remaining
non-cancellable lease terms in excess of one year at year end are as follows:
FLETCHER BUILDING’S PROFILE
within one year 53
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
within two years 43
within three years 38
within four years 30
within five years 25
after five years 49
238
Operating lease commitments relate mainly to occupancy leases of buildings.
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10
11
21
37
34
27
24
22
38
182
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BUILDING
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03
Financials
NOTES TO THE FINANCIAL STATEMENTS
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CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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JUNE 2003
NZ$M
FLETCHER BUILDING GROUP
JUNE 2002
NZ$M
31 CONTINGENT LIABILITIES
Provision has been made in the ordinary course of business for all known and probable future claims but not for
such claims as are considered remote. Contingent liabilities arise in respect of the following categories:
Contingent liabilities with respect to guarantees extended on trading transactions,
performance bonds and other transactions 139
Letters of credit 3
158
5
32 ENVIRONMENT, HEALTH AND SAFETY
It is company policy to monitor environmental, health and safety performance on an ongoing basis and to require
that all of its operations comply with applicable regulatory requirements. As part of this policy, management
is required to report regularly to the board of directors on current and future environmental, health and safety
performance. The group also commissions regular independent reports with respect to environmental, health and
safety management systems and the implementation of this policy.
The group is subject to numerous national and local environmental, health and safety laws and regulations
concerning its products, operations and other activities. Failure to comply with these laws and regulations may result
in orders being issued that could cause certain of the group’s operations to cease or be curtailed or may require
installation of additional equipment at substantial cost. Violators may be required to compensate those suffering loss
or damage by reason of violations and may be fined if convicted of an offence under such legislation.
Management believes that the group’s activities are in compliance in all material respects with applicable
environmental, health and safety laws and regulations.
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BUILDING
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Financials
NOTES TO THE FINANCIAL STATEMENTS
33 SELF INSURANCE
The company has completed an analysis of its capacity to retain otherwise insurable loss. The directors believe that
the group’s risk management programmes are adequate to protect its assets and earnings against losses incurred,
within the self insurance level of $10 million.
Based on past experience, the company does not anticipate that future losses within these levels would have a significant
impact on the group’s financial position or performance.
In certain circumstances, where required by law or where management considers it appropriate, insurance may be arranged for
exposures within the self insurance levels.
In general terms, subject to the self insurance levels, the group remains insured with insurers having a Standard
& Poor’s A grade rating or better. Of this coverage 80 percent is with insurance companies having an AA grade rating
or better. The following risks are insured at 30 June 2003.
Loss or damage to group property including business interruption
Marine public liability
Public and product liability resulting from construction activities
Property in the course of construction
The group has made provision for reported and estimated unreported losses incurred at balance date.
FLETCHER BUILDING GROUP
JUNE 2002
NZ$M
100
JUNE 2003
NZ$M
100
210
50
50
50
100
50
50
50
FLETCHER BUILDING’S PROFILE
Public and product liability
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CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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Financials
NOTES TO THE FINANCIAL STATEMENTS
FLETCHER BUILDING GROUP
JUNE 2003 JUNE 2002
NZ$M NZ$M
FLETCHER BUILDING LIMITED
JUNE 2003 JUNE 2002
NZ$M NZ$M
HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
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34 RELATED PARTY TRANSACTIONS
Fletcher Building Group
Trading activities with related parties
Purchase of scrap metal from Sims Pacific
Metals Limited 50
46
Amounts owing relating to the purchase of
scrap metal from Sims Pacific Metals Limited,
and included within Creditors 3
3
Purchase of raw materials from Wespine
Industries Pty Limited and Dyno Industries
W.A. Pty Limited 19
Amounts owing relating to the purchase of
raw materials from Wespine Industries Pty Limited
and Dyno Industries W.A. Pty Limited, and included
within Creditors 3
Fletcher Building Limited
Interest income received from subsidiary companies
REGULATORY DISCLOSURES
Dividend received from subsidiary companies
INVESTOR INFORMATION
DIRECTORY
Term receivable owing from subsidiary companies 1
Term liability owing to subsidiary companies 2
5
52
313
(470)
19
41
290
(334)
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1 This unsecured advance represents long term funding even though it is for no fixed term and bears interest at 10.2 percent.
2 These unsecured advances represents long term funding even though they are for no fixed term and bear interest at either 7.5 percent or 9 percent.
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FLETCHER
BUILDING
DESCR IPTI ON:
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03
Financials
NOTES TO THE FINANCIAL STATEMENTS
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CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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35 PRINCIPAL OPERATIONS
Fletcher Building Limited is the holding company of the Fletcher Building Group. The principal subsidiaries and
associates as at 30 June 2003, are outlined below:
COUNTRY OF % PRINCIPAL
DOMICILE HOLDING ACTIVITY
Principal subsidiaries
Fletcher Building Holdings Limited
NZ 100 Holding company
Fletcher Building Products Limited
NZ 100 Building products
Fletcher Concrete and Infrastructure Limited
NZ 100 Concrete products
Fletcher Distribution Limited
NZ 100 Merchandising
Fletcher Steel Limited
Fletcher Residential Limited
NZ 100 Steel production
NZ 100 Housing
The Fletcher Construction Company Limited
NZ 100 Construction
Winstone Wallboards Limited
NZ 100 Gypsum plasterboards
Fletcher Property Limited
PlaceMakers subsidiaries
NZ 100 Property management
NZ 50.1 Retail
Fletcher Building Finance Limited
NZ 100 Finance company
Firth Industries Peru S.A.
Cemac (Hong Kong) Limited
Peru 100 Concrete products
Hong Kong 100 Wall partitions & ceiling systems
Fletcher Construction Company (Fiji) Limited
Fiji 100 Construction
Fletcher Challenge Concrete Industries (Fiji) Limited Fiji 100 Quarrying
Metromix Concrete Company Limited
Fiji 100 Concrete products
Laminex Group Limited
Australia 100 Building products
Fletcher Building Australia Pty Limited
Australia 100 Holding company
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FLETCHER
BUILDING
DESCR IPTI ON:
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03
Financials
NOTES TO THE FINANCIAL STATEMENTS
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CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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COUNTRY OF % PRINCIPAL
DOMICILE HOLDING ACTIVITY
35 PRINCIPAL OPERATIONS CONT.
Fletcher Construction (Solomon Is) Limited
Solomon Is. 100 Construction
Fletcher Morobe Construction Pty Limited
PNG 100 Construction
Fletcher Building Netherlands B.V.
Netherlands 100 Finance
Tasman Investments (Netherlands Antilles) N.V.
Neth Antilles 100 Finance
Associates
Wespine Industries Pty Limited
Australia 50 Sawmill operator
Dyno Industries W.A. Pty Limited
Australia 50 Building products
Sims Pacific Metals Limited
NZ 50 Metal recycling
36 PENSION PLAN
Fletcher Building Limited is the principal sponsoring company of a defined benefit pension plan covering certain
employees in New Zealand. Membership of this plan has been closed for a number of years. During the year the
group acquired the Laminex Group Limited which has two defined benefit schemes in Australia and a number of
defined contribution plans which the Laminex Group Limited contributes to on behalf of its employees.
These defined benefit plans are accounted for in accordance with Statement of Financial Accounting Standard (FAS)
87, Employers Accounting for Pensions. This has the effect of smoothing the volatility in the returns earned by the
plan through amortising gains and losses over the life of the plan. At 30 June 2003 $83 million (June 2002 $32
million) of net losses are to be expensed in future years.
If the funding ratio of the New Zealand plan falls below 115 percent at any two consecutive annual actuarial
valuations, Fletcher Building Limited has an obligation to ensure that the value of the assets is at least 115 percent
of the plan’s accrued actuarial liability, as calculated by the plan’s actuary. This calculation is done on the plan’s
funding basis which differs from the calculation under FAS 87. At 31 March 2003 the value of the assets was 104
percent of the actuarial liability. The company contributed $2 million during the year and at year end recognised
a liability to the Plan for $17 million in respect of the estimated actuarial liability owing at 31 March 2004.
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FLETCHER
BUILDING
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03
Financials
NOTES TO THE FINANCIAL STATEMENTS
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CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
36 PENSION PLAN CONT.
The benefits are based on years of service and the employees’ compensation during their years of employment.
