Annual Report 2024
Fletcher Building Limited
When used in this annual report, references to the ‘Company’ are references to Fletcher Building Limited. References to ‘Fletcher Building’
or the ‘Group’ are to Fletcher Building Limited, together with its subsidiaries and its interests in associates and joint ventures. All references
to financial years FY24 and FY23 in this annual report are to the financial year ended 30 June.
References to $ and NZ$ are to New Zealand dollars unless otherwise stated.
In certain sections of this report the Group has chosen to present certain financial information exclusive of the impact of significant items
and/or the results of the legacy projects, consistent with previous market guidance. Where such information is presented, it is clearly
described and marked with an appropriate footnote. This allows the readers of this report to better understand the underlying operations
and performance of the Group.
Subcontractor teams continue work on
Fletcher Living's® Waiata Shores development.
Fletcher Building Limited Annual Report 2024
2
Welcome to our FY24 Annual Report, which describes our business operations, approach
to doing business and performance for the year. As with our previous reports, we have
included commentary on our strategy, governance, environmental and social performance
of our business alongside our financial results. We welcome questions, comments or
suggestions about this report to investor.relations@fbu.com.
This report and our previous reports and presentations are available at
fletcherbuilding.com.
Our Year
04
We are Fletcher Building
05 At a glance
06 Acting Chair’s Report
07 Acting CEO’s Report
08 Positioning ourselves for the future
09 Progress to target
10
Health and Safety
14
Our Customers
16
Continued investment in sustainable,
local manufacturing
18
Sustainability
23 Our People
Performance
28
Group Performance
30
Group Overview
34
Building Products
36
Distribution
38
Concrete
40
Australia
42
Residential and Development
44
Construction
Governance
46
Board and Executive Team
50
Corporate Governance
62
Sustainability Materiality
and Methodology
65
Remuneration Report
Financial Report
86
Trend Statement
87
Financial Statements
94
Notes to the Financial Statements
146 Independent Auditor’s Report
Other Disclosures
150 Statutory Disclosures
158 Corporate Directory
This Annual Report is dated 21 August 2024
and is signed on behalf of the Board by:
Contents
Front cover: Fletcher Living's®
Head of Sustainability Nicola
Tagiston with LowCO™ Home
residents Ella and Brendan
Smith. Nicola was awarded
the Emerging Leader award
at the 2024 NAWIC (National
Association for Women in
Construction) Awards.
Throughout this annual
report there are QR codes
which you can scan
with your mobile phone
camera to view additional
online material.
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of each page. The financial statements, notes and
references are also clickable for your convenience.
Barbara Chapman
Acting Chair
Sandra Dodds
Director
Fletcher Building Limited Annual Report 2024
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CONTENTS
Fletcher Building is a significant manufacturer, retailer, home
builder and partner on major construction and infrastructure
projects. Spanning the full value chain, we operate diversified
businesses across our core markets of New Zealand and
Australia, from resource extraction, product manufacturing
and distribution through to property development and
infrastructure construction.
Our purpose, ‘improving the world around us through smart
thinking, simply delivered’ is focused on accessing the best
ideas from around the world, or through innovating in our
own right, and bringing them to market in ways that make our
customers’ lives easier. As a business, we are decarbonising,
minimising waste and continually innovating to produce
better, more sustainable products and homes. In doing so,
we are building better environments for our customers and
communities, and a more sustainable future for generations
to come.
Fletcher Building is dual listed on the NZX and ASX,
and operates through six divisions – Building Products,
Distribution, Concrete, Australia, Residential and
Development and Construction.
New Zealand
Australia
South Pacific
Fletcher Building has operations in Papua New Guinea, Fiji, Samoa
and American Samoa, Tonga, Vanuatu and the Solomon Islands.
The above metrics exclude Tradelink®, which is
treated as a discontinued operation.
(1) Total Recordable Injury Frequency Rate. Total
number of recorded injuries per million hours
worked. Does not include Restricted Work Injuries.
FY24 excludes Wood Products. FY23 excludes Rocla
and Tumu®.
(2) Combined Scope 1 and Scope 2 emissions for
the Group.
(3) Net Promoter Score measures how satisfied our
customers are with our business; excludes Altus®
and the Construction division.
The 'Methodology used for non-financial measures'
section of this report explains how the above
measures are calculated.
We are Fletcher Building
Safety TRIFR (1)
3.3
2023: 3.1
Employee NPS
35
2023: 29
Customer NPS (3)
48
2023: 42
Carbon Emissions (2)
reduction from FY18
baseline year
19%
Fletcher Building Limited Annual Report 2024
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At a glance
People in New Zealand,
Australia and the South
Pacific (1)
Operating sites (1)
12,500+
780
EBIT before
significant items (1, 2)
EBIT margin before
significant items (1, 2)
Earnings per share
$509m
6.6%
(29.0)cents
Cash flows from
operating activities
Total dividend
$398m
nil
2023: $388m
2023: 34.0 cents
Information as at 30 June 2024.
(1) From continuing operations; excludes Tradelink® which is treated as discontinued operations.
(2) Measures before significant items are non-GAAP measures used by management to assess the performance of the Group and have been derived
from Fletcher Building’s financial statements for the year ended 30 June 2024.
Revenue (1)
Net (loss)/earnings –
reported
Leverage ratio
(net debt/EBITDA)
$7,683m
($227m)
1.99x
2023: $7,679m
2023: $235m
2023: 1.22x
2023: $785m
2023: 10.2%
2023: 30.0 cents
Fletcher Building Limited Annual Report 2024
5
CONTENTS
Dear Shareholders
As we reflect on the past financial year, I want
to acknowledge the considerable disruption
we have faced as a Company. This year
has tested our resilience and adaptability
and the Board appreciates the support our
shareholders have provided as we work to
overcome these challenges.
Governance and accountability
The requirement to announce additional
legacy Construction cost provisions over the
course of the year, together with the ongoing
plumbing issues in Western Australia, have
negatively affected both the Company’s
reputation and its financial performance.
In recognition of this, we have made a
number of Board and Management changes
as we progress through a period of renewal.
Ross Taylor retired in August 2024 having led
Fletcher Building as CEO since November
2017. During his time, Ross refocused the
Company to its current New Zealand and
Australia operations, turned around the
Australia division and reset the Construction
division including delivering completion
on almost all the 80 loss-making projects.
Ross led the Company with renewed
focus on our underlying businesses with
important investment, drove commitments
and improved its performance in safety,
sustainability, customer and people metrics.
He led the business strongly as we adapted
to the arrival and impact of COVID-19. The
Board is grateful for his contribution.
On 20 August 2024, the Board was pleased
to announce the appointment of Andrew
Reding as Group Chief Executive Officer and
Managing Director, following a global search.
We are pleased to have secured a leader of
Andrew’s calibre, experience and respect
in the market. His deep understanding of
the sectors we operate in, coupled with his
knowledge of Fletcher Building, make him
the ideal executive to lead the Group. He
assumes his new role on 30 September 2024.
The Board would also like to express
our appreciation to Nick Traber for his
contribution as Acting Group CEO. He has
been instrumental in providing stability at a
critical time, and on behalf of the Company,
we thank him for his energy and leadership
during this period.
On Board changes, Bruce Hassall retired as
Chair having served on the Board for seven
years. He governed through the significant
restabilisation of the Company including a
focus on cleaning up the legacy issues and
repositioning the go-forward business for
long-term performance and growth.
Further Board retirements included Doug
McKay, Martin Brydon and Rob McDonald.
All three served from 1 September 2018
and were very effective in either leading or
being part of a number of subcommittees.
Acting Chair's Report
We thank all our departing directors for their
involvement and influence.
Joining the Board as a non-executive director
in August 2024 was Tony Dragicevich, who
brings significant industry experience in
leading distribution and manufacturing
businesses across Australia and New Zealand.
Tony’s appointment is subject to shareholder
approval at the Annual Shareholders’ Meeting.
The Board and Executive team composition is
a critical priority for the Board. It is essential
that the Board and leadership team have the
right skills and capability required to drive the
performance of the business to deliver value
in the near and longer-term.
Operational challenges
The macro-economic backdrop of higher
interest rates and inflation have persisted
throughout the year and placed pressure
on developers and those invested in the
housing market. Building market activity
in New Zealand and Australia declined
considerably, with the lower volumes having
a significant impact on the performance of
Fletcher Building businesses. In response, the
Group has been focused on the disciplined
management of cost, working capital, cash,
capital expenditure and debt, as well as right-
sizing of businesses, where required, to the
current market conditions.
Western Australia plumbing, legacy
Construction, Higgins®, Tradelink®
divestment
At the half year, we reported extensively on
the ongoing Western Australia plumbing
issues, where our testing and expert reports
on causation showed that the leaks are
caused by installation failures and that
there is no manufacturing defect. Since
that time, we have been working through
developing and implementing a workable and
appropriate industry solution. Builders have
continued to draw down on the A$15 million
fund we established to remediate repairs for
their customers. We acknowledge the class
action proceeding filed in the Federal Court
of Australia and served on Iplex® Pipelines
Australia (Iplex®) in August 2024. Iplex®
intends to defend the proceedings. As per
our detailed disclosure notes, risks remain on
this matter.
Regrettably, we also reported $180 million of
additional provisions on a number of the final
Construction legacy projects at the half year.
Progress is being made on the New Zealand
International Convention Centre and Hobson
Street Hotel project (NZICC), and through the
year the Construction team completed and
handed over the carparks and the Horizon
Hotel to the client. In addition, the remaining
Contract Works Insurance claims with the
project insurers and the client were settled
in line with those assumed in the provisions
taken in February 2024, de-risking this aspect
of the project. The current provision on the
project is unchanged from that taken in
February 2024. However, risks will remain
until the project is completed, as described
in our detailed disclosure notes. These
include risks on time and cost to complete
the construction works and commission the
building, and the potential for disputes and
wash-up claims.
The Board has established additional
subcommittees that monitor and maintain
regular oversight on both Western Australia
plumbing issues and the Construction
business and legacy projects. During FY24,
the Board has placed particular emphasis
on regularly engaging with a broad range
of shareholders to receive and discuss their
feedback.
Disappointingly, a full review of the Higgins®
businesses at the year end led to a $117
million non-cash impairment and write-
down in their carrying value. We have tasked
Management to deliver on the credible path it
has to drive the business forward.
Positively, the successful shift to a 50/50 joint
venture for the Fiji Construction business is
highly strategic as it will enable the Company
to work with two strong local partners, Fiji
National Provident Fund and Fijian Holdings
Limited. Further, the Board was pleased
to enter into an agreement on the sale of
Tradelink® subsequent to year end and
expects settlement on 30 September 2024.
Taking into account these key matters, the
net loss attributable to shareholders for FY24
was $227 million compared to a profit of $235
million in FY23. This included $333 million of
significant items (mainly on legacy provisions
and Higgins) and $141 million net loss from
discontinued operations related to Tradelink®.
Given the current market conditions and in
line with the dividend policy (which is to pay
dividends in the range of 50% to 75% of net
earnings before significant items, and having
regard to available cash flow) and covenant
agreements, the Board has not declared a
final dividend.
Managing through-the-cycle
We remain connected to our purpose of
'improving the world around us through smart
thinking, simply delivered' with our focus on
customer, people, safety and sustainability
and our longer-term pipeline of investments
that will deliver when the market returns to
growth. With continued housing undersupply,
significant infrastructure demand, ageing
population and supportive immigration
settings, the long-term macro fundamentals
are solid.
In the immediate term, the Board remains
focused on seeing the legacy Construction
projects and Western Australia plumbing
matters to completion and on navigating
the headwinds in the economies where we
operate, ensuring the balance sheet remains
robust.
It has been pleasing to see the continued
improvements on our non-financial metrics
of safety, sustainability, customer and people
as disclosed in this report. This is critical
for the delivery of long-term sustainable
performance.
On behalf of the Board, I would like to
express my gratitude to our people for their
hard work and dedication during this very
difficult year. We also thank our shareholders
for your patience and support given the
disappointing performance. As we face the
current challenges, the Group is maintaining
its strong focus to manage them and deliver
sustainable outcomes for all stakeholders.
Barbara Chapman, Acting Chair
Barbara Chapman
Acting Chair
Fletcher Building Limited Annual Report 2024
6
The 2024 financial year has been a
challenging one for Fletcher Building.
The Company is navigating tough
market conditions with slowing demand,
inflationary and competitive pressures as
well as a transition in leadership. Despite the
obstacles, Fletcher Building’s businesses
have demonstrated resilience with a focus
on optimising our operational performance
and tightly managing the things within our
control. These focus areas include costs,
cash, capital expenditure, extending the
tenor of our debt facilities and obtaining
more favourable terms for covenant testing,
selling Tradelink® and resolving outstanding
legacy issues.
Financial performance overview
Market volumes declined materially in FY24.
In New Zealand, market volumes fell 25%
and in Australia, market volumes fell 15%,
each compared to the first half of FY23,
resulting in substantial revenue declines in
our materials and distribution businesses.
Offsetting this, and despite a tough housing
market this year, our New Zealand residential
business sold 886 units, compared to 617 in
FY23. Combined with higher revenues in the
Construction division, Group revenue from
continuing operations for the year was $7,683
million versus $7,679 million in FY23.
Our focus on costs in the softer market
has been a key priority across the Group.
Gross overhead cost reductions for the
year were $111 million, partly offset by
continued overhead inflation of $91 million
and restructuring costs of $16 million. We
also adjusted the implementation of our
capital expenditure programme to the
current market environment, with base
capex reduced and in-flight growth projects
reviewed and rephased.
Earnings before interest and tax (EBIT) for
continuing operations and before significant
items, was $509 million, down 35% from
$785 million in FY23. The Group EBIT margin
before significant items from continuing
operations softened in FY24 to 6.6%, from
10.2% in FY23.
Disappointingly, total significant items for
continuing operations for FY24 were $333
million. This was primarily due to a $117
million non-cash impairment and write-down
in the carrying value of the Higgins® business,
and the additional provisions required on our
legacy Construction projects announced at
HY24.
During the year, we made the decision to
divest our Tradelink® operations in Australia,
and in August 2024 we were pleased to
enter into a sale agreement with Metal
Manufactures Pty Limited. As a consequence,
Tradelink® has been treated as a discontinued
operation in the financial statements.
Including the impairment and write-down of
Acting CEO's Report
$158 million, the net loss from discontinued
operations was $141 million.
After factoring in Tradelink® discontinued
operations, we recorded a net loss after tax
of $227 million, compared to net earnings
of $235 million in FY23. Our return on funds
employed (ROFE) before significant items
was 10.0%, compared to 17.1% in FY23.
Strong cash flow performance and tight
control of working capital have been key
priorities over the past year. Trading cash
flows from continuing operations (excluding
legacy and significant items) were $784
million, compared to $537 million in FY23.
Overall cash flows from operational activities
were $398 million compared to $388 million
in FY23. At year end, net debt of $1.8 billion
was better than guidance, and we had strong
liquidity of $1.1 billion.
Our people, customers and communities
We are continuously driving to improve our
non-financial performance. Our focus remains
on enhancing the positive impact that we can
make on our people, customers, communities
and the environment.
Reflecting our commitment to Health and
Safety, in FY24 we recorded one serious
injury (3 in FY23), a significant improvement
on the 21 serious injuries we sustained during
the same 12-month period only five years
ago. Additionally, we have maintained a Total
Recordable Injury Frequency Rate (TRIFR) of
3.3 (3.1 in FY23) and a steady 89% of our sites
remained injury free across the year.
Investing in our people continues to be a
core priority. We have expanded our efforts
to attract, retain, and develop top talent,
fostering a diverse culture of excellence,
collaboration, and innovation. FBuSay,
our annual internal engagement survey,
spotlighted our progress, with an employee
Net Promoter Score (eNPS) of 35, a 6-point
uplift on eNPS of 29 in FY23. Pleasingly,
we have welcomed 236 more women into
leadership across our businesses. This has
lifted our proportion of women in leadership
to 23% from 21%, as we move to our goal of
30% by FY27.
Understanding and meeting the needs of our
customers continues to be a key component
of our strategy. We strengthened our levels
of customer engagement, leveraging digital
tools and data analytics to improve service
and build stronger relationships. Pleasingly,
we recorded a Net Promoter Score (NPS)
of 48 (compared to NPS 42 in FY23), which
is nearing our target of NPS ≥55, a strong
testament to the customer programmes each
of our businesses have been driving forward.
Over the past year, our commitment to
sustainability has resulted in substantial
progress toward our environmental goals.
We continue to make steady progress in
decarbonising our operations. This year, our
combined scope 1 and 2 emissions were 969
kt CO2e (1,012 in FY23), 19% lower than our
FY18 baseline year.
The response from our customers, as we
decarbonise and introduce more sustainable
products and solutions into the market,
has been excellent. This year we derived
74% of our product revenue from products
with sustainability certifications in our
manufacturing businesses. Similarly, we are
focused on how we manage waste across our
Nick Traber, Acting CEO
780+ sites, achieving 87% of waste diverted
from landfill this year, and exceeding our
target of 70% diversion by FY26.
The Residential and Development division
has continued to performed well through the
cycle and over the years, generating strong
EBIT margins and ROFE above 15%. We think it
is the right time to explore capital partnership
options for Residential and Development,
to invest in and drive the next phase of the
business’s success. Consequently, we have
engaged Jarden to explore partnership
options with both local and international
investors.
Legacy issues
With regards to our Construction legacy
projects, we achieved full works completion
on the Pūhoi to Warkworth motorway, one
of the largest infrastructure projects ever
undertaken in New Zealand. This means
that our last remaining Construction legacy
projects are the New Zealand International
Convention Centre and Hobson Street Hotel
(NZICC) and the Wellington International
Airport carpark (WIAL). On NZICC, in FY24 we
handed over the Horizon Hotel to the client
and settled our Contract Works Insurance
claims. The remainder of the NZICC project,
plus remedial works on the WIAL carpark, are
on track for completion through FY25.
Meanwhile, we remain focused on reaching a
pragmatic industry response to the plumbing
matters in Western Australia. Constructive
negotiations continue and Iplex is intent on
trying to reach an agreement in principle
with the Government and key parties in the
near term.
Outlook
We expect the year ahead to remain
challenging, with macro-economic pressures
likely to persist through the year. At this point,
we are planning for FY25 market volumes in
our materials and distribution businesses to
be 10% to 15% lower year-on-year compared
to FY24, however we remain vigilant to further
market weakness. In this environment, we
have a strong focus on tightly managing
costs and cash flows. We will also focus on
protecting our people, delivering on our
promise to customers and ensuring our
businesses are well positioned for when our
markets return to growth.
I want to acknowledge that the year has been
disruptive for many of our stakeholders. I wish
to offer my sincere appreciation for how our
people have adapted and remained focused
on supporting each other and our customers
this year.
As my time with Fletcher Building comes to
a close, I also offer my personal thanks to our
people, customers and shareholders for their
continued support and commitment as we
settle into a new phase of Fletcher Building’s
story.
Nick Traber
Acting CEO
Fletcher Building Limited Annual Report 2024
7
CONTENTS
Driven through key focus areas
Positioning ourselves for the future
A committed and leading provider of building products and
customer-led solutions for attractive trans-Tasman markets.
As our businesses and our customers navigate the current
economic cycle, we remain busy further strengthening the
fundamentals of how our businesses operate to be resilient
to market movements and provide strong positioning for
growth when the time is right.
Uniquely positioned in attractive markets across New
Zealand and Australia, Fletcher Building’s focus is to deliver
leading and diversified building materials and customer
solutions, through our strong brands. The long-term growth
outlook for the region is robust, with demand for high quality
housing and infrastructure to support growing populations,
the subject of enduring macro tailwinds.
We actively manage our portfolio by tapping into a deep
knowledge to go where attractive markets in our sector are.
This informs where we believe we should grow and where we
should recycle capital for future opportunities.
To drive performance across our portfolio of businesses, we
hold each to account across six key focus areas. In doing so,
we believe we can drive market leading performance across
both financial and non-financial measures. The way we go
about this is always characteristic of our committed and
capable people, and the values we share.
A place where
the belief that
‘all injuries are
preventable’
is possible,
together we work
to send each of
our people home
safely, every day.
SAFETY
Relentless focus
on providing more
of the products,
services and
solutions our
customers love.
CUSTOMER
A culture
of inclusive
and diverse
workplaces, where
people feel a sense
of belonging and
can reach their full
potential.
CAPABLE
& HIGHLY
ENGAGED
PEOPLE
Well run
businesses that
are disciplined on
cost and profitable
with good margins
as we perform
through the cycle
of our industry.
OPERATIONAL
& FINANCIAL
PERFORMANCE
Decarbonising,
minimising waste
and continually
innovating to
produce better,
more sustainable
products and
homes.
SUSTAINABILITY
Anchored by our Values
Investing in
sustainable
business and the
next generation of
building products
and services for
our local markets.
INNOVATION
& GROWTH
Better
Together
Customer
Leading
Be Bold
Protect
Fletcher Building Limited Annual Report 2024
8
Progress to target
The above metrics exclude Tradelink® which is treated as a discontinued operation.
1 Total number of recorded injuries per million hours worked. Does not include Restricted Work Injuries. FY24 excludes Wood Products.
2 Net Promoter Score measures how satisfied our customers are with our business; excludes Altus® and the Construction division.
3 Acquisitions include Tumu® branches in Hawke's Bay and Waipapa in FY23. Growth includes investment in the new Winstone Wallboards® plant in Tauriko, new Laminex®
New Zealand plant in Taupō, new PlaceMakers® Frame & Truss plant, and Steel site consolidation in Papakura.
4 Earnings before interest and tax, excluding significant items. FY20 significantly impacted by COVID-19 lockdowns. Trading Cash excludes significant items, legacy and
discontinued operations.
5 Scope 2 emissions assessed using location-based methodology. FY18 is the baseline year for Fletcher Building's verified Science-based Target for carbon reduction.
6 Employee engagement measures employee’s sentiment, giving our people the opportunity to share what it's like to work for Fletcher Building.
As we navigate through the current market, we remain focused as we continue to close the gap
towards best-in-class performance against our goals.
Customer Net
Promoter Score (NPS2)
Target ≥55
Total Recordable Injury
Frequency Rate (TRIFR1)
Operational and
Financial Performance4
Target ROFE > 15%
Growth and
Investments $m3
FY20
FY21
FY22
FY23
FY24
FY22
FY23
FY24
FY22
FY23
FY24
567
902
502
537
784
FY18
FY22
FY23
FY24
1,012
1,052
1,199
969
36
26
42
29
48
35
Scope 2 emissions
(kt CO2e)
Scope 1 emissions
(kt CO2e)
3.5
5.0
3.1
3.3
EBIT4 ($m)
ROFE
Trading cash ($m)
655
741
785
18.8%
19.3%
17.1%
Carbon Emissions5
19% decrease since FY18
Target 30% by FY30
Employee Engagement
Rating6
Target >40
509
10.0%
Acquisitions
Growth
5.7
155
3.7%
22
78
174
11
191
215
183
FY20
FY21
FY22
FY23
FY24
FY20
FY21
FY22
FY23
FY24
Data collected
for FY20 and FY21
not comparable.
Data collected
for FY20 and FY21
not comparable.
Fletcher Building Limited Annual Report 2024
9
CONTENTS
In FY24
3.3
TRIFR
FY23: 3.1
1
serious
injury
FY23: 3
59%
risks controlled through
Critical Control Verification
(CCV) processes
FY23: 48%
87%
of our people believe all
injuries are preventable
FY23: 86%
89%
sites injury free
Health and Safety
Zero injuries, everyday, everywhere
In FY24, a strong focus on our culture and bringing our critical risks under control led to fewer serious
injuries, and contributed to less severe injuries overall. Safety Leadership Programme and frontline
Power Up team-based refresher training continued, and several areas of the business trialled health
and wellbeing initiatives that will be made available across the Group from FY25 onwards.
SAFETY
Our focus in FY24 has been to continue to build capability by refreshing our Safety Leadership
Programme (SLP) and Power Up for frontline across each of our businesses. This investment
in our leaders and teams has been essential in maintaining our safety performance as we
upskill new safety leaders and introduce the Protect Safety programme to new starters. Safety
continues to be our leading driver for employee engagement and 90% of our people state
that they believe their leaders take responsibility for safety.
When it comes to the safety of our people, we can never be too comfortable that we are
doing enough. As we enter FY25, the Protect Safety programme will be adapted and updated
to keep skills fresh and grow the maturity of our safety culture. We keep challenging our
established and emerging safety leaders and teams to grow their capabilities, even as
business-wide safety cultures mature and as injuries become less frequent.
Overall, the total number of injuries we recorded in FY24 was relatively unchanged from
FY23, with the Total Recordable Injury Frequency Rate (TRIFR) of 3.3. Encouragingly, we are
recording fewer injuries related to our critical risks, and those recordable injuries that are
sustained, tend to be less severe. It’s our goal to achieve zero serious injuries, and in FY24,
we recorded one serious injury compared to three serious injuries in FY23.
In FY24, 89% of our sites remained injury free, including the entire Building Products division
for five straight months. This demonstrates that achieving 'zero injuries' is possible.
Protect-powered safety performance
Injury Performance
FY20
FY21
FY22
FY23
FY24
TRIFR scale
1.2
1
0.8
0.6
0.4
0.2
0
12
10
8
6
4
2
0
Serious injuries
Serious injury
Total Recordable Incident
Frequency Rate (TRIFR) (A2+)
7
5.7
8
5.0
2
3.4
3
3.1
3.3
1
Fletcher Building Limited Annual Report 2024
10
Never leaving it to luck: action on high
potential, near-miss incidents
A core part of the Protect mindset is to remain vigilant to
emerging risk, particularly as our overall safety performance
continues to improve.
High potential incidents (potentially serious or fatal incidents
where we ‘got lucky’ by avoiding more serious or fatal injury),
are a major focus for us. Our people have steadily increased
their reporting of these events as leaders have demonstrated
their commitment to listening and learning from these
incidents. Our reporting has nearly doubled over the past
five years, giving us more opportunities to learn before they
potentially translate into a serious incident.
In FY24, our analysis shows that our decrease in injury
rates has occurred with a simultaneous increase in near-
miss incident reporting. This decrease is also supported
by significant risk containment activities and frontline
observations related to our critical risks.
Building confidence in keeping risk under
our control
In FY24 all divisions established baseline controls for 21
identified safety, health and environmental critical risks
managed across our businesses. The benefit of this lead
measure is for our people to have more confidence in the
application of critical controls: controls we know will protect
our people from serious injury or a fatality.
A total of over 12,000 Critical Control Verifications (CCVs)
were performed by line leaders and supported by safety
teams in FY24.
At the beginning of the year, our CCVs confirmed that of
these critical risks, 48% were considered ‘fully controlled’
across all our risks and all our sites (in other words, 48%
of the time, all of the critical controls were in place when
checked). This has steadily improved over the course of
the year and the proportion of ‘fully controlled’ risks has
increased to over 59% at the end of FY24. In FY25, we will be
targeting further improvements and driving Risk Elimination
Plans to eliminate exposure of people to risk through ‘above
the line controls’, such as engineering controls.
Proving the value of Critical Controls
Our Residential and Development division was the first to
complete its full rollout of CCVs and develop a targeted plan
for improving critical risk performance. At the start of the
year, they verified that 49% of risks were considered fully
controlled so they pursued an improved performance from
this base.
The Fletcher Living® team embedded the use of CCVs at
key phases of the build to check specific critical risks and
controls (such as for scaffolding at the start-up phase), and
they started analysing their results at a local, site level each
month. Through targeted plans and interventions, the team
improved its performance to over 70% controlled at year end.
This corresponded to zero serious injuries (down from two in
FY23) and zero high potential events (down from 16 in FY23).
Videos:
Welcome to
Protect - our safety
programme.
Our award-winning Safety Leadership
Programme (SLP) is evolving to an
adaptive framework as safety culture
matures. Here, new learning modules
for SLP 2.0 Healthy Work are trialled by
a range of business leaders before they
are made more widely available in 2025.
Fletcher Building Limited Annual Report 2024
11
CONTENTS
Entry or at risk
reactive
SLP 1.0 Safety
Foundations
Power Up 1.0
Safety Foundations
Entry leadership
dependent
SLP 2.0 Healthy Work
Power Up 2.0
Healthy Work
Trust commitment
independent
PROTECT CULTURE MATURITY FRAMEWORK
SLP 3.0 Lifting Off
Power Up 3.0
Team Game Plan
High performing team
interdependent
Develop
leaders
Enable
frontline
Manage
critical risk
Traditional Safety
Approach
Leadership vision,
principles, coaching,
risk mindfulness,
leadership interactions
Values, behaviours,
impairment, speak up,
risk radar, danger bias,
stop think do
Hunting out and
containing dangerous
stuff (S3S4)
Leaders are starting
to lead differently
Wellbeing, spot the
signs, healthy work,
early intervention,
above the line controls,
learning teams
Health Ripple Effect,
wellbeing, spot the
signs, safe to fail,
learning teams
Frontline engages and
starts to feel safe
Reflect back, plan forward
& choose from existing
programs (operational
excellence, high
performing team, etc)
Reflect back, plan
forward with a team
game plan legacy
Critical Risk Plans to
eliminate exposure to
people (% Above the Line
Controls implemented)
Frontline engages and
starts to feel safe
Verifying that our critical
controls are in place
(% controlled)
Risk Containment
Sweeps
Risk Elimination Plans
Critical Control
Verifications (CCVs)
Introducing the Protect Colours Framework
We know that not all individuals’ and teams’ culture and
capabilities are the same at any one time. It is for this reason
that our Protect programme must evolve to become an
adaptive framework that fosters safety culture amongst
teams, while also challenging and growing individuals’
safety skills.
In FY24 we launched the Protect Culture Maturity Framework
(or ‘Colours Framework’) which is founded on the Dupont
Bradley Curve and articulates how we will develop our
safety culture maturity over time. This framework supports
continuous development for businesses, teams and
individuals as their safety culture shifts from reactive,
at-risk compliance cultures, through to more team-based,
interdependent and high performing safety cultures.
It is non-linear so safety leaders can move their businesses
and teams forward (or backward) at any time along the curve
to access the right learning and tools as they are ready.
To align with this approach, a progressive curriculum of
our Protect programme learning is being made available.
Entirely new modules, Safety Leadership Programme ‘SLP 2.0
Healthy Work’ for leaders and ‘Power Up 2.0 Healthy Work’ for
frontline will offer a strong wellbeing and psychosocial risk
focus for teams that are ready in FY25. New syllabus elements
are designed to help teams build further trust, expand their
safety ‘why’ to address health and to continue to increase our
frontline leadership on these issues.
Fletcher Building Limited Annual Report 2024
12
More and more of our people tell us that
they want to prioritise what we are calling
‘healthy work’ practices in our day to day.
For some people this means accessing
team-based lifestyle programmes, whereas
for others this includes specific medical or
mental health support.
In FY24 we undertook a review of our
wellbeing approach and we identified that,
consistent with the research globally, the
best thing we can do for the mental health
of our people is to continue to drive a
high performing culture where people feel
safe, valued and have a sense of purpose.
Additionally, we identified that the most
impact we can have on individuals is
through easy access to medical and mental
health advice for employees and their
families. And finally, we learned that lifestyle
change programmes where teams ‘opted
in’ for fun social activities or habit-forming
changes, saw the most significant results.
Many of our businesses already do great
work with their teams to champion good
health. In FY24, over 18,000 of our people
and their families came together for events
with either physical, social or mental
challenges. For example, at Firth’s® Hunua
site, the team tackled a specific goal, to
reduce sugary drink intake and increase
physical activity, which they did by 71%.
At Winstone Wallboards®, 20 people
participated in a weight-loss challenge,
where 74kgs were collectively shed.
At Fletcher Insulation® in Australia, the
team has developed its own “Living Safely
Everywhere" platform. This expanding safety
thinking includes health initiatives such as
skin cancer awareness and mental health,
and even supported 18 people to participate
in a mental health first aid course.
As a result of this review and by looking
closely at what works for our people, we
have partnered with the Employee Welfare
Fund to reimagine wellbeing for our people.
Our new ‘FB Well’ programme will build
on our Healthy Work focus, offering our
teams a menu of options to support social
connection, mental wellness, financial
stability and physical health. In addition,
we will be rolling out online employee care
platform Sonder to our employees and their
families, providing them with easy access to
medical advice, safety support and mental
health care all in one place.
Wellbeing at work
At Laminex®’s distribution centre in Auckland all 35 of their
people participated in six weeks of nutrition and health education
sessions culminating in a ‘Wellbeing Masterchef’ healthy meal-prep
challenge. The programme facilitated by LifeCare Consultants and
with funding from the Employee Welfare Fund (EWF) helped teams
establish a longer-term common goal – to regularly eat breakfast,
something not everyone was doing every day. The support
extended to equipping the site’s kitchen with smoothie makers, as
well as new vending machines with healthier choice food options.
18,000
people involved in EWF
wellbeing events in FY24
POWERED BY
FB
Well
It was heart-warming to
see how much the team
learned from these sessions.
Together we have committed
to making an effort to have
breakfast and a lot of team
members have recognised
the importance of movement
and joined the gym.
Sue Evans - Auckland Distribution Centre
Manager, Laminex® New Zealand.
Fletcher Building Limited Annual Report 2024
13
CONTENTS
Our Customers
In the past twelve months, we have continued to make progress in understanding
customer needs more deeply and driving these perspectives into our business strategy,
operations and practices. In FY24, we recorded a six-point improvement in the main
measure of our customer engagement, Net Promoter Score (NPS)1 to a result of NPS 48
(compared to NPS 42 in FY23). While this is a pleasing result making strong progress
towards our Group target of 55+, we think there is still room to improve the consistency
and focus of how we show up for our customers.
One area of focus is ensuring our people are fully engaged in how they make a difference.
Encouragingly, in our latest internal engagement survey, our people showed an improved
attitude to performing for our customers. On responding to questions on the experience
they offer customers, we recorded a three-point uplift in internal engagement (eNPS) to a
combined result of 35.5 (compared to the same measure of eNPS 32.5 in FY23).2
Relentless focus and insights-driven action
Regardless of what market we operate in, our customers tell us that the fundamentals
of product delivery and quality, backed by exceptional service, are what matter most
to them.
Each of our businesses is held to account on customer performance metrics and the
quality of its plans to address pain points important to our customers. These plans with
specific actions are designed based on deep insights gathered on the efficacy of our
customer relationships and interactions, and by benchmarking against competitors to
better understand how we are positioned in the markets we operate. We also closely
monitor our performance on delivery and service with a variety of tools, including tracking
delivery in-full on-time (DIFOT) for relevant businesses. Across the group these insights
point to opportunities to deliver even more exceptional service, new products and
innovative solutions to always exceed customers’ expectations.
By taking this insights-based approach, we have been able to drive performance,
upskill our senior leaders, and bring the voice of the customer directly to planning
and decision making.
We believe that the key to our success is in how satisfied and loyal our customers are. Ensuring that
all our businesses maintain relentless focus on their customers is a key priority for Fletcher Building.
CUSTOMER
1 Relationship Net Promoter Score
(NPS)
FY22
FY23
FY24
42
48
36
48.0
NPS
FY23: 42.0
Net Promoter Score1
Customers have responded strongly
to Comfortech's® H1 Hub with online
tools for planning projects in light of
new regulation to support increased
insulation of homes.
2 Includes Tradelink®.
Fletcher Building Limited Annual Report 2024
14
Firth®: Supporting customers with easy digital tools for common build challenges
Comfortech®: Customer solutions engineered for comfort, climate and protection
Firth® have been developing,
manufacturing and delivering concrete
and concrete products to New Zealanders
for almost a century from its 70+ sites. This
long standing success can be attributed
to constantly adapting to evolving
customer needs and requirements, in
particular using digital means to enable
market leading solutions to solve complex
customer problems.
This approach has proven highly effective
in partnering with customers to enable
better business outcomes.
The variables customers often have to
manage to ensure a successful concrete
pour can be challenging, not least the
predictability of the weather. Firth® have
made a mobile platform Truckast available
for customers to offer live insights to help
drive efficiency of order delivery and
pour performance on site. Truckast also
provides a range of other uses including
order management, a real-time view
of trucks making their way to site and
weather forecasts for the pour location.
Firth's® ability to deliver the products
and services customers require, when
they need them, has set it apart from
competitors and this is reflected in how
customers feel about their experience with
Firth®. In FY24, the company recorded an
increase in customer engagement with a
10 point uplift in NPS, to a market leading
NPS of 77.3 (compared to NPS 67.7 in
FY23).
The benefits of using an insights-led approach to deeply understand what is important
to our customers, are demonstrated by several of our businesses who already do
this well.
Comfortech® Building Performance Solutions (formerly named Tasman Insulation and
Forman Building Systems) acted on the opportunity to support customers to navigate
how building regulation changes would affect their projects. Effective from May 2023,
the H1 Building Code requirements in New Zealand brought sizeable change to how new
build construction must support energy efficiency. The team understood that customers
wanted suppliers to make this process easy, with three key customer purchasing criteria
clear on preference for products designed and tested for New Zealand conditions and
always readily available.
Comfortech® created simple online tools which show solutions specifically designed
to meet the H1 Building Code requirements. The ‘H1 Hub’ now offers educational
information for residential and commercial builds, as well as technical resources that
offer high quality, accurate information that is readily available and easy to use.
In addition, Comfortech® has introduced a range of Pink® Superbatts® products which
maximise thermal performance and are specifically developed to meet the H1 Building
Code changes.
As a result of continuing to evolve and respond to industry challenges, the team’s H1
solutions are often positively referenced in customer surveys. In addition, the H1 Hub on
the Comfortech® website saw an 83% increase in traffic during the first three months of
the H1 changes coming into effect and the business has continued to supply customers
nationwide with a delivery in full on time (DIFOT) score of over 90%.
Comfortech®
NPS
50.0
FY23: 61.7
DIFOT
90%
Firth®
NPS
70.8
FY23: 67.6
Anon (customer), NPS Survey data
Pink® Batts® provide the easiest documentation to fit
[insulation to] tight spaces and meet H1 values.
Website:
Firth®
Fletcher Building Limited Annual Report 2024
15
CONTENTS
We are proud to have made $850 million of investments in productive assets and sustainable
manufacturing in New Zealand, Australia and across the Pacific over the past five years. In doing so,
we are reinvesting in the future of local economies and prioritising sustainable building products for
more high quality, warm, dry and healthy homes people love to live in. This foresight has strengthened
our businesses to continue to support our customers as we have been navigating a significantly softer
market environment in FY24.
Laminex® New Zealand: Leading the next generation of popular,
sustainable building products
As a natural building material, wood has strong customer appeal, and is flexible to local
climate and conditions. It is ideal for how we construct exterior and finishing elements of
most buildings in this part of the world, and typically more sustainable than alternatives.
Laminex® New Zealand continues to perform and customers respond well to its range of
wood panels, popular with commercial and home builders alike.
The construction of its $350 million Taupō plant expansion has progressed in FY24 and
will be on track to begin production from late 2026.
The new 20,000m2 Taupō facility will allow the business to diversify its range of popular
panels, modular housing floors, walls, ceilings and cabinetry, such as leading Melteca®
range, used in kitchens, bathroom and commercial projects. It will also include a fully
integrated processing and packaging line which will generate further operational
efficiencies, increase the number of products on offer and can scale to triple current
production capacity when needed.
Powered and lit with low-carbon options, the plant will initially employ 66 people on
opening and is designed to sensibly manage waste and produce some of its own energy
requirements through a bio-mass facility on site. These features increase the sustainability
of the products coming off the line, create operational efficiencies, as well as keeping
running costs relatively contained.