Contributions are intended to provide not only for benefits attributed to service to date but also for those expected
to be earned in the future.
Plan assets consist primarily of property, equity and fixed income securities.
Assets of the plan
Assets of plan at fair value
Total projected benefit obligation
Funded surplus/(obligation)
Prior service costs
Net (gain)/loss 1
Transition asset 2
Projected unrecognised funded (surplus)/obligation
Recognised funded surplus 3
1 The unrecognised net loss is being amortised over ten years.
2 The net transition asset is being amortised over a further year as per the requirements of FAS 87.
3 Recognised funded surplus included within note 22, Investments.
JUNE 2003 JUNE 2002
NZ$M NZ$M
320
(328)
(8)
1
90
(7)
83
75
268
(247)
21
50
(19)
32
53
FLETCHER BUILDING’S PROFILE
Projected unrecognised funded (surplus)/obligation consists of:
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NOTES TO THE FINANCIAL STATEMENTS
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CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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36 PENSION PLAN CONT.
Net periodic pension (cost)/benefit
Service cost earned during the year
Interest cost on projected benefit obligation
Actual return on assets
Net amortisation of:
(i) Transition asset
(ii) Amortisation of net (gain)/loss
Difference between expected and actual return on assets
JUNE 2003 JUNE 2002
NZ$M NZ$M
(6)
(15)
12
(8)
18
1
(3)
(12)
2
9
(4)
16
8
Assumptions used
The following table provides the weighted average assumptions used to develop the net periodic pension cost and
the actuarial present value of projected benefit obligations for the group’s plans:
Assumed discount rate on benefit obligations
Expected long term rate of return on plan assets
Rate of increase in future compensation levels
2003 2002
% %
4.75
4.07
5.61
3.58
5.5
3.5
During the year the New Zealand actuary decreased the discount rate on benefit obligations from 4.75 percent to
3.8 percent to reflect the decrease in risk free interest rates. This had the effect of increasing the projected benefit
obligation by $26 million, and is part of the closing net loss to be amortised in future periods.
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FLETCHER
BUILDING
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03
Financials
NOTES TO THE FINANCIAL STATEMENTS
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CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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37 SEGMENTAL INFORMATION
JUNE 2003
OPERATING
REVENUE
JUNE 2002 JUNE 2003
OPERATING OPERATING
REVENUE EARNINGS
(EBIT)
JUNE 2002
OPERATING
EARNINGS
(EBIT)
JUNE 2003 JUNE 2002
TOTAL TOTAL
ASSETS ASSETS
NZ$M
Industry Segments
Building Products
Distribution
Concrete
Construction
Laminex
Other
865
807
497
618
432
2
3,221
820
686
470
871
2,847
1 19
112
55
83
34
44
3
331
Adjustment for Distribution 1
Other unusual items
Group
3,221
2,966
331
85
34
60
30
(4)
205
4
1
210
534
192
462
106
857
230
2,381
571
180
479
123
197
1,550
2,381
1,550
NZ$M
Geographical segments
Australia
New Zealand
Other
Group
JUNE 2003
OPERATING
REVENUE
BY ORIGIN
JUNE 2002 JUNE 2003
OPERATING OPERATING
REVENUE EARNINGS
BY ORIGIN (EBIT)
JUNE 2002
OPERATING
EARNINGS
(EBIT)
JUNE 2003 JUNE 2002
TOTAL TOTAL
ASSETS ASSETS
522
2,588
1 1 1
3,221
315
2,513
138
2,966
41
278
12
331
4
210
(4)
210
857
1,461
63
2,381
39
1,432
79
1,550
1 In June 2002 the results for Distribution were for a fifteen month period. To ensure comparability the results
for Distribution have been restated for both years on a twelve months consolidated basis in this note.
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AUDIT REPORT
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BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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TO THE SHAREHOLDERS OF FLETCHER BUILDING LIMITED
We have audited the financial statements on pages 47 to 105. The financial statements provide information about the past
financial performance and financial position of the company and group as at 30 June 2003. This information is stated in accordance
with the accounting policies set out on pages 58 to 64.
Directors’ responsibilities
The directors are responsible for the preparation of financial statements which give a true and fair view of the financial
position of the company and group as at 30 June 2003 and the results of their operations and cashflows for the year ended
on that date.
Auditors’ responsibilities
It is our responsibility to express an independent opinion on the financial statements presented by the directors and report our
opinion to you.
Basis of opinion
An audit includes examining, on a test basis, evidence relevant to the amounts and disclosures in the financial statements.
It also includes assessing:
• the significant estimates and judgements made by the directors in the preparation of the financial statements;
•
whether the accounting policies are appropriate to the company’s and group’s circumstances, consistently applied
and adequately disclosed.
We conducted our audit in accordance with New Zealand Auditing Standards issued by the Institute of Chartered Accountants of
New Zealand. We planned and performed our audit so as to obtain all the information and explanations which we considered
necessary in order to provide us with sufficient evidence to obtain reasonable assurance that the financial statements are free
from material misstatements, whether caused by fraud or error. In forming our opinion we also evaluated the overall adequacy
of the presentation of information in the financial statements.
Our firm has also provided other services to the company and certain of its subsidiaries in relation to taxation and general
accounting services. Partners and employees of our firm may also deal with the company and group on normal terms within
the ordinary course of trading activities of the business of the company and group. These matters have not impaired our
independence as auditors of the company and group. The firm has no other relationship with, or interest in, the company
or any of its subsidiaries.
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CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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Unqualified opinion
We have obtained all the information and explanations we have required.
In our opinion:
•
proper accounting records have been kept by the company as far as appears from our examination of those records;
• the financial statements on pages 47 to 105:
– comply with New Zealand generally accepted accounting practice;
– give a true and fair view of the financial position of the company and group as at 30 June 2003 and the results of their
operations and cashflows for the year ended on that date.
Our audit was completed on 13 August 2003 and our unqualified opinion is expressed as at that date.
KPMG
Auckland, New Zealand
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governance
& regulatory review
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CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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FLETCHER BUILDING HAS COMPLETED A WIDE-RANGING REVIEW OF CORPORATE
GOVERNANCE STANDARDS AND PRACTICES, AND ADOPTED A FRAMEWORK
BASED ON 10 INTERNATIONALLY RECOGNISED PRINCIPLES.
Fletcher Building is a New Zealand based building materials manufacturer whose securities are listed on the New Zealand
and Australian stock exchanges. In accordance with the requirement by these exchanges for formal adoption by boards of
directors of approved corporate governance practices, the board of the company confirms that it is committed to the highest
standards of behaviour and accountability, and has adopted policies and procedures that reflect this.
The company has adopted the 10 principles recognised by the Australian Stock Exchange Corporate Governance Council in its
report of 31 March 2003. While there is no ‘best’ way to organise for corporate governance, directors believe that this provides
an appropriate format. In establishing its corporate governance procedures, the company has also considered practices and
trends in corporate governance in other jurisdictions and has incorporated these where appropriate.
THE 10 ESSENTIAL GOVERNANCE PRINCIPLES ADOPTED BY THE BOARD ARE THAT THE COMPANY SHOULD:
1. LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT
The company’s procedures are designed to:
• enable the board to provide strategic guidance for the company and effective oversight of management
• clarify the respective roles and responsibilities of board members and senior executives in order to facilitate board
and management accountability to both the company and its shareholders
• ensure a balance of authority so that no single individual has unfettered powers.
The board has an obligation to protect and enhance the value of the company’s assets, and to act in its interests.
It exercises this obligation through the approval of appropriate corporate strategies and processes, with particular regard to
portfolio composition and return expectations. These include approval of transactions relating to acquisitions, divestments and
capital expenditures above delegated authority limits; financial and dividend policy; and the review of performance against
strategic objectives.
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BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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1. LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT CONT.
As part of its review of the strategic direction of the company, an off-site strategy session is held with senior management.
At most monthly board meetings, a strategic review is held of a business group or business unit, where focus is on the specific
strategies being contemplated or applied in that area.
The company achieves board and management accountability through written terms of reference for the chairman, directors and
management, and a formal delegation of authority to the chief executive. The effect of this framework is that whilst the board
has statutory responsibility for the activities of the company, this is exercised through delegation to the chief executive
officer, who is charged with the day-to-day leadership and management of the company. To strengthen its governance processes,
the board reviewed the delegations to the chief executive, and the operating delegations by the chief executive, during the year.