PlaceMakers® Frame & Truss:
Enhanced quality and efficiency for
Auckland builds
In Auckland, PlaceMakers® Frame & Truss is redeveloping
an Onehunga manufacturing site formerly home to
Winstone Wallboards®. On completion in 2026, the new
plant will allow the business to enhance efficiency and
increase local weekly production capacity from 500m3
product per week, to 1,200m3 of its modern timber wall-
frame and roof-truss pre-fabrication components.
Advanced automation within the plant, including the
use of robotics, will decrease fabrication lead time from months to weeks, significantly
improve precision dimensioning and tolerance of the finished product, as well as provide
an even safer environment for the team. Modern machinery and innovation built into the
$112 million facility upgrade will enable PlaceMakers® Frame & Truss to develop its cassette
floor offer while also advancing new product offerings such as sheathed structural
support products. All timber off-cuts generated will be recycled across Fletcher Building
businesses to minimise waste.
Continued investment in sustainable,
local manufacturing
>$850
million
investment in
productive assets
over the past 5 years
≥15%
ROFE
target for investments
made (at maturity)
INNOVATION
& GROWTH
Growth and
Investments $m*
Acquisitions
Growth
FY20 FY21 FY22 FY23 FY24
22
78
163
11
191
215
183
*The above metrics exclude
Tradelink® which is treated as a
discontinued operation.
Acquisitions include Tumu® branches
in Hawke's Bay and Waipapa in FY23.
Growth includes investment in the
new Winstone Wallboards® plant in
Tauriko, new Laminex® New Zealand
plant in Taupō, new PlaceMakers®
Frame & Truss plant, and Steel site
consolidation in Papakura.
Fletcher Building Limited Annual Report 2024
16
Working together with customers to
address the environmental impact of
new homes and the building products
they require, is essential as we adapt to a
changing climate.
In 2021, Fletcher Living® embarked on
an ambitious project, pulling together
a group of sustainability and technical
experts from across Fletcher Building and
the wider industry to shrink the carbon
footprint of residential homes. The project
reimagined how homes could be built
more sustainably showcasing a pathway
to a low emission, climate resilient future.
The result: Fletcher Living's® first low
carbon home, known as LowCO.
In January 2024, the three-bedroom stand-
alone LowCO home designed for low
energy, low carbon and low water use with
biodiverse landscaping2, was completed,
and in July 2024, the Smith family moved
in. Three other terrace-style LowCO
homes have now also been completed.
The Smiths will remain in regular contact
with the project team over the first three
years of use, as the team continues to
learn how the house stands up to the
demands of family life compared to their
modelling.
Ella Smith says, “Brendan is keeping
a keen eye on the smart monitoring
LowCO™: Homes fit for a lower-carbon future
7x less1
carbon emitted than
a typical new-build
standalone home1
Homestar
10
2
(v5) New Zealand Green
Building Council
80%
1
potable water savings
(house) & 50% (terrace)
For design and expected
performance information,
go to the LowCO website.
technology installed in the house, such
as temperature, water and energy usage.
For me, I am excited about experiencing
sustainable living beyond the usual
baseline of solar and rainwater."
On average, the lifespan of a typical New
Zealand detached home is 90 years. In
their research the LowCO team found
that during this time our houses would
need to emit 7x less carbon than a typical
New Zealand new-build detached house
to be consistent with keeping global
warming below 1.5 degrees Celsius.
While operating savings will help recover
upfront costs for a homeowner, the
LowCO build is more expensive to build,
than an equivalent sized three-bedroom
standalone Fletcher Living® home,
demonstrating why it is so important for
industry to make sustainable products
more available at scale.
Fletcher Residential and Development's
Head of Sustainability and LowCO
project lead, Nicola Tagiston reflects
that “while the individual energy, water,
and green technologies in LowCO are
incredibly forward-thinking and represent
best practices, what makes LowCO
extraordinary is its building science
and data-driven approach to design
and material choices. The project has
enabled our own businesses, such as
Comfortech® and Firth®, along with
public entities like Watercare, building
science experts Sustainable Engineering
Ltd and landscape architecture through
Beca, to unite around a common goal of
building a low carbon house.”
“LowCO stands as an opportunity to
keep learning and testing future, more
sustainable building practices. It is
also a testament to what the industry
can achieve when we prioritise the
needs of future generations and push
the boundaries of what is possible in
construction today.”
Ella Smith, LowCO Home resident
How cool that we can recycle so much
water! Brendan and I love that our three-
year-old daughter Tui loves to pick flowers
from the meadow! We are thrilled to be the
first to try out lower carbon home living and
with the added benefit of fewer bills to pay.
1 For information on the
reference emissions for a
standard build, and the design
and calculated performance
projections for LowCO, see
page 64 or refer to the case
studies on the LowCO website.
2 LowCO achieved a Homestar 10 rating as a
result of the sustainable aspects of the design.
Fletcher Building Limited Annual Report 2024
17
CONTENTS
Doing sustainably better business, in partnership with our customers and communities, is core
to our business strategy. We understand that our business activities can have impacts on the
environment, and it is important to our customers, shareholders and our people to reduce these
impacts. To do this, we put significant effort into actions that are important to our customers and can
create meaningful change.
In FY24 we made positive progress on our sustainability measures. These actions have been
internationally recognised, again achieving leadership ratings from the Carbon Disclosure Project
and inclusion in the S&P Sustainability Yearbook.
Action on emissions
We are committed to reducing our
greenhouse gas (GHG) emissions to
limit the impact of our operations on our
planet, and to mitigate climate risk to our
business. In addition to reducing our own
GHG emissions, we support our supply
chain to understand and reduce their
emissions too.
A summary of our process for assessing
climate-related risks is included in the
Corporate Governance section of this
report. We will also issue a separate
Climate Statement for FY24 in line with
mandatory reporting requirements set
by the New Zealand External Reporting
Board.
Scope 1 and Scope 2 GHG emissions
for our ongoing operations were 969
thousand tonnes of CO2e (kt CO2e) which
is a reduction of 4% from FY23 and a
reduction of 19% from our baseline year of
FY181. While some of the reduction from
FY23 to FY24 is due to lower production
activity in FY24, our business is becoming
less carbon intensive as we implement
carbon reduction measures.
GHG emissions relative to our
revenue have decreased 22%
from 162 t CO2e/$m in FY18 to
126 t CO2e/$m in FY24.
The highest sources of GHG emissions
for our business are from our cement
operations at Golden Bay™, electricity
used in our Australian businesses, process
heat from our manufacturing operations
in New Zealand, and the fuel used for
transport in New Zealand.
We made progress in all these areas
in FY24. Coal use at Golden Bay™ was
reduced through substitution with
alternative fuels including waste tyres
that would otherwise be sent to landfill,
using 18,000 tonnes in FY24. Together
with our use of biofuel, we achieved 47%
substitution of coal with alternative fuels
at Golden Bay™ during FY24. In FY25 we
will explore further options to reduce coal
usage.
Carbon dioxide is also produced from
the cement manufacturing process
itself, and therefore requires industry
solutions for these emissions. In FY24 we
collaborated with Concrete New Zealand
on development of this country's concrete
industry roadmap to achieve net zero
carbon emissions by 2050. The roadmap
charts a clear path to substantial carbon
reduction across the industry and it is
our collective goal to reduce emissions
by 44 per cent from 2020 levels, by
2030. To do this we will need to increase
the production and use of lower carbon
cement and concrete in New Zealand. For
our operations, we continued to research
and pilot options for lower carbon cement
in FY24, and will continue in FY25.
Sustainability
19%
Reduction in GHG
emissions since FY18(1)
A-
CDP ‘Leadership’ level
for management of GHG
emissions
A-
CDP Supplier
engagement rating
Fletcher Building Limited
Sustainability
Yearbook Member
S&P Global
1 Emissions and comparisons provided in this report are calculated for the Group on an equity share basis for our
continuing operations, and exclude Tradelink®. In this, and in our previous Annual Reports, emissions are reported
according to the Greenhouse Gas Protocol location-based methodology for Scope 2 emissions. FY24 emissions
including Tradelink®, calculated using both the location-based and market-based methodologies, are available on
the Sustainability Reports section of our website. The Methodology for non-financial measures section of this report
explains how emissions have been assessed and where the assurance statements can be found.
SUSTAINABILITY
Fletcher Building Limited Annual Report 2024
18
Carbon emissions
Emissions (kt CO2e)
location based
Emissions intensity (t CO2e/$m)
1,400
1,200
1,000
800
600
400
200
0
180
160
140
120
100
80
60
40
20
0
74%
product revenue from
sustainably certified
products in our
manufacturing businesses
87%
waste diverted
from landfill
FY18
FY19
FY20
FY21
FY22
FY23
FY24
Our Australian businesses are becoming less carbon
intensive both as a result of the electricity grid in Australia
decarbonising and due to our actions to install and purchase
green electricity. The rooftop solar installation constructed
in FY24 for one of our Laminex® operations in Queensland
will provide a reduction of approximately 900 t CO2e in FY25
by comparison with previous years and a second installation
is underway. In FY25 we will investigate further rooftop
solar and renewable electricity purchasing options for our
businesses in Australia.
The use of natural gas for process heat reduced in our New
Zealand operations. The installation of more efficient infrared
ovens in our Steel business in the previous year reduced
emissions by c.2,500 t CO2e in FY24 by comparison with
previous years. Our new wallboards facility at Tauriko was
designed with energy efficiency in mind, resulting in c.1,850
t CO2e of GHG reduction in this year, which we would expect
to improve further with a full year of operation in FY25.
We continue to transition our Construction road fleet toward
hybrid vehicles, and increased from 18% hybrid in FY23 to
32% in FY24. We are actively looking for cost effective options
for lower emission heavy fleet and equipment. We upgraded
some of our bitumen tankers with more efficient vehicles
which also have higher load capacity, meaning fewer trips by
road, and we sourced an electric dumper for our Wellington
Belmont quarry which we estimate will result in a reduction of
30,000 litres of fuel during FY25.
Our supply chain (Scope 3) emissions were 1,326 kt CO2e
in FY24, which is a 7% decrease from FY23, mainly due to
lower activity. We continue to work with our supply chain on
emissions reduction and were proud to be recognised for
leadership in supplier engagement by the Carbon Disclosure
Project (CDP) in FY24 with an ‘A-’ rating for our supplier
engagement on carbon reduction.
Te Ara Tūhono/Pūhoi to Warkworth motorway built in
joint venture with Acciona, is one of only three projects
outside North America to gain certification by the
Greenroads Sustainability Transport Council. Achieving
‘Silver’ accreditation, the project was recognised for
outstanding performance in construction environmental
management and site health and safety management,
as well as for community and iwi engagement.
303
290
275
266
259
239
217
896
812
804
823
793
773
752
Scope 1 emissions
Scope 2 emissions
Emissions intensity
Fletcher Building Limited Annual Report 2024
19
CONTENTS
Revenue from Sustainably Certified
Products – Target 75% by FY26
Percentage of
product revenue
80%
70%
60%
50%
40%
30%
20%
10%
0%
FY22
FY23
FY24
71%
74%
61%
Prioritising sustainable products and solutions
The future of the building products and construction
sector is best supported through developing and using
more sustainable building products and solutions.
Pleasingly, in FY24 we made more of these products
available and increased the proportion of these products
sold to customers.
We completed LowCO™, our sustainable homes of the future,
in FY24. The LowCO house and terraces are designed to
use significantly less carbon, electricity and water than a
standard build. One of the aims of building to the exacting
standards required by LowCO is to be an exemplar of
sustainable residential construction – which is why LowCO’s
designs are freely available for anyone to use.
Lower carbon infrastructure construction is important
to our customers and communities. To support progress
towards this, we partnered in the launch of the New Zealand
Environmental Product Declaration library housed within
Mott MacDonald’s Moata Carbon Portal, a tool designed to
streamline measurement and reduction of embodied carbon
in infrastructure projects.
We increased the number of sustainability certifications
held by our products. When we refer to ‘sustainably
certified’ products, we mean products made or sold by
our manufacturing businesses that hold a credible, third
party verified, sustainability certification that is recognised
in green building and sustainable infrastructure ratings.
These products support our customers to build using more
sustainable materials, and we added eight more certified
products to our portfolio in FY24, including certifications
for Humes® precast concrete, Laminex® particle board
and melamine products, and Altus® aluminium and
window systems.
Our Higgins® team published New Zealand's
first Environmental Product Declaration for
asphalt this year.
Our next step for this product is funded research on
biological binders for asphalt that could reduce asphalt
emissions and decarbonise road construction.
Product revenue from sustainability certified products in
our manufacturing businesses increased from 71% in FY23
to 74% this year, very close to our goal to achieve 75% by
FY26. This included revenue from products that hold Type
I environmental labels such as Eco Choice Aotearoa and
Global GreenTag GreenRate™, or Type III certification such as
Environmental Product Declarations.
Type I & Type III
certifications
Type III
certifications
Type I
certifications
28%
46%
SUSTAINABILITY
Our Laminex® Australia business has over 90
years of making building products in Australia,
including those shown here in one of our
customer showrooms.
Laminex® has a focus on reducing environmental
impact. Just under 90% of products sold by
Laminex® Australia hold Global GreenTag
GreenRate™ sustainability certification, a
robust third-party certification that identifies
environmentally preferable products and can
contribute toward customers achieving a Green
Star building rating.
Our manufacturing facility at Toolara is taking
further steps. The plant is already 100% water self-
sufficient, and generates part of its energy from
renewable biomass. In FY25, a new rooftop solar
installation will provide renewable energy as well.
Fletcher Building Limited Annual Report 2024
20
Fletcher Building Limited Annual Report 2024
20
The planning and engagement on the Positive Biodiversity
plan for our quarries carried out in FY24 will be realised in
FY25, including the start of our seven-year commitment to
support Nature Lands yellow crowned Kākāriki breeding
programme and support for the recovery of indigenous
flora and fauna in areas near to our operations.
As part of this commitment we will begin pest control on
960 hectares at Maungakawa Reserve in the Waikato in
partnership with Ngāti Hauā, 250 hectares of pest control
at Tiakiriri Kukupa Scenic Reserve (also known as Otaika
Valley Reserve) in Northland, and restoration planning for
three sites in Auckland.
Reducing waste and building up the circular economy
Each of our divisions is seeking out opportunities to reduce
or reuse waste, and working with customers and partners to
drive positive change through the circular economy.
In FY24 we completed a structured review across our
divisions to increase understanding of the waste streams
in our main regions of operation, improve the quality
of our waste data, and identify future circular economy
opportunities for our businesses to pursue.
We already recycle substantial quantities of wood, concrete,
plasterboard and steel, with the benefit of keeping these key
construction materials available for reuse and out of landfill.
In FY24 we recycled 171,000 tonnes of waste and sent 25,000
tonnes to landfill, achieving 87% diversion of waste from
landfill and exceeding our target to achieve >70%.
In addition to the recycled waste noted above, we continued
to use waste wood dust generated in operations at our
Laminex® businesses as an energy source to fuel those
operations, converting 116,000 tonnes to energy in FY24.
This not only avoids waste disposal but also provides carbon-
neutral energy that would emit c.85 kt CO2e if natural gas
was used instead.
Circular economy requires more than waste reduction, it is
also about innovation within our sector to reduce the overall
use of materials. While we are at an early stage with circular
economy, we have already implemented several initiatives.
Since its launch in 2022, Iplex® Australia’s Pipeback
programme has recovered 50 tonnes of material from
customers, mostly PVC and PE pipe off-cuts, recycling it back
into manufacturing and reducing the need for raw materials.
We acquired The Urban Quarry® in FY23, which turned over
30,000 tonnes of waste concrete and other materials into
recycled aggregates in FY24, not only removing waste from
landfill, but providing quality materials to our customers.
Fletcher Building Limited Annual Report 2024
21
CONTENTS
Firth’s® South Auckland area manager Rajesh (Roger) Panjanani and certified driver
Lesley Kemeny chat as they prepare for a local concrete pour at a site in Pukekohe,
South Auckland. Lesley credits Roger and the team’s great support as she was
amongst the first to access Fletcher Building’s gender affirmation leave in late 2023.
Lesley is passionate about sharing her story of transitioning at work with the aim to
highlight the people and services that are available to help.
Lesley Kemeny, certified truck driver at Firth®
It’s an important part of anyone’s journey that they
get some support from somewhere. It’s a very
emotional and very personal experience and not
all transgender people are the same. The more we
can do to make people feel comfortable to step into
who they really are, when they are ready, the better.
Fletcher Building Limited Annual Report 2024
22
Our People
At Fletcher Building, we recognise that as we support our people to grow and develop their careers,
our customers and businesses also benefit.
Together with support from the Fletcher Building Employee Education Fund, in FY24 we focused on
delivering the things that our people tell us keep them engaged. We invested in their capabilities with
a special emphasis on connecting with customers, and we further built up our inclusive culture to
support and empower our people to reach their full potential.
A highly engaged and
customer-committed
workforce
Central to our ability to deliver excellence
for our customers, is the exceptional
experience we offer our people. After
all, these are the people who in turn
create quality customer experiences of
their own.
In FY24, we focused engagement activities
on the areas our people told us mattered
the most. Workshops and roadshows
with our frontline, enabled leaders to
talk through business plans, building an
important sense of connection to how our
people contribute to our business. We also
responded to their challenge to do more
to recognise their great work, including
by highlighting their stories to the wider
organisation. Several businesses also
initiated new recognition programmes
of their own. This approach is having a
positive impact and in FY24 we increased
our measure of employee engagement,
employee Net Promoter Score (eNPS), by
six points to eNPS 35 (eNPS 29 in 2023).
Improving customer
outcomes through the
development of our people
We believe there is more we can do,
through our people, to enhance the
experience we offer our customers. In
FY24 we set out to apply this focus to our
training and development programmes.
Enhanced sales and service have been
the focus for development activities with
specific programmes in place to drive
customer outcomes in each business.
For example, within the New Zealand
Distribution division, training to sharpen
skills for better teamwork to deliver
‘exceptional moments’ for customers,
supported a positive 10+ point uplift as
shown in branch-level NPS scores during
the period.
35eNPS
Employee Net Promoter Score
FY23: 29
23.2%
women in leadership
FY23: 20.7%
89
more women in operational
leadership
162,000+
hours of training delivered
across all programmes in FY24
$5.1m spend
CAPABLE & HIGHLY
ENGAGED PEOPLE
Employee Engagement
Rating
FY22
FY23
FY24
29
35
26
Support from the
Fletcher Building
Employee Education
Fund (EEF)
Benefits offered by our Employee
Education Fund (EEF) included support
for external study for 211 people and
reached into the community with
extra tuition for families (supporting
391 individuals). Also through EEF, we
have continued to offer development
opportunities for the children of our
people through Outward Bound, Spirit
of Adventure and Hillary Outdoors,
which involved 65 young people in FY24,
and this year began offering holiday
programmes for Fletcher Building
families which offer great childcare
options for school holiday periods.
Fletcher Building Limited Annual Report 2024
23
CONTENTS
BUILDhers™: A home built by women
In March 2024, Fletcher Living's® first residential house-build project BUILDhers™ in
Whenuapai, north-west Auckland, was completed.
As well as delivering the comfortable, stylish, high-quality four-bedroom stand-alone
home the customer expects, the project succeeded in raising awareness and challenging
stereotypes that have prevented female tradespeople being a more common sight on site.
During the six months it was underway, the build made headlines as the team welcomed
over 20 groups on site, including young women from local high schools, and through the
‘Girls in High Vis’ initiative. The team celebrated International Women’s Day with a visit from
the Prime Minister, Christopher Luxon.
We are seeing an impressive rise in the numbers of skilled, site-based women entering
the industry with all the technical expertise needed. However, there is still more work to
be done to attract women to the industry. While the project involved 40+ skilled women
contributing to the design, build, marketing and sales phases, the team further highlighted
the lack of women in particular trades such as carpentry and scaffolding. The final home
delivered on time and on budget, meant the project was around 75% female built.
The next phase of the project has commenced, with Fletcher Living's® announcing
BUILDhers™ 2 which will undertake to build another home at Whenuapai from late-2024.
Planning and resourcing is now underway with a goal to involve an even higher proportion
of female tradespeople in this next build.
Our Construction, Building Products, Residential and
Development divisions have invested in innovation sprint
training to enable a faster path to market for new customer
solutions. In FY24, this training resulted in a range of
new initiatives being implemented, bringing several new
products, driving more value and enhancing sustainability
offerings. Examples of this include new acoustic panels at
Comfortech® and slab water tanks for rain retention for new
Fletcher Living® homes.
Encouragingly, our people tell us that they believe that they
are contributing to improve customer outcomes too. In our
latest internal engagement surveys, we recorded a six-point
improvement on this customer-oriented question. These
efforts helped achieve improved customer engagement as a
whole in FY24, with NPS of 48 which is approaching our best-
in-class target of ≥55.
Opportunities for more women to
participate and lead our businesses
Our Diversity, Equity and Inclusion strategy is driven through
three key areas: fostering an inclusive culture; improving
gender balance, and in creating more diverse ethnicity within
our leadership groups.
Construction, manufacturing and engineering are fantastic
careers for women and in FY24, we were determined to
increase the number of women in leadership in almost all
areas of our business. Several mentoring programmes are
now in place across the business, partnering our female
leaders with senior leaders. In FY24, 85 women participated
in our Women to Leadership mentoring programme which
provides 10 months of mentoring by a senior leader. These
efforts have supported improved engagement and further
strengthened our pipeline of female leadership talent.
During the year, we increased the overall proportion of
women in leadership from 20.7% in FY23 to a total of 23.2%
in FY24, with 236 more female leaders since FY23 (and within
that, 89 more female leaders of operations). Additionally,
with the appointment of four new female general managers
in FY24, we bring the proportion of the businesses run by
women to 22%, from 6% in FY23. This represents significant
progress as we work on achieving our target of 30% women
in leadership by FY27.
While our gender pay gap (the median pay for women
compared to men, regardless of job or level) is closing at
1.9%, our gender pay parity gap (paying women and men
the same for similar sized jobs) is larger at 5.1% (5.2% in
FY23). This gap is in part the result of continued increasing
wages in a tight, male-dominated building and construction
market. To take action to close the gap, we have reviewed
and pinpointed the moments where pay parity can creep and
updated tools for remuneration decision making. We are also
working with our leaders to support them to navigate the part
they play in achieving pay equity in their teams.
40+
women involved in
design, build and finish
20+
groups welcomed
on site to discuss
opportunities for
female careers in trades
Website:
BUILDhers™
Pictured: Project Manager,
Jasmin Lawrence (right), with
carpenters Melanie Henshaw
and Sylvia Campbell from
Fletcher Living's® BUILDhers™
project in Whenuapai.
Fletcher Building Limited Annual Report 2024
24
Being a part of the Tikanga programme with Te Wānanga o Aotearoa has been a truly
enriching learning experience. Through this we've been gifted fantastic cultural tools for
engaging with customers and people, and new light has been shined on the responsibility
we have in managing our operations with care for our community and the land.
Mike Arthur - General Manager, Winstone Wallboards®.
Video:
First Nations
36
participated in
Whakatupu i a Tupu Māori
and Pacific Leadership
FY23: 36
100+
people involved in basic
Te Reo learning
23
people completed
Te Wānanga programmes
in Tikanga or Te Reo in FY24
We celebrate the diversity of the many different ethnicities present across our
operations in Aotearoa New Zealand, Australia and the Pacific, and support specific
initiatives to enhance connections with indigenous cultures across the lands we share.
As a significant business with a long history in Aotearoa, we understand the
responsibility we have to empower our Māori communities, iwi, hapu, whānau,
customers and partners to grow and enhance their social, cultural, economic and
environmental wellbeing. In FY24 our Māori strategy ‘Te Kākano’ (the ‘seed’ or
‘beginning’) was initiated to help the business to better engage with Te Ao Māori
(Māori worldview), and weave more cultural practice into our daily business.
Our relationships with iwi local to our businesses in New Zealand are important to us,
and we have the opportunity to build and enhance that kaupapa (principle). Together
with representative iwi input we are strengthening our platform for engagement with
Māori communities. In FY24, we have been proud to work closely with many iwi and
hapu. For example, we have greatly appreciated the support of Taranaki whanui and
Ngāti Toa Rangatira as we refine our work to enhance the biodiversity of our Winstone
Aggregates® sites at Belmont Quarry, and in Taupō where, with the support of Te Awa
Kairangi, we are transforming our Laminex® manufacturing plant. We continue our
iwi partnerships with Te Aakitai Waiohua, Ngaati Te Ata Waiohua and Ngaati Tamaoho
supporting our PlaceMakers®, Higgins® and Firth® business in Tāmaki Makaurau. In
Hobsonville, Auckland at the Te Uru terraces, our Residential and Development teams
have effectively worked together with Ngāti Whātua o Kaipara, including collaborating
on some artwork that now adorns the apartment block.
In Australia, we are generating a deeper understanding of the rich history and culture
of Aboriginal and Torres Strait Islander peoples. Developing the contribution we can
make to reconciliation, is core to our Reflect Reconciliation Action Plan (RAP). The
Reconciliation Working Group was convened with representation from each of our
Australian businesses, and in September 2023, the group came together for the first
time, meeting with Yarnup, our First Nations partners in Brisbane.
This first phase of the programme is centred on ‘looking inwards’. To begin
that exploration, the team commissioned a video bringing to life the journey to
reconciliation which will help maintain momentum as we take early steps forward. In
FY25 we will move towards broader strategic initiatives including our membership
of Supply Nation, to increase opportunities for Aboriginal and Torres Strait Islander
suppliers, who are under-represented in our supply chain, to work with us.
Lifting up our indigenous cultures
Winstone Aggregates® environmental
manager Ian Wallace (left) meets with
members of the Pukekawa Quarry kaitiaki
group, Nanaia Rawiri (Ngāti Āmaru and Ngāti
Pou) and quarry manager Lance Gosling.
Fletcher Building Limited Annual Report 2024
25
CONTENTS
A pilecap constructed at Brian Perry Civil’s® Otaihanga
precast yard being transported by our largest jack-up
barge Manahau. BPC is delivering the Seaview Resilience
Project for CentrePort in Wellington, seismically
strengthening the wharf which feeds the adjacent fuel tank
farms while it continues to operate.
Fletcher Building Limited Annual Report 2024
26
Group Performance
Fletcher Building Limited Annual Report 2024
27
CONTENTS
Group Performance
Continuing operations
2024
NZ$M
2023 (3)
NZ$M
Revenue
7,683
7,679
EBIT before significant items (1)
509
785
Significant items (2)
(333)
(301)
EBIT
176
484
Lease interest expense
(58)
(53)
Funding costs
(142)
(94)
Earnings before tax
(24)
337
Tax expense
(55)
(88)
Earnings after tax
(79)
249
Non-controlling tax
(7)
(19)
Net (loss) / earnings
(86)
230
Net earnings before significant items
183
447
Basic earnings per share (cents)
(29.0)
30.0
Basic earnings per share before significant items - continuing operations (cents)
23.4
57.1
Dividends declared per share (cents)
34.0
Cash flows from operating activities
398
388
Capital expenditure
429
461
Investments
11
183
Revenue - continuing operations
2024
NZ$M
Restated
2023 (3)
NZ$M
Building Products
1,345
1,443
Distribution
1,615
1,824
Concrete
1,082
1,085
Australia
1,979
2,222
Materials and Distribution divisions
6,021
6,574
Residential and Development
796
607
Construction
1,614
1,319
Other
10
10
Gross revenue
8,441
8,510
Less: intercompany revenue
(758)
(831)
External revenue
7,683
7,679
(1) EBIT before significant items is a non-GAAP measure used by management to assess the performance of the business and has been derived from Fletcher Building
Limited’s consolidated financial statements for the period ended 30 June 2024. Further details of significant items can be found in note 2.2 of the consolidated
financial statements.
(2) Further details of significant items can be found in note 2.2 of the consolidated financial statements.
Note: External revenue includes income from the Group's Vertical Buildings Business (2024: $159 million 2023: $104 million), which the Group is in the process of
exiting. The New Zealand International Convention Centre and Hobson Street Hotel (NZICC) represent the largest project to complete in this sector. EBIT before
significant items, however, excludes any earnings from these projects, which are recognised as a Significant Item.
(3) The comparatives have been represented for Tradelink® classified as a discontinued operation. Further details of the change can be found in note 2.4.
Fletcher Building Limited Annual Report 2024
28
(1) EBIT before significant items is a non-GAAP measure used by management to assess the performance of the business and has been derived from Fletcher Building
Limited’s consolidated financial statements for the period ended 30 June 2024. Further details of significant items can be found in note 2.2 of the consolidated
financial statements.
(2) The comparatives have been represented for Tradelink® classified as a discontinued operation. Further details of the change can be found in note 2.4.
The above metrics exclude Tradelink®, which is treated as a discontinued operation.
* Before significant items.
1 FY20 significantly impacted by COVID-19 lockdowns.
EBIT
EBIT before significant items (1)
2024
NZ$M
2023 (2)
NZ$M
2024
NZ$M
2023 (2)
NZ$M
Building Products
124
200
143
215
Distribution
49
140
49
141
Concrete
134
154
130
156
Australia
109
157
126
167
Materials and Distribution
416
651
448
679
Residential and Development
100
147
100
147
Construction
(264)
(247)
28
26
Corporate and other
(76)
(67)
(67)
(67)
Total EBIT
176
484
509
785
Lease interest expense
(58)
(53)
(58)
(53)
Funding costs
(142)
(94)
(142)
(94)
Earnings before tax
(24)
337
309
638
Tax expense
(55)
(88)
(119)
(172)
Earnings after tax
(79)
249
190
466
Non controlling interests
(7)
(19)
(7)
(19)
Net earnings - continuing operations
(86)
230
183
447
Discontinued operation
(141)
5
(1)
5
Net earnings
(227)
235
182
452
$1.9b revenue
$5.6b revenue
22% NZ
3% AU
Infrastructure
19%
Construction
24%
AU Materials
and Distribution
17% NZ
7% AU
Commercial
36% NZ
15% AU
Residential
Group Performance (continued)
FY201
FY21
FY22
FY23
FY24
FY201
FY21
FY22
FY23
FY24
FY201
FY21
FY22
FY23
FY24
Group
EBIT* ($m)
Focus across NZ and Australia
Group
EBIT* Margin
Revenue weighted to market
Materials and Distribution Divisions
EBIT* Margin
Value chain revenue
155
2.4%
6.6%
8.9%
9.6%
10.2%
5.1%
7.4%
8.8%
9.1%
10.3%
655
509
741
785
48%
NZ Materials
and Distribution
9% Residential and Development
Fletcher Building Limited Annual Report 2024
29
CONTENTS
Group Overview
External revenue for the Group’s continuing operations 1 was $7,683 million, broadly in line with the
prior year’s $7,679 million. EBIT for continuing operations and before significant items was $509
million, down 35% compared to $785 million in the prior year. Group net earnings were an $227
million loss compared to $235 million reported in the prior year. Cash flows from operating activities
were $398 million, compared to $388 million in the prior year. Return on funds employed (ROFE)
excluding significant items was 10.0%, down on prior year of 17.1%.
While FY24 revenue was broadly flat,
the year had a higher weighting to
the Construction and Residential and
Development businesses, as revenues
for the materials and distribution
divisions (Building Products,
Distribution, Concrete, and Australia)
were materially impacted by a sharp
market slowdown in both New Zealand
and Australia.
In New Zealand, the first half of FY24
saw market volumes for the materials
and distribution divisions decline ~15%
against 1H23; and in the second half
of FY24, market volumes declined
a further ~10% against the 1H23
baseline. In Australia, market volumes
in the first half of FY24 declined ~8%
against 1H23; and in the second half
of FY24, volumes moved a further ~7%
lower. The residential sector in New
Zealand was the hardest hit, due to
challenging economics for housing
developers and falling consumer
confidence in the housing market.
Commercial and infrastructure
markets also declined, though not so
sharply as the residential sector, while
the rural market in New Zealand was
very weak due to reduced agricultural
expenditure. The challenging trading
environment led to pressure on
pricing and gross margins in certain
businesses, particularly in the
Distribution division in New Zealand,
which was subject to a significant
increase in competitive intensity.
For the Residential and Development
division, the market for house sales
in New Zealand was positive in the
first half, and then slowed materially
through the balance of FY24. This
slowdown was driven by greater
caution among prospective home
buyers as the New Zealand economic
outlook deteriorated; ongoing
challenges to secure residential home
loan financing; and a significant
increase in house listings. This led to
fewer transactions across the overall
market and also resulted in house
prices, which had been lifting in the
first half of FY24, returning to negative
growth in the second half of the year.
Cost inflation pressures across the
Group remained above long-term
averages in FY24, albeit the rate of
inflation eased slightly from the prior
year. Inflation averaged around 5%
across the Group in FY24, with areas of
higher cost pressure including labour
rates, international freight and New
Zealand electricity costs.
In response to the challenging market
and inflationary environment, the
Group has focused on managing
things within its control, in particular:
customer service, costs, cash flow,
capital allocation, funding lines, and
closing out the legacy construction
projects. Cost reduction has been
a particular focus, occurring
progressively across the Group as
market activity has declined. In FY24
key cost measures have included:
reducing manufacturing shift and
distribution store labour; exit of
loss-making sites and product lines;
reduction in overhead headcount; and
compression of discretionary spend.
The chart below provides a summary
bridge of EBIT before significant items
for the Group’s continuing operations
from FY23 and FY24, highlighting key
features of the FY24 result.
1. Lower market volumes for the
materials and distribution divisions
were the most significant driver of
earnings change, resulting in a $220
million adverse impact year on year;
2. Market share loss in the Distribution
division in the first half of FY24 was
partially offset by gains in certain
Concrete and Building Products
businesses (net $20 million EBIT
decline);
3. Despite competitive pressure on
pricing and areas of variable cost
pressure (e.g. electricity), overall
gains on price more than offset
inflation for the materials and
distribution divisions (net $32m EBIT
benefit);
4. Movements in steel prices resulted
in a $16 million year-on-year adverse
movement in steel inventory
valuations in the Building Products
division ($8 million benefit in FY23,
$8 million cost in FY24);
5. Land Development earnings were
$29 million lower in FY24 as less
profitable brownfield sites were
sold;
6. Overhead cost reduction across
the Group provided a $111 million
benefit on a gross basis, more than
EBIT Bridge FY23 to FY24: Key Drivers of Year on Year Change*
(EBIT before Significant Items, Continuing Operations, NZ$m)
(220)
(20)
(29)
(27)
(91)
111
785
509
32
(16)
(16)
FY23
Market
volume
Market
share
Land Dev
Restructuring
costs
Price vs
variable
COGS
Overhead
inflation
Other
Steel
inventory
valuation
Overhead
cost
reduction
FY24
1
2
3
4
5
6
7
Market Impacts –
Materials & Distribution
Overheads –
All divisions
Resi &
Devt
*Due to its classification as a discontinued operation, Tradelink® has been excluded from the Group’s continuing
operations in FY24. FY23 results have been restated on a like-for-like basis with FY24.
Fletcher Building Limited Annual Report 2024
30
Group Overview (continued)
(1) EBIT before significant items is a non-GAAP measure used by management to assess the performance of the business and has been derived from Fletcher Building
Limited’s consolidated financial statements for the period ended 30 June 2024. Further details of significant items can be found in note 2.2 of the consolidated
financial statements.
(2) The comparatives have been represented for Tradelink® classified as a discontinued operation. Further details of the change can be found in note 2.4.
Cash flow
2024
NZ$M
2023(2)
NZ$M
EBIT before significant items (1)
509
785
Depreciation and amortisation
337
307
Lease principal payments and lease interest paid
(226)
(212)
Provisions and other
(8)
(56)
Trading cash flow before working capital movements
612
824
Working capital movements
172
(287)
Trading cash flow excluding significant items and legacy projects - continuing
operations
784
537
Discontinued operations
(18)
11
Legacy projects cash flow
(376)
(31)
Significant items cash flow
(49)
(42)
Trading cash flow
341
475
Add: lease principal repayments
206
196
Less: cash tax paid
(15)
(191)
Less: funding costs paid
(134)
(92)
Cash flows from operating activities
398
388
offsetting inflationary overhead
cost increases of $91 million and
restructuring costs of $16 million;
7. Other reflects reduced JV income
and lower investment property
revaluations in Vivid Living® in FY24.
Detailed analysis of the individual
divisional results is included in
the subsequent sections of the
Management Commentary.
At the end of FY24, the Group’s legacy
construction projects were nearing
completion. During the year, full works
completion was achieved on the Pūhoi
to Warkworth (P2W) roading project,
and on the Horizon Hotel portion of
New Zealand International Convention
Centre (NZICC) project. The remaining
legacy construction works are
concentrated on NZICC (expected
to complete the build by the end of
calendar 2024 with commissioning
and handover in early 2025) and
less substantial remedial works on
the Wellington International Airport
Limited (WIAL) carpark. The Group
also continues to pursue material
claim recoveries on the P2W project.
Disappointingly, as announced at the
Interim Results, an additional provision
of $165 million was required on the
NZICC project and $15 million on the
WIAL carpark. Positively, the remaining
Contracts Works Insurance claims on
the NZICC project were settled and
paid in June 2024, with the amount
materially in line with the provision
announced in February 2024.
A review of the Australian Tradelink®
business led to a $122 million non-
cash impairment and writedown in its
carrying value in the Interim Results.
Following this, the decision was made
to commence a divestment process
of the business. Consequently,
Tradelink® has been classified as
a discontinued operation in the
financial statements. On 12 August
2024, the Group announced that it
has entered into an agreement with
Metal Manufactures Pty Limited to
sell 100% of the shares in Tradelink®
for A$170 million. As a result, an
additional impairment of $36 million
(A$32.5 million) was recognised at
30 June 2024, principally against the
business unit’s property, plant and
equipment, right-of-use assets, and
deferred tax assets. A review into the
resetting of the Higgins® New Zealand
business has also led to a $100 million
non-cash impairment and write down
of the business.
Across the Group, significant item
charges in FY24 totalled $488 million.
Of this, $333 million was from
continuing operations, mainly from
the additional legacy construction
provisions and Higgins® impairment
and write down.
Net interest expense for the Group was
$200 million in the year, of which $142
million related to funding costs and
$58 million related to lease expenses.
Tax expense was $55 million in the year
compared to $88 million in the prior
year.
Basic earnings per share from
continuing operations were (11.0) cents
for the year, compared to 29.4 cents in
the prior year. Excluding the impact of
significant items, earnings per share
from continuing operations were 23.4
cents, compared to 57.1 cents reported
in the prior year.
Group cash flows
Within the prevailing challenging market
conditions, the Company has remained
focused on ensuring robust cash flows.
Despite materially lower earnings
year-on-year, the Group delivered cash
flows from operating activities of $398
million, in line with the prior year’s $388
million. The key components of the
operating cash flow performance were:
• A material improvement in trading
cash flows (excluding significant
items and legacy projects) to $784
million in FY24, compared to the prior
year’s $537 million;
• Materially higher legacy project cash
outflows of $376 million, almost
entirely on the NZICC and P2W
Fletcher Building Limited Annual Report 2024
31
CONTENTS
Group Overview (continued)
projects, compared to a $31 million
outflow in FY23;
• Significant items cash outflows
(excluding legacy construction
projects) of $49 million, primarily
related to the Winstone Wallboards®
Tauriko plant transition costs and
Iplex® Australia Pro-fit matters,
compared to $42 million in the prior
year;
• Higher funding costs paid of $134
million, compared to $92 million in
the prior year; and,
• Lower cash tax payments of $15
million compared to $191 million in
FY23.