The board evaluates annually the performance of the chief executive and the chief executive’s direct reports. The evaluation is
based on criteria that include the performance of the business and the accomplishment of long term strategic objectives and
other non-quantitative objectives established at the beginning of each year.
The governance procedures require the separation of the role of chairman from that of the chief executive officer. The chairman’s
role is to manage the board effectively, to provide leadership to the board and to interact with the chief executive officer.
2. STRUCTURE THE BOARD TO ADD VALUE
Directors believe that for the board to be effective they need to facilitate the efficient discharge of the duties imposed by law
on the directors and add value to the company. To achieve this, the board is organised in such a way that it:
• obtains a proper understanding of, and competence to deal with, the current and emerging issues of the business
• can effectively review and challenge the performance of management and exercise independent judgement
• can assist in the identification of director candidates for shareholder vote.
Board composition
The constitution provides that the appropriate size for the board is between three and nine members. The board as determined
that eight is an appropriate number at this time, following the recent appointment of an Australian based director. This recognises the
increased Australian focus of the company’s operations with the acquisition of The Laminex Group. One-third of all directors
stand for election every year. The directors who retire in each year are those who have been longest in office since their last
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PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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2. STRUCTURE THE BOARD TO ADD VALUE CONT.
election or, if there are more than one of equal term, by agreement. Subject to continued shareholder support and with effect
from 1 July 2003, the standard term for a director will be six years from the date that he or she initially stands for election.
At the end of this term the director will offer his or her resignation. The board may, if it considers it appropriate, offer a further
three year term.The board has, during the latest year, constituted a nominations committee chaired by the chairman of the
company and composed of all the non-executive directors. This committee will assist in the identification of appropriate directors
and, through the committee chair, review the performance of existing directors.
Committees
Committees established by the board review and analyse policies and strategies, usually developed by management, which
are within their terms of reference. They examine proposals and, where appropriate, make recommendations to the full board.
Committees do not take action or make decisions on behalf of the board unless specifically mandated by prior board authority
to do so. A committee or an individual director may engage separate independent counsel at the expense of the company in
appropriate circumstances, with the approval of the chairman.
The current committees of the board are audit, remuneration and nominations. These meet when necessary and consist entirely
of non-executive directors. From time to time, the board may create ad hoc committees to examine specific issues on its behalf.
Board process
Although directors are elected by the shareholders to bring special expertise or perspectives to board deliberations, decisions of
the board are made as a group, after taking each perspective into account and in the best interests of the company as a whole.
The directors receive comprehensive information on the company’s operations before each meeting and have unrestricted
access to any other information or records. To assist in ensuring information available is timely, focused and concise, board
papers are prepared and distributed electronically in PowerPoint format. Where directors cannot participate in a meeting they
forward their views to another director in advance of the meeting.
In addition, senior management is available at each meeting to address queries, and to assist in developing the board’s understanding
of the issues facing the company and the performance of its businesses.
All directors attended at least eight of the 10 scheduled meetings throughout the latest year. 12 company site visits were undertaken
during board meetings as part of the review of operations, including visits to five of the Laminex sites. There were also three
special purpose meetings of directors, and the strategic retreat session with senior management.
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CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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3. PROMOTE ETHICAL AND RESPONSIBLE DECISION-MAKING
The company has written procedures to:
• clarify the standards of ethical behaviour required of company directors and key executives, and ensure the observance
of those standards through a code of conduct and the terms of reference for directors and management
• prescribe the circumstances where directors and employees can trade in company securities.
The company has a written code of values, and supplements this with various code of conduct practices that are incorporated
into all employees’ terms of employment. Further details are provided later in this section.
The procedures for trading in the company’s shares supplement the New Zealand legislation containing the Insider Trading
(Approved Procedure for Company Officers) Notice 1996. That legislation and the company’s securities trading code of conduct
prevent short-term trading and dealing in the company’s securities whilst directors and senior executives are in possession
of non public material and relevant information. The company supplements these measures by requiring that anyone designated as
having the opportunity to access price sensitive information can transact in the company’s securities only with the prior approval
of the company secretary.
4. SAFEGUARD INTEGRITY IN FINANCIAL REPORTING
While the ultimate responsibility to ensure the integrity of the company’s financial reporting rests with the board, the company
has in place a structure of review and authorisation designed to ensure the truthful and factual presentation of the company’s
financial position. This includes:
• an appropriately resourced audit committee operating under a written charter
• review and consideration by the audit committee of the accounts and the preliminary releases of results to the market
• a process to ensure the independence and competence of the company’s external auditors
• establishment of an internal audit function in the corporate office, with reporting responsibility to the audit committee
• responsibility for appointment of the auditors residing with the audit committee.
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CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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5. MAKE TIMELY AND BALANCED DISCLOSURE
The company has in place procedures designed to ensure compliance with the NZX and ASX Listing Rules such that:
• all investors have equal and timely access to material information concerning the company, including its financial situation,
performance, ownership and governance
• company announcements are factual and presented in a clear and balanced way.
Accountability for compliance with disclosure obligations is with the company secretary. Significant market announcements,
including the preliminary announcement of the half year and full year results, and the accounts for those periods, require review
by either the audit committee or the board.
6. RESPECT THE RIGHTS OF SHAREHOLDERS
The company seeks to ensure that its shareholders empathise with its activities by:
• communicating effectively with them
• giving them ready access to balanced and clear information about the company and corporate proposals
• making it easy for them to participate in general meetings.
To assist with this, a company website is maintained with relevant information, including copies of presentations, reports and
media releases. The corporate governance procedures will be included on the website later in the current year. To further
assist shareholders the company prepared its 2002 half year accounts in electronic format, and distributed it through this
medium where shareholders have so agreed. This annual report is also available in electronic format.
7. RECOGNISE AND MANAGE RISK
The company has a formalised system for identifying, over-seeing, managing and controlling risk.
The processes involved require the maintenance of a risk register that identifies key risks facing the business, and the status
of initiatives employed to reduce them. The risk register is reviewed regularly, as part of the internal audit reviews. A formal risk
review is held with the board at least annually.
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CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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8. ENCOURAGE ENHANCED PERFORMANCE
Directors and key executives need to be equipped with the appropriate knowledge and information to discharge their
responsibilities effectively, and assured that individual and collective performance is regularly and fairly reviewed.
The terms of reference for directors and the chairman, the charters for board committees and the delegation to the chief executive
officer all provide for reviews of the performance of directors and senior management. The nominations committee assesses
the composition and effectiveness of the board and its committees annually. The chair of the nominations committee undertakes
one-on-one reviews with all directors on the effectiveness of the board.
The board evaluates annually the performance of the chief executive officer and his direct reports. The evaluation is based on
criteria that include the performance of the business and the accomplishment of long term strategic objectives and other non
quantitative objectives established at the beginning of each year.
In addition to these annual performance reviews, significant policy issues and capital expenditure or divestment decisions of
management are required to go through a formal peer group review process, including approval by the executive office or the
board where necessary.
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CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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9. REMUNERATE FAIRLY AND RESPONSIBLY
The company seeks to ensure that its remuneration policies attract and maintain talented and motivated directors and employees
as a way of enhancing the performance of the company.
Non-executive directors’ remuneration
The aggregate amount of fees paid to non-executive directors for services in their capacity as directors during the year ended
30 June 2003 was:
BASE COMMITTEE
FEE CHAIR
NZ$M NZ$M
OTHER TOTAL
FEES
NZ$M NZ$M
R S Deane 180,000
180,000
P E A Baines 60,000 12,500
H A Fletcher 60,000 2,531
R G Norris 60,000
Sir D Spring 60,000 12,500
K M Vautier
TOTAL
60,000
480,000
25,000
3,850
6,381
72,500
62,531
60,000
72,500
63,850
511,381
The remuneration policy for directors does not include participation in either a share or share option plan. Directors or their
associates are nevertheless required to hold at least 20,000 shares in the company.
Directors’ fees are reviewed biennially by the nominations committee. The company’s policy is to align directors’ remuneration
with that for comparably sized Australian companies. With effect from 1 July 2003, the base fee for directors will be $62,500 per
annum. In acknowledgement of the varying workloads of the board committees the additional remuneration payable is $8,500
for membership of the audit committee, $2,500 for membership of the nominations committee and $6,000 for membership of
the remuneration committee. Committee chairs receive a 50 percent premium to the committee fee.