The Group’s free cash flow from
continuing operations and excluding
legacy construction projects was a
$304 million inflow compared to a
$327 million outflow in the prior year.
The materials and distribution divisions
reported strong trading cash flows
before significant items of $615 million,
compared to $707 million in the prior
year, despite ~$230m of lower earnings
and deteriorating customer liquidity.
The result was achieved through tight
management of inventories and trade
receivables, which resulted in a ~$200
million favourable reduction in working
capital. Creditor terms remained
consistent with the prior period.
The Residential and Development
division reported a materially improved
trading cash flow of $166 million,
compared to an outflow of $107
million in the prior year. A total of $156
million of land purchases (historic
agreements brought on balance sheet)
were settled during the year. However,
overall working capital in the division
reduced by $67 million in FY24, with
land development and housing work-
in-progress actively managed lower.
The division made limited new land
commitments in the year, remaining
well-positioned to support its future
sales pipeline through a total of
~4,200 sections under its control.
For the 2,800 sections and two rural
properties on balance sheet at the
end of June 24, the assessed market
valuation was ~$265 million higher
than the book value.
The Construction division recorded
a strong trading cash flow before
significant items and legacy projects of
$73 million, underpinned by good cash
generation in both Brian Perry Civil®
and Higgins®.
Net capital expenditure and
investments for the Group were $426
million in FY24, consisting of:
• Base capital expenditure of $228
million (maintenance, digital/ERP,
sustainability, and efficiency capital
expenditure), within the Group’s
FY24 guidance of $200 – $250
million;
• Growth capital expenditure and
investments of $136 million, lower
than the most recent FY24 guidance
of ~$150 million as the Group looked
to reduce capital outflows in a
deteriorating market environment.
The Group continued investment in
in-flight growth projects, primarily
the new Laminex® Taupō wood
panels plant ($98 million); a new
Firth® site development in Penrose
($10 million); and the consolidation
of Steel businesses in Papakura
($14 million).
• Final capital expenditure for the
Winstone Wallboards® plasterboard
plant of $38 million, with the project
commissioned in the first half of the
year on time and on budget.
In addition, the Group invested $20
million in the Vivid Living® retirement
village developments, and received
$7 million from the sale of plant and
equipment.
Dividend payments in the year
were $124 million for the FY23 final
dividend, with no interim dividend
having been declared.
Balance sheet, returns and
funding
ROFE before significant items for the
year to 30 June 2024 was 10%, below
the Group’s target of 15%. Funds
employed increased to $4.9 billion
compared to $4.8 billion at 30 June
2023, resulting from: an unwind of
onerous contract provisions on the
legacy construction projects; and the
Group’s investment in in-flight growth
projects.
The Group’s leverage ratio (net debt /
EBITDA before significant items) at 30
June 2024 was 1.99 times, compared
to 1.22 times at 30 June 2023, which
principally reflects debt drawdowns
associated with legacy cash outflows,
and the impact of the weaker earnings
in the year.
The Group’s gearing at 30 June 2024
was 34.7% compared with 27.8% at 30
June 2023.
Total funding available to the Group
at 30 June 2024 was $2,837 million, of
which $760 million was undrawn and
there was an additional $311 million of
cash on hand. This provided liquidity
to the Group at 30 June 2024 of
$1.1 billion.
In the first half of the year, the
Group executed a New Zealand
dollar denominated loan facility to
November 2026 with a three-bank
syndicate of $400 million, which
replaced the $300 million bilateral
revolving credit facility which was
due to mature in October 2024.
In June, the Group made
amendments to its banking
agreements which extend the tenor
of its debt facilities and enable it
to rely on more favourable terms
for covenant testing through to the
end of calendar 2025, if required.
Should the Group need to rely on
the amended covenant levels, it will
not pay a dividend until it agrees to
be tested by, and complies with, its
existing covenant levels.
The Group refinanced an Australian
dollar denominated $674.5m facility
that was scheduled to expire in
October 2025. The agreement
extends the expiry date for this
facility into two longer dated
maturities: A$424.5 million that will
now expire in July 2027, and A$250
million that will expire in June 2029.
The agreement significantly improves
the tenor of the Company’s funding
lines, such that the next material debt
maturity is in FY27.
The Group also announced its first
investment grade credit rating of
Baa2 assigned by Moody’s Investors
Service in the first half of the year.
This rating was subsequently
amended in June 2024 to Baa3 on a
negative outlook, following a review
by Moody’s.
The average maturity of the Group’s
debt at 30 June 2024 was 3.0 years,
with the currency split being 83%
New Zealand dollar; 16% Australian
dollar; and 1% spread over various
other currencies.
The Group currently has 44% of all
borrowings with fixed interest rates
with an average duration of 2.3 years.
Inclusive of floating rate borrowings,
the average interest rate on the debt
(based on period-end borrowings)
was 6.2%.
Dividend
Given the current market conditions
and in line with the Company’s
dividend policy and banking
covenant restrictions, the Board has
not declared a final dividend.
Fletcher Building Limited Annual Report 2024
32
Apprentice builder Richard Kalonihea
of Auckland's Craftsman Builders
confirms receipt, as PlaceMakers
Delivery team oversee order dispatch.
Divisional Performance
Fletcher Building Limited Annual Report 2024
33
CONTENTS
Building Products
*before significant items
Safety
FY24: 2.4 | FY23: 2.5
(TRIFR1)
Customer
FY24: 41.6 | FY23: 48.7
(NPS2)
People
FY24: 45 | FY23: 41
(eNPS)
Environment
FY24: 54 kt CO2e
FY23: 62 kt CO2e
Carbon emissions3
74% Revenue
from sustainably-
certified products
FY24
215
143
FY23
48% Residential
33% Commercial
19% Infrastructure
Revenue Weighted
Sector Exposure
34.0%
32.8%
ROFE*: 11%
The Building Products division reported gross revenue of $1,345
million, 7% lower than the prior year. EBIT before significant items was
$143 million, compared to the $215 million reported in the prior year.
Gross margin was 32.8% down from the prior year’s 34.0%, whilst EBIT
margin reduced 430 basis points to 10.6%. Trading cash flow of $192
million was $20 million higher than the prior year.
Revenue
$1,345m
1 Excludes Wood Products
2 Excludes Altus®
3 Combined Scope 1 & 2 carbon
emissions with an allocation
of Corporate emissions.
The FY24 results demonstrate solid
operating performance despite the
slowing residential and commercial
market environment. Revenue decline
compared to the previous year was driven
by the division's substantial exposure to
the residential sector (c. 48%) and the
commercial sector (c. 33%). However,
notwithstanding the lower market activity
and intense market competition, Winstone
Wallboards® and Laminex® continued to
expand market share.
The division’s gross margins remained
robust reflecting the solid pricing and
cost disciplines achieved despite the
continuing elevated cost inflation,
particularly on gypsum and paper
combined with high electricity and
labour cost. This was partly offset by
reduced resin and steel prices. The new
plasterboard plant in Tauranga resulted
in an $11 million higher depreciation
expense, while in our metals business
lower steel prices (~10% lower) resulted
in an adverse year on year inventory
valuation movement of $16 million ($8
million benefit in FY23 vs. a $8 million cost
in FY24).
In FY24, a continued focus was
managing the cost base in line with
the softening market conditions. Cost
reduction measures through the year
included: manufacturing shift reduction,
warehousing cost optimisation, order and
freight consolidation and high emphasis
on cutting back discretionary spending,
and trimming fixed overhead costs,
with more cost rationalisation strategies
embedded in all businesses ready to
be deployed in the event of further
market slowdown. Pleasingly, the FY24
second half overhead cost (excluding
restructuring costs of $2m) reduced by
$10 million compared to the first half.
The division’s EBIT before significant
items was $143 million, compared to
$215 million in the prior year. Key drivers
of the lower earnings were the material
reduction in market activity; higher
Winstone Wallboards® depreciation; and
the steel inventory revaluation referred
to above.
Notwithstanding the softer earnings, the
division delivered strong trading cash flow
of $192 million, $20 million higher than
the prior year, stemming from a reduction
in working capital, particularly trade
receivables and inventory. Stock returned
to more normal levels in FY24, with prior
year balances elevated by high post-
COVID stockholdings.
Capital expenditure was $178 million,
mostly for the ongoing construction of
the Laminex® Taupō wood panels plant
($98 million), completion of the Winstone
Wallboards® plasterboard plant ($38
million) and Steel Hunua site consolidation
($14 million) which are also the drivers for
the funds increase, now at $1,311 million.
Throughout FY24, in response to the
highly competitive market environment,
the division overhauled its sales strategies.
Winstone Wallboards® refreshed their
customer engagement roadmap resulting
in more meaningful and insightful
customer feedback paving the way
for market share gains. At Laminex®, a
product relaunch of Melteca® delivered
share gains and higher margins. Wood
products has begun implementing a
cohesive sales and operations process
that enhances alignment with both
internal and external customer needs.
The insulation business has revamped
its Pink® Batts® and PinkFit® strategy
driving the conversion of major customers
such as Kāinga Ora. Fletcher Steel®
has launched a new sales framework
that targets a broader customer base,
which combined with improved product
and service offering in our roofing
segment has started to enable market
share gains. At Iplex® New Zealand the
fittings segment has undergone portfolio
expansion that enabled higher traded
volume during the year despite the
slowing market.
172
192
Trading cash
FY24
FY23
16%
of group
revenue
EBIT*
Gross margin
34
Our Building Products businesses
Light Building Products
Wood Products
Metals
Financial Summary
Year ended 30 June
2024
NZ$M
2023
NZ$M
Gross revenue
1,345
1,443
External revenue
1,093
1,154
Gross margin
32.8%
34.0%
Overheads
308
295
EBIT before significant items (1)
143
215
EBIT margin before significant items (1)
10.6%
14.9%
Significant items (2)
(19)
(15)
Funds
1,311
1,210
ROFE (3)
11%
18%
Trading cash flow
192
172
Capital expenditure
178
191
Investments (4)
4
106
EBIT before significant items (1)
Year ended 30 June
2024
NZ$M
2023
NZ$M
Light Building Products
124
159
Metals
24
63
Wood Products
2
-
Divisional costs
(7)
(7)
Total
143
215
(1) EBIT before significant items is a non-GAAP measure used by management to assess
the performance of the business and has been derived from Fletcher Building
Limited's consolidated financial statements for the period ended 30 June 2024.
(2) Details of significant items can be found in note 2.2 of the consolidated financial
statements.
(3) EBIT before significant items / closing funds.
(4) Investments for the period ended 30 June 2024 include deferred settlement on
Waipapa earn-out.
Dimond Structural® sales manager,
Ian Davies with customers at the
Dimond Structural® Hunua Road,
Papakura site opening.
Fletcher Building Limited Annual Report 2024
35
CONTENTS
Distribution
The Distribution division reported gross revenue of $1,615 million,
11% lower than the prior year. EBIT before significant items was $49
million, compared to $141 million in the prior year. Gross margin
was 26.3%, down 260 basis points from 28.9% in the prior year. EBIT
margin before significant items was 3.0%, compared to 7.7% in the
prior year. Trading cash flow was $53 million, compared to $185
million in the prior year.
FY24 presented significant challenges
for the Distribution division. With a 78%
exposure to the residential sector, the
division’s market volumes fell sharply.
Additionally, the division was impacted
by PlaceMakers®' market share loss in the
first half of FY24 as competitors moved
aggressively on price. The division’s
share position stabilised in the second
half of FY24, however, price concessions,
particularly in frame and truss, were
necessary to achieve this. All regions
experienced market volume declines,
with the slowdown least pronounced in
the Auckland / Northland region and most
significant in the Waikato-Bay of Plenty
and Lower North Island regions.
The division’s gross margin was impacted
by these price concessions resulting in a
260-basis point erosion in gross margin
compared to the prior year. The decline
in the division’s gross margin dollars
was approximately 60% due to revenue
decline and 40% due to margin erosion.
Inflationary pressures continued to
be significant, particularly in labour,
property and technology expenses.
With employee costs constituting a
large portion of overall overheads, a
prudent approach was adopted, rehiring
only when necessary. Other key cost
control measures included revised shift
patterns across the branch network
and frame and truss manufacturing
plants, and all discretionary expenses
(travel, entertainment, consultancy)
were significantly reduced. Overall, the
division’s FY24 overhead expenses were
3% lower than the prior year, despite cost
inflation running at ~5%.
The division’s FY24 EBIT was $49 million,
compared to $141 million in the prior year,
with an EBIT margin of 3.0%, down
from 7.7%.
Trading cash flow for the year was
$53 million. This was supported by: a
reduction in stock levels by $9 million
through FY24; and improved customer
cash collections, with debtors’ days
trending down closer to FY22 levels
despite the tight customer credit
environment.
Capital expenditure in the year was $11
million, primarily comprising milestone
payments on equipment and capital
works for the relocation of PlaceMakers®
frame and truss manufacturing plant in
Auckland, which will improve operational
efficiency and enable share growth for the
business. Continued investment in digital
programmes, including the launch of a
new integrated Trade Portal and Customer
Relationship Management (CRM) platform
in PlaceMakers®, also featured. Planning
for the final integration of systems and
remaining processes between Tumu®4 and
PlaceMakers® started in the second half
of FY24 and is progressing well, with a
target completion by the end of the first
half of FY25.
In FY24, significant improvements were
made across non-financial metrics.
Customer NPS increased to 43 from 31
in the prior year. People eNPS rose to 41,
up from 30 in the prior year, reflecting
the division’s success in ensuring positive
customer and employee sentiment
despite a challenging market backdrop.
Ongoing focus on safety resulted in a
TRIFR of 3.5, down from 4.1 in the prior
year, underscoring our commitment
to a safe working environment. This
improvement highlights our proactive
approach to safety management through
rigorous protocols, ongoing training
and a strong safety culture, ensuring our
employees can go home safely every day.
Revenue
Safety
FY24: 3.5 | FY23: 4.1
(TRIFR1)
Customer
FY24: 43.2 | FY23: 31.3
(NPS2)
Environment
FY24: 10 kt CO2e
FY23: 10 kt CO2e
Carbon emissions3
78% Residential
22% Commercial
Revenue Weighted
Sector Exposure
1 FY24 includes Tumu®, FY23
excludes Tumu®
2 FY23 excludes Tumu®
3 Combined Scope 1 & 2 carbon
emissions with an allocation of
Corporate emissions
4 Tumu is a registered trademark of Tumu
Merchants Limited.
FY24
FY23
ROFE*: 16%
People
FY24: 41 | FY23: 30
(eNPS)
$1,615m
Trading cash
FY24
FY23
19%
of group
revenue
185
53
49
141
28.9%
26.3%
EBIT*
*before significant items
Gross margin
36
Our New Zealand
Distribution businesses
PlaceMakers® account manager,
David McConchie, on site
with customer Haydn Miller of
Rightline Construction.
Financial Summary
Year ended 30 June
2024
NZ$M
2023
NZ$M
Gross revenue
1,615
1,824
External revenue
1,578
1,792
Gross margin
26.3%
28.9%
Overheads
377
388
EBIT before significant items (1)
49
141
EBIT margin before significant items (1)
3.0%
7.7%
Significant items (2)
-
(1)
Funds
305
312
ROFE (3)
16%
45%
Trading cash flow
53
185
Capital expenditure
11
62
Investments
-
61
(1) EBIT before significant items is a non-GAAP measure used by management to assess
the performance of the business and has been derived from Fletcher Building
Limited's consolidated financial statements for the period ended 30 June 2024.
(2) Details of significant items can be found in note 2.2 of the consolidated financial
statements.
(3) EBIT before significant items / closing funds.
Fletcher Building Limited Annual Report 2024
37
CONTENTS
Concrete
The Concrete division reported gross revenue of $1,082 million, in
line with the prior year. EBIT before significant items was $130 million,
compared to $156 million in the prior year. Gross margin was 28.1%
down from the prior year’s 28.9% while EBIT margin was 12.0%, down
240 basis points from the prior year. Trading cash flow of $165 million
was a $9 million increase on the $156 million in the prior year.
The division delivered robust top-line
results in a challenging market, with the
decline in market activity offset by price
discipline and market share growth. The
division has continued to push into the
commercial and infrastructure segments,
particularly within the Firth® business,
which gained ~2 percent of market share
during the year. Winstone Aggregates®
increased revenue by 18% compared
to the prior year with the current year
including a full year of contribution from
The Urban Quarry® business acquired in
April 2023.
A key focus for the year has been aligning
the division’s fixed and variable cost
base to the current market environment.
In Firth®, this has involved closure or
repurposing of six regional concrete
plants and reallocation of trucks to
maximise utilisation. In Golden Bay™,
the focus has been increasing internal
cement supply in the South Island and
mitigating thermal energy cost inflation
through higher usage of alternative fuels.
In Humes® and Winstone Aggregates®, the
focus has been on production efficiency
and delivering benefits from recent
investments in debottlenecking and
operational improvements.
The division’s gross margin of 28.1%
was 80 basis points lower than the prior
year (FY23: 28.9%), mainly reflecting
the higher mix of revenue from the
commercial and infrastructure segments
and continued input cost inflation – in
particular, elevated electricity costs in
the second half impacting Golden Bay™.
Divisional overhead costs increased by
4% against the prior year, primarily due
to the acquisition of The Urban Quarry®
business. Excluding this acquisition,
overhead costs reduced 2% year on year.
EBIT before significant items of $130
million was $26 million lower than the
prior period. The key driver was the softer
market, lower gross margin from a higher
mix of commercial and infrastructure
revenues, elevated electricity costs, and
the sale of NZ carbon units in FY23.
Trading cash flow for the division was
strong at $165 million, up on the prior
year despite lower earnings due to
disciplined working capital management.
Stock management has been a key
highlight, particularly in Humes® which
has delivered a material reduction from
the prior year. Divisional debtor days
remained in line with the prior year, with
the heightened credit risk in the current
market environment well managed, with
collections closely monitored and no
material bad debt impacts during
the year.
Capital expenditure in the period of $89
million was focused on asset renewal,
quarry resource extension and key
in-flight initiatives – comprising the
development of Firth’s® new flagship
ready mix concrete plant in Auckland, and
continued investment in alternative fuels
capability to increase coal substitution at
Golden Bay™.
A key highlight for the period was the
successful integration of The Urban
Quarry® business into Winstone
Aggregates®. This provides a platform to
fast-track recycling of construction and
demolition waste, increasing the division’s
circular offering to customers.
Safety
FY24: 3.8 | FY23: 3.4
(TRIFR)
Customer
FY24: 51.1 | FY23: 51.2
(NPS)
People
FY24: 42 | FY23: 28
(eNPS)
Environment
FY24: 605 kt CO2e
FY23: 625 kt CO2e
Carbon emissions1
78% Revenue
from sustainably-
certified products
FY24
156
130
FY23
39% Residential
26% Commercial
35% Infrastructure
Revenue Weighted
Sector Exposure
ROFE*: 16%
Revenue
1 Combined Scope 1 & 2 carbon
emissions with an allocation of
Corporate emissions
$1,082m
156
165
Trading cash
FY24
FY23
13%
of group
revenue
EBIT*
28.9%
28.1%
*before significant items
Gross margin
38
Our Concrete businesses
Financial Summary
Year ended 30 June
2024
NZ$M
2023
NZ$M
Gross revenue
1,082
1,085
External revenue
782
800
Gross margin
28.1%
28.9%
Overheads
179
172
EBIT before significant items (1)
130
156
EBIT margin before significant items (1)
12.0%
14.4%
Significant items (2)
4
(2)
Funds
836
789
ROFE (3)
16%
20%
Trading cash flow
165
156
Capital expenditure
89
65
Investments
7
10
(1) EBIT before significant items is a non-GAAP measure used by management to assess
the performance of the business and has been derived from Fletcher Building
Limited's consolidated financial statements for the period ended 30 June 2024.
(2) Details of significant items can be found in note 2.2 of the consolidated financial
statements.
(3) EBIT before significant items / closing funds.
Programme manager, Auckland Airport,
Adrienne Khor with construction/
operations manager, Auckland Airport,
Mark Blanchard at the Brian Perry Civil®
Auckland airfield expansion project.
A project in conjunction with the Firth®
and Concrete division.
Programme manager, Auckland Airport,
Adrienne Khor with construction/
operations manager, Auckland Airport,
Mark Blanchard at the Brian Perry Civil®
Auckland airfield expansion project.
A project in conjunction with the Firth®
and Concrete division.
Fletcher Building Limited Annual Report 2024
39
CONTENTS
Australia
The Australia division (continuing operations) reported gross revenue
of $1,979 million, 11% lower than the prior year. EBIT before significant
items was $126 million, compared with $167 million in the prior year.
Gross margin increased to 34.5%, up from 33.5% in the prior year
while EBIT margin decreased to 6.4% compared to 7.5% in the prior
year. Trading cash flow was an inflow of $165 million, in line with the
prior year.
The first half of FY24 saw market volumes
for the division decline ~8% against 1H23;
and in the second half of FY24, market
volumes declined a further 7% against the
1H23 baseline. Residential finishing trades
softened in the second half, impacting H2
performance in Laminex® and Fletcher
Insulation®. The reduced level of civil
project activity was the main driver of
top line declines in Iplex®, and Stramit®
was impacted by the slowing residential
detached housing and shed markets.
Market share was mixed, with gains
achieved in Fletcher Insulation® and
Oliveri®, share held in Laminex® and Iplex®
and minor share losses experienced in
Stramit®.
Input cost inflation pressure remained
a feature of the trading environment.
Costs persisted at elevated levels in
freight, property, utilities, and labour,
but eased for raw materials. The
division restructured business lines and
departments, and consolidated and
closed sites to help manage the cost
pressures and mitigate the impacts of
lower trading volumes. Continued strong
pricing governance and new products
brought to market assisted the delivery of
gross margin improvements of 100 basis
points compared to the prior year.
EBIT before significant items of $126
million and EBIT margin of 6.4% were both
down on the prior year. At a business
unit level, Laminex® Australia, Iplex®
Australia and Fletcher Insulation® all
performed well in the challenging trading
environment, while Stramit's® results were
disappointing. Significant items of $17
million for the year relate predominantly
to legal costs for the Iplex Australia
pipes matter and the discontinuation of
engineered stone sales.
Trading cash flow for the division was an
$165 million inflow, in line with a $166
million inflow in the prior year. Lower
earnings were offset by a $38 million
unwind of working capital, including a
reduction of inventories in line with lower
revenues. Debtor collections remained
strong and the credit risk from increased
construction insolvencies was well
managed with no material impacts from
insolvencies experienced during the year.
Capital expenditure in the year was $53
million, with ongoing investments in
the areas of new product development,
manufacturing automation technologies
and digital omni-channel programmes.
The division’s focus on customer
produced positive outcomes, with
customer NPS increasing to 45 from 21 in
the prior year. This was mainly attributable
to improved efficiency rates in DIFOT
(Delivery in Full On Time). Additionally,
the division has seen substantial growth
in digital sales and has gained market
share in higher-margin segments, which
include, Laminex® decorative products,
Fletcher Insulation's® FirmaSoft® and
Rockwool® range, and the Oliveri®
bathroom category.
Total Recordable Injury Frequency Rate
(TRIFR) in the year was 3.4 and no serious
injuries were recorded. Pleasingly, 99%
of sites were injury free and Oliveri® had
zero injuries in the year.
The division remains focused on
sustainability, with a c. 20% reduction
in carbon emissions since 2018 and is
on track to achieve over 60% reduction
by 2030. Our Reconciliation Action Plan
has progressed well as we continue
our journey to support Aboriginal and
Torres Strait Islander people. Gender
participation and pay parity also improved
on the prior year.
Safety
FY24: 3.4 | FY23: 3.2
(TRIFR)
Customer
FY24: 44.5 | FY23: 21.0
(NPS1)
People
FY24: 14 | FY23:15
(eNPS)
Environment
FY24: 258 kt CO2e
FY23: 273 kt CO2e
Carbon emissions2
73% Revenue
from sustainably-
certified products
FY24
167
126
FY23
63% Residential
24% Commercial
13% Infrastructure
Revenue Weighted
Sector Exposure
ROFE*: 11%
Revenue
All metrics exclude Tradelink®,
classified as a discontinued
operation. FY23 excludes Rocla®.
1 Excludes Haven and Water
Filters Australia
2 Combined Scope 1 & 2 carbon
emissions.
of group
$1,979m
166
165
Trading cash
FY24
FY23
24%
of group
revenue
33.5%
34.5%
EBIT*
*before significant items
Gross margin
40
Our Australia businesses
Building Products Australia
Steel Australia
Financial Summary
Year ended 30 June
2024
NZ$M
2023(1)
NZ$M
Gross revenue
1,979
2,222
External revenue
1,925
2,163
Gross margin
34.5%
33.5%
Overheads
552
586
EBIT before significant items (2)
126
167
EBIT margin before significant items (2)
6.4%
7.5%
Significant items (3)
(17)
(10)
Funds
1,128
1,138
ROFE (4)
11%
15%
Trading cash flow
165
166
Capital expenditure
53
50
Investments
-
6
EBIT before significant items (2)
Year ended 30 June
2024
NZ$M
2023
NZ$M
Building Products Australia
129
144
Steel Australia
7
31
Divisional costs
(10)
(8)
Total
126
167
(1) The comparatives have been restated to exclude discontinued operations. Further
details of the change can be found in note 2.4 of the consolidated financial statements
(2) EBIT before significant items is a non-GAAP measure used by management to assess
the performance of the business and has been derived from Fletcher Building
Limited's consolidated financial statements for the period ended 30 June 2024.
(3) Details of significant items can be found in note 2.2 of the consolidated financial
statements.
(4) EBIT before significant items / closing funds.
Fletcher Insulation® national sales
manager, Helen Awali.
Fletcher Building Limited Annual Report 2024
41
CONTENTS
Residential and
Development
The Residential and Development division reported gross revenue of
$796 million, 31% higher than the prior year. EBIT was $100 million
compared to $147 million in the prior year. Gross margin was 21.9%
down from the prior year’s 33.3% while EBIT margin was 12.6%, down
from 24.2% in the prior year. Trading cash flow was an inflow of $166
million compared to an outflow of $107 million in FY23.
Following a challenging FY23, New
Zealand housing market conditions
showed initial signs of improvement
through HY24. In the second half, record
market house listings, elevated interest
rates and broader economic uncertainty
adversely impacted buyer sentiment
and urgency. Despite this challenging
backdrop, Fletcher Residential delivered
strong sales volumes, continuing to
leverage its high-quality, customer centric
reputation, with a focus on lower price
points in the most active part of the
market. 886 units were taken to profit in
FY24, compared to 617 in the prior year.
Clever Core™, the division’s panelisation
business, delivered 180 homes in the
year, a 22% increase on the prior year.
Vivid Living® opened its first retirement
development at Red Beach, completing
17 settlements, and construction
commenced at the next village in Karaka,
South Auckland.
Fletcher Residential reported EBIT of $94
million, down from $112 million in the prior
year with an EBIT margin of 13% (FY23:
20%). The FY24 result included revaluation
gains associated with Vivid Living® of $2
million, compared to $16 million in the
prior year.
The Industrial Development business
delivered EBIT of $6 million, reflecting
five small land transactions, compared to
$35 million in the prior year largely driven
by one land transaction. These provided
a cash contribution of $58 million in the
current year.
Trading cash flow in FY24 was an inflow
of $166 million, compared to an outflow
of $107 million in the prior year. The
division settled $156 million of land
purchases in FY24, most of which were
contracted in prior periods, including
the first major payment for The Hill at
Ellerslie Racecourse. Despite these land
additions, divisional funds employed
reduced from $915 million at 30 June
2023, to $841 million at 30 June 2024,
as the division actively managed cash
flow in a challenging housing market.
The decrease in funds was driven by a
reduction in housing stock due to strong
FY24 sales volumes, together with a
scaling back of some build programmes.
A number of apartment projects have
also been paused until better market
conditions prevail.
Looking ahead, the division remains
well positioned to support its future
sales pipeline through a total of ~4,200
sections under control. For the ~2,800
sections and two rural properties on
balance sheet at June 2024, the assessed
market value was ~$265 million higher
than the book value, providing a degree
of margin resilience for the business in
future periods.
The division continues to lead the
industry on innovation and sustainability,
including the completion of LowCO™, a
series of standalone and terrace homes
that produce seven times less carbon
than the standard Kiwi home, recently
awarded a Homestar 10 certification, and
BUILDhers™, a New Zealand-first project,
built and sold almost entirely by a team
of women.
$796m
Revenue
Safety
FY24: 5.2 | FY23: 3.0
(TRIFR)
Customer
FY24: 65.3 | FY23: 72.2
(NPS1)
Environment
FY24: <1 kt CO2e
FY23: <1 kt CO2e
Carbon emissions2
147
(107)
100
166
93% Residential
7% Commercial
Revenue Weighted
Sector Exposure
Trading cash
1 In FY23, Vivid Living® and
Apartments were not present
thus excluded
2 Combined Scope 1 & 2 carbon
emissions with an allocation
of Corporate emissions
FY24
FY24
FY23
FY23
ROFE*: 12%
33.3%
21.9%
People
FY24: 60 | FY23: 40
(eNPS)
9%
of group
revenue
EBIT*
Gross margin
42
Our Residential and
Development businesses
Financial Summary
Year ended 30 June
2024
NZ$M
2023
NZ$M
Gross revenue
796
607
External revenue
739
594
Gross margin
21.9%
33.3%
Overheads
76
72
EBIT (1)
100
147
EBIT margin
12.6%
24.2%
Funds
841
915
ROFE (2)
12%
16%
Trading cash flow
166
(107)
Capital expenditure (3)
20
23
EBIT (1)
Year ended 30 June
2024
NZ$M
2023
NZ$M
Fletcher Residential
94
112
Industrial Development
6
35
Total
100
147
(1) The EBIT result includes a $2 million gain on revaluation of Vivid Living® investment
property (2023: $6 million). There were no gains on transfer of land from Fletcher Living®
to Vivid Living® in the current period (2023: $10 million).
(2) EBIT / closing funds.
(3) Capex includes investment property development for Vivid Living®.
New home consultants Tian Tian
Wang, (left) and MeeLei Ang
(right) with customers at the
Fletcher Living® Chinese Home
Buyers Evening in Penrose.
Fletcher Building Limited Annual Report 2024
43
CONTENTS
The Construction division reported gross revenue of $1,614 million,
which was $289 million or 22% higher than the prior year. Prior to
elimination of intra-Group margin on the Winstone Wallboards® plant,
EBIT before significant items was $28 million compared to $32 million
in the prior year. Trading cash outflow of $310 million compares to an
outflow of $26 million in the prior year. Excluding legacy contracts,
trading cash was an inflow of $66 million compared to an inflow of $5
million in the prior year.
The increase in top-line performance
compared to the prior year was driven
by higher volumes in Higgins® and Brian
Perry Civil® businesses. Higgins® benefited
as reconstruction works commenced
following the destructive weather events
in FY23, and Brian Perry Civil® from
significant programmes of work across
the water, airports and marine sectors. A
key highlight for Brian Perry Civil® was the
successful commencement of work on
the Auckland Airport expansion project,
while the division has also benefited from
projects such as the Eastern Busway
Alliance, which combines cross-business
capabilities from Major Projects, Higgins®,
and Brian Perry into one project.
A continued focus on safety, well-being
and engagement of our people saw TRIFR
remain stable at 3.0 (FY23: 2.9) and eNPS
lift to 32 (FY23: 25).
Gross margin dollars across the specialist
works businesses of Brian Perry Civil® and
Higgins® increased by $24 million on the
prior year, with gross margin in FY24 of
8.4%, compared to 9.4% in the prior year.
Divisional cost controls remained tight,
with overheads at 6.9% of gross revenue
(FY23: 8.3%). Overall, EBIT for the division
was $28 million and EBIT margin was 1.7%
(FY23: 2.4%).
Significant items for the period totalled
$292 million, including $180 million of
legacy provisions recognised through
the half-year results: $165 million for
increased costs on the NZICC project, and
$15 million for expected remedial works
costs for Wellington International Airport
Limited (WIAL). Both projects are part of
the legacy vertical building operations
being wound down. A review into the
resetting of the Higgins® New Zealand
business has also led to a $100 million
non-cash impairment and write down of
the business. Following the agreement to
divest 50% of its Fiji construction business
to two local partners, that was completed
on 31 July 2024, a non-cash impairment
of $17 million has been recognised. This
was partially offset by income recognised
from the recovery of Cyclone Gabrielle
and North Island Floods insurance claims
received during the year.
Trading cash flow for the division was an
outflow of $310 million, driven by outflows
of $376 million associated with legacy
projects, primarily NZICC and Pūhoi to
Warkworth. Positively, the remaining
Contract Works Insurance claims with the
NZICC project insurers were settled and
paid in June 2024, de-risking this aspect
of the project, with the amount materially
in line with the provision announced in
February 2024. On legacy projects, full
works were completed on the Pūhoi to
Warkworth project, the Hobson Street
Hotel and NZICC basement carpark were
handed over to the client, and remedial
works have progressed on the Wellington
International Airport Carpark.
Excluding legacy contracts, trading
cash flow was a $66 million inflow. This
was driven by strong working capital
management, including finalisation of
variation claims and accounts, and client
advance payments received in the second
half of FY24 for new work won.
The Construction division orderbook
closed the financial year at $1.8 billion,
compared to $2.8 billion in FY23. A $500
million downwards adjustment to the
orderbook was made in 2H FY24 for the
division’s share of the Transport Rebuild
East Coast (TREC), based on latest NZTA
budget advice. Preliminary work continues
on the Riverlink project in Wellington,
however the full scheme is not yet
recognised in orderbook.
Capital expenditure in the year of $20m,
compared to $19m in prior period,
concentrated on civil equipment for the
Higgins® and Brian Perry Civil® businesses.
$1,614m
Revenue
77% Infrastructure
23% Commercial
Revenue Weighted
Sector Exposure
19%
of group
revenue
Safety
FY24: 3.0 | FY23: 2.9
(TRIFR)
Environment
FY24: 41 kt CO2e
FY23: 41 kt CO2e
Carbon emissions1
1 Combined Scope 1 & 2 carbon
emissions with an allocation
of Corporate emissions
People
FY24: 32 | FY23: 25
(eNPS)
Construction
*before significant items and prior
to elimination of intra-Group
margin in relation to Winstone
Wallboards® Tauriko plant.
32
(26)
28
(310)
FY24
FY24
FY23
FY23
ROFE*: 20%
Trading cash
EBIT*
9.4%
8.4%
Gross margin
44
Traffic controller, Usaia
Nataraku from Higgins® Fiji.
Our Construction businesses
Financial Summary
Year ended 30 June
2024
NZ$M
2023
NZ$M
Gross revenue (1)
1,614
1,325
External revenue
1,566
1,176
Gross margin
8.4%
9.4%
Overheads
111
110
EBIT before significant items (1, 2)
28
32
EBIT margin before significant items (1, 2)
1.7%
2.4%
Significant items (3)
(292)
(273)
Funds
138
85
ROFE (4)
20%
38%
Trading cash flow (1)
(310)
(26)
Capital expenditure
20
19
(1) Prior to elimination of intra-Group margin in relation to Winstone Wallboards® Tauriko plant.
(2) EBIT before significant items is a non-GAAP measure used by management to assess the
performance of the business and has been derived from Fletcher Building Limited's consolidated
financial statements for the period ended 30 June 2024.
(3) Details of significant items can be found in note 2.2 of the consolidated financial statements.
(4) EBIT before significant items / closing funds.
Note: External revenue includes income from the Group's Vertical Buildings Business (2024:
$159 million 2023: $104 million), which the Group is in the process of exiting. The New Zealand
International Convention Centre and Hobson Street Hotel (NZICC) represent the largest project to
complete in this sector. EBIT before significant items, however, excludes any earnings from these
projects, which are recognised as a Significant Item.
Fletcher Building Limited Annual Report 2024
45
CONTENTS
Barbara Chapman
CNZM, BCom, CMInstD
Acting Chair and
Independent Non-Executive
Director
Term of office: Appointed
Acting Chair 4 March 2024,
director 1 September 2018,
last elected 2023 annual
meeting.
Board committees:
Chair of the People and
Remuneration Committee,
Chair of the Nominations
Committee, Member of the
Disclosure Committee.
Barbara brings extensive
and diverse trans-Tasman
executive experience to the
Board having served as CEO
and managing director of
ASB Bank for seven years
and having held a number
of senior executive roles
responsible for marketing,
communications, human
resources, life insurance and
retail banking in New Zealand
and Australia. She has an
extensive list of professional
achievements to her credit,
including being named
New Zealand Herald’s 2017
Business Leader of the Year.
In 2019, Barbara was made
a Companion of the New
Zealand Order of Merit for
services to business.
Barbara is the Chair of
Genesis Energy Limited and
NZME (New Zealand Media
and Entertainment) Limited,
Deputy Chair of The New
Zealand Initiative and is a
director of Bank of New
Zealand.
Barbara was appointed
Acting Chair on 4 March
2024 to facilitate the search
for the new permanent Chair
of Fletcher Building.
Peter Crowley
BEcon, BA, FAICD
Independent Non-Executive
Director
Term of office: Appointed
director 1 October 2019,
last elected 2022 annual
meeting.
Board committees:
Member of the Audit and
Risk Committee, Member of
the Nominations Committee,
Member of the People and
Remuneration Committee,
Member of the Safety,
Health, Environment and
Sustainability Committee.
Peter has over 40 years
of experience in the
construction materials and
building products industries
across Australia, New
Zealand, Asia, Europe and
North America.
From 2003-2015, he served
as managing director and
CEO of GWA Group Limited,
a leading Australian supplier
of building fixtures and
fittings to households and
commercial premises. He
also spent 18 years in the
cement industry, including
various chief executive roles
with The Rugby Group plc.
and a variety of managerial
roles with Queensland
Cement and its parent
company Holcim.
Peter is a director of
Barrambin Trading Company
Pty Limited and The Riverside
Coal Transport Company Pty
Limited.
Cathy Quinn
ONZM, LLB, CMInstD
Independent Non-Executive
Director
Term of office: Appointed
director 1 September 2018,
last elected 2021 annual
meeting.
Board committees:
Chair of the Disclosure
Committee, Chair of the
Safety, Health, Environment
and Sustainability
Committee, Member of the
Audit and Risk Committee,
Member of the Nominations
Committee.
Cathy practised as one of
New Zealand’s foremost
commercial and corporate
lawyers for over 30 years.
In 2016, Cathy was made an
Officer of the New Zealand
Order of Merit for services to
law and women.
Cathy is a director of
Fonterra Co-operative
Group Limited and Rangatira
Limited, chairs Tourism
Holdings Limited and Fertility
Associates Holdings Limited,
and is Pro-Chancellor of
the University of Auckland
Council.
Our Board
Fletcher Building Limited Annual Report 2024
46
Sandra Dodds
BCom, FCA, GAICD
Independent Non-Executive
Director
Term of office: Appointed
director 1 September
2023, elected 2023 annual
meeting.
Board committees:
Chair of the Audit and Risk
Committee, Member of the
Safety, Health, Environment
and Sustainability
Committee, Member of the
Disclosure Committee.
Sandra has a broad
and diverse industrial
background with over 30
years of operational and
financial experience as an
executive leader in complex
infrastructure businesses
across New Zealand,
Australia and Asia. Until
recently Sandra led the
infrastructure sector team at
Broadspectrum.
Sandra is a director of
Contact Energy Limited,
OceanaGold Corporation,
and Snowy Hydro Limited.