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CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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9. REMUNERATE FAIRLY AND RESPONSIBLY CONT.
The board chairman’s fee is determined as three times the base fee paid to directors. In acknowledgement of the additional
time commitments required of any Australian based director a travelling allowance of $10,000 per annum will be also payable.
Where an ad hoc committee is convened, such as for due diligence, additional remuneration is payable at $1,000 per half day.
The company believes that this will provide an appropriate remuneration structure given the increased Australasian focus of the
company’s activities and the increased corporate governance obligations imposed on directors.
Executive director’s remuneration
R G Waters’ remuneration for the year ended 30 June 2003 was $800,000 plus incentive remuneration of $700,000. Incentive
remuneration was based on achieving a minimum level of profitability and specific goals related to the performance of the
company. A part of this remuneration has been taken by way of an employer contribution for the provision of a retirement
benefit from the Fletcher Building Retirement Plan.
R G Waters’ appointment as chief executive is for indefinite duration, subject to the company’s standard criteria for cessation
of employment. In terms of that contract he has been issued 1,000,000 options over the ordinary shares of the company, at an
exercise price of $2.28 per option, being the weighted average selling price of the company’s shares in the 10 trading days prior
to the date of announcement of his appointment on 16 May 2001. The options have a term of six years.
Executive directors do not receive remuneration as directors of Fletcher Building Limited or group subsidiaries.
Directors’ and officers’ indemnification and insurance
The company has arranged a programme of directors’ and officers’ liability insurance covering directors, executives and employees in
managerial positions acting on behalf of the company. Cover is for damages, judgements, fines, penalties, legal costs awarded
and defence costs arising from wrongful acts committed whilst acting for the company. The types of acts that are not covered
are dishonest, fraudulent, malicious acts or omissions; wilful breach of statutes, regulations or a duty to the company; improper
use of information to the detriment of the company; and breach of professional duty. This insurance cover is supplemented by
indemnification by the company, but excluding liability for criminal acts.
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BOARD OF DIRECTORS
CONCRETE
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LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
9. REMUNERATE FAIRLY AND RESPONSIBLY CONT.
Senior management remuneration
The company’s remuneration strategy aims to attract, retain and motivate high calibre employees at all levels of the organisation,
and so drive performance and sustained growth in shareholder value. Underpinning this philosophy is that all employees should be
appropriately and competitively rewarded – particularly for delivering superior performance which contributes to improved business results.
To this end, the company’s remuneration committee is kept fully apprised of relevant market information and best practice,
obtaining advice from external advisors when necessary. Remuneration levels are reviewed annually for market competitiveness.
Total remuneration for executives comprises fixed pay, including the value of any benefits, and short term variable pay in the form of
an annual performance related bonus which forms a significant portion of the total remuneration package. All executive performance
bonuses require achievement of a mixture of company financial and personal targets.
Alignment with shareholder interests is achieved through a requirement that all senior executives hold shares in the company,
or an economic interest in such shares, equal to the value of half of their fixed annual remuneration.
FLETCHER BUILDING’S PROFILE
Half the after tax value of any annual bonus payment received is required to be invested in this manner until the stipulated
threshold has been reached.
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
10. RECOGNISE THE LEGITIMATE INTERESTS OF STAKEHOLDERS
The company recognises that it has a number of legal and other obligations to non shareholder stakeholders such as employees,
clients, customers and the community as a whole.
Its commitment to these obligations is captured in the code of values, and in various policies and procedures (for ethical conduct,
the responsibilities of employees, conflicts of interest, and relationships with suppliers and customers) that are incorporated
into the employment terms of all employees.
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REGULATORY DISCLOSURES
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CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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DIRECTORS’ HOLDINGS OF EQUITY SECURITIES AT 30 JUNE 2003
ORDINARY SHARES
OPTIONS
BENEFICIAL
ASSOCIATED
PERSONS
CAPITAL NOTES
BENEFICIAL ASSOCIATED
PERSONS
P E A Baines
R S Deane
H A Fletcher
G J McGrath
R J Norris
D T Spring
K M Vautier
R G Waters*
22,115
1,295
9,028
20,000
20,000
20,550
38,422
50,000
526,494
12,663
29,000
88,338
1,000,000
25,000
300,000
20,000
50,000
20,000
131,410
677,495
1,000,000
29,000
415,000
* In addition to these holdings, R G Waters has also acquired an economic interest in the company’s equity securities
equivalent to a holding of 142,461 shares, by way of a retirement benefit the value of which is determined by reference
to the value of Fletcher Building shares on the date of withdrawal.
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BUILDING PRODUCTS
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PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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SHARE DEALINGS BY DIRECTORS
During the year, directors disclosed in respect of section 148(2) of the Companies Act 1993 that they acquired or disposed
of a relevant interest in shares as follows:
DIRECTOR
G J McGrath
K M Vautier
R G Waters
NUMBER NUMBER
OF SHARES OF SHARES
ACQUIRED DISPOSED
CONSIDERATION DATE
PAID/RECEIVED
$
20,000
1,277*
977*
2,762*
2,829*
65,909
4,407
3,370
9,531
9,763
16/06/03
14/11/02
09/04/03
14/11/02
09/04/03
* Shares acquired through the dividend reinvestment plan.
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DIRECTORS’ INTERESTS REGISTER
Directors’ certificates to cover entries in the interests register in respect of remuneration, dealing in the company’s securities,
insurance and other interests have been disclosed as required by the Companies Act 1993.
In accordance with Section 140(2) of the Companies Act 1993, directors have advised changes in their interests during the year of:
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HIGHLIGHTS
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LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
AS AT 30 JUNE 2003
P E A Baines
Tower Managed Funds Limited
Fletcher Building Finance Limited
Comalco New Zealand Limited
R S Deane
Institute of Policy Studies at
Victoria University (Wellington)
FLETCHER BUILDING’S PROFILE
Centre for Independent Studies Limited
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
Board of Advisors for the International Institute
of Modern Letters
Fletcher Building Finance Limited
Mayoral Business Advisory Board (Wellington)
H A Fletcher
Ports of Auckland Limited
Fletcher Building Finance Limited
CGNU Australia Holdings Limited
G J McGrath
Campbell Brothers Ltd (Brisbane) Limited
Fletcher Building Finance Limited
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15/08/02
23/10/02
20/11/02
03/09/02
03/09/02
26/09/02
23/10/02
09/01/03
31/08/02
23/10/02
31/05/03
07/07/03
30/06/03
Resigned as director
Appointed director
Resigned as director
Resigned as member
Resigned as director
Resigned as member
Appointed chairman
Appointed chairman
Appointed director
Appointed director
Resigned as chairman
Initial notice of appointment as a director
Appointed director
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AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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DIRECTORS’ INTERESTS REGISTER CONT.