Tony Dragicevich
BCom, ACA, GAICD
Independent Non-Executive
Director
Term of office: Appointed
director 1 August 2024
Board committees:
Member of the Safety,
Health, Environment and
Sustainability Committee
Tony is a highly
accomplished CEO
and director with
significant experience in
leading distribution and
manufacturing businesses
across Australia and New
Zealand.
Since 2013, Tony has
held the role of Managing
Director and CEO of Capral,
Australia’s largest aluminium
extrusion manufacturing and
distribution business. Prior
to this, he was Managing
Director and CEO of Wattyl
Group, one of the largest
paint manufacturers in
Australia and New Zealand.
His other leadership
roles have included Chief
Executive of GWA Bathrooms
and Kitchens (Caroma),
Managing Director of Red
Paper Group, and General
Manager of Carter Holt
Harvey Insulation.
Tony is also a director of
the Australian Aluminium
Council.
Bruce Hassall
BCom, CMInstD
Chair and Independent Non-
Executive Director
Term of office: Appointed
director 1 March 2017,
last elected 2020 annual
meeting.
Board committees:
Chair of the Nominations
Committee, Member of the
People and Remuneration
Committee.
Bruce stepped down from
the Board effective 4 March
2024.
Martin Brydon
MBA, FAICD, FAIM, Dip Elect
Eng, Dip Elron Eng
Independent Non-Executive
Director
Term of office: Appointed
director 1 September 2018,
last elected 2023 annual
meeting.
Board committees:
Member of the People and
Remuneration Committee,
Member of the Safety,
Health, Environment and
Sustainability Committee.
Martin stepped down from
the Board effective 30 June
2024.
Doug McKay
ONZM, BA, AMP (Harvard),
CFInstD
Independent Non-Executive
Director
Term of office: Appointed
director 1 September 2018,
last elected 2021 annual
meeting.
Board committees:
Chair of the Safety,
Health, Environment and
Sustainability Committee,
Member of the Audit and
Risk Committee
Doug stepped down from the
Board effective 21 June 2024.
Former Directors
Rob McDonald
BCom, FCA, CMInstD
Independent Non-Executive
Director
Term of office: Appointed
director 1 September 2018,
last elected 2021 annual
meeting.
Board committees:
Chair of the Audit and Risk
Committee, Member of
the Disclosure Committee,
Member of the People and
Remuneration Committee.
Rob stepped down from
the Board effective 30 June
2024.
Fletcher Building Limited Annual Report 2024
47
CONTENTS
Executive Team
Gareth O'Reilly
Chief Executive Australia
Claire Carroll
Chief People Officer
Haydn Wong
Group General Counsel and
Company Secretary
James Peters
Chief Executive NZ Distribution
Hamish McBeath
Chief Executive Building Products
Thornton Williams
Acting Chief Executive Concrete
Steve Evans
Chief Executive Residential
and Development
Wendi Bains
Chief Health and Safety Officer
Phil Boylen
Chief Executive Construction
Joe Locandro
Chief Information Officer
For the full biographies of our Executive Team, please see www.fletcherbuilding.com/about-us/board-and-management.
Bevan McKenzie
Chief Financial Officer
Nick Traber
Acting Chief Executive Officer
Fletcher Building Limited Annual Report 2024
48
Chief Information Officer, Joe Locandro (on right), meets with
members of the Fletcher Tech team. Beyond their leadership of
innovative and practical IT solutions across the business, this year
Fletcher Tech has hosted a number of internal education events for
Fletcher Building people. Topics have ranged from opportunities for
artificial intelligence in manufacturing and construction, through to
demonstrating exoskeletons for safer work on sites.
Chief Information Officer, Joe Locandro (on right), meets with
members of the Fletcher Tech team. Beyond their leadership of
innovative and practical IT solutions across the business, this year
Fletcher Tech has hosted a number of internal education events for
Fletcher Building people. Topics have ranged from opportunities for
artificial intelligence in manufacturing and construction, through to
demonstrating exoskeletons for safer work on sites.
Fletcher Building Limited Annual Report 2024
49
CONTENTS
Corporate Governance
The Board is committed to ensuring that Fletcher Building has appropriate corporate governance
arrangements in place that are consistent with the size and nature of the Group’s operations.
At Fletcher Building, governance is about creating a strong and principled ethics-based culture, where accountability and
transparency improve the quality and clarity of decision-making within the Group. The primary objective is to create and
adhere to a corporate culture that is open and transparent, develops capabilities and identifies opportunities to create value
for our stakeholders.
The Group’s approach to applying the principles and recommendations outlined in the NZX Corporate Governance Code
dated 1 April 2023 (“the Code”) is set out below (including where its practice materially differs from the Code). The Group’s
constitution, the Board and committee charters, Code of Conduct and policies referred to in this statement are available to
view on our website at fletcherbuilding.com/investor-centre/corporate-governance.
This governance statement is current as at 30 June 2024 and was approved by the Board on 20 August 2024.
Principle 1 – Ethical Standards
CODE OF CONDUCT
The Group has a Code of Conduct with which all directors, senior executives and employees are required to comply. The
Code of Conduct documents minimum standards of ethical behaviour including the Group’s values, operating safely and
responsibly, acting with integrity and honesty, protecting our assets, complying with the law, and speaking up. The Group
closely monitors organisational behaviour against the requirements of the Code of Conduct, and training of all employees
occurs at least once every three years.
In addition, the Group’s Anti-bribery and Corruption Policy provides for a zero-tolerance approach to bribery and corruption,
whether in the private or public sector, anywhere in the world. The policy also sets out expectations around giving and
receiving gifts, charitable donations and dealings with business partners. The policy provides that political donations are
not permitted without approval of the Board. Total political donations in FY24 were less than $10,000 across the Group. All
Fletcher Building personnel must adhere strictly to the requirements of this policy. There were no reported breaches of this
policy in FY24.
Fletcher Building has a free phone and online service (“FBuCall”) which can be used by any directors and employees of
Fletcher Building Limited and its subsidiaries (“Fletcher Building personnel”) to report suspected unacceptable, unethical or
illegal behaviour in the workplace. This service is operated by independent external providers so calls are kept anonymous.
Fletcher Building strongly believes in upholding human rights across all its business operations. Human rights are fundamental
civil, political, economic and social rights and freedoms that every human is entitled to without discrimination and include
the right to be treated decently at work, to express opinions and beliefs without fear of recrimination, to have privacy, and to
be free from harassment, abuse or discrimination. Our Human Rights Policy describes how Fletcher Building will uphold and
monitor human rights within its business operations.
The Modern Slavery Act 2018 is Australian legislation which commenced on 1 January 2019. Our Human Rights Policy includes
the statement that Fletcher Building prohibits the use of all forms of forced labour, including indentured labour, bonded
labour, prison labour, modern forms of slavery, and any form of human trafficking within our supply chain. Modern Slavery
Statements are reported to the Australian Border Force and published on our website and in the online modern slavery
register controlled by the Australian Border Force.
SECURITIES TRADING POLICY
The Group has a Securities Trading Policy which applies to all Fletcher Building personnel, and their related persons.
The policy also applies to any Fletcher Building secondee, adviser or contractor who is in possession of material information
that is not available to the market and who intends to trade, advise, or encourage others to trade in listed securities of Fletcher
Building or its subsidiaries.
The policy employs the use of blackout periods to restrict persons covered by the Securities Trading Policy who are more
likely to have knowledge of, or access to, inside information from trading. This group of personnel must notify the Company
Secretary of their intent to trade. In addition, through our share registry, Computershare Investor Services Limited, we actively
monitor trading in Fletcher Building securities by senior personnel.
"Directors should set high standards of ethical behaviour, model this behaviour
and hold management accountable for these standards being followed
throughout the organisation.”
Fletcher Building Limited Annual Report 2024
50
BOARD’S ROLES AND RESPONSIBILITIES
The role of the Board is to provide overall strategic guidance and effective oversight of management for the purposes of
protecting and enhancing the value of Fletcher Building assets in the best interests of the Group. The Board has statutory
responsibility for the affairs and activities of the Group, which in practice is achieved through delegation to the CEO who is
charged with the day-to-day leadership and management of the Group.
The Board’s roles and responsibilities are formalised in a Board Charter, which is available on the Group’s website. The Board
Charter sets out those functions that are delegated to management and those that are reserved to the Board.
NOMINATION AND APPOINTMENT OF DIRECTORS
Procedures for the appointment and removal of directors are governed by the Group’s constitution. The Nominations Committee
makes recommendations to the Board in respect of Board and committee composition and, when required, identifies individuals
it considers to be qualified to become Board members.
Before a person is appointed to the Board, checks as to the person’s character, experience, education, criminal record and
bankruptcy history are conducted. Each director receives a letter formalising his or her appointment. That letter outlines the key
terms and conditions of his or her appointment, including Fletcher Building’s expectations of the role of director, and is required
to be countersigned confirming agreement.
DIRECTOR INDEPENDENCE
The Group acknowledges the importance of having independent directors who have an appropriate balance of skills to optimise
the performance of the Group.
The Board currently comprises five directors, with a wide range of skills and experience. The qualifications and experience of
each of the directors, including length of service, are set out in “Our Board” section.
The factors that the Board will consider in deciding whether a director is ‘independent’ are set out Appendix A to the Nominations
Committee Charter. Any director who has a change in relevant circumstance to any of those factors must immediately notify the
Chair of that change so that his or her independence can be re-assessed. If there is a change in the Board’s determination, it will
be announced to the market. The Board considers all the current directors as at 30 June 2024 to be independent.
The Chair is an independent director and is not the CEO. In addition, the Chair of the Audit and Risk Committee is not the Chair of
the Board and, pursuant to its charter, all members of this committee are non-executive and independent directors.
“To ensure an effective board, there should be a balance of independence, skills,
knowledge, experience and perspectives.”
Principle 2 – Board Composition and Performance
Corporate Governance (continued)
Fletcher Building Limited Annual Report 2024
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CONTENTS
Corporate Governance (continued)
INCLUSION AND DIVERSITY
Fletcher Building’s Inclusion and Diversity Policy was updated in 2024 and is available on the Group’s website. The People and
Remuneration Committee annually reviews progress against inclusion and diversity initiatives developed by the Group to deliver
outcomes against the policy.
The Board is satisfied with the initiatives being implemented by the Group and its performance. Our inclusion and diversity
strategy, set in 2019, concentrates on three dimensions: creating an inclusive culture, greater female representation, and more
diverse ethnicity in leadership.
We are members of the Champions for Change network in New Zealand and continue to provide diversity reporting as input into
the Champions for Change Annual Diversity Report. This report provides a benchmark against appropriate external comparators
as per current policy requirements. Participating in the report holds us accountable year on year to increase our representation
of women across our business at all levels as well as reporting on our ethnicity representation.
Our goal to increase women in operational roles, continues as we progress towards our ambitious but achievable goal of 30%
women in leader and individual contributor roles, including our Board, by the end of FY27.
To achieve our goal, in FY24, each division set Gender Action Plans which focused our efforts on targeted actions to improve
representation. These divisional plans are supported by Group initiatives, including our enhanced parental leave and flexible
working policies. We have also increased our emphasis on development and mentoring programmes to support women at all
levels of the business. Achieving gender targets forms part of the Executive and Senior leaders' STI where appropriate, which
supports alignment between our critical priorities and remuneration.
Our Australian division is in the second year of its Reconciliation Action Plan that represents our commitment to tangible and
impactful actions, both in the present and the future, to actively contribute to the ongoing process of reconciliation in Australia.
Te Kakano, our Māori strategy continues to help our business embrace and adopt the Māori identity and world view in our
business practices which will in turn create stronger relationships with mana whenua in the community.
In FY24 we further developed our Māori Leadership Programme, Whakatupu, to include our Pasifika whanau creating Whakatupu
La Tupu. Whakatupu La Tupu helps amplify the voices and representation of Māori and Pasifika communities in leadership
positions at Fletcher Building and supports the overall goal of creating a more diverse and representative leadership cohort
across our business.
We have strong, people-led employee action groups to support our inclusive culture. FB Pride is instrumental in supporting
our Rainbow Tick re-accreditation year on year. Tatai and the Equality Network lead highly regarded mentoring programmes,
developing confident leaders within their communities.
Comparison of gender composition within Fletcher Building between 30 June 2023 and 30 June 2024 is set out in the
table below.
2024
2023
Female
Male
Gender
Diverse
Female
Male
Gender
Diverse
Board of directors
3 (50%)
3 (50%)
0 (0%)
2 (29%)
5 (71%)
0 (0%)
Executive committee (1)
2 (15%)
11 (85%)
0 (0%)
2 (17%)
10 (83%)
0 (0%)
Senior management (2)
24 (33%)
48 (67%)
0 (0%)
19 (26%)
55 (74%)
0 (0%)
All employees
25%
74%
1%
25%
75%
0%
(1) Executive Committee includes Ross Taylor (outgoing CEO) and Nick Traber (Acting CEO) and Thornton Williams (Acting CE Concrete).
(2) Senior management for these purposes includes any leader who reports to a member of the executive committee.
Fletcher Building Limited Annual Report 2024
52
Corporate Governance (continued)
BOARD SKILLS MATRIX
The Board has adopted a skills matrix which takes account of the breadth of the Group’s business interests and the nature of the
Group’s strategic focus. Skills and diversity that are relatively underweight are considered when making appointments to the
Board. The table below shows the representation of expertise among the current directors for the Board as a whole.
DIRECTOR INDUCTION AND DEVELOPMENT
The Board conducts induction and continuing development for directors, which includes visits to Group operations and briefings
from key executives and industry experts. Directors conducted site visits to observe first-hand the safety and other management
practices and business responses to issues. In addition, all directors carried out an in-depth cyber training workshop which
included simulating a cyber crisis situation.
BOARD PERFORMANCE
Reviews of the performance of the Board and individual directors are carried out regularly to assist the Board as a whole and
individual directors to perform to a high standard.
The Board conducted a comprehensive performance review in 2024 with the assistance of independent consultant Morrow Sodali.
The next review is scheduled for early 2026.
Capabilities
Director expertise
Industry: manufacturing and distribution, land and property development, construction
and infrastructure
Industry: New Zealand / Australia building products sector and construction materials
Financial expertise
Commercial depth
Technology and digital innovation
Sales and go-to-market
M&A, divestments, corporate restructuring
Environmental, social and governance
Government, legal, regulatory
Health and safety
People, culture transformation
Key:
Primary
Secondary
Fletcher Building Limited Annual Report 2024
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CONTENTS
Committee
Roles and Responsibilities
Members as at
1 July 2024
Audit and Risk
Committee
The role of the ARC is to advise and assist the Board in discharging the responsibilities
with respect to external financial reporting, internal control environment, internal audit
and external audit functions, and risk management practices.
Sandra Dodds (Chair)
Peter Crowley
Cathy Quinn
Nominations
Committee
The committee oversees all matters relevant to the composition of the Board and
its committees (including renewal, succession, independence, and diversity), Board
performance, and professional development for directors.
Barbara Chapman
(Chair)
Peter Crowley
Cathy Quinn
People and
Remuneration
Committee
The principal role of the committee is to oversee and regulate compensation and
organisational matters affecting the Group, including remuneration and benefits,
people-related policies (including diversity), performance and remuneration of the
Group’s senior executives and management development, and succession planning of
the CEO and his direct reports.
Barbara Chapman
(Chair)
Peter Crowley
Safety, Health,
Environment
and
Sustainability
Committee
The role of the committee is to support and advise the Board on strategies related
to safety, health, environment, and sustainability; monitor emerging trends; oversee
management of risks, opportunities and impacts; review SHES governance framework
and management systems; monitor performance of related targets and commitments;
incorporate appropriate metrics into operating frameworks and reporting; and approve
public disclosures related to its roles and responsibilities.
Cathy Quinn (Chair)
Barbara Chapman
Peter Crowley
Sandra Dodds
*
* Tony Dragicevich joined the Safety, Health, Environment and Sustainability Committee effective 1 August 2024.
Principle 3 – Board Committees
“The board should use committees where this will enhance its effectiveness in key areas,
while still retaining board responsibility.”
In accordance with the Board Charter, committees have been set up to enhance the Board’s effectiveness in key areas, while still
retaining overall responsibility. As at 30 June 2024, the Board committees were:
– Audit and Risk Committee (ARC)
– Nominations Committee
– People and Remuneration Committee
– Safety, Health, Environment and Sustainability Committee (SHES)
Each committee is governed by a charter setting out its roles and responsibilities (which are available on the Group’s website).
Committees do not take action or make decisions on behalf of the Board unless specifically mandated by prior Board authority to
do so. Employees only attend committee meetings at the invitation of the particular committee. From time to time, the Board may
create ad-hoc committees to examine specific issues on its behalf.
Corporate Governance (continued)
Fletcher Building Limited Annual Report 2024
54
Board
Audit and Risk
Committee
Nominations
Committee
People and
Remuneration
Committee
Safety, Health,
Environment and
Sustainability
Committee
Number of meetings held
26
5
3
5
5
Bruce Hassall (Chair) (1)
10
3
2
3
Barbara Chapman (Acting Chair) (2)
26
3
5
Martin Brydon (3)
22
5
5
Peter Crowley
24
5
3
5
Sandra Dodds (4)
25
4
4
Rob McDonald (5)
26
5
5
Doug McKay (6)
24
5
5
Cathy Quinn
26
5
5
Corporate Governance (continued)
ATTENDANCE AT BOARD AND COMMITTEE MEETINGS
The table below shows directors’ attendance at the Board and committee meetings during the year ended 30 June 2024.
The directors' meetings referred to in the table above do not include additional ad hoc or transactional committee meetings held
through the year.
In addition to these standing Board Committees, the Board established the Disclosure Committee as a board committee in
December 2023. Western Australia Plumbing Issues Committee was set up in October 2023. There are no committee fees
payable, and they meet as required.
TAKEOVER PROTOCOLS
The Board has established detailed protocols that set out the procedure to be followed if there were a takeover offer for the
Group, including any communication between Group insiders and the bidder.
(1) Bruce Hassall attended Committee meetings in an ex officio capacity and stepped down from the Board effective 4 March 2024.
(2) Barbara Chapman, director, was appointed Acting Chair of the Board effective 4 March 2024.
(3) Martin Brydon stepped down from the Board effective 30 June 2024.
(4) Sandra Dodds was appointed director on 1 September 2023.
(5) Rob McDonald stepped down from the Board effective 30 June 2024.
(6) Doug McKay stepped down from the Board effective 21 June 2024.
Fletcher Building Limited Annual Report 2024
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CONTENTS
Corporate Governance (continued)
CONTINUOUS DISCLOSURE
Fletcher Building is committed to providing all of our investors with timely access to full and accurate material information about the
Group. Our Disclosure Policy sets out the internal processes designed to enable the Group to comply with the disclosure obligations
of the NZX and ASX. The Board has adopted this policy, which applies to all members of the Board and executive, all employees of
Fletcher Building and its affiliated entities, as well as consultants, contractors and other service providers where they have a relevant
contractual obligation to Fletcher Building or one of our businesses. The Disclosure Policy is available on the Group’s website.
Directors formally consider at each Board meeting whether there is relevant material information which should be disclosed to
the market.
DISCLOSURE OF CODES AND CHARTERS
All of our key governance documents (including the Code of Conduct, key corporate policies and Board and committee
charters) are available on our website at fletcherbuilding.com/investor-centre/corporate-governance.
INTEGRITY IN NON-FINANCIAL REPORTING
The Board has approved an overarching Sustainability Policy and a sustainability strategy for the business.
That strategy was developed by evaluating non-financial environmental, social and governance issues that are material to the
business. It includes non-financial goals and measures for the business. The strategy and progress measures are published on
our website.
Progress against the strategy is reported to the Board committee responsible for the strategy area, as determined in each board
charter.
Annual progress against the non-financial measures in the sustainability strategy goals and measures is reviewed by
management and by the relevant Board committee. This internal review covers matters including the methodology applied
to calculate the measure (with reference to external benchmarks, frameworks, and global standards if relevant); the coverage
of the measure; the completeness of the measure; any key assumptions in relation to the measure; the comparability of the
measure to historic reporting; the materiality of the measure; and management’s confidence that the measure and supporting
information is materially correct.
Climate-related reporting
The Group also periodically assesses climate-related risks to the business. The approach taken to assess these risks is outlined
in Principle 6. Significant transitional risks resulting from climate change are reported to the Safety, Health, Environment and
Sustainability Committee and significant physical risks are included in the risk management process for the business and
reported to the Audit and Risk Committee. The Group will issue a separate Climate Statement for FY24, as required by the
climate-related disclosure (CRD) framework for New Zealand.
“The board should demand integrity in financial and non-financial reporting, and in the
timeliness and balance of corporate disclosures.”
Principle 4 – Reporting and Disclosure
Fletcher Building Limited Annual Report 2024
56
Corporate Governance (continued)
FBU Board
ARC Committee
SHES Committee
Internal Audit
Executive Committee
Finance
Legal
People
Division
BU
BU
BU
BU
Division
EHS
Group
Risk
IT
Property
3rd Line of Defence:
Board, Executive and
Internal Assurance
2nd Line of Defence:
Group Functions
1st Line of Defence:
Business Units
Figure 1
“Directors should have a sound understanding of the material risks faced by the
issuer and how to manage them. The board should regularly verify that the issuer
has appropriate processes that identify and manage potential and material risks.”
“The remuneration of directors and executives should be transparent, fair and reasonable.”
Principle 5 – Remuneration
Principle 6 – Risk Management
Fletcher Building’s remuneration strategy is designed to attract, retain and motivate high calibre people at all levels of the
organisation with remuneration programmes that are market-competitive, flexible and affordable. Our frameworks provide
incentive to drive for both annual and long-term results, and to maximise shareholder value.
Our practices for setting remuneration are detailed in our Remuneration Policy. The policy is governed by the People and
Remuneration Committee in line with its charter, which is available on our website.
The ‘Remuneration Report’ section details the remuneration framework of Fletcher Building, as well as the remuneration of the
directors, the CEO and other executives, and senior management. This includes a discussion on share-based remuneration.
Fletcher Building's Risk Management Framework is aligned with ISO31000: 2018 Risk Management – Principles and Guidelines
standard. The purpose of the risk management framework is to identify, assess, control, monitor and report the key risks we face
so that the Group can achieve its objectives and protect its staff, customers and reputation. The framework provides a consistent
structure for risk management and is aligned with Group strategy.
The Group’s risk management framework is based on the three lines of defence model, as shown in Figure 1 below. Responsibility
for operational risk management sits with the managers in the individual business units and the divisional chief executives.
Our risk management and assurance processes support this through our Group functions and are ultimately overseen by the
Board and the Executive Leadership Team. A dedicated internal audit team takes a risk-based approach to auditing key business
activities and reports directly to the Audit and Risk Committee (ARC).
As part of its risk management responsibility, the Audit and Risk Committee receives regular reports of the existing and
emerging key risks, progress on the closure of recommendations that are generated through the risk engineering programme,
current and target risk ratings as well as controls to mitigate or manage risks. This includes key risks, uncertainties and
judgments on key construction projects as disclosed in note 3 of the consolidated financial statements. The Safety, Health,
Environment and Sustainability Committee (SHES) and the People and Remuneration Committee also periodically receive risk
updates related to matters specifically covered by the relevant board charters.
Fletcher Building Limited Annual Report 2024
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CONTENTS
Corporate Governance (continued)
ACTIVITIES IN FY24
In FY24, the Group continued its focus on risk management in four key areas: governance and reporting, response and recovery
advice, risk management expertise and guidance, and business resilience.
A total of 27 risk workshops were held with the individual business unit leadership teams in FY24. These workshops are a key
component of the Group’s risk management approach and assist in developing a bottom-up reporting process. Additionally,
the risk workshops process supports the individual business units’ leadership teams to consider that the appropriate risk
management strategies are being pursued.
During FY24, regular assessment of the Group’s supply chain exposures remained a focus as climate change, cyber and
geopolitical events impacted global supply chains. Given the level of disruption observed over the last few years risk
management strategies are now embedded at business unit level to manage potential disruptions.
Fletcher Building utilises a number of external experts to enhance risk management and help manage some of its key risks, such
as business resilience, product quality and information security. As part of our risk engineering programme, external engineers
conducted 33 site surveys in FY24. The reports and recommendations produced from these site surveys provide valuable risk and
resilience insights to Group management and the Board, as well as our insurers. In relation to information security, we use the
international NIST Cybersecurity Framework to help reduce our risk and protect our network data.
We have continued our product quality assurance programme with the assistance of external product quality auditors surveying
selected manufacturing facilities in the year. These audits assess the effectiveness of existing controls and processes to assist the
continued evolution of the Group’s product quality systems.
An external review of the Fletcher Building Risk Management Framework was finalized in FY24. The review assessed the Risk
Management Framework as fundamentally sound and a number of enhancements to governance, training and systems were
recommended and will be adopted in due course.
In FY24, the Group appointed Aon New Zealand to assess climate related physical risks. The assessment focused on three
scenarios over three time horizons being 2030, 2050 and 2070. The scenarios used map to RCP2.5/SSP1, RCP2.6/SSP2 and RCP
8.5/SSP3 in the fifth and sixth IPCC assessment reports. Of the three scenarios assessed, the RCP 8.5/SSP3 scenario, also known
as the ‘reasonable worst case’ or ‘Hot House’ scenario, is the scenario with the highest potential climate impacts.
The assessment focused on a number of climate-related hazards, including rainfall, temperature rise, sea level rise, extreme
storm events and bush fire.
The FY24 review confirmed that the Group’s overall exposure to climate related hazards is moderate with flooding being the key
exposure.
The FY24 assessment also confirmed that the proportion of assets exposed to flooding risk has not materially changed compared
to the previous analysis completed in 2022.
The level of exposure to flood risk does not materially change over the three time horizons under any of the climate scenarios.
Due to more granular flood data becoming available in FY24, we were able to quantify not only the exposure of our New Zealand
assets to flood risk but also the potential impact on our New Zealand assets of physical damage due to flooding.
For New Zealand, this is relatively moderate. As an example, the material damage cost of a 1 in 100-year pluvial flood event if
experienced simultaneously at all New Zealand sites is calculated to be c. $90 million. We will undertake the same detailed
impact analysis for our assets in Australia when the methodology and granular data become available.
Fletcher Building Limited Annual Report 2024
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Corporate Governance (continued)
Description
How this risk may impact
Fletcher Building
How we manage this risk at Fletcher Building
Business resilience
A disruption to business processes,
particularly the loss of key assets, may
lead to an inability to undertake the
activities of a business unit or the Group.
A disruption event at a key
site could lead to an extended
operational interruption, which
may negatively impact the
financial performance of a
business unit and, ultimately,
the Group.
– Business units have business continuity plans in place that
address the identified operational continuity risks. Focus
remains on continuous improvement to strengthen these plans
in respect of various risks including natural events.
– Regular monitoring of the risk environment occurs to consider
whether key risks are appropriately covered by insurance,
where practical and cost-effective.
– An established independent risk engineering review
programme is in place for our key sites.
– The business has carried out scenario analysis for physical
climate change risk in FY20, FY22 and FY24. We review short,
medium, and long-term risks associated with climate change
and resource availability at divisional and Group level to assess
our resilience and the risk horizon.
Economic and construction downturn
The building and construction industry
in which the Group operates is
fundamentally cyclical and is impacted
by the macroeconomic conditions within
both the New Zealand and Australian
economies.
The failure by the Group to
identify early and respond to
cyclical downturns may impact
financial results and cause sub-
optimal business performance
by business units and the
Group.
– Senior leadership teams of business units and divisions
monitor their key markets and are supported by the Corporate
centre with in-depth market analysis.
– Regular operational reviews are undertaken with business
units and divisions as well as the Board undertaking divisional
deep dives.
– There is a strong focus on working capital, capital expenditure
and balance sheet management.
Regulatory and legal
With the Group operating in a number
of different business sectors as well as
countries, it is subject to a wide range of
regulatory requirements and jurisdictions.
These regulations and jurisdictions can
be complex, subject to change and may
affect the Group’s operations.
Failure to adhere to, or adapt
to changes in, the various
regulatory requirements may
lead to the imposition of
penalties, operational disruption
and/or reputational damage.
– The Group has developed a broad range of policies that
address the regulatory and legal risks that are faced by
its businesses. A number of these policies are located at:
https://fletcherbuilding.com/investor-centre/corporate-
governance/
– The Group periodically reviews emerging regulation and
emerging international standards and frameworks to identify
potential future regulatory changes.
– The Group’s Golden Rules provide a framework for all staff
on the type of contractual risks that the Group is prepared to
accept.
Product quality
The Group constructs, manufactures
as well as sources from third parties a
range of structures and building products
that are required to meet local and
international standards and regulations.
Products and structures
manufactured, supplied and/
or purchased that may not
meet relevant international or
local standards and regulations
may lead to product recalls,
remediation costs and/or
financial penalties.
– Product quality control systems and processes exist within our
businesses to manage this risk.
– Supplier vetting and reviews are undertaken by both our
businesses, and where appropriate, by third parties.
– External experts provide independent Product Quality Review
(PQR) audits on business units’ manufacturing and product
quality control processes.
– For more information on material product quality claims
currently being managed, please refer to notes 12 and 26 of
the consolidated financial statements.
Supply chain
Disruption to business unit operations
through the ineffective coordination
and control of the organisational
supply chain. The Group’s supply chain
may face a variety of challenges such
as pandemics, logistical and public
infrastructure constraints or disruption
to key suppliers.
Disruption to business unit
or Group operations through
ineffective coordination and
control of the organisational
supply chain may result in
operational disruption, penalties
and reputational damage.
– Business units have business continuity plans in place that
look to address the identified supply chain issues.
– Where possible, business units look to establish contingent
supply agreements across material/product suppliers and
logistical providers.
KEY RISKS
The Fletcher Building Risk Management Framework is focused on ten key commercial (non-health and safety) risks that the Group
faces across its business. However, these risks are dynamic and new risks and uncertainties may materialise in the future due to
changes in economic conditions, regulatory environment, and other factors. The current ten key risks are:
Fletcher Building Limited Annual Report 2024
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CONTENTS
Corporate Governance (continued)
Description
How this risk may impact
Fletcher Building
How we manage this risk at Fletcher Building
People
The failure by the Group to attract,
retain and engage our people
(including engagement with collective
representation groups) negatively
impacting business units or the Group.
The failure of the current
processes to attract and retain
talented staff can have a negative
impact on the functioning of a
business unit and the Group.
Additionally, industrial action by
collective representation groups
can cause operational disruption.
– The People and Performance function within the Group
supports the business by providing advice, tools, processes
and policies to drive employee, team and business
performance.
– Business units and the Group benefit from the development
and learning activities provided by the central Organisational
Development team.
– FBuSay, the Group-wide employee engagement survey,
provides valuable insights about staff engagement.
Environment
Business unit operations may cause
environmental damage through the failure
to comply with the required environmental
laws, resource consents and regulations.
Additionally, execution of strategic
sustainability initiatives is required for the
Group to achieve its purpose of ‘improving
the world around us’ in relation to
sustainability goals, in particular achieving
a 30% reduction of carbon emissions by
2030.
Failure to comply with the
environmental laws, resource
consents and regulations may
result in imposition of penalties
and reputational damage.
Additionally, a failure to meet the
Group’s sustainability objectives
may result in decreased demand
from customers for the Group’s
building materials.
– Business units that have potential significant environmental
impacts have Environmental Management Plans in place and
have monitoring processes in place for resource consents.
– At both the Group and business unit levels, we engage with
regulators on proposed changes to standards and regulations.
– The Group has a stated sustainability strategy with short- and
medium-term goals and accompanying Group progress
measures.
Technology resilience
Like many businesses, Fletcher Building
is dependent on information technology
systems to maintain its operations.
Failure to provide reliable, resilient,
adaptable and efficient technology
infrastructure may impact the operations
of the business units or the Group.
Additionally, the Group is also exposed
to threats by third parties that can create
operational disruption or result in the loss
of personal information or confidential
data.
Failure to provide reliable,
resilient, adaptable, and efficient
technology infrastructure may
cause operational disruption
and/ or reputational damage to
business units or the Group.
Failure to safeguard personal
information or confidential
information may also result in
the imposition of penalties and
reputational damage.
– Continued capital expenditure investment in technology
systems across the Group to support our operations.
– A dedicated team within FletcherTech to address the constantly
evolving cybersecurity threats that the Group faces.
– Group-wide education and awareness training, including the
Board of Directors, in relation to cyber-threats and cyber breach
preparedness.
– We use international experts and partners to enhance our
cyber resiliency.
– We proactively undertake disaster recovery planning for our
systems and infrastructure.
Contractual
The Group has a diverse portfolio of
business units and the execution of
onerous contract(s) by any one of the
business units may result in the Group
being liable for liabilities or performance
under contracts that are commercially
adverse.
The execution of onerous
contracts may have the potential
to negatively impact financial
performance or the reputation of
a business unit or the Group.
– The Group has established delegated financial authorities
(‘DFA’) that business units and the Group must adhere to.
– The Group has developed Golden Rules which govern the way
we contract with external parties.
– For more information about risks and claims relating to our
construction contracts, please see note 3 of the consolidated
financial statements, "Construction Accounting".
Corporate reputation and social licence to operate
The Group appreciates the privileged
position it has in the communities in which
it operates and the social responsibility
that it has to a wide range of stakeholders.
In a diverse and ever-changing economic
and social environment, the Group
needs to consider whether its operations
continue to address the interests of all its
key stakeholders.
The failure to act in a way that
supports a strong corporate
and social reputation for the
Group with its key stakeholders
(Government, investors, customers
and communities) may result in
adverse commercial, reputational
or regulatory outcomes leading to
negatively impacting the financial
performance of a business unit or
the Group.
– Engagement with the communities and how we work with
stakeholders takes different forms for each business unit and
project.
RISK CAPTURE AND REPORTING
The risk and uncertainties that are faced by the individual business units are captured in the Group-wide risk management tool,
RADAR. The information captured in RADAR enables risk management information captured at the business unit level to be
disseminated at higher levels of the organisation.
The Group undertakes operational risk reporting through business unit operational reviews. This allows the Group to see how
business units are making decisions in assessing risks and implementing their business strategies. It also assists the Group in
understanding how different risks affect different parts of the business.
In addition to the risks captured in RADAR, specific updates on Group level impacts, such as risks associated with regulatory change,
climate change and modern slavery, are reviewed annually and reported to the Board or to the relevant Board committee.
Fletcher Building Limited Annual Report 2024
60
Corporate Governance (continued)
The Audit and Risk Committee conducts an annual performance assessment of the external auditor, EY, to ensure their ongoing
quality and effectiveness. The Auditor Independence Policy, available on our website, includes requirements for the rotation of
external audit engagement partners and guidelines for the provision of non-audit services by the Group’s auditor.
Details of the fees and expenses paid to EY are provided in note 7 of the consolidated financial statements within this Annual
Report. Any additional work performed by EY beyond the statutory audit was pre-approved in accordance with the policy.
These services did not constitute prohibited non-audit services, such as bookkeeping, payroll services, or legal advocacy, and
adequate safeguards were applied to ensure they did not compromise independence. Furthermore, the services were considered
insignificant relative to the audit fees.
EY representatives attend our Annual Shareholders’ Meeting each year to answer questions from shareholders relevant to the
audit.
INTERNAL AUDIT
Fletcher Building has an internal audit function, which evaluates and improves the effectiveness of key risk management, control
and governance processes. Internal audit develops an annual internal audit plan for approval by the Audit and Risk Committee
and is accountable for its implementation. To provide for the independence of the internal audit function, internal audit reports
functionally to the Audit and Risk Committee and administratively to the Chief Financial Officer.
COMMUNICATING WITH SHAREHOLDERS
Fletcher Building maintains a website, which contains information about Fletcher Building’s financial performance, operational
activities, corporate governance and other information of specific relevance to investors and stakeholders. The website includes
detailed information on Fletcher Building’s ESG (environmental, social and governance) measures which allows our stakeholder
community to monitor our performance and easily identify and access the processes, measures, initiatives and certifications
that underpin our commitment in these areas. The core requirements on communicating with shareholders are formalised in a
Shareholder Communications Policy, most recently approved in May 2024, and available on our website.
The Group operates an investor relations programme, which includes scheduled interactions with investors, analysts and other
market commentators. Presentations are disclosed on the Group’s website and the NZX and ASX announcement platforms.
Shareholder meetings with the Chair and Chair of People and Remuneration Committee and other directors are facilitated throughout
the year. During FY24 the Board has placed particular emphasis on regularly engaging with a broad range of shareholders to receive
and discuss their feedback. The Chief Executive Officer, Chief Financial Officer, and at times, operational executives, present via an
analysts’ and investors’ conference call after the release of the interim and full year results (and at other times where warranted) and
answer questions raised by analysts and investors. Site visits also form part of the investor relations programme throughout the year.
The Board bi-annually obtains research on the perceptions that the New Zealand and Australian investment community has of the
Group, management and performance. In FY24, the Board increased female representation to the Board adding skills and expertise
while also helping meet the group’s 30% women in leadership target.
ELECTRONIC COMMUNICATIONS
Shareholders have the option to receive communications from, and send communications to, Fletcher Building in electronic form.
Shareholders are actively encouraged to take up this option.
SHAREHOLDER VOTING
Major decisions that may change the nature of Fletcher Building are presented as resolutions at the Annual Shareholders’ Meeting
and voted on by shareholders. We offer an electronic voting facility to allow shareholders to vote ahead of the meeting without
having to attend or appoint a proxy. There have been no major decisions made during the year that would change the nature of
Fletcher Building and that would require shareholder approval.
ANNUAL SHAREHOLDERS’ MEETING
All shareholders are entitled to attend the Group’s Annual Shareholders’ Meeting, either in person or by a representative. Resolutions
at shareholder meetings are by way of a poll, where each shareholder has one vote per share. Fletcher Building encourages
shareholders to ask questions in advance of the meeting, to encourage further engagement with the Group and provide management
with a view of the concerns of the Group’s shareholders. Our notice of meeting is sent to all our shareholders and is posted on our
website at least 20 working days prior to the meeting.
“The board should ensure the quality and independence of the external audit process.”
“The board should respect the rights of shareholders and foster constructive relationships
with shareholders that encourage them to engage with the issuer.”
Principle 7 – Auditors
Principle 8 – Shareholder Rights and Relations
Fletcher Building Limited Annual Report 2024
61
CONTENTS
Sustainability Materiality
and Methodology
MATERIALITY ANALYSIS
As a large business, we recognise our operations have an impact on many people. Our sustainability strategy is based on what
is most important to our business, people, communities, customers, key stakeholders and investors; where we have the most
impact; and where our actions can lead to meaningful change. These are our material sustainability impacts, and they form the
basis of the goals within our sustainability strategy.
Material impacts assessment
In FY22 we engaged an independent specialist consultancy to conduct a materiality assessment. The assessment followed 2021
Global Reporting Initiative (GRI) Standards, in particular GRI 3: Material Topics, to identify and assess our impacts. Our FY18
materiality assessment served as a starting point, complemented by analysis of external benchmarks including those from, at
that time, the Sustainability Accounting Standards Board (SASB), the Living Standards Framework, leading industry peers, and
sustainability investor indices including the Dow Jones Sustainability Index (DJSI) and MSCI together with internal workshops with
subject matter experts from several of our divisions.
Following the principle of double materiality, the analysis was designed to look at external environmental, social and governance
impacts on our organisation and also to identify our impacts on the economy, environment, and people across Fletcher Building’s
activities and business relationships. The impacts identified included those caused by our activities, impacts where our activities
contribute to an impact, and impacts that are neither caused nor contributed to by our activities but where our operations are
associated with the impact. The severity of the impacts was assessed based on the scale of the impact, scope of the impact, and
the degree to which remediation of the impact is possible.