R J Norris
Fletcher Building Finance Limited 23/10/02 Appointed director
Sir Dryden Spring
Fletcher Building Finance Limited 23/10/02 Appointed director
Ericsson Synergy Limited 10/02/03 Resigned as director
Ericsson Communications Limited 28/02/03 Resigned as chairman & director
Goodman Fielder Limited 19/03/03 Resigned as deputy chairman & director
K M Vautier
Advisory Board of the New Zealand Asia Institute 01/07/02 Appointed chair
Fletcher Building Finance Limited 23/10/02 Appointed director
R G Waters
Fletcher Building Finance Limited 23/10/02 Appointed director
Wespine Industries Pty Limited 13/11/02 Appointed director
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20 LARGEST SHAREHOLDERS AS AT 31 AUGUST 2003
NAME
NO OF SHARES
% OF SHARES
FLETCHER
BUILDING
03
DESCR IPTI ON:
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HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
•
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•
•
•
•
•
•
•
•
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•
•
•
New Zealand Central Securities Depository Limited
RBC Global Services Australia Nominees Pty Limited
Citicorp Nominees Pty Limited
J P Morgan Nominees Australia Limited
National Nominees Limited
LAMINATES AND PANELS
Peter Hanbury Masfen & Joanna Alison Masfen
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
Commonwealth Custodial Services Limited
Fletcher Building Employee Educational Fund
Westpac Custodian Nominees Limited
Cogent Nominees Pty Limited
Fletcher Building Share Schemes Limited
NZ Guardian Trust Company Limited
Leveraged Equities Limited
ABN Amro Craigs Limited
Investment Custodial Services Limited
IOOF Investment Management Limited
Australian Mutual Provident Society
First NZ Capital Securities Limited
Tower Trust (NSW) Limited
Fletcher Building Nominees Limited
204,343,472
51,131,434
33,654,001
9,191,070
7,668,838
2,638,854
2,427,718
2,002,765
1,914,110
1,868,813
1,328,500
1,214,324
1,198,393
889,623
798,155
796,417
750,000
652,834
600,000
576,610
47.41
11.86
7.81
2.13
1.77
0.61
0.56
0.46
0.44
0.43
0.30
0.28
0.27
0.20
0.18
0.18
0.17
0.15
0.13
0.13
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FLETCHER
BUILDING
03
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HIGHLIGHTS
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BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
•
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National Nominees New Zealand Limited
Westpac Banking Corporation
Citibank Nominees (New Zealand) Limited
Accident Compensation Corporation
ANZ Nominees Limited
Custody and Investment Nominees Limited
FLETCHER BUILDING’S PROFILE
AMP Life Limited
Royal & Sun Alliance Life and Disability (New Zealand) Limited
HSBC Nominees (NZ) Limited
Premier Nominees Limited
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
20 LARGEST SHAREHOLDERS AS AT 31 AUGUST 2003 CONT.
New Zealand Central Securities Depository Limited provides a custodial depository service that allows electronic trading of
securities to its members and does not have a beneficial interest in these shares. Its major holders of Fletcher Building shares are:
NAME
NO OF SHARES
% OF SHARES
85,673,766
28,587,589
16,438,741
14,039,321
13,174,297
5,301,393
4,873,597
4,508,700
2,929,478
2,758,104
19.88
6.63
3.81
3.26
3.06
1.23
1.13
1.05
0.68
0.64
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BUILDING
03
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BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
SUBSTANTIAL SECURITY HOLDERS
According to notices given to the company under the Securities Markets Act 1988, as at 31 August 2003 the following were
substantial security holders in the company through having relevant interests as below:
The total number of issued voting securities of Fletcher Building Limited as at that date was 430,930,813.
SUBSTANTIAL SECURITY HOLDER
Commonwealth Bank of Australia
Perpetual Trustees Australia Limited
STOCK EXCHANGE LISTINGS
NUMBER OF VOTING
SECURITIES
40,029,323
57,227,227
DATE OF
NOTICE
19/08/03
28/08/03
FLETCHER BUILDING’S PROFILE
The company’s shares are listed on the New Zealand (NZX) and Australian (ASX) stock exchanges. With effect from 1 July 2002,
the company’s shares were accepted for full listing, rather than a foreign exempt listing, by the ASX.
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
•
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BUILDING
03
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CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
HIGHLIGHTS
DISTRIBUTION OF SHAREHOLDER AND HOLDINGS AS AT 31 AUGUST 2003
CHAIRMAN’S REVIEW
SIZE OF HOLDING
NUMBER OF %
SHAREHOLDERS
1 - 999
1,000 - 4,999
5,000 - 9,999
10,000 - 99,999
100,000 and over
GEOGRAPHIC DISTRIBUTION
New Zealand
United States of America
Australia
Rest of World
12,391
13,770
2,626
1,744
90
28,461
136
1,411
613
40.47
44.97
8.58
5.70
0.29
92.96
0.44
4.61
1.99
NUMBER OF %
SHARES
6,563,887
31,284,878
19,002,346
37,289,143
337,198,455
314,191,590
340,841
115,277,233
1,529,045
1.52
7.25
4.41
8.64
78. 1 7
72.85
0.08
26. 71
0.36
All shares issued are fully paid and have full voting rights. The number of shareholders holding less than the marketable parcel
of A$500 under the listing rules of the ASX is 1,414.
The other equity securities on issue are $400 million capital notes, which can convert to ordinary shares of the company on the
basis of 98 per cent of the then current value of the shares. These equity securities are quoted on the NZX but are unquoted
on the ASX.
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LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
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DISTRIBUTION OF CAPITAL NOTEHOLDERS AND HOLDINGS AS AT 31 AUGUST 2003
SIZE OF HOLDING
FLETCHER BUILDING LIMITED
NUMBER OF
NUMBER OF
NOTEHOLDERS %
CAPITAL NOTES %
1 - 999 2 0.02 1,000
1,000 - 4,999 4,496 34.08 13,227,250
5,000 - 9,999 3,503 26.55 24,245,250
10,000 - 49,999 4,606 34.92 89,742,000
50,000 - 99,999 399 3.02 26,067,250
100,000 - 499,999 169 1.28 28,002,500
500,000 and over 17 0.13 68,714,750
0.00
5.29
9.70
35.90
10.42
11.20
27.49
DISTRIBUTION OF CAPITAL NOTEHOLDERS AND HOLDINGS AS AT 31 AUGUST 2003
SIZE OF HOLDING
1 - 999
FLETCHER BUILDING FINANCE LIMITED
NUMBER OF
NUMBER OF
NOTEHOLDERS %
CAPITAL NOTES %
1,000 - 4,999 2 0.04 6,000
5,000 - 9,999 1,103 20.24 6,059,000
10,000 - 49,999 3,659 67.15 64,621,000
50,000 - 99,999 463 8.50 25,535,000
0.00
4.04
43.08
17.02
17.95
17.90
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DIRECTORY
100,000 - 499,999 199 3.65 26,922,000
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500,000 and over 23 0.42 26,857,000
FLETCHER
BUILDING
03
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HIGHLIGHTS
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CHIEF EXECUTIVE’S REVIEW
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FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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LIMITATIONS ON THE ACQUISITION OF THE COMPANY’S SECURITIES
The terms of the company’s admission to the ASX require the following disclosure.
The company is incorporated in New Zealand. As such it is not subject to Chapters 6, 6A, 6B and 6C of the Australian
Corporations Act dealing with the acquisition of shares (such as substantial holdings and takeovers). Limitations on acquisition
of the securities are, however, imposed on the company under New Zealand law:
(i) Securities in the company are in general freely transferable and the only significant restrictions or limitations in relation
to the acquisition of securities are those imposed by New Zealand laws relating to takeovers, overseas investment and
competition.
(ii) The New Zealand Takeovers Code creates a general rule under which the acquisition of more than 20 percent of the voting
rights in the company or the increase of an existing holding of 20 percent or more of the voting rights in the company can
only occur in certain permitted ways. These include a full takeover offer in accordance with the Takeovers Code, a partial
takeover offer in accordance with the Takeovers Code, an acquisition approved by an ordinary resolution, an allotment
approved by an ordinary resolution, a creeping acquisition (in certain circumstances) or compulsory acquisition if a
shareholder holds 90 percent or more of the shares in the company.
(iii) The New Zealand Overseas Investment Act and Overseas Investment Regulations regulate certain investments in
New Zealand by overseas persons. In general terms, the consent of the New Zealand Overseas Investment Commission
is likely to be required where an “overseas person” acquires shares or an interest in shares in the company that amount
to more than 25 percent of the shares issued by the company or, if the overseas person already holds 25 percent or more,
the acquisition increases that holding.
(iv) The New Zealand Commerce Act 1986 is likely to prevent a person from acquiring shares in the company if the acquisition
would have, or would be likely to have, the effect of substantially lessening competition in a market.
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HIGHLIGHTS
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FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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NEW ZEALAND EXCHANGE WAIVERS
(i) Capital Notes
On 11 November 2002 and 20 March 2003, the Market Surveillance Panel of the NZX granted the company waivers from Listing
Rule 7.6.1 (prohibition on acquisition of an equity security of the company) with respect to the repurchase of capital notes made
pursuant to a roll-over of a further tranche of notes. This waiver was necessary because the capital notes are equity securities
by virtue of a term of their issue allowing a holder on certain dates to elect to have the capital notes convert to shares of the
company. If the holder so elects, the company can either redeem or repurchase the capital notes for cash at par. A repurchase
would be a technical breach of Listing Rule 7.6.1 even though the company’s option to purchase is expressly provided in the
original terms of issue and those terms were fully disclosed to holders.