Stakeholder insights
As part of the assessment, our consultant conducted confidential interviews with selected subject matter experts, following
the AA1000 Stakeholder Engagement Standard (SES). Representatives from the public sector, infrastructure providers, industry
peers and experts, industry associations, sustainability consultancy, investor experts, academia and a cohort of early career
employees from within our business were interviewed. The interviews provided specific insights on the significance of different
impacts; expectations and requirements about performance; and how Fletcher Building could further accelerate and refine its
approach to sustainability.
The key insights from the interviews were that stakeholders want to see sustainability embedded within the business strategy for
Fletcher Building, and for the business to look at impacts and opportunities to improve sustainability not just within the business
but across the value chain through partnering and providing thought leadership within our sectors of operation. Internal and
external stakeholders saw great potential for Fletcher Building to contribute to society, largely in areas we already focus on,
including greenhouse gas emissions, material usage and waste, and health safety and wellbeing.
Material impacts and integration with our strategy
The assessment identified 26 sustainability impacts that are material for Fletcher Building, which we prioritised to 12 impacts with
highest severity. These fall into the three broad categories summarised below:
• Climate change impacts: Scope 1 and Scope 2 emissions and climate mitigation; Scope 3 supply chain emissions and
embodied carbon, and Scope 3 emissions from use of our products
• Resources, emissions and the circular economy: Use of raw materials; operational waste and resources efficiency; modern
methods of construction and innovation; circularity in construction; ecosystem impacts; and healthy products
• Health, safety and wellbeing: Health, safety and wellbeing of our workforce; employment practices; and employee, community
and civic engagement
Both the material impacts and the stakeholder insights from our FY22 materiality analysis are integrated into sustainability
strategy.
Climate change impacts are addressed in the net positive environmental impact strategic goal, as well as in the net zero carbon
group measure. Resources, emissions and the circular economy impacts are addressed in the Leading the Way in Sustainable
Building Products and Solutions and Circular Economy Commitment across our business goals, as well as the revenue from
sustainably certified products and waste measures. These goals also reflect stakeholders' desire to see sustainability embedded
within our business strategy and value chain. Health, safety and wellbeing impacts are addressed in the Safe, diverse and
inclusive workspace and in the Our community at the heart of what we do goals, as well as the rest of the Group measures.
As part of partnering and providing thought leadership within our sectors of operation, we are an active member of the following
sustainability organisations:
Progress against the goals in our sustainability strategy is reported in the front sections of this Annual Report. We note the recent
issue of ISSB standards, and will refer to these in our next assessment of material impacts.
– Sustainable Business Council
– Sustainable Business Network
– New Zealand Green Building Council
– Green Building Council Australia
– Climate Leaders Coalition
Fletcher Building Limited Annual Report 2024
62
Sustainability Materiality and Methodology (continued)
METHODOLOGY USED FOR NON-FINANCIAL MEASURES
Greenhouse Gas (GHG) emissions
The Greenhouse Gas (GHG) emissions included in this report were calculated for the period from 1 July 2023 to 30 June 2024 in
accordance with the GHG Protocol and ISO 14064-1:2018 International Standard for GHG Emissions Inventories and Verification.
Our Scope 1 (ISO 14064 category 1, direct emissions), Scope 2 (ISO 14064 category 2, indirect emissions from imported energy)
and Scope 3 emissions (ISO 14064 categories 3-6, indirect emissions from the supply chain) have been externally assured by
Toitū Envirocare in accordance with ISO 14064-1:2018. Assurance statements for FY18 to FY24 are available in the ‘Sustainability
Reports’ section of our website.
GHG emissions in this report were calculated in accordance with the GHG Protocol location-based methodology, as were
emissions for years prior to FY24. Market-based emissions, which account for the renewable content of electricity generated on
site or purchased by the business, are provided in the FY24 assurance statement on our website.
Scope 1 and Scope 2 emissions from our businesses were calculated on the equity share basis. This means that emissions from
our businesses and from joint ventures we are part of have been included. For joint ventures, the percentage of emissions
included is based on our percentage ownership of the joint venture.
The divisional GHG emissions included in this report represent the share of our Group GHG emissions resulting from operations
within those divisions. As with Group emissions, these were calculated on the equity share basis. Divisional emissions in this
report also include an allocation of corporate GHG emissions from our head office operations in New Zealand. These corporate
GHG emissions have been allocated to the New Zealand divisions in proportion to the divisional contribution to overall GHG
emissions for Fletcher Building.
Scope 3 emissions, those from our supply chain, were calculated in accordance with the GHG Protocol. Scope 3 emissions
were assessed for all upstream value chain categories and all downstream categories other than processing, use and end-of-life
treatment of sold products, and downstream leased assets.
Our reported Scope 3 emissions for FY24 include data sourced directly from our largest steel and cement suppliers. Supplier-
specific data was used for c. 54% of reported Scope 3 emissions. For the balance of emissions, we have used emission factors
from goods and services published by the New Zealand or Australian governments to convert the mass, volume or other units
for goods and services into tonnes of CO2 equivalent (t CO2e). Where data on quantities of supply chain goods and services was
not available, we have estimated emissions using spend based factors, using the internationally recognised DEFRA factor set,
corrected for exchange rates and inflation.
Figures in the sustainability report exclude emissions from our Tradelink® business for FY24 and for all comparative years,
including the FY18 baseline year. Tradelink® contributed c. 2% of total Group emissions in FY24.
Waste diverted from landfill
The waste diverted from landfill figures included in this report are the tonnage of waste diverted from landfill. These figures
include waste managed as part of our principal waste contracts, which represents most of the waste generated from our
operations, together with waste reported by individual operational sites. Figures in this report exclude Tradelink®, which in FY24
contributed c. 1% of total waste volumes.
The figures for waste diverted from landfill do not include waste material resulting from our operations that was reused as
cleanfill or hardfill, or waste used for energy recovery. The waste figures in this report do not include waste that is not managed
under our principal waste contracts, and where specific waste measurements for our operations are not provided to us.
Revenue from sustainably certified products
The revenue from sustainably certified products included in this report is revenue from products that hold a credible, third party
verified, sustainability certification.
The sustainability certifications that we include are Type I environmental labelling requirements under the ISO 14024 Standard
(Eco Choice Aotearoa, Good Environmental Choice Australia, Global GreenTag GreenRate™) and Type III environmental
declaration requirements under the ISO 14025 Standard.
These certifications qualify for the sustainable products credits in either the Green Star or IS Rating construction sustainability
ratings within New Zealand and Australia.
We calculate the revenue for sustainably certified products as a percentage of the total revenue from products made or sold
by our manufacturing businesses. We exclude revenue from non-manufacturing businesses (our distribution and construction
businesses) from the total revenue used for this calculation.
Where revenue is noted as being for products that hold Type I certification, these products may also hold Type III certification.
Where revenue is noted as being for products that hold Type III certification, these products do not also hold Type I certification.
Fletcher Building Limited Annual Report 2024
63
CONTENTS
Sustainability Materiality and Methodology (continued)
Total Recordable Incident Frequency Rate (TRIFR)
Total Recordable Incident Frequency Rate (TRIFR) included in this report is the total number of recordable injuries and illnesses
per million hours worked in a year by Fletcher Building.
TRIFR calculation is on a 12-month rolling period and is the total number of recordable injuries multiplied by a million and
divided by total number of hours worked. Recordable injury definitions are derived from the Occupational Safety and Health
Administration standards, and include Medical Treatment Injuries, Lost Time Injuries, Serious injuries and Fatal Injuries, and
exclude Restricted Work Injuries. Total number of hours worked excludes holiday time and includes contractors, it is estimated
where required based on work activities.
TRIFR in this report includes all employees and contractors working under Fletcher Building control or on Fletcher Building
controlled sites.
Net Promoter Score (NPS) and Employee Net Promoter Score (eNPS)
Net Promoter Score is a widely used metric to measure satisfaction of respondents. It asks a simple question centred around the
likelihood of recommendation for a specific area. NPS ranges from -100 to 100 and is calculated by subtracting the percentage
of detractors (i.e. those who gave survey scores of 0-6 out of 10) from the percentage of promoters (i.e. those who gave survey
score 9-10 out of 10). NPS and eNPS are measured at regular intervals via surveys at a cadence appropriate for each business.
External third-party platforms are used to conduct surveys, receive and follow up on feedback, and generate insights. Businesses
refresh customer and employee lists regularly to make sure a representative sample is surveyed.
Customer NPS in this report includes all business units other than the Group's joint venture and associates, newly acquired
business units and the Construction division.
Employee Net Promoter Score (eNPS) included in this report is the result of a Groupwide employee engagement survey, which
provides insights on permanent employees’ sentiment, giving our people the opportunity to share what it is like to work for
Fletcher Building.
Fletcher Building changed to using eNPS in FY23. In light of this, FY22 comparative (reported as engagement percentile using the
previous methodology) has been recalculated in line with the presentation for FY24.
LowCO™ design and performance information
Energy, electricity and water savings for LowCO referenced in this report are based on calculated projections for pilot LowCO
homes. Embodied and operational carbon over LowCO’s expected 90-year service life is calculated using a Passive House
Planning Package energy model and BRANZ LCAQuick v3.5 integration.
The 90-year service life for a New Zealand home is referenced in the study by C. Chandrakumar, S. McLaren, D. Dowdell, R.
Jaques, A science-based approach to setting climate targets for buildings: The case of a New Zealand detached house, Build.
Environ. 169 (2020) 106560.
The climate impact of a New Zealand new-built detached house which informed the target for the LowCO project is referenced
in: D. Dowdell, Design to cut carbon - the time is now, Build 177 (2020) 35-36.
Further information on the reference information, design, modelling and expected performance of LowCO is available in the
‘Sustainable Engineering’ case study, which is available in the ‘Useful Resources’ section of the LowCO website.
Fletcher Building Limited Annual Report 2024
64
Remuneration Report
In a year since opening its doors, Residential and
Development's retirement option Vivid Living® has welcomed
29 residents to the first village at Red Beach north of Auckland.
Nestled within existing Fletcher Living® communities, Vivid
Living® is proving popular with people looking to enjoy the
benefits of retirement community living, while retaining a
50% share of any capital gains on the property longer-term.
In a year since opening its doors, Residential and
Development's retirement option Vivid Living® has welcomed
29 residents to the first village at Red Beach north of Auckland.
Nestled within existing Fletcher Living® communities, Vivid
Living® is proving popular with people looking to enjoy the
benefits of retirement community living, while retaining a
50% share of any capital gains on the property longer-term.
Fletcher Building Limited Annual Report 2024
65
CONTENTS
Remuneration Report
Message from the People and Remuneration
Committee Chair
Dear Shareholders
On behalf of the Board, I am pleased to present Fletcher
Building’s remuneration report for the financial year ended 30
June 2024.
The year in review
The Group’s financial performance in FY24 was impacted by a
sharp fall in activity across our key markets. While many of our
businesses responded well in this environment, the Group’s
overall results were below targeted levels. In addition, and
disappointingly, further provisioning was required on the legacy
construction projects in FY24, especially on the New Zealand
International Convention Centre. In light of this performance,
the Board applied discretion for no FY24 Short-Term Incentive
(STI) payments to be made to the Acting Group CEO and Chief
Executives.
In addition to financial returns, non-financial goals balancing the
short and medium term are incorporated in the STI scorecards of
our senior leaders. These goals focus on safety, critical project
delivery, sustainability, diversity, engagement and improving
customer experience – and are tailored to the priorities of each
division. In FY24, we are pleased to report a 7-point increase
in both customer and employee NPS, though we still see too
much inconsistency across the Group’s businesses, which is
an ongoing focus. We are also pleased that the Group’s carbon
emissions are now 19% lower than our 2018 baseline, and that
our ESG (Environmental, Social and Governance) performance
is recognised through being included in the S&P Sustainability
Yearbook and a member of the Dow Jones Sustainability Index.
Our leaders have made material progress in effectively
managing the Western Australia plumbing issues. This included
achieving clarity on causation, scope and extent of repairs as
well as constructive stakeholder engagement. An effective go-
forward plan has been developed to minimise disruption and
cost exposure, which forms a central part of the confidential
mediation process that
is ongoing.
With Ross Taylor’s departure and Nick Traber stepping into the
Acting Group CEO role in March 2024, a prorated remuneration
approach was followed for Nick in FY24. This entailed
recognising Nick for the three quarters of the financial year as CE
of the Concrete division and resetting his goals for the critical
focus areas of the Group in the remaining quarter as Acting
Group CEO: progressing the NZ International Convention Centre
and Pūhoi to Warkworth, and funding. Due to the substantial
fall in market activity since the financial targets were set at the
start of the year, these targets were not achievable when Nick
stepped into the Acting CEO role. While the Group’s financial
targets remained in place, the EBIT gate was removed for Nick
to provide him with skin-in-the-game to achieve these critical
goals. Had the Board not applied discretion for CEs’ STIs to be
forfeited, Nick's STI outcome for FY24 in the Acting Group CEO
capacity would have been 18.3% of maximum, while Ross Taylor
was not eligible for a payment.
Our Long-Term Incentive (LTI) is subject to two equally weighted
performance measures: Return on Funds Employed (ROFE) and
relative Total Shareholder Return (rTSR), assessed against a
comparator group of no fewer than 10 Australasian companies.
Since 2011 the comparator group used to assess the rTSR
measure gradually reduced, most commonly due to takeovers or
being delisted. Fewer than 10 organisations remained this year
and we therefore undertook a comprehensive review prior to
the 2024 grant. Our revised approach is for the rTSR component
to be assessed against a filtered NZX All and ASX 200 index in
equal measure. This dual index-based approach reflects both
the New Zealand and Australian markets in which we operate
and provides a large group of comparators. A larger group
can smooth the volatility and sensitivity to small changes in
performance, or changes to individual companies which occur
in a small cohort. This approach is therefore more robust and
sustainable than our previous approach. Further details about
this revised approach are set out in Section 1.5 of the report.
The year ahead
Throughout the last five years, we have made a number of
enhancements to our remuneration framework and reporting,
with a key focus on increasing transparency and disclosure,
and creating closer alignment between remuneration and
shareholder outcomes.
Framework changes included introducing STI deferral,
increasing minimum shareholding requirements, removing
the LTI retest dates, reviewing LTI performance measures
and aligning the LTI grant and test dates to the Group’s full
year results. Given the number of recent changes, we are not
considering further changes to our framework in FY25.
We have also enhanced the remuneration report to respond to
investor feedback, increase transparency and more closely align
to Australian standards.
In addition to frequent engagement sessions with investors and
proxy advisers, the next step for alignment would be providing
shareholders the chance to voice formal feedback on the
remuneration report. As a matter of good corporate governance
and to provide investors with a holistic vote on our remuneration
policies and practices, we are introducing a non-binding vote
on the full remuneration report at the October 2024 Annual
Shareholder Meeting (ASM).
I would like to thank our people for their continued commitment
and performance throughout this year.
I invite you to review our Remuneration Report.
Barbara Chapman
People and Remuneration Committee Chair
Fletcher Building Limited Annual Report 2024
66
Remuneration Report (continued)
CONTENTS
1.
FY24 Remuneration Framework
68
2.
Performance Outcomes
72
3.
Group CEO Remuneration
74
4.
Frequently Asked Questions
80
5.
Employee Remuneration
82
6.
Directors' Remuneration
83
1. FY24 REMUNERATION FRAMEWORK
The following sections describe the remuneration framework in place during FY24.
1.1 The role of the People and Remuneration Committee
The principal role of the People and Remuneration Committee is broader than purely remuneration matters. Its role is to oversee
and regulate remuneration, and organisational matters affecting the Group, including remuneration and benefits policies,
diversity and inclusion, culture, performance and remuneration of the Group’s senior executives, development and succession
planning for the Group CEO and executives (i.e., leadership roles reporting directly to the Group CEO), and major organisational
changes.
The People and Remuneration Committee is kept apprised of relevant market information and best practice, obtaining advice
from external advisors when necessary.
Key decisions made and reviews undertaken by the People and Remuneration Committee during FY24 included: review and
approval of the FY24 STI and LTI plans for senior leaders, review of internal and external succession candidates for the Group
CEO role, approval of Acting Group CEO appointment, approval of updated remuneration proposals, review of pay parity and our
parental leave policy, and pension plan governance matters.
1.2 Remuneration strategy and framework
The FY24 remuneration framework and how it supports the strategy is set out on the next page.
Fletcher Building Limited Annual Report 2024
67
CONTENTS
Remuneration Report (continued)
Purpose
Improving the world around us through smart thinking, simply delivered
Risk
Encourage conduct that
does not expose the Group
to inappropriate risk while
promoting high standards
and accountability
Strategy
Focus on sustainable
earnings, profitable
growth and key Company
goals and objectives
(short and long-term)
Shareholder
Focus on the creation of
shareholder value by driving
an ownership culture with
‘skin-in-the-game’
Remuneration
Element
Element
Delivery
Performance
Measure
Relationship
to Strategy
Our People
Attract and retain high
calibre people, rewarding
high standards of
performance and values
Vision
To be the leader in New Zealand and Australian building products and solutions
Remuneration Principles
Governance
Our Board is responsible for the Group’s remuneration policy, which is available on our website, with the People
and Remuneration Committee assisting in the conduct of its responsibilities. A key role of the Committee is to
oversee and regulate remuneration and organisation matters affecting the Group.
FY24 REMUNERATION FRAMEWORK
Remuneration framework and how it supports the strategy
Guaranteed remuneration components
At-risk remuneration components (subject to performance outcomes)
Fixed Remuneration
Executives are benchmarked
against a peer group
composed of New Zealand and
Australian companies generally
comparable in size, complexity
and industry
Short-Term Incentive
Recognises on a discretionary
basis, achievement of
the Group and individual
performance objectives
Long-Term Incentive
Aim to drive long- term,
sustainable results, and
creation of shareholder value
Allocation of Fletcher
Building shares, with vesting
after 3 years, based on
achievement of shareholder
return and Return on Funds
Employed (ROFE) over this
period. Allocation is made
using face value at the time
of grant
Supporting the alignment
of our most senior people
with shareholder interests,
ensuring value is created for
our people where relative
TSR is realised and ROFE
is achieved. Encouraging
long-term sustainability, a
focus on performance and
growth, and achievement of
the Group strategy
Two equally weighted
measures: Relative Total
Shareholder Return (rTSR)
referenced to NZX and
ASX index comparator
groups and ROFE
Following the release of the
final audited financial year
results, a portion is paid in
cash and the remainder is
deferred into equity for 2 years
Rewards for safety, financial
and individual performance,
measured using a balanced
scorecard
Retains and motivates key
talent, and drives alignment by
rewarding for achievement of
the Group goals and creation
of shareholder value
Includes base salary, any
allowances, non-cash benefits,
and superannuation/KiwiSaver
Set based on capability,
performance, job size, and
industry benchmarks
Attract and retain key talent to
drive the delivery of the Group
strategy. Rewards ongoing
performance in role
Fletcher Building Limited Annual Report 2024
68
Remuneration Report (continued)
1.3 Fixed Remuneration
Fletcher Building’s policy is to set fixed remuneration based on capability, performance, size of role, and industry benchmarks
in the country in which the employee is located. Participation in retirement savings plans is made available to employees as
required by remuneration practices in relevant countries.
Remuneration levels are independently reviewed and benchmarked annually for market competitiveness, and alignment
with strategic and performance priorities. A peer group which comprises New Zealand and Australian companies, generally
comparable in size, complexity and industry is used to benchmark executives. Our peer organisations display similar
characteristics to Fletcher Building by way of industry/sector, market capitalisation, revenue, geographic scope and employee
numbers and generally reflects where the Group wins talent from and loses talent to.
1.4 Short-Term Incentive (STI)
The following table summarises the Senior STI plan which applied to the Group CEO and Chief Executives in FY24.
STI Element
Description
Eligibility
• Participation in the STI plan is by annual invitation at the discretion of the Board and typically includes
senior leaders who have a direct impact on the Group’s performance.
Opportunity
• Group CEO: Target = 112% of base salary
• Acting Group CEO: Target = 70% of base salary
• Chief Executives: Target = 70% - 80% of base salary (role dependent)
• Maximum opportunity is 1.5 x target for all participants
• For FY24 only: In lieu of a remuneration increase, the STI pay-out at target increased from 100% to 110%
for the Group CEO, Chief Executives, and General Managers. This STI uplift only applies to the financial
component of the STI and the additional cost of this approach was added to our financial targets – i.e.
additional STI was only achievable if more-stretching financial targets are met.
Vehicle
• Group CEO: 50% cash; 50% deferred into equity (share rights) for 2 years
• Acting Group CEO: 60% cash; 40% deferred into equity (share rights) for 2 years
• Chief Executives: 60% cash; 40% deferred into equity (share rights) for 2 years
Overview
• The STI plan is designed to incentivise the Group’s earnings, operating cash and those measures that drive
sustainable business performance by rewarding employees' performance against financial, safety and
individual goals.
Performance
conditions
and
weightings
• The weightings of financial, safety and individual goals vary by role, as outlined below.
Measure
Description
Operational
Executives
Functional
Executives
Safety
gateway
• Safety leadership interactions reinforce a line-led safety culture,
and place emphasis on the importance of active and authentic
leadership for safety on site.
12
6
Financial
• Group CEO and Functional Executives in Corporate: Group EBIT
and trading cash (excluding significant items).
• Operational Executives in Divisions: Divisional EBIT and trading
cash (excluding significant items), capital management or work
won, depending on the division's priorities.
• EBIT is a gateway to the individual goals,1 i.e. if the EBIT threshold
is not met, no individual component of the STI is payable.
• To strike an appropriate balance between focusing on division
financials and those of the Group, a multiplier (either up or down)
is applied based on the achievement of a Group EBIT target.
Target: 65%
(115% max)
Target: 50%
(100% max)
Safety
• For businesses with TRIFR (Total Recordable Injury Frequency Rate)
>2.0, the safety component of the STI plan will include a safety
lead (risk) and safety lag (TRIFR) measure, weighted at 5% each.
• For businesses with TRIFR <2.0, the safety component consists
of lead indicators only, weighted at 10%. TRIFR is still tracked for
these businesses, and if it increases past the overall Group TRIFR,
they will lose 5% of the total 10% safety weighting in the STI.
• The safety lead target differs by role, with operating executives
based on risk containment sweeps2, and functional executives on
those areas of safety culture they are most able to influence.
10%
10%
General
Performance Conditions
(1) There has been a substantial fall in market activity since targets were set at the start of the financial year, which has significantly impacted EBIT in the materials and
distribution divisions. The Group EBIT targets are no longer achievable and with Nick Traber not being in the Acting Group CEO role for the first 9 months, the removal of
the EBIT gate provides him with skin-in-the-game to achieve critical individual goals.
(2) Risk Containment is an important Critical Risk Management field walk activity to identify and immediately intervene to reduce critical risk exposure.
Fletcher Building Limited Annual Report 2024
69
CONTENTS
Remuneration Report (continued)
STI Element
Measure
Description
Operational
Executives
Functional
Executives
Performance
conditions
and
weightings
Individual
• Individual goals for the executives are aligned to the different
priorities of their businesses or functions, and may include
customer, people (engagement, talent and diversity),
sustainability (including carbon reduction), innovation and
critical projects or other strategic goals that drive performance
beyond the current financial year.
25%
40%
Total STI scorecard at target (Financial Target + Safety + Individual)
100%
100%
Total STI scorecard at maximum (Financial Max + Safety + Individual)
150%
150%
• Performance hurdles for our financial measures are set at three levels: a threshold level, which must be
met before any STI is paid, a target level and a maximum level that reflects stretch performance. Financial
thresholds are generally set at 90% of target hurdles, with maximum generally at 110% of target hurdles.
• The 110% pay-out at target which applies for FY24 only, is delivered via a 10% step increase when financial
targets are achieved only, as follows:
- straight-line between threshold to target (0% - 100%);
- increase with a 10% step at target; and
- straight-line between target and maximum (110% - 150%), with the maximum opportunity remaining at 150%.
• The performance range for individual and safety measures is between 0% and 100%, with no opportunity for
stretch performance.
Assessment
of awards
• An assessment of performance against the performance conditions occurs following finalisation of the
Group’s full year results.
• Each of these financial measures is assessed separately at this time and achievement against each
executive’s individual goals is reviewed and approved by the Board.
• Eligibility for consideration of a payment under the STI requires a participant to remain employed by the
Group at the date of payment, following the end of the financial year.
• Both the cash and deferred equity (share rights) components are awarded as soon as reasonably
practicable after the announcement of the Company’s full year results in August each year.
Deferred
Equity:
Disposal
restrictions
and
dividends
• A participant is entitled to receive one ordinary share for each vested share right.
• The share rights will vest and be automatically exercised into shares on the second anniversary of the
grant date, subject to the plan’s leaver provisions.
• There will be no disposal restrictions on the shares received following the vest and exercise of share
rights, subject to any minimum shareholding obligations and insider trading policies.
• No dividends (or voting rights) are received on the deferred share rights during the deferral period.
1.5 Long-Term Incentive (LTI)
The table below summarises the Group’s share based executive long-term share scheme (ELSS).
LTI Element
Description
Eligibility
• Participation in the ELSS is by annual invitation at the discretion of the Board and includes the Group CEO
and Chief Executives.
Opportunity
• Group CEO: Target = 80% of base salary
• Acting Group CEO: Target = 50% of base salary
• Chief Executives: Target = 40% - 50% of base salary (role dependent)
• Maximum opportunity is 1.0 x Target for all participants
Vehicle
• Under the ELSS, participants purchase shares in the Group at the offer price with an interest-free loan.
The offer price is established at market value at the commencement of the three-year restrictive period.
The shares are held by a trustee on behalf of participants until the end of that three-year restrictive period.
• Provided the nominated share performance criteria are met and participants remain employed with the
Group throughout the restrictive period, a taxable cash bonus is paid sufficient to repay the interest-free
loan related to vested shares and legal title in the shares is then transferred to the participants.
• Subject to the impact of any increase in the tax rate since allocation, net after-tax dividends related to the
vested shares are paid to the employee.
• To the extent that the performance criteria are not met, or the participant ceases to be employed by the
Group, the shares are forfeited, and the proceeds used to repay the interest-free loan. Exceptions to this
are considered in the case of redundancy or retirement.
Performance Conditions
Timing
General
Fletcher Building Limited Annual Report 2024
70
Remuneration Report (continued)
LTI Element
Description
Overview
• The ELSS is designed to align executive remuneration with sustainable financial outcomes for
shareholders over the longer term, and to attract and engage participants.
Performance
conditions,
weightings,
and timing
(2023 ELSS
grant)
• The 2023 ELSS grant is subject to two equally weighted performance criteria, tested at the end of a three-
year restrictive period:
- Relative total shareholder return (rTSR); and
- Return on Funds Employed (ROFE).
• TSR performance is determined by benchmarking, by way of percentile ranking, the TSR performance of
the Group against a NZX All and ASX 200 index in equal measure (i.e. 25% each). To improve comparability
with Group, both indices have been filtered to include companies with a market capitalisation above
$100m in the Industrial, Materials (excluding Metals and Mining), Consumer Discretionary and Real Estate
(excluding REITs) sectors.
• The relative TSR performance and vesting entitlements are set out in the table below.
TSR Percentile
Percentage entitlement
Below 51st
NIL
At 51st
50%
Above 51st to below 75th
51% - 99% linear pro-rata
At 75th or above
100%
• ROFE performance is determined by dividing EBIT by average funds employed and assessing it using the
performance thresholds set out in the table below.
• The ROFE performance range includes a threshold at the point where ROFE equals the weighted average
cost of capital and a maximum of 15%. Performance is assessed in the year of vesting based on EBIT,
excluding the impact of M&A and restructuring costs.
• The ROFE performance and vesting entitlements are set out below:
ROFE Percentile
Percentage entitlement
At or below weighted average cost
of capital (WACC)
NIL
Between WACC and 15%
1% - 99% linear pro-rata
At or above 15%
100%
• The Board has the discretion to determine the extent to which any shares held in the ELSS should be
transferred in any takeover, merger or corporate restructure.
Performance Conditions
1.6 Minimum shareholding requirement
Over time, the Group CEO, Executives (reporting directly to the Group CEO) and General Managers must acquire and maintain a
holding in the Group’s ordinary shares until such time as the greater of the sum invested or the market value of their shareholding
exceeds 100%, 75% and 50% of their base remuneration respectively. Any shares granted under the ELSS scheme do not count
towards the minimum shareholding requirement unless they vest.
Although there is no time limit in which the Group CEO and Executives must build this investment, any shares that vest under the
STI Plan, LTI Plan or any similar scheme can't be sold until their shareholding equals or exceeds the minimum requirement.
These shareholding requirements strengthen the alignment of Executives’ equity with long-term Group performance and the
interests of shareholders.
As at 30 June 2024, the Group CEO (Ross Taylor) had a holding in the Group’s ordinary shares equal to 98% of base remuneration.
The Acting Group CEO had a holding in the Group’s ordinary shares equal to 23% of his Acting Group CEO base remuneration
(which equates to 38% of his previous base salary as Chief Executive Concrete). These figures have been calculated in
accordance with the minimum shareholding requirement methodology, which uses the greater of the sum invested or the market
value of the shares. This does not include any unvested STI or LTI awards.
Fletcher Building Limited Annual Report 2024
71
CONTENTS
Remuneration Report (continued)
1.7 FBuShare
FBuShare is Fletcher Building’s employee share plan available to all permanent employees. The plan aims to connect our people
with our performance, and to promote employee engagement and retention. Employees acquire shares in the Group and, if they
continue to be employed after a three-year qualification period, they become entitled to receive one bonus award share for every
two shares purchased in the first year of each qualification period and still owned at the end of that period. FBuShare does not
require any performance criteria to be met. FBuShare has a minimum contribution rate of NZ$250 per annum and a maximum
contribution rate of NZ$5,000 per annum (or the equivalent currency in other countries). Directors are not eligible to participate
in FBuShare.
1.8 Malus and clawback
Our malus and clawback framework applies to unvested and vested STI, both cash and deferred, and unvested and vested LTI
awards. Under this framework, the company has the right to reduce the incentive remuneration component prior to payment
or vesting, and clawback the incentive remuneration amount from a participant for a period of three years from the end of the
financial year for which the STI payment is made or vesting of the LTI.
There are four key steps in the framework, each of which contains a set of parameters and/or questions that guide management
and directors in determining the extent to which any STI or LTI would be impacted. These steps include:
1.
Identifying and investigating trigger events;
2. Assessing trigger events and required consequences;
3. Determining accountability and intent; and
4. Quantifying the adjustment and application.
Although a list of financial and non-financial trigger events has been identified for which this framework would apply, this list is
not exhaustive and management, the People and Remuneration Committee or Board may determine other events apply in its
ultimate discretion.
During FY24 no trigger events were identified and therefore, the Board was not required to consider application of the malus and
clawback framework.
2. PERFORMANCE OUTCOMES
2.1 5-year performance summary
Financial year
FY24
FY23
FY22
FY21
FY20
Short-term performance
Net earnings/loss ($m)
(227)
235
432
305
(196)
EBIT ($m)(1)
516
782
756
668
160
Cash ($m)(2)
766
517
592
879
410
Group CEO STI achieved (as a % of maximum)(3)
-
36.0
92.5
94.0
0.0
Acting Group CEO STI achieved (as a % of maximum) (4)
18.3
-
-
-
-
(1) EBIT excludes significant items, however, includes the impact of Iplex® Australia Pro-Fit costs in FY23. FY24 EBIT includes Tradelink®.
(2) The Cash measure was operational cash flow in FY19-FY22, trading cash flow (excluding significant items) in FY23, and trading cash flow (excluding significant items
and legacy) in FY24. Trading cash flow excluding significant items is calculated consistently with the published Group cash flow from operations, excluding cash
tax, non-lease interest costs and significant items, but adjusting/deducting for lease principal payments classified as part of cash flows from financing activities, to
represent business unit-controlled cash flows.
(3) The Group CEO is not eligible for a FY24 STI payment.
(4) The Acting CEO started in the role 29 March 2024 and amounts displayed are only for this acting period of the financial year. Note, the Board applied discretion for
the Acting Group CEO and Chief Executives to fully forfeit FY24 STI payments.
Long-term performance
1-year TSR (%)(5)
(45)
15
(28)
107
(21)
3-year TSR (%)(6)
(45)
74
12
12
(45)
ROFE (%)
10.0
17.1
19.3
18.8
3.7
Dividends (cents per share)(7)
0.0
40.0
36.0
12.0
15.0
Year-end share price ($)
2.83
5.42
5.04
7.52
3.70
Group CEO LTI vested (as a % of maximum)
0.0
0.0
0.0
0.0
0.0
Group CEO LTI grant date
1 July 2021
1 July 2020
1 July 2019
1 July 2018
1 July 2017
(5) Share price movement in year and gross dividend received, to prior year closing share price.
(6) Using 5-day VWAP as per the ELSS.
(7) Gross dividend paid during the period.
Fletcher Building Limited Annual Report 2024
72
Remuneration Report (continued)
2.2 FY24 Short-term incentive (STI) performance
Safety performance
All executives met or exceeded the required safety leadership interactions in FY24, and all divisions exceeded their safety lead
performance measures. TRIFR performance across the Group is slightly higher, with the FY24 result up to 3.2 from 3.1 in FY23.
This performance resulted in the 5% safety lag goal of the STI scorecard not being achieved.
In the event of a fatality or serious injury, the Board has the discretion to adjust any or all of the STI payment and in doing so
considers the leader’s length of time in role (and therefore ability to influence), his or her demonstrated leadership prior to the
incident as well as the quality of the leader’s response post-incident. The Board recognises the importance of this discretion and
has and will continue to adjust outcomes where it considers appropriate.
In FY24, we had one serious injury which was a non-life-threatening hand injury. Aligned to our belief that all injuries are
preventable, the Safety, Health, Environment and Sustainability Committee (SHES) considered all factors associated with this
incident, including leadership performance and efforts of the teams.
Where appropriate, the SHES Committee provides its findings to the People and Remuneration Committee to review the impact
on remuneration outcomes using the STI Discretionary Impact Framework. As per this framework, only serious injuries that were
fatal or serious with potentially fatal consequences are reviewed to assess whether discretion should be applied to impact STI
outcomes. This ensures that leaders are not unfairly sanctioned for events that, under slightly different circumstances, would not
have caused serious harm.
Given that the non-life-threatening hand injury was not potentially fatal, and after considering all associated factors, there has
been no impact to the STI outcome this year.
However, a thorough review has been conducted and both individuals involved in the incident (i.e., the incumbent and the
supervising manager) have been exited from the business because they did not follow the required safety processes and
previously failed to report violations. The business unit’s leadership has kicked off a “boots on the ground” initiative to engage
more frequently and actively on site. Furthermore, the machine involved in the incident has been decommissioned until
improvements have been implemented, audit procedures have been improved, and updated inspection guides have been
rolled out.
Financial performance
EBIT performance during FY24 was below threshold for our Australia, Building Products, Concrete and Distribution divisions, and
the overall Group.
It was above threshold for the Residential and Development and Construction divisions, which resulted in only the CEs of these
divisions meeting the gateway requirement to be eligible for payment of individual goals.
For the purposes of the FY24 STI, the Construction division’s financials were split between financials related to legacy projects
and financials from continuing operations. The purpose of this approach was to drive a separate but key focus on both
completing legacy projects and the criticality of delivering the in-year financials for the go-forward business. While the legacy
financials were completely forfeited due to the poor performance of the NZ International Convention Centre (NZICC) project,
financials focused on continuing operations (both EBIT and cash) exceeded the maximum performance hurdle.
Cash performance for the Residential and Development division and the Group is below the threshold hurdle, while performance
for the Australia, Building Products, Concrete and Distribution divisions is between threshold and target.
The Residential and Development division has not met threshold for its Capital Envelope measure and the Construction division
similarly did not meet the threshold for its division-specific New Work Won measure.
Individual performance
Where the EBIT gateway to individual goals were met, achievement against individual goals for executives in FY24 range from
35% to 90%. Further details about the individual goal performance of the Group CEO and Acting Group CEO are outlined in
Sections 3.3 and 3.4 respectively on pages 78 and 79.
Board discretion applied
The formulaic FY24 STI outcomes of the Acting Group CEO and Chief Executives ranged between 3% to 62% of maximum. In
reviewing the formulaic outcomes, the Board considered these do not accurately reflect the Group’s financial performance or the
shareholder experience in FY24. They therefore applied discretion for the Acting Group CEO and Chief Executives to fully forfeit
FY24 STI payments.
Fletcher Building Limited Annual Report 2024
73
CONTENTS
Remuneration Report (continued)
2.3 Long-term incentive (LTI) performance
The July 2020 long-term share scheme grant, which was within the 12-month retest period up to 30 June 2024, was below the
minimum threshold performance level and was therefore forfeited. The July 2021 long-term share scheme grant was below the
minimum threshold performance level and therefore entered the 12-month retest period. As a reminder, the LTI retest extensions
were removed with the 2022 grant, and the 2021 grant is therefore the last grant for which a retest extension will apply.
The vesting and forfeiture of shares (due to failure to meet performance criteria) over the last five years are set out in the
following table:
Date of grant
Shares granted
% vested
% forfeited
September 2023
745,440
In-flight
September 2022 (1)
616,654
July 2021 (2) (3)
395,085
July 2020 (4)
1,998,635
0%
100%
July 2019 (5)
1,386,100
0%
100%
(1) As per the prospective LTI changes introduced in FY23, grant and test dates were aligned to the announcement of the Group’s full year results, and the retests were
removed.
(2) Due to a change in the remuneration framework for General Managers (GMs) during FY21, this employee group is no longer eligible for LTI awards, resulting in a
lower number of shares granted in July 2021 compared to previous years. Equity is delivered for GMs through the equity deferral of their STI component.
(3) Fletcher Building's TSR did not meet the minimum vesting threshold for the three years ended 30 June 2024 for the 2021 issue. Therefore, the restrictive period has
been extended to 30 June 2025.
(4) The restrictive period for the 2020 issue was extended for 12 months until 30 June 2024. Fletcher Building's TSR did not meet the minimum vesting threshold for the
period ended 30 June 2024. Therefore, 100% of the shares in the 2019 issue will be forfeited in August 2024.
(5) The restrictive period for the 2019 issue was extended for 12 months until 30 June 2023. Fletcher Building's TSR did not meet the minimum vesting threshold for the
period ended 30 June 2023. Therefore, 100% of the shares in the 2019 issue were forfeited in August 2023.
3. GROUP CEO REMUNERATION
3.1 Group CEO: Ross Taylor (On garden leave until 23 August 2024)
3.1.1 Remuneration package overview
The following diagram shows how remuneration is delivered to the Group CEO.
Fixed Remuneration
Base salary and other benefits
Short-term incentive
Cash (50%)
Deferred equity (50%)
Long-term incentive
Shares
50% Relative TSR and 50% ROFE
Start of
the year
End of
Year 1
End of
Year 2
End of
Year 3
Fletcher Building Limited Annual Report 2024
74
Remuneration Report (continued)
3.1.2 Remuneration mix
Ross Taylor’s annual base remuneration as at 30 June 2024 was $2,223,600, with an on-target STI of 112% of base salary and LTI
of 80% of base salary. The current mix of remuneration components for the Group CEO is set out below, and clearly shows the
significant weighting of variable pay (at risk), which is subject to achievement of short-term and long-term strategic goals.
The charts below show the Group CEO’s remuneration package pay mix as a percentage of total package for both on-target
performance and maximum performance.
At target
At maximum
Remuneration element
Value in NZD
% of total package
Value in NZD
% of total package
Fixed Remuneration
$2,322,503
35.2%
$2,322,503
29.7%
STI Cash
$1,245,216
18.9%
$1,867,824
23.8%
STI Equity
$1,245,216
18.9%
$1,867,824
23.8%
LTI
$1,778,880
27.0%
$1,778,880
22.7%
Total remuneration package
$6,591,815
100%
$7,837,031
100%
3.1.3 Remuneration received
The remuneration Ross Taylor received for FY24 and FY23 is set out in the table below.
FY24
FY23
Base remuneration
$2,223,600
$2,223,600
Other benefits (1)
$98,903(2)
$134,911
Short-term incentive accrued in the financial year
-(3)
$1,345,286(4)
Received (5)
$2,322,503
$3,703,797
Long-term incentives
Granted but only awarded after 3 years, if performance criteria are met
FY24
FY23
Long-term incentive - number of shares granted
193,227(6)
168,296(7)
Long-term incentive - face value of grant
$1,778,880
$1,778,880
Refer above for details of the STI and ELSS.
(1) Includes medical insurance, KiwiSaver and Australian superannuation for days worked in Australia as required by Australian taxation law.
(2) The other benefits value is less in FY24 than FY23 as Ross worked more days in Australia, which resulted in less KiwiSaver payments, but no additional Superannuation
payments as this is capped.
(3) The Group CEO is not eligible for a FY24 STI payment.
(4) FY23 base remuneration x STI target (112% of base remuneration) x FY24 STI maximum outcome (36%) x 150%. 50% payable in September of the following financial
year and 50% deferred into equity for 2 years.
(5) This table sets out remuneration awarded for the relevant financial year. The table on page 82 shows remuneration received during the year, which includes amounts
relating to prior years but paid in the year due to timing differences.
(6) Based on a share price of NZ$4.88/AU$4.48, being the volume weighted average price for the five business days prior to 1 September 2023. The number of shares
granted was calculated by converting the long-term incentive value to the Australian dollar equivalent and using the Australian tax rate for the relevant financial year.
(7) Based on a share price of NZ$5.61/AU$5.01, being the volume weighted average price for the five business days prior to 1 September 2022. The number of shares
granted was calculated by converting the long-term incentive value to the Australian dollar equivalent and using the Australian tax rate for the relevant financial year.
The table below outlines the Group CEO’s remuneration package at target and at maximum in NZD.
Equity Pay
Variable Pay (at risk)
LTI: Long-Term Incentive
STI: Short-Term Incentive
FR: Fixed Remuneration
(includes base salary and
other benefits)
Group CEO
on Target
Performance
Pay Mix
Group CEO
Maximum
Performance
Pay Mix
LTI
27%
LTI
22%
FR
35%
FR
30%
STI Cash
19%
STI Cash
24%
STI
Equity
19%
STI
Equity
24%
Fletcher Building Limited Annual Report 2024
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CONTENTS
3.2 Acting Group CEO: Nick Traber (Effective 29 March 2024)
3.2.1 Remuneration package overview
The following diagram shows how remuneration is delivered to the Acting Group CEO
3.2.2 Remuneration mix
Nick Traber’s annual base remuneration for his role as Acting Group CEO as at 30 June 2024 was $1,400,000. His STI and LTI
opportunity remained unchanged from his package as the divisional Concrete Chief Executive, i.e. 70% and 50% of base salary
at target, respectively. The current mix of remuneration components for the Acting Group CEO is set out below. All values have
been pro-rated for the 3-month period of FY24 which he was the Acting Group CEO (29 March 2024 to 30 June 2024).
The charts below show the Acting Group CEO’s remuneration package pay mix as a percentage of total package for both on-
target performance and maximum performance.
Equity Pay
Variable Pay (at risk)
LTI: Long-Term Incentive
STI: Short-Term Incentive
FR: Fixed Remuneration
(includes base salary and
other benefits)
Acting
Group CEO
on-target
performance
pay mix
LTI
22%
LTI
20%
FR
46%
STI Cash
19%
STI
Equity
13%
STI
Equity
16%
Remuneration Report (continued)
Acting
Group CEO
maximum
performance
pay mix
FR
40%
STI Cash
24%
Fixed Remuneration
Base salary and other benefits
Short-term incentive
Cash (60%)
Deferred equity (40%)
Long-term incentive
Shares
50% Relative TSR and 50% ROFE
Start of
the year
End of
Year 1
End of
Year 2
End of
Year 3
Fletcher Building Limited Annual Report 2024
76
At target
At maximum
Remuneration element
Value in NZD(1)
% of total package
Value in NZD(1)
% of total package
Fixed Remuneration
$365,825
46.4%
$365,825
40.1%
STI Cash
$147,000
18.8%
$220,500
24.4%
STI Equity
$98,000
12.5%
$147,000
16.2%
LTI
$175,000
22.3%
$175,000
19.3%
Total remuneration package
$785,825
100%
$908,325
100%
(1) Pro-rated for time in Acting Group CEO role from 29 March 2024 to 30 June 2024.
3.2.3 Remuneration received
The remuneration Nick Traber received in his role as Acting Group CEO, from 29 March 2024 to 30 June 2024 is set out in the
table below.
FY24
Base remuneration
Base remuneration
$352,143
Other benefits (1)
$13,682
Short-term incentive accrued in the financial year
- (2)
Received (3)
$365,825
Refer above for details of the STI.
(1) Includes medical insurance and KiwiSaver.
(2) The Board applied discretion for the Acting Group CEO and Chief Executives to fully forfeit FY24 STI payments.
(3) This table sets out remuneration awarded for the relevant financial year. The table on page 82 shows remuneration received during the year. Nick Traber did not
receive a Long-Term Incentive in his role as Acting Group CEO.
The table below outlines the Acting Group CEO’s remuneration package at target and at maximum in NZD.
Remuneration Report (continued)
Fletcher Building Limited Annual Report 2024
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CONTENTS
Remuneration Report (continued)
3.3 Group CEO FY24 STI outcome
For FY24, the following financial and non-financial measures were considered by the Board to incentivise earnings and operating
cash, and to drive sustainable business performance. STI performance for FY24 was measured between threshold and maximum
hurdles, with straight-line pro-rate from 0% at threshold to 100% at target, and 150% at maximum. While Ross Taylor is not
eligible for a FY24 STI payment, we have disclosed the Group CEO’s scorecard alongside the Acting Group CEO’s to illustrate
performance against the targets set by the Board. The table below summarises performance against targets for each of the
measures under the Group CEO’s FY24 STI.
Measure
Comment
Safety gateway
Gate
for any
payment
Actively led the Protect Strategy through leadership of safety on site
and through safety walks.
Financial goals
FB Group EBIT
(gateway to individual goals)
0%-80%
The annual EBIT (excluding significant items) result of $516 million
was below the threshold performance hurdle and this goal was
therefore not achieved. This was due principally to a significant fall
in market activity impacting earnings for the Group’s Materials and
Distribution businesses.
Note: EBIT includes Tradelink® for the purposes of the FY24 STI.
FB Group Cash
0%-35%
Trading cash flow performance (excluding significant items
and legacy projects) of $766 million was below the threshold
performance hurdle and this goal was therefore not achieved. Strong
working capital management across the Group led to good cash flow
generation, however this was not sufficient to offset the impact of
lower earnings.
Safety goals
Risk containment sweep and critical control
verification plans, sweeps completed to plan
and actions closed within timeframes.
0%-5%
The focus on the roll-out of critical risk initiatives is key in driving the
right behaviours and focus. With high uptake, the number of sweeps
completed across FB materially exceeded the target, resulting in
more risks controlled and creating a safer workplace.
FB Group Total Recordable Injury Frequency
Rate (TRIFR) reduced from 3.1 to 2.8 or below.
0%-5%
Group TRIFR has increased slightly from 3.1 to 3.2 during FY24. As
such, the targeted reduction was not achieved.
Individual goals
Construction legacy project works on track to
be completed no later than end of FY25, with
financial outcomes managed within the risk
framework.
0%-5%
Good progress towards completion of remaining key legacy projects,
including works completion on Pūhoi to Warkworth and Horizon
Hotel (part of NZICC), and settlement of remaining Contract Works
Insurance claims on NZICC. However, $180m additional provisioning
on NZICC and Wellington Airport carpark in Feb-24 means the legacy
projects position is materially worse than expectations set in June
2023. Goal not achieved.
Increase female operational leaders in line
with the plan to reach our 30% target by FY27.
0%-5%
The increase in the percentage of female operational leaders
outperformed the FY25 target of the longer-term plan for FY27,
resulting in the full achievement of the related STI goal.
Effectively manage the Western Australia
plumbing issue to achieve clarity on
causation, scope and extent of repairs,
and develop effective fixes and work
methodologies to minimise disruption and
ongoing fix costs.
0%-10%
An effective go-forward plan has been developed to minimise
disruption and cost exposure and effectively address the plumbing
failures in WA. This forms a central part of the confidential mediation
process that is ongoing and has been engaged on constructively
with key stakeholders.
Growth investment projects remain on track
regarding implementations and financial
return outlook.
0%-5%
Timing delays and cost increases in certain areas of the growth
projects, however financial return outlook for the projects remains
attractive. Goal partially achieved.
FY24 STI Outcome (as a % of maximum)
0%-150%
3%
Note: Not eligible for a FY24 STI payment
Scorecard weighting
pay-out range
Actual
outcome: %
of maximum
Key:
At or above maximum
Achievement between
target and maximum
Partial achievement between
threshold and target
At or below threshold achievement
Fletcher Building Limited Annual Report 2024
78
3.4 Acting Group CEO FY24 STI outcome
The following financial and non-financial measures were considered by the Board to be the most critical areas for the Acting
Group CEO to deliver in Q4 of FY24. STI performance for FY24 was measured between threshold and maximum hurdles, with
straight-line pro-rate from 0% at threshold to 100% at target, and 150% at maximum. The table below summarises performance
against targets for each of the measures under the Acting Group CEO’s FY24 STI for the period 29 March 2024 to 30 June 2024.
Noting the Board exercised discretion for the Acting Group CEO’s FY24 STI to be fully forfeited.
Measure
Comment
Safety gateway
Gate
for any
payment
Actively led the Protect Strategy through leadership of safety on site
and through safety walks.
Financial goals
FB Group EBIT
(No gateway to individual goals)
0%-80%
The annual EBIT (excluding significant items) result of $516 million
was below the threshold performance hurdle and this goal was
therefore not achieved. This was due principally to a significant fall
in market activity impacting earnings for the Group’s Materials and
Distribution businesses.
Note: EBIT includes Tradelink® for the purposes of the FY24 STI.
FB Group Cash
0%-35%
Trading cash flow performance (excluding significant items
and legacy projects) of $766 million was below the threshold
performance hurdle and this goal was therefore not achieved. Strong
working capital management across the Group led to good cash flow
generation, however this was not sufficient to offset the impact of
lower earnings.
Safety goals
Risk containment sweep and critical control
verification plans, sweeps completed to plan
and actions closed within timeframes.
0%-5%
The focus on the roll-out of critical risk initiatives is key in driving the
right behaviours and focus. With high uptake, the number of sweeps
completed across FB materially exceeded the target, resulting in
more risks controlled and creating a safer workplace.
FB Group Total Recordable Injury Frequency
Rate (TRIFR) reduced from 3.1 to 2.8 or below.
0%-5%
Group TRIFR has increased slightly from 3.1 to 3.2 during FY24. As
such, the targeted reduction was not achieved.
Individual goals
Construction legacy project: Pūhoi to
Warkworth
0%-5%
Works completion achieved and project claims further developed.
Given this project remains in line with expectations set at the
beginning of FY24, goal achieved.
Construction legacy project: New Zealand
International Convention Centre (NZICC)
0%-5%
Since Mar-24, the NZICC project has remained on track for works
completion by Dec-24, and forecast financial outcomes maintained
as per the Feb-24 position. Positive settlement of remaining Contract
Works Insurance claims in Jun-24. Goal achieved.
Successfully refinance the Company’s
October 2025 Syndicate bank facility, and
maintain an investment grade credit rating
with Moody’s
0%-15%
Successful refinancing of the Syndicate bank facility in Jun-24, in
line with target timing and terms. Moody’s credit rating maintained
at investment grade (Baa3), however with negative outlook. Goal
partially achieved.
FY24 STI Outcome (as a % of maximum)
0%-150%
18%
Note: Board discretion applied to fully forfeit FY24 STI
Scorecard weighting
pay-out range
Actual
outcome: %
of maximum
Remuneration Report (continued)
Key:
At or above maximum
Achievement between
target and maximum
Partial achievement between
threshold and target
At or below threshold achievement
Fletcher Building Limited Annual Report 2024
79
CONTENTS
Remuneration Report (continued)
Key Questions
Fletcher Building Response
Reference
Leadership Transition Arrangements
What remuneration arrangements
are in place for the Group CEO’s
(Ross Taylor’s) exit?
Ross Taylor (Group CEO) went on garden leave on 28 March 2024. To support an orderly
transition, Ross remained available to support Nick Traber (the Acting Group CEO) and
the business as required until the end of his notice period on 23 August 2024. No other
severance will be paid to Ross.
His in-flight (i.e. granted but not yet vested) STI equity and LTI awards will be treated as
per the scheme rules. Retention of these awards is in place so Executives have a long-term
focus on the performance of the company (even post termination), as the final value of the
awards will be subject to share price performance at vesting.
• FY22 and FY23 deferred STI equity: Remains on-foot until vesting date (2 years post grant)
o STI equity refers to a portion of STI earned in previous years, which has been deferred
into share rights. These awards are not subject to further performance conditions.
• FY22 and FY23 LTI awards: Remains on-foot, pro-rated for time and tested at the end of
the restrictive period (3 years post grant)
o Given that the LTI has not yet been earned (in contrast to the STI equity), it is prorated
for the portion of the vesting period served. It also remains subject to the rTSR and
ROFE performance conditions at the end of the restrictive period and the value of the
awards are subject to share price.
Section 3.1
Remuneration Report Vote
Why are you putting the
remuneration report to a vote at
the AGM?
As a New Zealand incorporated company listed on the ASX, Fletcher Building is not
required to disclose an Australian-style remuneration report or put that remuneration
report to a vote.
While FB is not legally required to put our remuneration report to a vote, we will present
the FY24 report to a non-binding vote (i.e. not a substantive rule but to understand
shareholder views) at the October ASM. This decision has been taken to enhance and
evolve shareholder engagement on remuneration, in response to feedback from investors,
and as a matter of good corporate governance.
Message from
Committee
Chair
What will happen in the event of
2 strikes against the remuneration
report?
In contrast to Australia requirements, we are not adopting a vote to spill the board in the
event of 2 consecutive strikes. Based on Australian practice, this resolution is almost never
approved, it is expensive and (as shown by recent succession events) the FB Directors
are focused on Board renewal.
This renewal process is currently underway with the resignations of Bruce Hassall, Rob
McDonald, Doug McKay, and Martin Brydon, and the appointment of Tony Dragicevich.
We believe it is more beneficial for the FB Board to continue its focus on succession and
engage on any additional skills or candidates investors recommend. We will also continue
regular engagement to gain feedback on and improve our remuneration practices and
reporting (where appropriate).
Message from
Committee
Chair
Why do you not put the LTI grant
up for resolution at the AGM?
As a New Zealand incorporated company listed on the ASX, Fletcher Building is not
required to put equity grants to a vote – noting the requirement in Australia only applies
when new equity is issued (i.e. not if acquired on-market). This is also not common
practice for other NZ incorporated companies listed on the ASX.
We are, however, putting the Remuneration Report up for a vote which includes both LTI
and STI. We are doing this because we want to provide shareholders with a holistic vote on
our remuneration policies and practices and therefore did not want to only put the LTI to a
vote when not taking the same action for the STI deferred equity or remuneration report.
Message from
Committee
Chair
Why does FB not comply with all
Australian requirements?
As a dual listed company, incorporated in NZ, we comply with the Australian requirements
that are most meaningful for our shareholders and will assist in assessing FB’s
remuneration.
Complying in full would be cost prohibitive and compliance for compliance’s sake without
increasing value for shareholders. We will consult on and consider additional information
investors would like disclosed.
Message from
Committee
Chair
Why have all Key Management
Personnel (KMP) not been
included in the remuneration
report?
The decision of who a KMP is has always been discretionary such that practices vary
broadly across the ASX. Furthermore, in New Zealand disclosure of CEO remuneration
requires consent. This would be prohibitive for a broad group and disclosure for many NZ
executives could lead to poaching risks and upward pressure on pay over the longer term.
Message from
Committee
Chair
4. FREQUENTLY ASKED QUESTIONS
Fletcher Building Limited Annual Report 2024
80
Remuneration Report (continued)
Key Questions
Fletcher Building Response
Reference
Remuneration Framework
Do you think the executives’
remuneration framework
balances the short and long term?
Executives are focused on the quality of earnings over the longer term via the LTI
component (which is a significant element of total remuneration), the two-year STI deferral
(which is aligned with shareholders via share price appreciation or depreciation during
that time), and those individual STI goals which are future-focused.
The introduction of STI deferral in FY22 was also accompanied by an increase in the
mandatory shareholding for the Group CEO from 50% to 100% of base salary, and from
50% to 75% for other Executives.
Section 1
Why did you review and make
changes to the rTSR peer group
for the LTI?
Our previous peer group consisted of 10 Australasian companies.
While this Group initially consisted of 17 companies in 2011, it had become smaller
over time due to comparable organisations across the ASX and NZX decreasing – most
commonly due to takeovers or being delisted (e.g. Crane Group, Nuplex, Dulux and most
recently Adelaide Brighton, Boral and CSR).
In 2023, <10 comparable organisations remained in our peer group and we engaged
external consultants to undertake an independent comprehensive review for future grants.
Section 1.5
Why are you proposing to move
to an index-based approach?
A bespoke group should ideally consist of no less than 20 companies. This is because
larger groups (such as those provided by an index) can smooth the volatility and sensitivity
to small changes in performance or changes to individual companies (such as Boral’s
change of control event), which occurs in a small cohort. Our review highlighted that there
aren’t at least 20 comparable organisations across New Zealand and Australia and we
therefore adopted an index-based approach.
Section 1.5
How is ROFE calculated?
ROFE is EBIT on average funds. With regards the treatment of significant items for the
purposes of calculating LTI, ROFE will include any asset impairments that have been made
but exclude any M&A divestments and restructuring costs.
We take the deduction on asset impairment because management hasn’t supported the
value of the business. But for M&A, almost invariably a divestment is not being made
by the management team who bought it. We don’t want to have perverse incentives
where management might not look to do a divestment if there’s going to be a write down
and negatively impact their LTI. Or conversely, asset sales just because of the gain, to
positively impact their LTI.
Section 1.5
Why does Fletcher Building
have a loan scheme rather than
a performance rights scheme?
This would seem to be more
complex for employees and
the company, especially with
regards to the taxation of the
“bonus” part of the scheme.
This has been a long-running plan that was majority NZ practice. Many NZ companies
still apply these loan plans. The loan-based plan is retained because it ensures the tax on
the share price appreciation is not borne by the Company, as it would be under a share
rights plan.
With a reduced number of participants in the LTI plan (~12 remaining), the simplicity of
the plan is less relevant as any clarification on the operation of the plan can be dealt
with on a case-by-case basis.
Section 1.5
Fletcher Building Limited Annual Report 2024
81
CONTENTS
Remuneration Report (continued)
From NZ$ to NZ$
New Zealand
business
activities
International
business
activities
Total
From NZ$ to NZ$
New Zealand
business
activities
International
business
activities
Total
100,000 – 110,000
628
395
1023
480,000 – 490,000
2
1
3
110,000 – 120,000
515
336
851
490,000 – 500,000
2
1
3
120,000 – 130,000
392
258
650
500,000 – 510,000
2
0
2
130,000 – 140,000
344
202
546
510,000 – 520,000
3
0
3
140,000 – 150,000
234
169
403
520,000 – 530,000
3
0
3
150,000 – 160,000
185
142
327
530,000 – 540,000
2
2
4
160,000 – 170,000
139
117
256
540,000 – 550,000
2
1
3
170,000 – 180,000
114
80
194
550,000 – 560,000
1
0
1
180,000 – 190,000
97
60
157
560,000 – 570,000
2
1
3
190,000 – 200,000
58
46
104
580,000 – 590,000
1
1
2
200,000 – 210,000
51
48
99
590,000 – 600,000
0
2
2
210,000 – 220,000
47
26
73
620,000 – 630,000
1
0
1
220,000 – 230,000
42
23
65
640,000 – 650,000
0
2
2
230,000 – 240,000
43
25
68
660,000 – 670,000
0
1
1
240,000 – 250,000
26
21
47
670,000 – 680,000
0
1
1
250,000 – 260,000
25
13
38
690,000 – 700,000
1
0
1
260,000 – 270,000
22
12
34
750,000 – 760,000
1
0
1
270,000 – 280,000
17
14
31
760,000 – 770,000
1
0
1
280,000 – 290,000
11
5
16
770,000 – 780,000
1
0
1
290,000 – 300,000
14
10
24
790,000 – 800,000
0
1
1
300,000 – 310,000
11
7
18
800,000 – 810,000
1
0
1
310,000 – 320,000
7
10
17
820,000 – 830,000
1
0
1
320,000 – 330,000
13
11
24
910,000 – 920,000
1
1
2
330,000 – 340,000
9
2
11
920,000 – 930,000
0
2
2
340,000 – 350,000
13
1
14
930,000 – 940,000
1
0
1
350,000 – 360,000
6
5
11
940,000 – 950,000
1
0
1
360,000 – 370,000
0
3
3
960,000 – 970,000
1
0
1
370,000 – 380,000
4
3
7
970,000 – 980,000
0
1
1
380,000 – 390,000
6
2
8
990,000 – 1000,000
0
1
1
390,000 – 400,000
5
5
10
1,000,000 – 1,010,000
0
1
1
400,000 – 410,000
9
1
10
1,020,000 – 1,030,000
1
0
1
410,000 – 420,000
2
3
5
1,030,000 – 1,040,000
0
1
1
420,000 – 430,000
2
2
4
1,070,000 – 1,080,000
1
1
2
430,000 – 440,000
1
2
3
1,220,000 – 1,230,000
1
0
1
440,000 – 450,000
5
2
7
1,240,000 – 1,250,000
1
0
1
450,000 – 460,000
3
0
3
2,190,000 – 2,200,000
0
1
1
460,000 – 470,000
6
1
7
4,380,000 – 4,390,000
0
1
1
470,000 – 480,000
4
0
4
3,145
2,086
5,231
5. EMPLOYEE REMUNERATION
Section 211(1)(g) of the Companies Act 1993 requires disclosure of the number of employees or former employees of the Group
whose remuneration and any other benefits received by them during the year in their capacity as employees, was equal to or
exceeded $100,000 per annum and to state the number of such employees or former employees in brackets of $10,000. These
amounts are included below and include all applicable employees or former employees of Fletcher Building worldwide. The
remuneration amounts include all monetary amounts and benefits actually paid during the year, including redundancies and the
face value of long-term incentives vested.
The decrease in the highest bracket in FY24 (4,380,000 – 4,390,000) compared to the highest bracket in FY23 (6,670,000 –
6,680,000) is as a result of the one-off share-based retention award granted to the Group CEO in 2019, which vested on 30 June
2022 but was allocated in FY23.
This table is required by law and sets out remuneration that has been received during this year, and so includes amounts that
relate to prior periods (due to timing of payments).
Fletcher Building Limited Annual Report 2024
82
Remuneration Report (continued)
6. DIRECTORS’ REMUNERATION
The current total directors’ remuneration pool approved by shareholders in 2011 is $2 million per annum. Directors receive
remuneration determined by the Board on the recommendation of the Nominations Committee. The Directors’ aggregate
remuneration per annum must be within the remuneration pool approved by shareholders. There are no schemes for retirement
benefits for non-executive directors. Information of directors’ holdings of securities is set out in the Statutory Disclosures section.
In June 2024, the Nominations Committee considered the appropriateness of current directors’ fees and recommended to the
Board no change to the fees for FY25 to be paid out of the current shareholder approved remuneration pool of $2 million per
annum, as shown in the following table.
The remuneration scale for directors is outlined below:
Fees to directors for unscheduled additional work required for the Group is time based payable at $1,200 per half day. Directors
do not receive any further remuneration for also being directors of Fletcher Building Industries Limited, the NZX-listed issuer
of the Group’s capital notes. Directors’ fees exclude GST, where appropriate. In addition, Board members are entitled to be
reimbursed for costs directly associated with carrying out their duties, including travel costs.
Details of the total remuneration received by each Fletcher Building director for FY24 are as follows:
Remuneration scale
Position
FY24
FY25(1)
Board of directors
Chair (2)
Non-Executive director
$391,000
$155,500
$320,000
$155,500
Audit and Risk Committee
Chair
Member
$38,000
$19,500
$38,000
$19,500
Nominations Committee
Chair
Member
-
$8,500
-
$8,500
People and Remuneration Committee
Chair
Member
$29,000
$14,500
$29,000
$14,500
Safety, Health, Environment and Sustainability Committee
Chair
Member
$29,000
$14,500
$29,000
$14,500
Overseas based directors - travelling allowance
$18,000
$18,000
(1) FY25 fees are effective from 1 July 2024.
(2) No additional fees are paid to the Board Chair for committee roles.
Directors
Board Fees
Audit and Risk
Committee
Nominations
Committee
People and
Remuneration
Committee
Safety, Health,
Environment
and
Sustainability
Committee
Overseas
based
directors
travelling
allowance
Total
Remuneration
Bruce Hassall (Chair)(1)
$263,820
$-(1)
$-
$263,820
Barbara Chapman
(Acting Chair)(2)
$234,000
$5,667
$-(2)
$19,333*
$-*
$259,000
Martin Brydon(3)
$155,500
$14,500
$14,500
$18,000
$202,500
Peter Crowley
$155,500
$19,500
$8,500
$14,500
$18,000
$216,000
Sandra Dodds(4)
$129,583
$16,250
$12,083
$15,000
$172,916
Rob McDonald(5)
$155,500
$38,000*
$14,500
$208,000
Doug McKay(6)
$155,500
$19,500
$29,000*
$204,000
Cathy Quinn
$155,500
$19,500
$14,500
$189,500
TOTAL
$1,404,903
$112,750
$14,167
$48,333
$84,583
$51,000
$1,715,736
FY24 fees are effective from 1 July 2023.
* Chair of Committee
(1) No additional fees are paid to the Board Chair for committee roles; stepped down from the Board effective 4 March 2024.
(2) Director appointed as Acting Chair and chair of the Nominations Committee each effective 4 March 2024, no additional fees are paid to the Acting Chair for
committee roles.
(3) Stepped down from the Board effective 30 June 2024.
(4) Appointed as director 1 September 2023, appointed as member of Audit and Risk Committee and Safety, Health, Environment and Sustainability Committee each
effective 1 September 2023.
(5) Stepped down from the Board effective 30 June 2024.
(6) Stepped down from the Board effective 21 June 2024.
Fletcher Building Limited Annual Report 2024
83
CONTENTS
Financial Report
Laminex® Australia celebrates its new
showroom opening in Melbourne in
June, with a customer event.
Fletcher Building Limited Annual Report 2024
84
Fletcher Building Limited Annual Report 2024
85
CONTENTS
Notes
June
2024
NZ$M
June
2023
NZ$M
June
2022
NZ$M
June
2021 (1)
NZ$M
June
2020
NZ$M
Financial performance
Operating revenue (2)
7,683
7,679
7,746
7,371
6,537
Earnings before interest and taxation (EBIT) (2)
176
484
686
532
(113)
Net earnings/(loss) (2)
(86)
230
426
306
(185)
Cash flow from operations
398
388
592
879
410
Earnings per share - basic (cents per share) (2)
(11.0)
29.4
52.7
37.1
(22.2)
Dividends for the period (cents per share)
34.0
40.0
30.0
Financial performance - before significant items (continuing operations)
Earnings before interest and taxation (EBIT)
509
785
741
655
155
Net earnings
183
447
479
431
85
Earnings per share - basic (cents per share)
23.4
57.1
59.4
52.3
10.2
Balance sheet
Current assets
3,188
3,330
3,277
3,125
3,824
Non-current assets
5,686
5,751
5,144
4,849
4,954
Total assets
8,874
9,081
8,421
7,974
8,778
Current liabilities
2,088
2,201
2,157
1,906
2,385
Non-current liabilities
3,458
3,203
2,499
2,333
2,858
Total liabilities
5,546
5,404
4,656
4,239
5,243
Capital
2,995
2,993
3,003
3,248
3,280
Reserves
322
657
747
471
220
Minority equity
11
27
15
16
35
Total equity
3,328
3,677
3,765
3,735
3,535
Total liabilities and equity
8,874
9,081
8,421
7,974
8,778
Other financial data
Total shareholders' return (%) (3)
(45)
15
(28)
107
(21)
Net tangible assets per share ($)
2.97
3.17
3.47
3.30
2.87
Gearing (%) (4)
34.7
27.8
15.1
4.4
12.3
Leverage (5)
2.0
1.2
0.6
0.2
0.9
Return on average funds (%) (6)
0.5
10.6
18.0
15.2
(2.7)
Return on average equity (%) (7)
(6.5)
6.4
11.7
8.6
(5.1)
Return on average funds - before significant items (%) (6)
10.0
17.1
19.3
18.8
3.7
Return on average equity - before significant items (%) (7)
5.2
12.2
13.2
11.6
0.1
(1) Restated following revisions to NZ IAS 38 Intangible Assets adopted by the Group.
(2) Continuing operations.
(3) Share price movement in year and gross dividend received, to opening share price.
(4) Net debt (borrowings less cash and deposits) to net debt and equity.
(5) Net debt to EBITDA before significant items.
(6) EBIT to average funds (net debt and equity less deferred tax asset).
(7) Net earnings to average shareholders' funds.
Trend Statement
86
Fletcher Building Limited Annual Report 2024
Consolidated Income Statement
For the year ended 30 June 2024
Continuing operations
Note
2024
NZ$M
2023*
NZ$M
Revenue
7,683
7,679
Cost of goods sold
(5,521)
(5,282)
Gross margin
2,162
2,397
Selling, general and administration expenses
(1,665)
(1,662)
Share of profits of associates and joint ventures
10
34
Revaluation gain on investment property
2
16
Significant items
(333)
(301)
Earnings before interest and taxation (EBIT)
176
484
Lease interest expense
(58)
(53)
Funding costs
(142)
(94)
Earnings/(loss) before taxation
(24)
337
Taxation expense
(55)
(88)
Earnings/(loss) after taxation from continuing operations
(79)
249
Losses attributable to non-controlling interests
(7)
(19)
Net earnings/(loss) from continuing operations
(86)
230
Net earnings/(loss) from discontinued operation net of tax
2.4
(141)
5
Net earnings/(loss) attributable to the shareholders
(227)
235
Net earnings/(loss) per share (cents)
6
Basic
(29.0)
30.0
Diluted
(29.0)
28.4
Net earnings/(loss) per share from continuing operations (cents)
6
Basic
(11.0)
29.4
Diluted
(11.0)
27.8
Weighted average number of shares outstanding (millions of shares)
6
Basic
783
783
Diluted
783
848
Dividends declared per share (cents)
20
34.0
* The comparatives have been represented for Tradelink® classified as a discontinued operation. Further details of the change can be
found in note 2.4.
The accompanying notes form part of and are to be read in conjunction with these consolidated financial statements.
On behalf of the Board, 21 August 2024.
Barbara Chapman
Acting Chair
Sandra Dodds
Director
87
Fletcher Building Limited Annual Report 2024
4
14
2.2
18
27
CONTENTS
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2024
2024
NZ$M
2023*
NZ$M
Net earnings/(loss) attributable to shareholders
(227)
235
Net earnings attributable to non-controlling interests
7
19
Net earnings/(loss) after tax
(220)
254
Other comprehensive income
Items that do not subsequently get reclassified to Consolidated Income Statement:
Movement in pension reserve
21
21
Items that may be reclassified subsequently to Consolidated Income Statement in
the future:
Movement in cash flow hedge reserve
(7)
2
Movement in currency translation reserve
(1)
(23)
(8)
(21)
Other comprehensive income
13
(21)
Total comprehensive income/(loss) for the year
(207)
223
Total comprehensive income/(loss) for the year arises from:
Continuing operations
(66)
228
Discontinued operations
(141)
5
Total comprehensive income/(loss) for the year
(207)
233
* The comparatives have been represented for Tradelink® classified as a discontinued operation. Further details of the change can be
found in note 2.4.
The accompanying notes form part of and are to be read in conjunction with these consolidated financial statements.
88
Fletcher Building Limited Annual Report 2024
Consolidated Statement of Movements in Equity
For the year ended 30 June 2024
NZ$M
Note
Share capital
Retained earnings
Share-based
payments reserve
Cash flow hedge
reserve
Currency
translation reserve
Pension reserve
Total
Non-controlling
interests
Total equity
Total equity at 30 June 2022
3,003
705
26
8
(55)
63
3,750
15
3,765
Total comprehensive income for the year
235
2
(23)
214
19
233
Movement in non-controlling interests
(7)
(7)
Dividends paid to shareholders of the parent
20
(311)
(311)
(311)
Movement in share-based payment reserve
3
5
2
10
10
Repurchase of shares
21
(13)
(13)
(13)
Total equity at 30 June 2023
2,993
634
28
10
(78)
63
3,650
27
3,677
Total comprehensive loss for the year
(227)
(7)
(1)
21
(214)
7
(207)
Movement in non-controlling interests
(23)
(23)
Dividends paid to shareholders of the parent
20
(124)
(124)
(124)
Movement in share-based payment reserve
2
5
(2)
5
5
Total equity at 30 June 2024
2,995
288
26
3
(79)
84
3,317
11
3,328
The accompanying notes form part of and are to be read in conjunction with these consolidated financial statements.
89
Fletcher Building Limited Annual Report 2024
CONTENTS
Consolidated Balance Sheet
As at 30 June 2024
Assets
Note
2024
NZ$M
2023
NZ$M
Current assets:
Cash and cash equivalents
8
311
365
Current tax assets
27
28
6
Contract assets
3
142
141
Derivatives
19
10
18
Debtors
9
914
1,176
Inventories
10
1,276
1,624
Total current assets before held for sale
2,681
3,330
Assets classified as held for sale
2.4
507
Total current assets
3,188
3,330
Non-current assets:
Property, plant and equipment
13
2,191
2,072
Investment property
14
100
58
Intangible assets
15
1,055
1,253
Right-of-use assets
16
1,191
1,324
Investments in associates and joint ventures
23
221
225
Inventories
10
594
456
Retirement plan assets
28
152
126
Derivatives
19
46
44
Deferred tax assets
27
136
193
Total non-current assets
5,686
5,751
Total assets
8,874
9,081
Liabilities
Current liabilities:
Creditors, accruals and other liabilities
11
1,147
1,416
Provisions
12
171
403
Lease liabilities
16
164
192
Derivatives
19
18
20
Contract liabilities
3
166
82
Borrowings
17
86
88
Total current liabilities before held for sale
1,752
2,201
Liabilities directly associated with assets held for sale
2.4
336
Total current liabilities
2,088
2,201
Non-current liabilities:
Creditors, accruals and other liabilities
11
134
52
Provisions
12
28
31
Lease liabilities
16
1,272
1,404
Derivatives
19
2
1
Borrowings
17
2,022
1,715
Total non-current liabilities
3,458
3,203
Total liabilities
5,546
5,404
Equity
Share capital
21
2,995
2,993
Reserves
322
657
Shareholders' funds
3,317
3,650
Non-controlling interests
22
11
27
Total equity
3,328
3,677
Total liabilities and equity
8,874
9,081
The accompanying notes form part of and are to be read in conjunction with these consolidated financial statements.
90
Fletcher Building Limited Annual Report 2024
Consolidated Statement of Cash Flows
For the year ended 30 June 2024
Note
2024
NZ$M
2023
NZ$M
Cash flow from operating activities
Receipts from customers
8,667
8,496
Dividends received
10
4
Payments to suppliers, employees and other
(8,064)
(7,769)
Interest paid
(200)
(152)
Income tax paid
(15)
(191)
Net cash from operating activities
8
398
388
Cash flow from investing activities
Sale of property, plant and equipment
7
6
Purchase of subsidiaries
(11)
(183)
Purchase of property, plant and equipment and intangible assets
(402)
(445)
Payments for investment property and investment property under development
(20)
(19)
Net cash from investing activities
(426)
(641)
Cash flow from financing activities
Issue of capital notes
32
50
Repurchase of capital notes
(78)
(56)
Repurchase of shares - transferred to treasury stock
(13)
Drawdown of borrowings
920
774
Repayment of borrowings
(568)
(3)
Principal elements of lease payments
(206)
(196)
Contributions from non-controlling interests
15
37
Distribution to non-controlling interests
(17)
(13)
Dividends paid to shareholders of the parent
(124)
(311)
Net cash from financing activities
(26)
269
Net movement in cash held
(54)
16
Add: opening cash and cash equivalents
8
365
351
Effect of exchange rate changes on net cash
(2)
Closing cash and cash equivalents
8
311
365
The accompanying notes form part of and are to be read in conjunction with these consolidated financial statements.
91
Fletcher Building Limited Annual Report 2024
CONTENTS
Note
Description
Financial Performance
Statement of accounting policies
Key estimates, judgements and other financial
information
Construction accounting
Revenue from contracts with customers
Segmental information
Net earnings per share
Consolidated income statement disclosures
Working Capital Management
Cash and cash equivalents
Debtors
Inventories, including land and property
developments
Creditors, accruals and other liabilities
Provisions
Long-term Investments
Property, plant and equipment
Investment property
Intangible assets
Leases
Note
Description
Funding and Financial Risk Management
Borrowings
Net funding costs
Financial risk management
Group Structure and Related Parties
Dividends and shareholder tax credits
Capital
Non-controlling interests
Investments in associates, joint ventures and joint
operations
Related party disclosures
Other Information
Capital expenditure commitments
Contingent liabilities
Taxation
Retirement plans
Share-based payments
Subsequent events
Contents
92
Fletcher Building Limited Annual Report 2024
Note 1
Note 2
Note 3
Note 4
Note 5
Note 6
Note 7
Note 8
Note 9
Note 10
Note 11
Note 12
Note 13
Note 14
Note 15
Note 16
Note 17
Note 18
Note 19
Note 20
Note 21
Note 22
Note 23
Note 24
Note 25
Note 26
Note 27
Note 28
Note 29
Note 30
Significant changes in the current reporting period
The financial position and performance of the Group were particularly affected by the following events and transactions during
the year:
–
The sharp market slowdown in both New Zealand and Australia, with revenues for the materials and distribution divisions
(Building Products, Distribution, Concrete, and Australia) materially lower than the prior year. The challenging trading
environment led to pressure on pricing and gross margins in certain businesses, particularly in the Distribution division in New
Zealand, which was subject to a significant increase in competitive intensity.
–
The Group recognised additional loss provisions on the New Zealand International Convention Centre and Hobson Street Hotel
(NZICC) project of $165 million and a provision to remediate the Wellington International Airport Limited carpark of $15 million.
These provisions have been recognised as Significant Items in the Consolidated Income Statement. Refer to note 3.
–
The Group recognised a non-cash impairment and write-down of $122 million, at the half year, in relation to the Tradelink® cash
generating unit (CGU) which includes the impairment and write-down of Tradelink's® remaining goodwill and brand balances.