(ii) Related party financing
On 16 December 2002 the Market Surveillance Panel of the NZX granted the company a waiver from Listing Rule 9.2.1 (material
transactions involving related parties) in relation to a finance facility established with a syndicate of banks and financial institutions
including the ANZ Banking Group (New Zealand) Limited and the National Bank of New Zealand Limited. Two directors of
Fletcher Building Limited, Roderick Deane and Sir Dryden Spring are also directors of these banks respectively. This waiver was
necessary because, at the time the financing facility was arranged, ANZ Banking Group (New Zealand) Limited and The National
Bank of New Zealand Limited are deemed to be related parties of the company for the purposes of Listing Rule 9.2.1, as a result
of these common directorships.
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FLETCHER
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HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
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CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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EMPLOYEE REMUNERATION
Section 211(1)(g) of the New Zealand Companies Act 1993 requires disclosure of remuneration and other benefits, including
redundancy and other payments made on termination of employment, in excess of $100,000 per year, paid by the company or
any of its subsidiaries worldwide to any employees who are not directors of the company. To give more appropriate information
on total employees’ remuneration, where there is a contractual commitment to provide incentive remuneration in respect of the
year ended 30 June 2003 the amount accrued as at 30 June 2003 and paid before 30 September 2003 has also been included
in the total remuneration disclosed below.
NZ$
NEW ZEALAND
BUSINESS ACTIVITIES
INTERNATIONAL
BUSINESS ACTIVITIES
NZ$
NUMBER OF EMPLOYEES
NUMBER OF EMPLOYEES
NEW ZEALAND
BUSINESS ACTIVITIES
INTERNATIONAL
BUSINESS ACTIVITIES
100,000 - 1 10,000
1 10,000 - 120,000
120,000 - 130,000
130,000 - 140,000
140,000 - 150,000
150,000 - 160,000
160,000 - 170,000
170,000 - 180,000
180,000 - 190,000
190,000 - 200,000
200,000 - 210,000
210,000 - 220,000
220,000 - 230,000
230,000 - 240,000
240,000 - 250,000
250,000 - 260,000
50
57
25
22
29
9
17
6
6
4
4
3
6
4
6
5
3
3
4
1
3
2
4
1
2
2
260,000 - 270,000
270,000 - 280,000
280,000 - 290,000
290,000 - 300,000
300,000 - 310,000
310,000 - 320,000
340,000 - 350,000
350,000 - 360,000
370,000 - 380,000
400,000 - 410,000
430,000 - 440,000
440,000 - 450,000
560,000 - 570,000
570,000 - 580,000
640,000 - 650,000
660,000 - 670,000
1
4
1
2
1
1
1
1
2
1
1
1
1
1
1
1
1
1
1
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FLETCHER
BUILDING
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HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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SUBSIDIARY COMPANY DIRECTORS
Section 21 1(2) of the New Zealand Companies Act 1993 requires the company to disclose, in relation to its subsidiaries,
the total remuneration and value of other benefits received by directors and former directors and particulars of entries
in the interests registers made during the year ended 30 June 2003.
Apart from some overseas subsidiaries which have independent directors or are required to have a specific number of local
residents as directors, no wholly owned subsidiary has directors who are not full-time employees of the group. The company had
156 subsidiaries worldwide at 30 June 2003.
No employee of Fletcher Building Limited appointed as a director of Fletcher Building Limited or its subsidiaries receives or
retains any remuneration or other benefits as a director. The remuneration and other benefits of such employees, received
as employees, are included in the relevant bandings for remuneration disclosed below under Employee Remuneration.
Except where shown below, no other director of any subsidiary company within the group receives director’s fees or other
benefits as a director.
The following persons respectively held office as directors of subsidiary companies at the end of the year or in the case of
those persons with the letter (R) after their name ceased to hold office during the year. Alternate directors are indicated by
the letter (A) after their name.
Aickin Timber Limited
O Lyttleton, R Scott, D Worley, R de Raat
Alan Milne Building Supplies Limited
A Milne, D Worley, R de Raat (A), L Dixon (A)
Amies Building Supplies Limited
J Amies, D Worley, R de Raat (A), Deavoll (A),
P Flay (AR)
Anson Building Supplies Limited
A Anson, D Worley, R de Raat (A), A Gray (A),
L Dixon (AR)
Aramis Investments Limited
M Binns, M Farrell, A Reding, W Roest
Auckland Frame and Truss Supplies Limited
O Lyttleton, D Worley, D Deavoll, N Letica,
M Waterman, S Blakemore (R)
Bandelle Pty Limited
M Binns, L Box, M Stone (R), C Wickham (R)
Bowen Building Supplies Limited
B Bowen, D Worley, R de Raat (A), P Flay (A)
Bramley Building Supplies Limited
P Bramley, D Worley, R de Raat (A), L Dixon (A)
Building Choices Limited
D Close, D Worley, R de Raat (A), L Dixon (A)
BVP No.1 Limited
M Binns, M Farrell, A Reding, W Roest
BVP No.3 Limited
M Binns, M Farrell, A Reding, W Roest
Calder Building Supplies Limited
P Calder, D Worley, P Flay (A), R de Raat (A), C Gray (R)
Call An Angel Limited
D Worley
Cemac (Hong Kong) Limited
C Wing Shum, D Thomas
Cleaver Building Supplies Limited
A Gray, M Cleaver, D Worley, R de Raat (A)
Collier Building Supplies Limited
D Worley, R de Raat, (A), A Ellis (A), A Gray (AR),
C Collier (R), A Ellis (R)
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BUILDING
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HIGHLIGHTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
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BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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SUBSIDIARY COMPANY DIRECTORS CONT.
Cotter & Thomas Building Supplies
A Ellis, D Worley, R de Raat
Craig Building Supplies Limited
A Ellis, D Worley, R de Raat (A)
Cullen Building Supplies Limited
R Cullen, D Worley, R de Raat (A), A Gray (A),
A Ellis (AR)
Cullity Timber Holdings Pty Limited
M Farrell, D Le Quesne, W Roest, J Nolan (R), L Box (A)
Davis & Casey Building Supplies Limited
T Davis, D Worley, R de Raat (A), L Dixon (A)
Delcon Holdings (No. 1) Limited
M Binns, M Farrell, A Reding, W Roest
Delcon Holdings (No. 2) Limited
M Binns, M Farrell, A Reding, W Roest
Delcon Holdings (No. 3) Limited
D Haslett, M Wood, A Reding, W Roest, M Binns (R),
M Farrell (R)
Delcon Holdings (No. 5) Limited
M Binns, M Farrell, A Reding, W Roest
Delcon Holdings (No. 8) Limited
M Binns, M Farrell, A Reding, W Roest
Dial A Hubby Limited
O Lyttleton, R Scott, R de Raat
Duroid Pty Limited
G Kirk, L Box, C Wickham (R)
FDL No. 8 Limited
D Worley
FDL No. 9 Limited
D Worley
FDL No. 10 Limited
D Worley
Fernhill Reality Limited
S Boroughs, C Loughlin
Fletcher Challenge Concrete Industries (Fiji) Limited
M Binns, R Harper, R Frost (R)
Fletcher Challenge Finance Investments Limited
M Binns, M Farrell, A Reding, W Roest
Fletcher Challenge Forest Industries Limited
M August, J Ollard, D Wood
Fletcher Challenge Industries S.A.
M Binns, K Cowie, H Ritchie
Firth Industries Peru S.A.
M Binns, B Denekamp, R Silva-Rodriguez, K Cowie (R)
Fletcher Challenge Investments UK Limited
D Wood, J Ollard
Fletcher Aluminium Pty Limited
G Kirk, L Box, C Wickham (R), M Eglinton (R)
Fletcher Challenge Investments Overseas Limited
M Binns, M Farrell, A Reding, W Roest
Fletcher Building (Australia) Pty Limited
M Binns, M Hope, D Le Quesne, L Box, C Wickham (R),
G Taylor (R)
Fletcher Building (Australia) Finance Pty Limited
M Binns, M Hope, L Box, C Wickham (R), M Stone (R)
Fletcher Building Finance Limited
P Baines, R Deane, H Fletcher, G McGrath, R Norris,
R Waters, Sir D Spring, K Vautier
Fletcher Building Holdings Limited
M Binns, M Farrell, A Reding, W Roest
Fletcher Building Netherlands B.V.
M Farrell, W Roest, P Ruoff, A Van De Werken
Fletcher Building Products Limited
M Binns, M Farrell, A Reding, W Roest
Fletcher Challenge Materiais De Construcao Limitada
D Kenderdine, J Wisniewski (R)
Fletcher Challenge Overseas Holdings Limited
M Binns, M Farrell, A Reding, W Roest
Fletcher Challenge Steel (Fiji) Limited
D Hargovind, A Pearson, A Reding, W Roest
Fletcher Challenge Steel Products (Australia)
Pty Limited
A Pearson, L Box, C Wickham (R)
Fletcher Concrete & Infrastructure Limited
M Binns, M Farrell, A Reding, W Roest
Fletcher Construction (Malaysia) SDN BHD
C Lum, G Ogilvie
Fletcher Construction (Nouvelle Caledonie) Limited
A Brown
Fletcher Construction (Singapore) PTE Limited
G Davies, A Jones, K Lee
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Evans Building Supplies Limited
M Evans, D Worley, R de Raat (A), L Dixon (A)
Fletcher Challenge Building Bolivia S.A.
M Binns, K Cowie, H Ritchie
FDCC Californa Inc
M Binns, K Kupchak, C Munkowits
Fletcher Challenge Building UK Limited
J Ollard, D Wood
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BUILDING
03
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LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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report by clicking on a blue bullet
SUBSIDIARY COMPANY DIRECTORS CONT.
Fletcher Construction (Solomon Islands) Limited
A Brown, R Gibson
Fletcher Resorts Limited
M Binns, M Farrell, A Reding, W Roest
Fletcher Construction Australia Limited
M Binns, C Munkowits, M Stone, C Wickham
Fletcher Steel Limited
M Binns, M Farrell, A Reding, W Roest
Hudson Building Supplies Limited
L Dixon, A Ellis, D Worley, R de Raat
Inventure Limited
M Binns, M Farrell, A Reding, W Roest
Fletcher Construction Company (Fiji) Limited
A Brown, R Gibson, P Watts
Fletcher Wood Panels (Australia) Pty Limited
J Brendan, H Dolan, R Linton, A Reding
John Cockburn Building Supplies Limited
J Cockburn, D Worley, R de Raat (A), L Dixon (A)
Fletcher Construction Limited
M Binns, C Munkowits, L Box, C Wickham, M Stone (R)
Fletcher Wood Panels Building Technologies Limited
S Broome, R Linton, A Reding, W Roest
Ken Jones Building Supplies Limited
K Jones, D Worley, R de Raat (A), L Dixon (A)
Fletcher Constuction Company North America Inc
M Binns, K Kupchak, C Munkowits
Formex Pty Limited
M Farrell, D Le Quesne, W Roest, J Nolan (R), L Box (A)
Kenna Building Supplies Limited
L Kenna, D Worley, R de Raat (A), L Dixon (A)
Fletcher Distribution Limited
M Binns, M Farrell, A Reding, W Roest, D Worley
Formica (N.Z.) Limited
M Farrell, W Roest, R Waters
Kevin Jarvis Building Supplies Limited
K Jarvis, D Worley, R de Raat (A), A Gray (A), A Ellis (AR)
Fletcher Marketing Pty Limited
M Binns, L Box, M Stone (R), C Wickham (R)
Geoff Brown Building Supplies Limited
L Dixon, G Brown, D Worley, R de Raat (A)
Key Building Supplies Limited
A Ellis, D Worley, R de Raat (A), S Blakemore (AR)
Fletcher Morobe Construction Pty Limited
A Brown, R Gibson, L Gray, L Mathias, K Fletcher
Goldwood Pty Limited
M Farrell, D Le Quesne, W Roest, J Nolan (R), L Box (A)
Kimura Building Supplies Limited
D Worley, P Flay, J Kimura, R de Raat (A)
Fletcher Paynter Profiles Limited
S Broome, R Linton, A Reding, D McLachlan,
W Farmer(R)
Fletcher Projects Pty Limited
M Binns, L Box, M Stone (R), C Wickham (R)
Fletcher Property Developments UK Limited
M August, J Ollard, D Wood
Fletcher Property Investments UK Limited
M August, J Ollard, D Wood
Fletcher Property Limited
M Binns, M Farrell, A Reding, W Roest
Fletcher Residential Limited
M Binns, M Farrell, A Reding, W Roest
Graeme Joy Building Supplies Limited
L Dixon, G Joy, D Worley, R de Raat (A)
Laminex (Australia) Pty. Ltd.
M Farrell, D Le Quesne, W Roest, J Nolan (R), L Box (A)
Grant McLeod Building Supplies Limited
D Worley
Laminex Group (N.Z.) Limited
M Binns, M Farrell, A Reding, W Roest
Hedges Building Supplies Limited
R Hedges, D Worley, A Ellis (A), R de Raat (A)
Laminex Group Limited
M Farrell, D Le Quesne, W Roest, J Nolan (R), L Box (A)
Hilson Building Supplies Limited
D Worley, R de Raat (A), P Flay (A), C Hilson (R)
Langford-Lee Building Supplies Limited
M Langford-Lee, D Worley, R de Raat (A), P Flay (A)
Hire A Hubby (NZ) Limited
O Lyttleton, R Scott, D Worley, R de Raat
Hooper Building Supplies Limited
G Hooper, D Worley, R de Raat (A), L Dixon (A)
Laracy Building Supplies Limited
K Laracy, D Worley, R de Raat (A), A Gray (A),
S Blakemore (AR)
M Wong Building Supplies Limited
M Wong, D Worley, R de Raat (A), L Dixon (A)
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FLETCHER
BUILDING
03
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CHAIRMAN’S REVIEW
CHIEF EXECUTIVE’S REVIEW
BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
Go directly to a section of the
report by clicking on a blue bullet
SUBSIDIARY COMPANY DIRECTORS CONT.
McDonald Building Supplies Limited
L Dixon, I McDonald, D Worley, R de Raat
PlaceMakers Limited
D Worley
McGill Building Supplies Limited
J McGill, P Flay , D Worley, R de Raat
Raoul Holdings Limited
M Binns, M Farrell, A Reding, W Roest
McLaughlan Building Supplies Limited
K McLaughlan, D Worley, R de Raat (A), L Dixon (A)
Residential Advances Limited
M Binns, D Halsey
Mecon Hawaii Limited
J Caldwell, D Hastert, K Kupchak
Meleccio Enterprises Limited
M Binns, M Farrell, A Reding, W Roest
Metromix Concrete Company Limited
M Binns, R Harper, R Frost (R)
Mike Mattin Building Supplies Limited
M Martin, D Worley, R de Raat (A), P Flay (A)
Minnell Building Supplies Limited
D Minnell, D Worley, R de Raat (A), S Blakemore (R)
Mount Timber & Hardware Limited
O Lyttleton, R Scott, D Worley, R de Raat
Neil Thomson Building Supplies Limited
D Worley, R de Raat (A), P Flay (A)
Nick Letica Building Supplies Limited
N Letica, D Worley, R de Raat (A), D Deavoll (A),
P Flay (AR)
Nock Building Supplies Limited
A Ellis, M Nock, D Worley, R de Raat (A)
Oakley Wood Panels Pty Limited
M Farrell, D Le Quesne, W Roest, J Nolan (R), L Box (A)
Pacific Trade & Export Limited
M Binns, M Farrell, A Reding, W Roest
Residential Mortgages Limited
M Binns, D Halsey
Residential Mortgage Investments Limited
M Binns, D Halsey
Rolleston Building Supplies Limited
R Rolleston, D Worley, R de Raat (A), P Flay (A),
R de Raat (R)
RTI Wood Panels Pty Limited
M Farrell, D Le Quesne, W Roest, J Nolan (R), L Box (A)
Seabar Holdings (No 16) Limited
M Binns, M Farrell, A Reding, W Roest
Servicios Y Administraciones Apoquindo Limitada
C Eyzaguirre
Shunde Cemac Building Material Company Limited
W Keung Leung, J Shum, D Thomas
Southbound Building Supplies Limited
A Rance, D Worley, R de Raat (A), L Dixon (A)
Steven Marshall Building Supplies Limited
S Marshall, D Worley, R de Raat (A), D Deavoll (A),
P Flay (AR)
Stichbury Building Supplies Limited
S Stichbury, D Worley, R de Raat (A), A Gray (A),
S Blakemore (AR)
Stickland Building Supplies Limited
L Stickland, D Worley, R de Raat (A), D Deavoll (A),
P Flay (AR)
Sullivan & Armstrong Building Supplies Limited
J Sullivan, D Worley, R de Raat (A), D Deavoll (A),
P Flay (AR)
Tasman Investments (Netherlands Antilles) N.V.