Subsequent to this, the Group announced its intention to exit the Tradelink® business, with the business classified as held for
sale from 1 April 2024, and presented as a discontinued operation, with the consolidated income statement represented for
this change. On 12 August 2024, the Group announced that it has entered into an agreement with Metal Manufactures Pty
Limited to sell 100% of the shares in Tradelink® for A$170 million. As a result, an additional impairment of $36 million (A$32.5
million) was recognised at 30 June 2024. Refer to note 2.3 and note 2.4.
–
The Group recognised a non-cash impairment and write-down of $100 million in relation to Higgins®New Zealand CGU which
includes the impairment of Higgins® New Zealand's goodwill ($90 million). Refer to note 2.3.
–
The Group entered into an agreement to divest 50% of its Higgins® Fiji construction business to two local partners, Fiji National
Provident Fund and Fijian Holdings Limited. Higgins® Fiji is classified as held for sale at 30 June 2024, with the transaction
completing on 31 July 2024. Refer to note 2.3 and note 2.4.
–
In the first half of the year, the Group executed a New Zealand dollar denominated loan facility to November 2026 with a three-
bank syndicate of $400 million, which replaced the $300 million bilateral revolving credit facility which was due to mature in
October 2024. In June, the Group made amendments to its banking agreements which extend the tenor of its debt facilities
and enable it to rely on more favourable terms for covenant testing through to the end of calendar 2025, if required. Should
the Group need to rely on the amended covenant levels, it will not pay a dividend until it agrees to be tested by, and complies
with, its existing covenant levels. The Group refinanced an Australian dollar denominated $674.5m facility that was scheduled
to expire in October 2025. The agreement extends the expiry date for this facility into two longer dated maturities: A$424.5
million that will now expire in July 2027, and A$250 million that will expire in June 2029. The agreement significantly improves
the tenor of the Company’s funding lines, such that the next material debt maturity is in FY27. Refer to note 17.
–
The Group also received its first investment grade credit rating of Baa2 assigned by Moody’s Investors Service in the first half
of the year. This rating was subsequently amended in June 2024 to Baa3 on a negative outlook, following a review by Moody’s.
Refer to note 17.
–
The New Zealand Government passed legislation to remove commercial building depreciation for tax purposes from 1 April
2024. As a result, a $34 million tax expense has been recognised in the year as the tax base of the Group’s buildings in New
Zealand has been reduced to nil. Refer to note 27.
93
Fletcher Building Limited Annual Report 2024
CONTENTS
1. Statement of accounting policies
General information
The consolidated financial statements presented are those of Fletcher Building Limited (the Company) and its subsidiaries (the
Group). The Group is primarily involved in the manufacturing and distribution of building materials and residential, commercial and
infrastructure construction. Fletcher Building Limited is domiciled in New Zealand. The registered office of the Company is 810 Great
South Road, Penrose, Auckland.
The Company is registered under the Companies Act 1993 and is a Financial Markets Conduct Act (FMCA) 2013 reporting entity in terms
of the Financial Reporting Act 2013. The Group is a for-profit entity.
Basis of presentation
These consolidated financial statements have been prepared in accordance with Generally Accepted Accounting Practice in New
Zealand, which is the New Zealand equivalent to International Financial Reporting Standards (NZ IFRS). They also comply with
International Financial Reporting Standards.
These financial statements are presented in New Zealand dollars ($), which is the Group’s presentation currency, and rounded to the
nearest million unless otherwise stated.
The consolidated financial statements comprise the income statement, statement of comprehensive income, statement of movements
in equity, balance sheet, statement of cash flows, and statement of accounting policies, as well as the notes to these financial
statements.
Accounting convention
Accounting policies have been consistently applied by the Group and unless otherwise stated, are in line with prior year. These financial
statements are based on the general principles of historical cost accounting, except for assets and liabilities measured at their fair value,
as described below:
•
Certain financial assets and liabilities (including derivative instruments) – measured at fair value;
•
Defined benefit pension plan asset/liabilities – measured at fair value; and
•
Investment property – measured at fair value or revalued amounts.
Where necessary, certain comparative information has been reclassified to conform to changes in presentation in the current year.
Accounting policies are disclosed within each of the applicable notes to the consolidated financial statements and are marked with this
colour.
Critical accounting estimates and judgements
The preparation of consolidated financial statements in conformity with NZ IFRS requires the directors to make estimates and
judgements that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of
the consolidated financial statements and the reported amounts of sales and expenses during the reporting period. Key estimates,
assumptions and judgements are continually evaluated and are based on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the circumstances. Actual results could differ from those estimates.
The estimates and judgements that are critical to the determination of the amounts reported in the consolidated financial statements have
been disclosed with the relevant notes in the consolidated financial statements and are marked with this colour, or where applied to the
financial statements as a whole, are detailed below.
Basis of consolidation
The consolidated financial statements comprise the Company, its controlled entities and its interest in associates, partnerships and joint
arrangements. Intercompany transactions and balances are eliminated in preparing the consolidated financial statements.
Subsidiaries
Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has
rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the
activities of the entity.
Subsidiaries are included in the consolidated financial statements using the acquisition method of consolidation, from the date control
commences until the date control ceases. The acquisition method of accounting is used to account for all business combinations,
regardless of whether equity instruments or other assets are acquired.
Foreign currency translation
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
prevailing 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 and other
currency instruments designated as hedges of such investments are recognised directly in the currency translation reserve and in
the Consolidated Statement of Comprehensive Income. The cumulative exchange variations are reclassified subsequently to the
Consolidated Income Statement if the overseas operation to which the reserve relates is sold or otherwise disposed of.
Notes to the Consolidated Financial Statements 2024
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Fletcher Building Limited Annual Report 2024
Foreign currency transactions
Transactions in foreign currencies are translated at exchange rates at the date of the transactions. Monetary assets and liabilities in
foreign currencies at balance date are translated at the rates of exchange prevailing at balance date.
Foreign exchange gains and losses resulting from the settlement of such transactions are recognised in earnings, except where deferred
in the Consolidated Statement of Comprehensive Income as qualifying cash flow hedges and qualifying net investment hedges.
Non-monetary assets in foreign currencies are translated at the exchange rates in effect when the amounts of these assets were
recognised.
The following key exchanges rates were applied in the preparation of the consolidated financial statements:
NZD/AUD
2024
2023
Change
Average rates
0.9228
0.9142
0.9%
Closing rates
0.9150
0.9173
-0.3%
2. Key estimates, judgements and other financial information
This section provides details of the key estimates and judgements undertaken when preparing these consolidated financial statements.
2.1 CHANGES IN ACCOUNTING POLICIES, INTERPRETATION AND AGENDA DECISIONS
New and amended accounting standards and interpretation adopted
The Organisation for Economic Co-operation and Development’s (OECD) international tax reform (known as Pillar Two)
The Group has adopted the amendments introduced to NZ IAS 12: Income Taxes, as a result of the OECD international tax reform (known
as Pillar Two), effective 10 August 2023 for periods beginning on or after 1 January 2024.
Those amendments include:
–
A mandatory temporary exception to the recognition and disclosure of deferred taxes arising from the jurisdictional
implementation of the Pillar Two model rules; and
–
Disclosure requirements for affected entities to help users of financial statements better understand an entity’s exposure to Pillar
Two income taxes arising from that legislation
The Group has applied the mandatory exception to recognising and disclosing information about any deferred tax impact related to
Pillar Two income taxes. Further information about the impact of the amendments is set out in note 27.
New and amended accounting standards and interpretation not yet effective
IFRS 18 - Presentation and Disclosure in Financial Statements
In April 2024, the IASB issued IFRS 18 Presentation and Disclosure in Financial Statements, as a replacement for IAS 1, effective for
the Group’s financial year beginning 1 July 2027. The requirements in the new standard are designed to achieve comparability of the
financial performance of similar entities, especially related to how ‘operating profit or loss’ is defined. It also requires new disclosures for
some management-defined performance measures. The XRB has yet to publish the equivalent standard in New Zealand and the Group
is assessing the impact of adopting the standard to the financial statements.
2.2 SIGNIFICANT ITEMS
In reporting financial information, the Group presents non-GAAP performance measures, which are not defined or specified under the
requirements of NZ IFRS.
The Group believes that these non-GAAP measures, which are not considered to be a substitute for or superior to NZ IFRS measures, provide
stakeholders with additional useful information on the performance of the business. The non-GAAP measures are consistent with how the
business performance is planned and reported to the Board and Audit and Risk Committee.
The Group makes certain significant item adjustments to the statutory profit measures in order to derive non-GAAP measures. The Group
discloses certain non-operating items as significant items. The Group’s policy is to recognise significant items for transactions or events
outside of the Group's ongoing operations that have a significant impact on reported profit. This policy provides stakeholders with additional
useful information as a means to assess the year-on-year trading performance of the Group. On this basis, significant items include, but are
not limited to, the following:
– Gains and losses arising from mergers and acquisition (M&A) activity (i.e. business acquisitions and disposals) and associated costs.
– Restructuring and other associated costs arising from significant strategy changes that are not considered by the Group to be part of the
normal operating costs of the business.
– Impacts of significant one off events that have a material effect on the Group's financial performance and asset valuation.
– Impairment charges and provisions that are considered to be significant in nature and/or value to the trading performance of the business.
– Net gains and losses on the disposal of properties and businesses where a commitment to close has been demonstrated.
Notes to the Consolidated Financial Statements 2024 (Continued)
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Fletcher Building Limited Annual Report 2024
CONTENTS
Notes to the Consolidated Financial Statements 2024 (Continued)
As at 30 June 2024, Significant Items from continuing operations totalled $333 million (30 June 2023: $301 million). This amount
captures both gains and losses from transactions or events outside of the Group's ongoing operations that have had significant impact
on the Group's reported profit and loss in the period.
2024
2023
NZ$M
EBIT
Significant
items
EBIT before
significant
items
EBIT
Significant
items
EBIT before
significant
items
Building Products
124
(19)
143
200
(15)
215
Distribution
49
49
140
(1)
141
Concrete
134
4
130
154
(2)
156
Australia
109
(17)
126
157
(10)
167
Materials and distribution divisions
416
(32)
448
651
(28)
679
Residential and Development
100
100
147
147
Construction
(264)
(292)
28
(247)
(273)
26
Corporate and other
(76)
(9)
(67)
(67)
(67)
Continuing operations
176
(333)
509
484
(301)
785
Discontinued operation
(148)
(155)
7
13
13
Group
28
(488)
516
497
(301)
798
Significant items from continuing operations include:
NZICC and WIAL construction provisions ($180 million)
Onerous contract provisions recognised as part of the interim results by the Group's Construction division, with $165 million attributable
to increased costs and lower expected Contract Works Insurance (CWI) recoveries on the NZICC project, and $15 million of costs for
remedial works at Wellington International Airport Limited, as the Group winds down its operations in the vertical building sector. Refer
to note 3.
Impairment of Higgins® New Zealand CGU ($100 million)
Non-cash impairments and asset write downs recognised in Higgins® New Zealand as at 30 June 2024, including a partial impairment
of Higgins® New Zealand’s goodwill balance ($90 million), as well as losses associated with the derecognition of fixed assets ($7 million)
and other associated costs ($3 million) as the business right-sizes and rationalise its property footprint. Refer to note 2.3.
Impairment of Higgins® Fiji and New Zealand Ceiling and Drywall assets held for sale ($21 million)
Both Higgins® Fiji and New Zealand Ceiling and Drywall (NZCDS) were classified as held for sale as at 30 June 2024. Following the
classification as held for sale, impairments and write downs were recognised in Higgins® Fiji ($17 million) and New Zealand Ceiling and
Drywall ($4 million), as the carrying value of their net assets exceeded their fair value less cost to sell. Refer to note 2.4.
Winstone Wallboards® transition costs to Tauriko ( $15 million)
Final costs incurred as part of Winstone Wallboards® operations' transition from Auckland to Tauriko (Bay of Plenty, New Zealand).
Legal Fees in relation to Iplex® Australia pipes matter ($7 million)
Legal fees incurred by Iplex® Australia in relation to Pro-fit pipes matter. Refer to note 26.
Discontinuation of engineered stone product range sales in Australia ($6 million) and additional silicosis claims provision ($4 million)
Effective from 1 July 2024, the Australian Government has banned the use, supply and manufacture of engineered stone. The ban applies
to engineered benchtops, slabs and panels. As a result, Laminex® Australia recognised $6 million of costs, the amount which includes
write down of remaining inventories, and associated fixed assets, as well as restructuring and disposal costs.
Based on the latest available facts, the Group has increased its provision for silica related personal injury claims in Australia by an
additional $4 million, refer to note 12.
Cyclone Gabrielle and North Island floods insurance recoveries ($10 million)
The Group's Concrete ($3 million) and Construction ($7 million) divisions recognised gains in Significant Items following receipt of
insurance proceeds relating to property damage losses and costs of direct remedial works following Cyclone Gabrielle and North Island
Floods in FY23.
Gain on step acquisition ($1 million)
A gain was recognised following the acquisition of the remaining 50% interest in Cromwell Certified Concrete Limited (CCCL) on 25 July
2023 for a consideration of $6.5 million. The previously held equity interest was remeasured to its fair value at the acquisition date with
the gain recognised in profit and loss as a Significant Item (NZ IFRS 3 Business Combinations).
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Fletcher Building Limited Annual Report 2024
Digital@Fletchers asset impairment ($9 million)
$9 million of capitalised Digital@Fletchers costs allocated to Tradelink® were no longer considered recoverable and therefore have been
impaired and recognised as a Significant Item. Refer to note 15.
Significant items from discontinued operations include:
Impairment of Tradelink® CGU ($155 million)
Non-cash impairments and asset write downs recognised in Tradelink® as part of the interim results (31 December 2023), including a
full impairment of Tradelink's remaining goodwill and brand balances ($122 million). A further $36 million of asset impairments were
recognised as at 30 June 2024 following announcement that the Group had entered into an agreement with Metal Manufactures Pty
Limited to sell 100% of the shares in Tradelink® for A$170 million. Refer to note 2.3 and note 2.4.
Earnings per share
Earnings per share is disclosed in full in
. The below disclosure has been included to provide additional useful information by
removing the impact of Significant Items in the current and prior year, and the resulting impact on the earnings per share measure.
The effect of Significant Items on earnings per share is as follows:
2024
NZ$M
2023
NZ$M
Net earnings/(loss) after taxation from continuing operations (as per Consolidated
Income Statement)
(86)
230
Add back: Significant Items before taxation (note 2.2)
333
301
Less: tax benefit on Significant Items (note 27)
(64)
(84)
Net earnings before Significant Items from continuing operations
183
447
Net earnings/(loss) per share before Significant Items from continuing operations (cents)
23.4
57.1
Net earnings/(loss) per share from continuing operations - as reported per
Consolidated Income Statement (cents)
(11.0)
29.4
2.3 INTANGIBLE ASSET IMPAIRMENT TESTING
GOODWILL AND INTANGIBLE ASSETS WITH INDEFINITE USEFUL LIVES
The Group tests indefinite life intangible assets, including goodwill and brands, for impairment on an annual basis. Each cash generating unit
(CGU) to which goodwill is allocated is valued using a discounted cash flow model. This is representative of the higher of fair value less costs
to dispose and value-in-use.
Management has used its past experience of sales growth, operating costs and margin, and external sources of information where
appropriate, to determine cash flow projections for the future. These cash flow projections are principally based on the business units'
forecast five-year plan, which are risk adjusted where appropriate. Cash flows beyond five years have been extrapolated using estimated
terminal growth rates, which do not exceed the long-term average growth rate for the industries and countries in which the business units
operate. Cash flows are discounted using a nominal rate specific to each business and jurisdiction.
The Group performs its annual impairment assessment and considers indicators of impairment at each reporting date. This includes
the relationship between the Group's market capitalisation and its book value, among other factors. As at 30 June 2024, the market
capitalisation of the Group was below the book value of its net equity, indicating potential impairment. In addition, the overall decline
in construction and development activities in New Zealand and Australia, as well as the ongoing economic uncertainty, have led to
decreased demand for the Group's products, also indicating potential impairment.
During the year, Tradelink® and Higgins® Fiji, previously both "watchlist" business units, were classified as disposal groups held for
sale. Prior to being classified as held for sale, and as part of the interim results, a $122 million non-cash impairment and write-down of
Tradelink®'s assets were recognised. No impairment was required for the Higgins® Fiji assets prior to their classification as held for sale.
However, as a result of the held for sale classification, the recoverable value of these CGUs was assessed against the fair value less the
cost to sell at 30 June 2024, with a non-cash impairment of $17 million recognised on Higgins® Fiji assets and $36 million recognised on
Tradelink® assets.
As at 30 June 2024, Group management classified Higgins® New Zealand and Iplex® New Zealand (2023: Higgins® New Zealand,
Higgins® Fiji and Tradelink®) as 'watchlist' business units for the purpose of the Group’s impairment testing procedures, with Iplex®
New Zealand added to the watchlist at year-end. These CGUs demonstrate a heightened sensitivity to changes in assumptions, with
a non-cash impairment of $100 million recognised in the Higgins® New Zealand CGU at year-end, and the risk of impairment/further
impairment due to reasonably possible changes in key valuation assumptions.
With the exception of Higgins® New Zealand and Iplex® New Zealand, no reasonably possible change in key assumptions used in the
determination of the recoverable value of CGUs would result in an additional and material impairment to the Group.
Notes to the Consolidated Financial Statements 2024 (Continued)
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Fletcher Building Limited Annual Report 2024
note 6
CONTENTS
New Zealand CGUs
The goodwill and brand balances for 15 New Zealand CGUs represent 50% of the Group (2023: 48%). Discount rates between 8.5% and
10.8% (2023: between 8.6% and 10.7%) have been used for New Zealand business units, reflecting the risk profile and the regions in
which they operate. An average annual growth rate of 2.8% has been used over the five-year forecast period for New Zealand business
units, based on past performance and management’s expectations of market development. The terminal growth rate employed for New
Zealand businesses was 2.0% (2023: 2.0%).
Australia CGUs
The goodwill and brand balances for four Australia CGUs represent 50% of the Group (2023: 49%). A discount rate of 7.6% (2023:
between 7.6% and 8.1%) has been used for Australian business units, reflecting the risk profile and the regions in which they operate.
An average annual growth rate of 4.2% has been used over the five-year forecast period for Australian business units, based on past
performance and management’s expectations of market development. The terminal growth rates employed for Australia businesses was
2.5% (2023: 2.5%).
Sensitivity to reasonably possible changes in assumptions
The following table sets out the remaining goodwill and brands balance for those CGUs, where a reasonably possible change in key
assumptions could result in impairment:
2024
Higgins® New Zealand
NZ$M
Iplex® New Zealand
NZ$M
Goodwill
24
105
Brands
19
7
Higgins® New Zealand
Key Assumptions
Value attributed
Revenue growth (5-year Cumulative Average Growth Rate (CAGR))
10.65%
EBIT margin (5-year average)
2.67%
Discount rate (post-tax)
10.80%
Group and Construction divisional management have implemented a number of strategic and operational initiatives aimed at resetting
the business to generate margin growth and improve productivity. These initiatives, coupled with a lower-risk and higher quality forward
orderbook (alliance contracts, national and local maintenance cost plus contracts) are expected to support productivity and drive better
profitability going forward.
Higgins® New Zealand has performed broadly in line with its FY24 budget. However, the uncertain near-to-medium-term economic
outlook and adverse trading conditions have impacted Higgins's® forecast earnings and cash flows. Group management also
acknowledges the time required for strategic initiatives to reach their full potential, and the risk that they may not, further impacting
the overall assessment of Higgins® New Zealand’s future earnings and cash flow forecast. As a result the Group has recognised a $100
million non-cash impairment and write-down of Higgins® New Zealand’s assets as at 30 June 2024. The non-cash impairment and asset
write downs included a partial impairment of Higgins® New Zealand’s goodwill balance ($90 million), as well as losses associated with
the derecognition of fixed assets ($7 million) and other associated costs ($3 million), as the business right-sized and rationalised its
property footprint.
The recoverable value of the Higgins® New Zealand CGU of $124 million was assessed as at 30 June 2024 using a value-in-use
discounted cash flow method. This valuation is based on a five-year business plan, formulated with consideration of the company's
historical performance. The long-term growth rate applied to the forecast's fifth-year cash flows is 2.0% (June 2023: 2.0%), and a post-
tax discount rate of 10.8% (June 2023: 10.1%) has been used in the impairment model.
Impact of possible changes in key assumptions on Higgins® New Zealand CGU
If the revenue CAGR assumption used in the value-in-use calculation had been 100 basis points (bp) lower than management’s estimates
as at 30 June 2024 (9.65% instead of 10.65%), the Group would have had to recognise an additional impairment against the carrying
amount of goodwill of $18 million. A 100 bp reduction in the five-year average EBIT margin would have resulted in additional impairment
of $74 million against the carrying amount of goodwill, brands, property plant and equipment and right-of-use assets. If the discount
rate applied to the cash flow projections had been 100bp higher than management’s estimates (11.8% instead of 10.8%), the Group
would have had to recognise an additional impairment of $19 million against the carrying amount of goodwill.
Iplex® New Zealand
Key Assumptions
Value attributed
Revenue growth (5-year Cumulative Average Growth Rate (CAGR))
12.37%
EBIT margin (5-year average)
12.81%
Discount rate (post-tax)
9.20%
Notes to the Consolidated Financial Statements 2024 (Continued)
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Fletcher Building Limited Annual Report 2024
Iplex® New Zealand performance in the year was materially below its FY24 budget, impacted by: slowdowns in New Zealand's
commercial, rural and residential construction sectors; loss of market share; with price ceded to reduce expensive resin stock acquired
during COVID stock build, compressing trading margins. The Group's annual impairment review showed increased sensitivity to
changes in key assumptions used to value Iplex® New Zealand's recoverable value. As a result, Iplex® New Zealand has been added to
the Group's Watchlist.
The recoverable value of the Iplex® New Zealand CGU of $195 million was assessed using a value-in-use discounted cash flow method,
marginally exceeding its carrying amount as at 30 June 2024. This valuation is based on a five-year business plan reviewed by the Board,
formulated with consideration of the company's historical performance. The long-term growth rate applied to the forecast's fifth-year
cash flows is 2.0% (June 2023: 2.0%), and a post-tax discount rate of 9.2% (June 2023: 9.2%) has been used in the impairment model.
Impact of possible changes in key assumptions on Iplex® New Zealand CGU
If the revenue CAGR assumption used in the value-in-use calculation had been 200 basis points (bp) lower than management’s estimates
as at 30 June 2024 (10.37% instead of 12.37%), the Group would have had to recognise an impairment against the carrying amount of
goodwill of $19 million. A 200 bp reduction in the five-year average EBIT margin (10.81% instead of 12.81%) would have resulted in an
impairment of $32 million against the carrying amount of goodwill. If the discount rate applied to the cash flow projections of this CGU
had been 200bp higher than management’s estimates (11.2% instead of 9.2%), the Group would have had to recognise an impairment of
$44 million against the carrying amount of goodwill.
Assets held for sale
Tradelink®
During the year, Tradelink's® performance continued to trend below its long-term targets as the business faced increased market
competition and saw its market share decrease. Group management completed a comprehensive review of Tradelink's® operations in
the year, with strategic initiatives identified to strengthen the business' market position.
Group management acknowledged that the negative short-to-medium-term economic outlook and the expected time it would take
for strategic initiatives to reach full potential would continue to adversely impact management's assessment of Tradelink's® forecast
earnings and cash flows. As a result, the Group recognised a NZ$122 million non-cash impairment and write-down of Tradelink's® assets
during the year. The non-cash impairment and write-down includes the impairment of the remaining goodwill (A$57 million) and Brand
(A$48 million) assets. Consequently, the associated deferred tax liability on brands (A$15 million) recognised in Tradelink® was also
released, as an adjustment to tax expense.
The recoverable value of the Tradelink® CGU of A$152 million was assessed as at 31 December 2023 using a value-in-use discounted
cash flow method. This valuation was based on a five-year business plan, formulated with consideration of the company's historical
performance. The long-term growth rate applied to the forecast's fifth-year cash flows is 2.5% (June 2023: 2.5%), and a post-tax discount
rate of 8.1% (June 2023: 8.1%) was used in the impairment model.
On 14 February 2024, the Group announced its intention to divest the Tradelink® business and initiated an active programme to locate a
buyer, with Tradelink® reclassified to held for sale as at 1 April 2024, see note 2.4 for further details.
Immediately prior to the classification of Tradelink® as a discontinued operation, carrying value of its net assets was measured at the
higher of its value-in-use and fair value less costs to sell, with no additional impairment or write-down required.
On 12 August 2024, the Group announced that it has entered into an agreement with Metal Manufactures Pty Limited to sell 100% of
the shares in Tradelink® for A$170 million. The transaction is made up of a cash payment of A$160 million payable on the settlement
date expected to occur on 30 September 2024. The remaining A$10 million will be a deferred cash payment based on achieving
separation milestones. Separation is expected to take up to two years and be completed by September 2026. There are no regulatory
or other conditions to be satisfied to complete the transaction. As a result, an additional impairment of $36 million (A$32.5 million) was
recognised at 30 June 2024, principally against the business unit’s property, plant and equipment, right-of-use assets and deferred tax
assets.
Higgins® Fiji
On 18 June 2024, the Group announced that it had entered an agreement to divest 50% of its Higgins® Fiji construction business to two
local partners, Fiji National Provident Fund and Fijian Holdings Limited.
The transaction valued the Higgins® Fiji business, comprising Fletcher Construction and Higgins® branded operations, at approximately
NZ$40 million. The Company will receive cash proceeds of approximately NZ$20 million for the sale of a 50% stake in the business. As a
result, the Group recorded a non-cash impairment of NZ$17 million at 30 June 2024. The full amount of impairment was allocated to the
business unit's goodwill balance.
Higgins® Fiji's assets and associated liabilities were classified as held for sale as at 30 June 2024, see note 2.4 for further details. Prior
to reclassification as held for sale, Higgins® Fiji was measured at the higher of its value-in-use and fair value less costs to sell, there was
no additional write-down to fair value less costs. On 31 July 2024, following receipt of regulatory approvals, the Group successfully
completed the transaction to divest 50% of the Higgins® Fiji construction business. The Group also fully repaid and cancelled the FJ$20
million term loan with ANZ Fiji, the loan was fully drawn as at 30 June 2024.
Notes to the Consolidated Financial Statements 2024 (Continued)
99
Fletcher Building Limited Annual Report 2024
CONTENTS
2.4 DISCONTINUED OPERATION AND ASSETS HELD FOR SALE
The Group classifies non-current assets and disposal groups as held for sale if their carrying amounts will be recovered principally through
a sale transaction rather than through continuing use. Non-current assets and disposal groups classified as held for sale are measured at the
lower of their carrying amount and fair value less costs to sell. Costs to sell are the incremental costs directly attributable to the disposal of
an asset (disposal group), excluding finance costs and income tax expense.
The criteria for held for sale classification are regarded as met only when the sale is highly probable, and the asset or disposal group is
available for immediate sale in its present condition. Actions required to complete the sale should indicate that it is unlikely that significant
changes to the sale will be made or that the decision to sell will be withdrawn. Management must be committed to the plan to sell the asset
and the sale expected to be completed within one year from the date of the classification.
Property, plant and equipment, intangible assets and right-of-use assets are not depreciated or amortised once classified as held for sale.
Assets and liabilities classified as held for sale are presented separately as current items in the Consolidated Balance Sheet.
Discontinued operations are reported when a component of the Group has been disposed of or is classified as held for sale, and represents
a separate major line of business or geographical area of operations. The results of discontinued operations are presented separately in the
Consolidated Income Statement as a single amount comprising the post-tax profit or loss of discontinued operations and the post-tax gain
or loss recognised on the disposal or remeasurement to fair value less costs to sell. Comparative information in the Consolidated Income
Statement is represented to reflect the classification of operations as discontinued from the start of the earliest period presented.
On 14 February 2024 the Group announced its intention to divest the Tradelink business and initiated an active programme to locate
a buyer. The associated assets and liabilities were consequently presented as held for sale from 1 April 2024 when the criteria to be
classified as held for sale were met, with Tradelink being classified as a discontinued operation. The results of Tradelink for the year are
presented below. Both Higgins® Fiji and NZCDS did not meet criteria of a discontinued operation, but their assets and liabilities have
been classified as held for sale as at 30 June 2024.
Financial performance and cash flow information for discontinued operation
The financial performance and cash flow information presented are for the year ended 30 June 2024 and the year ended 30 June 2023
(comparative).
2024
NZ$M
2023
NZ$M
Revenue
758
790
Cost of goods sold
(529)
(556)
Gross Margin
229
234
Selling, general and administration expenses
(222)
(221)
Significant Items
(155)
Earnings before interest and taxation (EBIT)
(148)
13
Lease interest expense
(7)
(7)
Income tax expense/(benefit)
14
(1)
Profit/(loss) after income tax of discontinued operation
(141)
5
Other comprehensive income/(loss) from discontinued operations
Net earnings/(loss) from discontinued operation
(141)
5
Net earnings/(loss) after taxation from discontinued operations (cents)
Basic
(18.0)
0.6
Diluted
(18.0)
0.6
Net cash inflow/(outflow) from operating activities
20
47
Net cash inflow/(outflow) from investing activities
(10)
(9)
Net cash inflow/(outflow) from financing activities
(5)
(28)
Net increase in cash generated by the subsidiary
5
10
The cumulative foreign exchange losses recognised in other comprehensive income in relation to Tradelink® as at 30 June 2024 were
$54 million.
Notes to the Consolidated Financial Statements 2024 (Continued)
100
Fletcher Building Limited Annual Report 2024
Assets and liabilities of disposal group classified as held for sale
The following assets and liabilities were reclassified as held for sale and in relation to the discontinued operation as at 30 June 2024:
Tradelink®
NZ$M
Higgins® Fiji
NZ$M
NZCDS
NZ$M
Assets classified as held for sale
Property, plant and equipment
31
10
Intangible assets
11
18
Tax asset
15
1
Right-of-use assets
102
1
3
Debtors
103
37
2
Inventories
169
2
2
Total assets of disposal group held for sale
431
68
8
Liabilities directly associated with assets classified as held for sale
Creditors, accruals and other liabilities
139
29
Lease liabilities
139
1
3
Provisions
20
1
1
Contracts
3
Total liabilities of disposal group held for sale
298
34
4
Disposal groups classified as held for sale as at 30 June 2024 were measured at the lower of their carrying amount and fair value less
costs to sell at the time of the reclassification, resulting in the recognition of impairments of $57 million in Tradelink®, Higgins® Fiji
and NZCDS and classified as Significant Items in the Consolidated Income Statement (see note 2.2 and note 2.3). The fair values of
Tradelink®, Higgins® Fiji and NZCDS were determined using the approach as described in note 2.3. This is a level 3 measurement as per
the fair value hierarchy.
3. CONSTRUCTION ACCOUNTING
The Group's Construction division is engaged with a wide variety of customers to construct and maintain building and infrastructure
projects across New Zealand and the South Pacific. Services provided by the division include construction contract works, engineering
and maintenance services. Each project has a different risk profile based on its individual contractual and delivery characteristics. The
Group's policies for accounting for such projects are outlined below, including related estimates and judgements made by management
that have the most significant effect on the carrying value of assets and liabilities of the Group as at 30 June 2024.
Estimates and judgements are made relating to a number of factors when accounting for construction contracts. On the income side,
these include estimates and judgements made on variations to consideration which typically include variations due to changes in scope
of work, recoveries of claim income or bonus elements from customers, and potential liquidated damages or penalties that may be levied
by customers. On the cost side, these include estimates and judgements related to the assessment of future costs after considering; the
programme of work throughout the contract, any changes in the scope of work, any maintenance and defect liabilities, expected inflation
(for unlet sub-trades), and the recovery of any cost through insurance claims. For cost reimbursable contracts, there are also estimates
required on the level of disallowable costs which requires an assessment of whether costs are recoverable under the terms of the contract
and therefore should be recognised as income. Estimates of the final outcome of each contract may include cost contingencies to take
account of specific risks within each contract that have been identified.
Construction projects are inherently more uncertain earlier in their lifetime, which leads to a number of significant estimates and
judgements being made at these early stages. Construction divisional management perform regular reviews of their project positions
including reassessment of cost to complete estimates, any cost contingencies and estimated recoverability of any variations at each
reporting date. Significant estimates and judgements are reviewed on a regular basis throughout the contract life and are adjusted where
appropriate. However, the nature of the risks on contracts are such that they often cannot be resolved until the project has been completed.
The significant judgements inherent in accounting for the Group’s most material construction projects are:
– The extent to which a project progresses in line with the complex project programme and timetable previously formed and the resulting
impact of any programme delays or gains on project costs, especially project overheads (preliminary and general costs) and any
liquidated or other damages or penalties;
– Sub-contractor costs, in particular costs that are yet to be agreed in scope or price (including inflationary pressures) or cost increase that
may arise due to programme prolongation;
Notes to the Consolidated Financial Statements 2024 (Continued)
101
Fletcher Building Limited Annual Report 2024
CONTENTS
– Recovery of any insurance claims;
– The outcome of ongoing commercial negotiations, including elements of variable consideration and changes in project scope with
customers; and
– Future weather and ground conditions.
The Group's Construction division has a diverse portfolio of long-term construction contracts. The nature and complexity of these contracts
mean the outcome can be subject to a significant level of estimation uncertainty, particularly in relation to the likelihood and quantum of any
variation claims receivable, as well as the quantification and assessment of any other claims/counterclaims that may exist. Actual outcomes
could be different from estimated amounts which may impact projection positions recognised.
Construction accounting policies
Revenue recognition
Construction contract revenue
The Group derives revenue from the construction of building and infrastructure projects across New Zealand and the South Pacific.
Contracts entered into may be for the construction of one or several separate inter-linked pieces of large infrastructure. While it is
uncommon, contracts can be entered into for the delivery of several projects. Where this occurs, management determines whether a single
or multiple performance obligations exist, and allocates the total contract price across each performance obligation based on the relative
stand-alone selling prices. The nature of construction projects ordinarily leads to variations in the project size and scope over time. It is also
normal practice for contracts to include bonus and penalty elements based on timely construction or other performance criteria, recognised
as variable consideration.
Generally, contracts identify various inter-linked activities required in the construction process and the performance obligation is fulfilled over
time and as such revenue is recognised over time. Revenue is invoiced based on the measured output of each process based on appraisals that
are agreed with the customer on a regular basis, with the Group's right to payment occurring on a performance to date basis also.
Revenue on construction contracts (including sub-contracts) is determined using the percentage of completion method and represents the
value of work carried out during the period, including amounts not invoiced. Costs are recognised as incurred and revenue is recognised
on the basis of the proportion of total costs at the reporting date to the estimated total costs of the contract. Margin on a contract is
not recognised until the outcome of the contract can be reliably estimated. Management use their professional judgement to assess
both the timing of physical completion of the project and the risks associated with forecast financial result of the contract as part of this
determination.
Maintenance contract revenue
Services revenue is primarily generated from maintenance services supplied to roading assets owned by local or central government in
New Zealand and the South Pacific. This revenue also arises in respect of infrastructure assets previously constructed by the Group where
maintenance was included in the contract. The service contracts are typically determined to have one single performance obligation which
is significantly integrated and is fulfilled over time.
Variable consideration
Revenue in relation to variations, such as a change in the scope of the contract, is only included in the contract price when it is approved by
the parties to the contract, the variation is enforceable, or in certain circumstances when it is highly probable that a significant reversal of
revenue recognised will not occur and is approved by the Board of Directors.
Contract assets, contract liabilities and provisions for onerous contracts
Contract assets/liabilities are usually stated at cost plus profit recognised to date, less progress billings. Costs include all expenditure
directly related to specific projects and an allocation of fixed and variable overheads incurred in the Group’s contract activities based on
normal operating capacity. Contract assets and liabilities arising from construction work in progress at year end are disclosed below.
Onerous contracts are defined in NZ IAS 37 Provisions; where the unavoidable costs (i.e. the costs that the division cannot avoid because it
has to fulfil the contract) of meeting the obligations under a contract exceed the economic benefits expected to be received under it. When
a contract is identified as onerous ('loss-making'), a provision is made for estimated future losses on the entire contract. Onerous contract
provisions recognised in relation to the Group's legacy building and infrastructure projects have been disclosed in note 12.
A summary of the major construction projects and their approximate stage of completion is disclosed to demonstrate the uncertainty
that remains on these projects.
Status of construction projects (> $200 million original contract value) as at 30 June 2024:
Forecast
Percentage of
completion 2024
Business unit
completion*
(% cost)
New Zealand International Convention Centre and Hobson Street
Hotel (NZICC) - Fixed price contract and fire reinstatement
Buildings
2024
92%
Pūhoi to Warkworth - Fixed price contract (Public Private Partnership)
Infrastructure
2024
99%
* Calendar year
Notes to the Consolidated Financial Statements 2024 (Continued)
102
Fletcher Building Limited Annual Report 2024
Notes to the Consolidated Financial Statements 2024 (Continued)
Revenue backlog
Revenue backlog, as disclosed below, refers to the level of construction work the Group is contracted to but is not yet complete as at
period end. This represents the performance obligations that are yet to be completed for the construction contracts active as at 30 June
2024. The long-term nature of the contracts held by the Buildings, Infrastructure, Brian Perry Civil® and Higgins® businesses will see
these performance obligations completed over a period generally between one to five years, although some may extend longer.
Revenue backlog by business unit as at 30 June 2024:
Current Revenue Backlog
NZ$M
Top 5 projects as a % of
Revenue Backlog
Buildings
104
100%
Infrastructure
305
98%
Brian Perry Civil®
395
67%
Higgins®
1,006
48%
South Pacific
35
99%
1,845
NA
Reduction in Brian Perry Civil® orderbook relates to removal of Water Enterprise Model (WEM) project
Revenue backlog by business unit as at 30 June 2023:
Current Revenue Backlog
NZ$M
Top 5 projects as a % of
Revenue Backlog
Buildings
292
100%
Infrastructure
348
97%
Brian Perry Civil®
1,298
45%
Higgins®
807
39%
South Pacific
71
97%
2,816
NA
Contract assets
The gross amount of construction and maintenance work in progress consists of costs attributable to work performed and emerging profit
after providing for any foreseeable losses. In applying the accounting policies on providing for these losses, accounting judgement is
required.
Construction contracts with cost and margin in advance of billings are presented as part of contract assets.
Contract liabilities
Construction contracts where the total progress billings issued to clients (together with foreseeable losses if applicable) on a project exceed
the costs incurred to date plus recognised profit on the contract are recognised as a liability.
2024
NZ$M
2023
NZ$M
Construction contracts with cost and margin in advance of billings
142
141
Contract assets
142
141
Construction contracts with billings in advance of cost and margin
166
82
Contract liabilities
166
82
103
Fletcher Building Limited Annual Report 2024
CONTENTS
Notes to the Consolidated Financial Statements 2024 (Continued)
Construction projects update
Pūhoi to Warkworth (P2W)
The Fletcher Construction Company Limited (the FCC) and its 50% joint venture partner, Acciona (together Construction JV), are
subcontracted for the design and construction of P2W motorway, by the Northern Express Group (NX2), which is undertaking the project on
behalf of Waka Kotahi NZ Transport Agency (Waka Kotahi).
The road opening was achieved on the 14 June 2023, with full works completion approved in May 2024. The project was initially set to be
completed in December 2021. However, programme delays and inefficiencies were experienced, as a result of constraints on resource and
productivity arising from the impacts of the NZ Government's 2020 COVID-19 pandemic response. In July 2020, an agreement was reached
between the parties which included revising the planned service commencement date to May 2022, with Waka Kotahi issuing a notice
acknowledging the right to relief under the Project Agreement for certain COVID-19 events.