E Rakers (US$1,750), M Farrell, T Mol (US$1,750),
W Roest, A Van De Werken (R)
Ted Harper Building Supplies Limited
E Harper, D Worley, R de Raat (A), P Flay (A)
Terrace Insurances (PCC) Limited
M Eades, J Stuart, J McDonald, J Parkinson, M Farrell
Terrace Insurances Limited
M Eades, J Stuart, J McDonald, J Parkinson, M Farrell
Terry Mellsop Building Supplies Limited
T Mellsop, D Worley, R de Raat (A), A Ellis (A)
The Fletcher Construction Co (PNG) Pty Limited
A Brown, R Gibson, L Gray, L Mathias, K Fletcher
The Fletcher Construction Company Cook Islands
Limited
A Brown, R Gibson
The Fletcher Construction Company Limited
M Binns, M Farrell, A Reding, W Roest
The Fletcher Organisation (Vanuata) Limited
A Brown, R Gibson
The Fletcher Trust and Investment Company Limited
M Binns, C Munkowits
Trade Mart Limited
A Ellis, O Lyttleton, D Worley, R de Raat, R Scott
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BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
Go directly to a section of the
report by clicking on a blue bullet
SUBSIDIARY COMPANY DIRECTORS CONT.
Trademates Limited
O Lyttleton, R Scott, D Worley
Trevor Cockburn Building Supplies Limited
L Dixon, T Cockburn, D Worley, R de Raat
Van Der Vossen Building Supplies Limited
A Ellis, D Worley, R de Raat (A)
Varoy Building Supplies Limited
A Ellis, J Varoy, D Worley, D Deavoll, R de Raat (A),
P Flay (AR)
Warren Smith Building Supplies Limited
A Ellis, D Worley, R de Raat (A), W Smith (R)
Waterman Building Supplies Limited
M Waterman, D Worley, R de Raat (A), D Deavoll (A),
P Flay (AR)
Wesfi Constructions Pty Limited
M Farrell, D Le Quesne, W Roest, J Nolan (R), L Box (A)
Wesfi Jandakot Pty Limited
M Farrell, D Le Quesne, W Roest, J Nolan (R), L Box (A)
Wesfi Limited
M Farrell, D Le Quesne, W Roest, J Nolan (R), L Box (A)
Wesfi Lumber Pty Limited
M Farrell, D Le Quesne, W Roest, J Nolan (R), L Box (A)
Wesfi Manufacturing Pty Limited
M Farrell, D Le Quesne, W Roest, J Nolan (R), L Box (A)
Wesfi Woodworks Pty Limited
M Farrell, D Le Quesne
WFI Insurances Pte Limited
M Farrell, W Roest
Winstone Limited
M Binns, M Farrell, A Reding, W Roest
Winstone Wallboards Limited
M Binns, M Farrell, A Reding, W Roest
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BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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report by clicking on a blue bullet
ANNUAL SHAREHOLDERS’ MEETING
The Annual Shareholders’ Meeting of Fletcher Building Limited will be held at the ASB Club Lounge, Eden Park Function Centre,
Auckland, New Zealand, at 2.00pm on Tuesday 11 November 2003.
DIVIDEND REINVESTMENT PLAN
Fletcher Building shareholders (excluding those in jurisdictions where the issue of shares is not permitted by law) can participate
in a Dividend Reinvestment Plan, under which they have the opportunity to reinvest their dividends in additional shares.
To participate, please contact the share registry.
ON-LINE TRADING AND FINANCIAL INFORMATION
Details on Fletcher Building and its operations for the year ended 30 June 2003 can be viewed at the Fletcher Building website,
at www.fletcherbuilding.com.
This website contains all news releases to the New Zealand Exchange and other financial presentations made
by the company.
ELECTRONIC COMMUNICATIONS
The Electronic Transactions Act 2002 was passed late last year but is not yet in force. This Act allows the company to distribute
all shareholder materials in electronic form, where shareholders so agree. A consent form advising an email address is enclosed
with the annual report. Shareholders interested in viewing the electronic version of the annual report that would be received if
they so elected can so do by going to the company’s website, as noted above.
DIRECT CREDITING OF INTEREST AND DIVIDENDS
To minimise the risk of fraud and misplacement of interest and dividend cheques shareholders and noteholders are strongly
recommended to have all payments made by way of direct credit to their nominated bank account. This can be done by simply
giving the share registry written notice.
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BOARD OF DIRECTORS
CONCRETE
DISTRIBUTION
LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
FLETCHER BUILDING’S PROFILE
Gross dividend
SHARE REGISTRIES
Details of the company’s share registries are given in the Directory on the inside back cover of this report.
Shareholders with enquiries about share transactions, changes of address or dividend payments should contact the share registry
in the country in which their shares are registered.
FINAL DIVIDEND INFORMATION
NZ CENTS PER SHARE
Dividend declared
Tax credits
Dividend withholding payment refund
NZ tax (33%)
Non resident withholding tax (15%)
Net cash dividend to shareholders
Record date
Payment date
NZ RESIDENTS
NON RESIDENTS
10.0000
4.9254
14.9254
(4.9254)
10.0000
10.0000
4.9254
14.9254
(2.2388)
12.6866
24 October 2003
24 October 2003
13 November 2003
13 November 2003
As individual shareholders’ circumstances may differ, these New Zealand tax and non resident withholding tax calculations
are for guidance only.
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FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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DIRECTORY
EXECUTIVE COMMITTEE
Ralph Waters
Mark Binns
Andrew Reding
David Worley
Jonathan Ling
Bill Roest
Martin Farrell
Peter Merry
Chief Executive Officer and Managing Director
Chief Executive, Construction
Chief Executive, Concrete
Chief Executive, Building Products
Chief Executive, Distribution
Chief Executive, Laminates and Panels
Chief Financial Officer
Company Secretary
General Manager, Human Resources
REGISTERED OFFICES
New Zealand
Fletcher Building Limited
Private Bag 92 114
Auckland
Fletcher House, 810 Great South Road
Penrose, Auckland, New Zealand
Telephone: +64 9 525 9000
Australia
Fletcher Building Limited
P O Box 407
Doncaster, Melbourne
Victoria 3108
Level 2
90-94 Tram Road
Doncaster, Melbourne
Victoria 3108, Australia
Telephone: +61 3 9848 4811
ARBN 096 046 93
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LAMINATES AND PANELS
CONSTRUCTION
BUILDING PRODUCTS
FLETCHER BUILDING’S PROFILE
PEOPLE
ENVIRONMENT
FINANCIAL REVIEW
FINANCIALS
AUDIT REPORT
CORPORATE GOVERNANCE
REGULATORY DISCLOSURES
INVESTOR INFORMATION
DIRECTORY
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report by clicking on a blue bullet
DIRECTORY CONT.
SHAREHOLDER ENQUIRIES
Shareholders with enquiries about share transactions or changes of address should contact the share
registrar in the country in which their shares are registered.
REGISTRIES
New Zealand
Australia
Computershare Investor Services Limited
Computershare Investor Services Pty Limited
GPO Box 7045
Sydney, NSW 2001, Australia
Level 3, 60 Carrington St
Sydney, NSW 2000, Australia
Telephone: 1300 855 080 (within Australia)
Telephone: +61 3 9615 5970 (outside Australia)
Facsimile: +61 2 8234 5050
Private Bag 92 119
Auckland 1020
Level 2, 159 Hurstmere Rd
Takapuna, North Shore City
New Zealand
Telephone: +64 9 488 8777
Facsimile: +64 9 488 8787
OTHER INVESTOR ENQUIRIES
Fletcher Building Limited
Private Bag 92 114
Auckland, New Zealand
Telephone: +64 9 525 9000
Facsimile: +64 9 525 9032
Email: moreinfo@fb.co.nz
Website: www.fletcherbuilding.com
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