COVID-19 events (further lockdowns in 2021, introduction of a traffic light system and national and regional border closures) and the
consequent impacts of those matters on supply chain and resource availability, further adversely impacted the progress of project
construction and associated costs.
The Construction JV has lodged a claim with NX2 and Waka Kotahi for the impacts and delays arising from COVID-19 and other weather
events. In December 2022, the Construction JV entered into an agreement with Waka Kotahi, which provided it with some interim and
potentially refundable financial support, but without any party agreeing variations for compensation or extensions of time for the project
to reach the contract Service Commencement Date. If no variations or extension of time are agreed between the parties or ultimately
determined under the contract, the Construction JV will incur unrecoverable costs and liquidated damages (from 16 August 2022, being the
current contractual Planned Service Commencement Date to mid-June 2023). Unless the Construction JV and Waka Kotahi agree otherwise,
that claim will be resolved through an agreed dispute resolution process, unlikely to be earlier than 2025.
Separately, Construction JV has lodged material claims under the Contract Works Insurance policy for damage to the project works caused
by landslips and weather events during construction. For claims that have been notified, coverage has been confirmed under the Contract
Works Insurance policy. An assumed recovery for all events has been included in the determination of the final project position and estimated
final margin.
Finally, as the project completes, the Construction JV will expect to make claims against some of its suppliers and may be subject to claims
against it by suppliers and subcontractors. The Group has assessed the facts and circumstances known to it relating to the Construction
JV’s estimate of net cost of remaining works, including the merits of Construction JV’s claims and likelihood of receipt of further relief under
the Project Agreement, quantification of any claims and costs under this relief and the expected recovery under insurance policies, and
concluded that no additional provision is required to be recognised as at 30 June 2024. There remains a risk that, ultimately, the full amount
of the Construction JV’s claims will not be recovered.
New Zealand International Convention Centre and Hobson Street Hotel (NZICC)
As announced on 5 February 2024, and in its interim financial statements as at 31 December 2023, additional provisions of $165 million on
New Zealand International Convention Centre and Hobson Street Hotel (NZICC), and $15 million on Wellington International Airport Limited
(WIAL) carpark project were recognised, classified as a Significant Item.
On NZICC, the additional provision was recognised as actual and expected costs to complete the project had increased, principally in the
areas of steel remediation, internal fit-out, and installation of operating systems. The increased costs were primarily due to higher levels of
subcontractor resource required to deliver the final stage of the project. In addition, it was assessed that a portion of the FCC claims against
the project Contract Works Insurance (CWI) may not be recoverable. No change in provision was required as at 30 June 2024.
At 30 June 2024, and as announced on 1 July 2024, the HSH project achieved practical completion and has been handed over to the client,
with the NZICC project remaining on schedule to complete the build by the end of calendar 2024. Additionally, prior to year-end, the FCC
settled and received final payment on its remaining CWI claims with the NZICC project insurers and SkyCity. The CWI settlement proceeds
are materially in line with those assumed in the FCC’s provision recognised at 31 December 2023, and so de-risks this aspect of the project
with the current provision on the project being unchanged from 31 December 2023. The remaining forecast revenues to secure on the
project solely relate to c. $30 million in 'BAU' client revenues (i.e. for work that was still to complete at the time of fire).
The assessment of the net cost to complete the project continues to rely on the application of estimates and judgements (e.g. programme
to complete and cost estimates for certain trades) and, as such, may be subject to change as the project progresses. It is possible that the
final provision could be below or above the levels currently allowed for due to changes in costs to complete. As the project approaches
completion, there is also risk of dispute over delay and cost with SkyCity. No claims have been received to date and project forecast and
expected final margin does not allow for any.
The Group continues to pursue recoveries under the NZICC Third Party Liability (TPL) insurance policy of more than $100 million. While the
Company considers it has good grounds to recover material amounts under the TPL policy, it has determined that these proceeds are not
yet “virtually certain” in accordance with NZ IAS 37 Provisions, Contingent Liabilities and Contingent Assets to be recognised. As such, no
amount has been recognised to be recovered under the TPL policy in the project position. The Company will continue to pursue its rights to
recovery under the TPL policy, though this is not expected to be settled until calendar year 2025.
Wellington International Carpark (WIAL)
On the WIAL carpark project, the FCC completed a multi-level carpark for WIAL in October 2018. The client had alleged there are a number
of defects in the carpark and the adjacent storm water drainage. It is claiming the cost of remediation and other related losses in the order of
$40 million. Based on the FCC’s assessment of the estimated remedial costs and expected recoveries, the FCC recognised a provision of $15
million in the interim financial statements as at 31 December 2023, classified as a Significant Item.
At 30 June 2024, the storm water drainage remediation works are nearing completion, and the cost of those remediation works are
materially in line with that assumed in the FCC’s provision recognised at 31 December 2023. The FCC continues to work with WIAL to agree
a remediation solution to quality issues identified on the carpark and to settle claims. These matters may take some time to be resolved. The
FCC has assessed that no additional provision is required to be recognised on the WIAL carpark project as at 30 June 2024.
It is possible that the final provision could be below or above the levels currently allowed for and would ultimately depend on the solution
agreed and associated costs, and final claim settlements.
104
Fletcher Building Limited Annual Report 2024
Financial Review
This section explains the results and performance of the Group, including the segmental analysis and earnings per share.
4. REVENUE FROM CONTRACTS WITH CUSTOMERS
The Group revenue is derived from the following streams:
– Sale of building products and materials
– Development and sale of properties
– Construction of building and infrastructure projects (refer to note 3)
– Maintenance service contracts (refer to note 3)
Revenue from contracts with customers is recognised when control of the goods or services is transferred to the customer at an amount
that reflects the consideration to which the Group expects to be entitled in exchange for those goods or services. The Group has generally
concluded that it is the principal in its revenue arrangements, because it typically controls the goods or services before transferring them to
the customer.
Building Products and Distribution divisions
Sale of building products and materials
The materials and distribution businesses within the Group recognise revenue when control of the goods has passed to the customer, the
associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods,
and there is a high probability that a significant reversal in the revenue recognised will not occur. Revenue is measured net of returns, trade
discounts and volume rebates. The timing of the transfer of control varies depending on the individual terms of the sales agreement. For
most sales, this occurs when the product is delivered to the customer.
Residential and Development division
Development and sale of properties
Through the Residential and Development division the Group derives income from the sale of completed houses and apartments, and the
sale of development sites surplus to Group requirements. Revenue is recognised when control passes to the customer for each type of
transaction. Residential unit sales are commonly recognised at the time of settlement, when title passes to the customer and payment is
received. Land development sales are recognised in line with the requirements of the specific sale and purchase agreement.
Performance obligations vary between the types of transactions. The sale of a completed house to a customer is a single performance
obligation, as residential units are not constructed under contract from a customer. For development sales, the division reviews the terms of
the sale to determine whether the performance obligations are distinct and separately identifiable.
2024
Sale of
building
products and
materials
NZ$M
Development
and sale of
properties
NZ$M
Construction
contract
revenue
NZ$M
Maintenance
contract
revenue
NZ$M
Total
NZ$M
Goods and services transferred at a point in time
5,378
739
6,117
Goods and services transferred over time
797
769
1,566
Total revenue from contracts with customers
5,378
739
797
769
7,683
2023
Sale of
building
products and
materials
NZ$M
Development
and sale of
properties
NZ$M
Construction
contract
revenue
NZ$M
Maintenance
contract
revenue
NZ$M
Total
NZ$M
Goods and services transferred at a point in time
5,909
594
6,503
Goods and services transferred over time
644
532
1,176
Total revenue from contracts with customers
5,909
594
644
532
7,679
Notes to the Consolidated Financial Statements 2024 (Continued)
105
Fletcher Building Limited Annual Report 2024
CONTENTS
Notes to the Consolidated Financial Statements 2024 (Continued)
5. SEGMENTAL INFORMATION
Segmental information is presented in respect of the Group’s industry and geographical segments. The use of industry segments as the
primary format is based on the Group’s management and internal reporting structure, which recognises groups of assets and operations
with similar risks and returns.
Description of industry segments
Building Products
The Building Products division is a manufacturer, distributor, and marketer of building products used in the residential,
industrial and commercial markets in New Zealand.
Distribution
The Distribution division consists of building and plumbing product distribution businesses in New Zealand.
Concrete
The Concrete division includes the Group's interests in the concrete value chain, including extraction of aggregates, and
the production of cement, ready-mix concrete and concrete products. The division operates in New Zealand.
Australia
The Australia division manufactures and sells building materials for a broad range of industries across Australia.
Residential and
Development
The Residential and Development division primarily operates in New Zealand, but also in Australia. In New Zealand, the
division's operations include building and sale of residential homes and apartments, development and sale of commercial
and residential land, and management of retirement village assets. In Australia, the division's operations include
development and sale of commercial land. Development activity includes sale of land property that is surplus to the
Group's operating requirements.
Construction
The Construction division is a supplier of building and maintenance services for infrastructure projects across New
Zealand and the South Pacific. The division is exiting the vertical building sector, with NZICC and WIAL being the last
projects for the Group.
Discontinued
operation
Discontinued operation comprises the Tradelink® business classified as held for sale from 1 April 2024 and was previously
included in the Australia segment.
Industry segments
Gross revenue
2024
NZ$M
Gross revenue
2023*
NZ$M
External revenue
2024
NZ$M
External revenue
2023*
NZ$M
Building Products
1,345
1,443
1,093
1,154
Distribution
1,615
1,824
1,578
1,792
Concrete
1,082
1,085
782
800
Australia
1,979
2,222
1,925
2,163
Materials and distribution
6,021
6,574
5,378
5,909
Residential and Development
796
607
739
594
Construction
1,614
1,319
1,566
1,176
Corporate and other
10
10
Continuing operations
8,441
8,510
7,683
7,679
Discontinued operation
762
794
758
790
Group
9,203
9,304
8,441
8,469
Less: intercompany revenue
(762)
(835)
External revenue
8,441
8,469
8,441
8,469
* The comparatives have been represented for Tradelink® classified as a discontinued operation. Further details of the change can be found in note 2.4.
Note: External revenue includes income from the Group's Vertical Buildings Business (2024: $159 million 2023: $104 million), which the Group is in the process of exiting. The New
Zealand International Convention Centre and Hobson Street Hotel (NZICC) represents the largest project to complete in this sector. EBIT before significant items, however, excludes any
earnings or losses from these projects, which are recognised as a Significant item.
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Fletcher Building Limited Annual Report 2024
EBIT before
significant items
2024
NZ$M
EBIT before
significant items
2023*
NZ$M
Building Products
143
215
Distribution
49
141
Concrete
130
156
Australia
126
167
Materials and distribution
448
679
Residential and Development
100
147
Construction
28
26
Corporate and other
(67)
(67)
Continuing operations
509
785
Discontinued operation
7
13
Group
516
798
* The comparatives have been represented for Tradelink® classified as a discontinued operation. Further details of the change can be found in note 2.4.
Funds^
2024
NZ$M
Funds^
2023
NZ$M
Building Products
1,311
1,210
Distribution
305
312
Concrete
836
789
Australia
1,128
1,138
Materials and distribution
3,580
3,449
Residential and Development
841
915
Construction
138
85
Corporate and other
226
158
Continuing operations
4,785
4,607
Discontinued operation
118
230
Group operating funds
4,903
4,837
Net debt
(1,797)
(1,438)
Deferred tax (excl. deferred tax liability on brands)
222
278
Group
3,328
3,677
^ Funds represent the external assets and liabilities of the Group and are used for internal reporting purposes.
Notes to the Consolidated Financial Statements 2024 (Continued)
107
Fletcher Building Limited Annual Report 2024
CONTENTS
Notes to the Consolidated Financial Statements 2024 (Continued)
Depreciation,
depletion and
amortisation
expense 2024
NZ$M
Depreciation,
depletion and
amortisation
expense 2023*
NZ$M
Capital
expenditure+
2024
NZ$M
Capital
expenditure+
2023*
NZ$M
Building Products
64
48
178
191
Distribution
58
53
11
62
Concrete
75
70
89
65
Australia
81
82
53
50
Materials and distribution
278
253
331
368
Residential and Development
4
3
20
23
Construction
42
39
20
19
Corporate and other
13
12
48
42
Continuing operations
337
307
419
452
Discontinued operation
36
51
10
9
Group
373
358
429
461
+ Capital expenditure represents additions to the balance sheet of property, plant and equipment and intangible assets, excluding the impacts of the investments/acquisitions of
companies or businesses.
* The comparatives have been represented for Tradelink® classified as a discontinued operation. Further details of the change can be found in note 2.4.
Geographic segments
External revenue
2024
NZ$M
External revenue
2023
NZ$M
EBIT before
significant items
2024
NZ$M
EBIT before
significant items
2023
NZ$M
New Zealand
5,602
5,353
383
612
Australia
2,702
2,959
132
177
Other jurisdictions
137
157
1
9
Group
8,441
8,469
516
798
Significant items (note 2.2)
(488)
(301)
Earnings before interest and taxation (EBIT)
28
497
Non-current assets+
2024
NZ$M
Non-current assets+
2023
NZ$M
Funds^
2024
NZ$M
Funds^
2023
NZ$M
New Zealand
4,137
3,762
3,613
3,403
Australia
1,212
1,574
1,229
1,381
Other (including debt and taxation)
3
52
(1,514)
(1,107)
Group
5,352
5,388
3,328
3,677
^ Funds represent the external assets and liabilities of the Group and are used for internal reporting purposes.
+ Excludes deferred tax assets, retirement plan surplus and financial instruments.
108
Fletcher Building Limited Annual Report 2024
Notes to the Consolidated Financial Statements 2024 (Continued)
6. NET EARNINGS PER SHARE
Earnings per share is the portion of a company's profit allocated to each outstanding ordinary share and is calculated by dividing the
earnings attributable to shareholders by the weighted average of ordinary shares on issue during the year including treasury stock. Capital
notes and options are convertible into the Company's shares and may therefore result in dilutive securities for purposes of determining the
diluted net earnings per share. The Group may, at its option, purchase or redeem the capital notes for cash at the principal amount plus any
accrued but unpaid interest.
2024
2023
Net earnings/(loss) per share (cents)
Basic
(29.0)
30.0
Diluted
(29.0)
28.4
Net earnings/(loss) per share from continuing operations (cents)
Basic
(11.0)
29.4
Diluted
(11.0)
27.8
Numerator
NZ$M
NZ$M
Net earnings/(loss)
(227)
235
Numerator for basic earnings per share
(227)
235
Dilutive capital notes
6
Numerator for diluted net earnings/(loss) per share
(227)
241
Numerator (continuing operations)
NZ$M
NZ$M
Net earnings/(loss)
(86)
230
Numerator for basic earnings/(loss) per share
(86)
230
Dilutive capital notes
6
Numerator for diluted net earnings/(loss) per share from continuing
operations
(86)
236
Denominator (millions of shares)
Weighted average number of shares outstanding (note 21)
783
783
Conversion of dilutive capital notes
65
Denominator for diluted net earnings/(loss) per share
783
848
109
Fletcher Building Limited Annual Report 2024
CONTENTS
7. CONSOLIDATED INCOME STATEMENT DISCLOSURES
2024
NZ$M
2023
NZ$M
The following items are specific disclosures required to be made and are included
within the Consolidated Income Statement:
Employee related short-term costs (1)
1,482
1,466
Other long-term employee related benefits
51
48
Net periodic pension cost
5
3
Net interest income on defined benefit assets
(4)
(4)
Depreciation of property, plant & equipment
149
137
Amortisation of intangible assets
16
14
Depreciation of right-of-use assets
172
156
Short-term and low-value lease asset expense
57
59
Repairs and maintenance
168
158
Restructuring costs
16
1
Insurance proceeds (business interruption)
(9)
(2)
Emissions trading unit sales
(6)
(9)
Bad debts written off
2
5
Research and development expenditure
3
5
Donations and sponsorships
3
4
Loss on disposal of property, plant and equipment
3
(1) Short-term employee benefits for the executive committee included in the above are disclosed in note 24.
Auditor's remuneration
2024
NZ$000's
2023
NZ$000's
Audit and review of the financial statements (1)
4,066
3,652
Total audit and assurance services
4,066
3,652
Other services
Other services (2)
24
73
Total non-assurance services
24
73
Total auditor's remuneration
4,090
3,725
(1) Includes fees for both the annual audit of the financial statements (including subsidiary level statutory financial statements) and the review of the interim financial statements.
(2) Other services relate to agreed upon procedures ($10,500), taxation compliance ($7,500) and financial statement preparation services ($5,500) relating to the Group's Fiji based
subsidiaries.
Notes to the Consolidated Financial Statements 2024 (Continued)
110
Fletcher Building Limited Annual Report 2024
Working Capital Management
This section provides details of the key elements of working capital which includes cash, receivables, inventories and short-term liabilities.
8. CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash and demand deposits with banks that are readily convertible to cash.
Cash and cash equivalents include the Group's share of amounts held by joint operations of $31 million (2023: $40 million).
At 30 June 2024, approximately $42 million (2023: $42 million) of total cash and deposits were held in subsidiaries that operate in
countries where exchange controls and other legal restrictions apply and are not immediately available for general use by the Group.
2024
NZ$M
2023
NZ$M
Cash and bank balances
295
271
Contract retention bank balances
16
18
Short-term deposits
76
Cash and cash equivalents
311
365
Reconciliation of net earnings to net cash from operating activities
2024
NZ$M
2023
NZ$M
Net earnings/(loss)
(227)
235
Earnings attributable to minority interest
7
19
(220)
254
Add/(less) non-cash items:
Depreciation, depletions and amortisation
373
358
Other non-cash items
439
211
Taxation
25
(102)
Net loss on disposal of property, plant and equipment
3
840
467
Net working capital movements
Residential and Development
67
(240)
Construction
(346)
(52)
Other divisions:
Debtors
151
34
Inventories
64
21
Creditors
(158)
(96)
(222)
(333)
Net cash from operating activities
398
388
9. DEBTORS
Debtors are amounts due from customers for goods sold or services performed in the ordinary course of business. They are generally due
for settlement within 30 to 90 days and are therefore all classified as current. Debtors are recognised initially at the amount of consideration
that is unconditional, unless they contain significant financing components, when they are recognised at fair value. The Group holds the
trade receivables with the objective of collecting the contractual cash flows and therefore measures them subsequently at amortised cost
using the effective interest method. Details about the Group’s credit risk policies and the calculation of the loss allowance are provided in
note 19.3.
Notes to the Consolidated Financial Statements 2024 (Continued)
111
Fletcher Building Limited Annual Report 2024
CONTENTS
2024
NZ$M
2023
NZ$M
Trade debtors
636
875
Contract debtors
148
126
Contract retentions
32
35
Less expected credit loss provisions
(15)
(20)
Trade and contract debtors
801
1,016
Other receivables
113
160
914
1,176
Current
705
893
0 - 30 days over standard terms
80
94
31 - 60 days over standard terms
10
12
61+ days over standard terms
21
37
Provision
(15)
(20)
Trade and contract debtors
801
1,016
Fair values of debtors
Due to the short-term nature of the current receivables, their carrying amount is considered to be the same as their fair value.
Recoverability and risk exposure
Information about the recoverability of trade receivables and the Group’s exposure to foreign currency risk and credit risk can be found
in notes 19.1 and 19.3.
10. INVENTORIES, INCLUDING LAND AND PROPERTY DEVELOPMENTS
Raw materials, stores, work in progress and finished goods
Raw materials, stores, work in progress and finished goods are stated at the lower of cost and net realisable value. Cost comprises direct
materials, direct labour and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of
normal operating capacity. Cost includes the reclassification from equity of any gains or losses on qualifying cash flow hedges relating to
purchases of raw materials but excludes borrowing costs. Costs are assigned to individual items of inventory on the weighted average basis.
Costs of purchased inventory are determined after deducting rebates and discounts. Net realisable value is the estimated selling price in the
ordinary course of business less the estimated costs of completion and the estimated costs and replacement costs in the consumable stores
and spares necessary to make the sale.
Property and land inventories
Residential units and freehold land held for resale are stated at the lower of cost and net realisable value. Freehold land under development
comprises land acquisition and development costs as well as any direct or indirectly attributable overheads. Residential units, both
completed and under development, comprise apportioned land costs as well as direct materials, labour costs, site overheads, associated
professional charges and other attributable overheads. Net realisable value represents the estimated selling prices less all estimated costs
of completion and overheads.
2024
NZ$M
2023
NZ$M
Manufacturing, distribution and other inventories
Raw materials
213
249
Work in progress
17
16
Finished goods
585
797
Consumable stores and spare parts
54
41
869
1,103
Inventories held at cost
814
1,003
Inventories held at net realisable value
55
100
869
1,103
Notes to the Consolidated Financial Statements 2024 (Continued)
112
Fletcher Building Limited Annual Report 2024
2024
NZ$M
2023
NZ$M
Property and land inventories
Freehold land
69
26
Freehold land under development
511
455
Properties under development
273
364
Completed properties
148
132
1,001
977
All property and land inventories are held at cost.
Total inventories
Current portion
1,276
1,624
Non-current portion
594
456
1,870
2,080
Inventory classified as non-current
The non-current portion of inventories relates to land and developments that are expected to be held for greater than 12 months.
Land and property commitments
The Group's Residential and Development division has commitments for the purchase of land and construction services totalling $275
million (2023: $455 million), of which $86 million is expected to be delivered in the year ending 30 June 2025.
Emissions units
Emissions units held for own use are allocated to the Group under the New Zealand Emissions Trading Scheme (ETS) and used to
settle the Group's emissions obligation. The units are initially recognised at cost with subsequent reassessment for lower of cost or net
realisable value. Emissions units held by the Group as at 30 June 2024 have been recognised at nil value (2023: nil).
11. CREDITORS, ACCRUALS AND OTHER LIABILITIES
Trade creditors and other liabilities are stated at cost or estimated liability where accrued. Employee entitlements include annual leave
which is recognised on an accrual basis and the liability for long service leave which is measured as the present value of expected future
payments to be made in respect of services provided by employees.
Assumptions in determining long service leave relate to the discount rate, estimates relating to the expected future long service leave
entitlements, future salary increases, attrition rates and mortality.
2024
NZ$M
2023
NZ$M
Trade creditors
530
772
Contract retentions
22
23
Accrued interest
20
18
Other liabilities
498
429
Employee entitlements
200
219
Workers' compensation schemes
11
7
1,281
1,468
Current portion
1,147
1,416
Non-current portion
134
52
Carrying amount at the end of the year
1,281
1,468
The non-current portion of creditors and accruals as at 30 June 2024 primarily relates to long service employee entitlement obligations
and deferred land purchases.
Notes to the Consolidated Financial Statements 2024 (Continued)
113
Fletcher Building Limited Annual Report 2024
CONTENTS
Restructuring
NZ$M
Warranty &
environmental
NZ$M
Onerous
contracts
NZ$M
Other
NZ$M
Total
NZ$M
2024
Carrying amount at the beginning of the year
11
24
281
118
434
Charged to earnings
14
6
180
14
214
Settled or utilised
(8)
(10)
(383)
(40)
(441)
Released to earnings
(1)
(2)
(4)
(7)
Recognised on balance sheet
2
2
Classified as held for sale
(1)
(2)
(3)
15
18
78
88
199
2023
Carrying amount at the beginning of the year
16
25
78
78
197
Charged to earnings
2
7
255
47
311
Settled or utilised
(7)
(6)
(52)
(22)
(87)
Released to earnings
(1)
(2)
(13)
(16)
Recognised on balance sheet
28
28
Currency translation
1
1
11
24
281
118
434
Notes to the Consolidated Financial Statements 2024 (Continued)
12. PROVISIONS
Provisions for restructuring, service and environmental warranties and other provisions are recognised when the Group has a present legal or
constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and the
amount can be reliably estimated. Provisions are not recognised for future operating losses other than losses recognised on onerous contracts.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering
the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the
same class of obligations may be small.
Provisions are measured at the present value of management’s best estimate at the end of the reporting period of the expenditure required
to settle the present obligation. The discount rate used to determine the present value is a pre-tax rate that reflects current market
assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is
recognised as an interest expense.
Restructuring
Restructuring provisions are recognised when the Group is demonstrably committed, without realistic possibility of withdrawal, to a formal
detailed plan. Costs relating to ongoing activities are not provided for.
Warranty and environmental
Warranty provisions represent an estimate of potential liability for future rectification work in respect of products sold and services
provided. Environmental provisions represent an estimate for future liabilities relating to environmental obligations.
Onerous contracts
An onerous contract is a contract under which the unavoidable costs (i.e. the costs that the Group cannot avoid because it has the contract)
of meeting the obligations under the contract exceed the economic benefits expected to be received under it. The unavoidable costs
under a contract reflect the least net cost of exiting from the contract, which is the lower of the cost of fulfilling it and any compensation
or penalties arising from failure to fulfil it. The cost of fulfilling a contract comprises the costs that relate directly to the contract (i.e. both
incremental costs and an allocation of costs directly related to contract activities).
Other
Other provisions relate to miscellaneous matters, across the Group, including any make good provisions.
114
Fletcher Building Limited Annual Report 2024
2024
NZ$M
2023
NZ$M
Current portion
171
403
Non-current portion
28
31
Carrying amount at the end of the year
199
434
During the year, the Group utilised $8 million (2023: $7 million) in respect of restructuring obligations across various businesses. The $15
million remaining provision, in relation to restructuring, is expected to be utilised within the next 12 months. Warranty and environmental
provisions are expected to be utilised over the next two years. Onerous contracts include a charge to earnings of $180 million associated with
the completion of the NZICC and the WIAL projects (refer to note 3). Other provisions include a charge to earnings for the recognition of a
fund related to the Iplex® Australia Pro-fit pipes matter (refer to note 26), and an additional provision for the settlement of silicosis claims in
Australia.
Silicosis
Laminex® Australia (together with other engineered stone manufacturers, distributors, and fabricators in Australia) is the subject of a number
of silica related personal injury claims in Australia. Laminex® Australia has settled the majority of claims that have been brought against it to
date, and in FY24 Laminex® Australia contributed $1.3m to claim settlements. Estimating the number and cost of future silica related personal
injury claims is subject to uncertainties and assumptions, as further detailed below. The Group has considered the exposure Laminex®
Australia may have for the existing and future claims and, to the extent it considers appropriate to do so, has provided for them. Based on
currently available information, the Group has increased its estimate of the future number claims by approximately 20% compared to its
prior estimate. In addition, regulators in multiple States are currently seeking a greater contribution from the industry to settlement amounts
than has been the case historically. Laminex® Australia does not accept the basis for seeking greater contribution, however there is a risk that
the proportionate contribution by the industry to settlement amounts may increase in future claims. Based on its assessment of the factors
above, the Group has increased its provision for silica related personal injury claims in Australia by an additional $4 million (A$3.4 million),
which has been classified as a Significant Item. Notwithstanding that increase, and the information obtained from settling claims in recent
years, it is not possible, at this stage, to determine the Group’s full exposure to these claims due to significant uncertainty associated with:
– the number of workers affected by silicosis as a result of engineered stone provided by manufacturers and fabricators in Australia,
the number of claims that may be received and the timing of them;
– the nature of those claims and the amounts sought to be recovered, which vary considerably based on the condition and circumstances of
the injured worker;
– the size of any settlement amounts agreed or damages awarded, particularly given different laws in various States; and
– the degree to which other parties, such as the worker’s employer and other manufacturers, are liable to (and do) contribute to any amount
owed to the worker.
As a result, there remains a risk that, ultimately, the final exposure of Laminex® Australia to these claims will be greater than the amount
currently allowed.
Provision for Investigation Fund
As previously advised, Iplex® Australia had made a provision for certain costs associated with this matter of A$15 million in the prior year,
which was classified as a Significant Item. That provision is not an indication of Iplex® Australia's view as to the costs it will or may incur
in relation to this matter, but relates to costs expected to be incurred in investigating this matter, contributing to the cost of repairs and
replacement work by Western Australia builders who choose to do so in the interim (in return for the provision of data and access to homes
which have had plumbing failures) and fund the work to identify a solution for the industry, as described in the Company’s 17 April 2023 NZX
announcement. As at 30 June 2024, approximately A$2.5m of the Fund remains to be spent.
Fletcher Insulation® provision for product claims
Fletcher Insulation® Australia is the subject of claims relating to installed glass wool insulation containing an imported foil. Fletcher
Insulation® Australia is investigating the complaints to ascertain the cause and extent of the issue. Fletcher Building’s New Zealand insulation
business, Comfortech®, did not use the same imported foil. The Group has considered the exposure Fletcher Insulation® Australia may
have for the existing and future claims, with a provision recognised based on the facts and circumstances known at balance date. Fletcher
Insulation® Australia is also assessing potential recoveries from its supplier of the product. There remains a risk that the Group’s full exposure
will be greater than the amount currently allowed.
Notes to the Consolidated Financial Statements 2024 (Continued)
115
Fletcher Building Limited Annual Report 2024
CONTENTS
Long-term Investments
This section details the long-term assets of the Group including property, plant and equipment, investment property, intangible assets
and leases.
13. PROPERTY, PLANT AND EQUIPMENT
Land, buildings, plant and machinery and fixtures and fittings are stated at historical cost less depreciation. Historical cost includes
expenditure that is directly attributable to the acquisition of the items. 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, including subsequent
expenditure. To the extent acquisition, development and construction of capital projects extend over a period of 12 months, attributable
borrowing costs are capitalised as part of the cost of the asset while the asset is being developed or constructed. On completion of
development, all assets included in assets under construction are reclassified appropriately into the relevant categories of property, plant
and equipment.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable
that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying
amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged
to the Consolidated Income Statement during the reporting period in which they are incurred.
Depreciation of property, plant and equipment is calculated on the straight line method. Expected useful lives, which are regularly reviewed,
typically range between:
Buildings
30–50 years
Plant and machinery
5–15 years
Fixtures and equipment
2–10 years
Resource extraction assets are held at historic cost and depleted over the shorter of the life of the site or right to use period. Site
development costs incurred in order to commence extraction are capitalised as resource extraction assets.
Assets are reviewed annually for impairment indicators. An asset’s carrying amount is written down immediately to its recoverable amount if
the asset’s carrying amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the Consolidated Income
Statement.
2024
Land
NZ$M
Buildings
NZ$M
Plant &
Machinery
NZ$M
Fixtures &
Equipment
NZ$M
Resource
Extraction
NZ$M
Total
NZ$M
Carrying value at the beginning of the year
242
316
1,270
140
104
2,072
Additions
20
32
221
42
19
334
Acquisitions from business combination
1
1
1
3
Disposals
(1)
(2)
(5)
(2)
(10)
Depreciation expense
(11)
(104)
(31)
(10)
(156)
Impairment
(8)
(8)
Classified as held for sale
(2)
(1)
(10)
(32)
(45)
Currency translation
1
1
260
334
1,366
117
114
2,191
Represented by:
Cost
260
464
2,752
348
166
3,990
Accumulated depreciation and impairment
(130)
(1,386)
(231)
(52)
(1,799)
Carrying value at the end of the year
260
334
1,366
117
114
2,191
Notes to the Consolidated Financial Statements 2024 (Continued)
116
Fletcher Building Limited Annual Report 2024
2023
Land
NZ$M
Buildings
NZ$M
Plant &
Machinery
NZ$M
Fixtures &
Equipment
NZ$M
Resource
Extraction
NZ$M
Total
NZ$M
Carrying value at the beginning of the year
183
259
1,123
133
102
1,800
Additions
68
63
209
40
11
391
Acquisitions from business combination
10
8
48
2
68
Disposals
(1)
(1)
(2)
(2)
(6)
Depreciation expense
(9)
(98)
(32)
(9)
(148)
Reversal of impairment
4
4
Impairment
(6)
(6)
Transfer of assets to inventory
(22)
(2)
(1)
(25)
Currency translation
(2)
(4)
(6)
242
316
1,270
140
104
2,072
Represented by:
Cost
242
448
2,678
417
147
3,932
Accumulated depreciation and impairment
(132)
(1,408)
(277)
(43)
(1,860)
Carrying value at the end of the year
242
316
1,270
140
104
2,072
As at 30 June 2024, property, plant and equipment includes $396 million of assets under construction that are not depreciated until they
are commissioned and brought into use (2023: $607 million).
Physical impacts from climate-related risk
In FY24, the Group appointed Aon New Zealand to assess climate related physical risks. Three scenarios over three time horizons (2030,
2050 and 2070) were assessed. The scenarios used map to RCP2.5/SSP1, RCP2.6/SSP2 and RCP 8.5/SSP3 in the fifth and sixth IPCC
assessment reports. Of the three scenarios assessed, the RCP 8.5/SSP3 scenario, also known as the ‘reasonable worst case’ or ‘Hot
House’ scenario, is the scenario with the highest potential climate impacts. The assessment focused on a number of climate-related
hazards, including rainfall, temperature rise, sea level rise, extreme storm events and bush fire.
The FY24 review confirmed that:
–
the Group's overall exposure to climate related hazards is moderate with flooding being the key exposure;
–
the share of the Group's asset value assessed to have high or extreme flood hazard exposure has not materially changed from
the previous assessment in 2022;
–
the assessment did not identify a material change in risk in the FY2030 or 2050 timeframes;
–
some change in flood risk is expected for the FY2070 timeframe due to changes in climate stressors.
In FY23, there were property damages and direct remedial works resulting from the impacts of Cyclone Gabrielle and North Island Floods
in New Zealand, which amounted to $21 million. Those businesses and locations impacted, are included within the identified Group's
assets exposed to high or extreme flood hazards per the Aon New Zealand climate related physical risk report. Overall, the analysis
quantified a physical risk which is not material to the Group’s future cash flows. The analysis confirmed no change to the expected useful
economic lives of non-current assets as disclosed.
14. INVESTMENT PROPERTY
The Group's investment property primarily relates to Vivid Living®, the Group's retirement operations, and is held for long-term yields and
is not occupied by the Group. The Group's investment property includes freehold development land and building units under development
including adjacent common facilities.
Investment property is initially measured at cost and includes land and property construction costs, together with any directly attributable
overheads of bringing the asset to the condition necessary for it to be capable of operating in the manner intended by management.
The Group applies the fair value model for subsequent measurement of its development land and completed retirement units, with any
resulting gain or loss being recognised in the Consolidated Income Statement. The measurement of fair value is within the scope of NZ IFRS
13 Fair Value Measurement, and determined by way of an independent valuation undertaken of the retirement village assets in accordance
with professional valuation standards as at 30 June 2024.
All investment property has been determined to be level 3 in the fair value hierarchy as the fair value is determined using inputs that are
unobservable.
Notes to the Consolidated Financial Statements 2024 (Continued)
117
Fletcher Building Limited Annual Report 2024
CONTENTS
The Group's investment property is categorised as follows:
2024
NZ$M
2023
NZ$M
Development land at fair value
27
14
Retirement units under construction at cost
25
17
Completed retirement units at fair value
48
27
100
58
Movement in the Group's investment property balances is outlined below:
2024
NZ$M
2023
NZ$M
Opening balance
58
34
Additions
20
19
Transferred from inventory
20
3
Transferred to inventory
(14)
Change in fair value
2
16
Closing balance
100
58
The Group’s interest in all completed investment property was valued on 30 June 2024 by Colliers Limited, at a total of $48 million (2023:
$27 million).
During the year, 17 retirement units were provided to residents under Vivid Living®'s occupation rights agreements (ORA). As at 30 June
2024, the carrying value of the Group's ORA liability amounted to $17 million, recognised in Other Liabilities, refer to note 11.
15. INTANGIBLE ASSETS
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangibles are carried at cost
less any accumulated amortisation and accumulated impairment losses.
The Group's intangible assets with indefinite useful lives are not amortised but are tested for impairment annually, either individually or at the
cash-generating unit level. Intangible assets with a definite life are amortised on a straight-line basis.
Goodwill is stated at cost, less any impairment losses. Goodwill is allocated to cash generating units and is not amortised but is tested
annually for impairment, and when an indication of impairment exists. Brands for which all relevant factors indicate that there is no limit to
the foreseeable net cash flows are considered to have an indefinite useful life and are held at cost and are not amortised but are subject to an
annual impairment test.
For the purposes of considering whether there has been an impairment, assets are grouped at the lowest level for which there are identifiable
cash flows that are largely independent of the cash flows of other groups of assets. When the book value of a group of assets exceeds the
recoverable amount, an impairment loss arises and is recognised in the Consolidated Income Statement immediately.
Amortisation of definite life intangible assets is calculated on the straight line method. Expected useful lives, which are regularly reviewed,
typically range between:
Intangible assets, including software
5-15 years
Cloud computing arrangements
The Group recognises costs incurred in configuring or customising cloud application software as an intangible asset only if the activities
create a resource that the Group can control and from which it expects to benefit. Such costs are amortised over the estimated useful life
of the software application on a straight-line basis. The remaining useful life is reviewed at least at the end of each reporting period and any
changes are treated as changes in accounting estimates.
Where the Group cannot determine whether it has control of the cloud application software, the arrangement is deemed to be a service
contract and any implementation costs (i.e. cost incurred to configure or customise the cloud application software), are expensed to the
Consolidated Income Statement as incurred.
Where the provider of the cloud application software provides both configuration and customisation services, judgement is required to
determine whether these services are distinct from the underlying use of the software application. Distinct configuration and customisation
costs are expensed as incurred as the software application is configured or customised (i.e. upfront). Non-distinct configuration and
customisation costs, that significantly enhance or modify the cloud-based application, are recognised as a prepaid asset and expensed over
the contract term on a straight-line basis.
To the extent the acquisition and development of capital intangible projects extend over a period of 12 months, attributable borrowing
costs are capitalised as part of the cost of the asset while the asset is being developed. On completion, all cost included in asset under
development are reclassified as Other Intangibles and amortised when available for use.
Notes to the Consolidated Financial Statements 2024 (Continued)
118
Fletcher Building Limited Annual Report 2024
Assessing the carrying value of goodwill and indefinite life brands requires management to estimate future cash flows to be generated by
the related cash generating unit. The key assumptions used in the value-in-use or fair value less costs of disposal basis include the expected
rate of growth of revenues and earnings, the terminal growth rate and the appropriate discount rate to apply, and are detailed in note 2.3.
2024
Goodwill
NZ$M
Brands
NZ$M
Other
Intangibles
NZ$M
Total
NZ$M
Carrying value at the beginning of the year
823
287
143
1,253
Additions
75
75
Disposals
(1)
(1)
Acquired from business combination
6
6
Impairment
(153)
(52)
(9)
(214)
Amortisation expense
(16)
(16)
Classified as held for sale
(33)
(2)
(14)
(49)
Currency translation
1
1
643
234
178
1,055
Represented by:
Cost
643
314
364
1,321
Accumulated impairment/amortisation
(80)
(186)
(266)
Carrying value at the end of the year
643
234
178
1,055
2023
Goodwill
NZ$M
Brands
NZ$M
Other
Intangibles
NZ$M
Total
NZ$M
Carrying value at the beginning of the year
717
289
110
1,116
Additions
53
53
Disposals
(3)
(3)
Acquired from business combination
110
110
Impairment
(1)
(1)
Amortisation expense
(16)
(16)
Currency translation
(4)
(2)
(6)
823
287
143
1,253
Represented by:
Cost
823
367
310
1,500
Accumulated impairment/amortisation
(80)
(167)
(247)
Carrying value at the end of the year
823
287
143
1,253
As at 30 June 2024, other intangible assets include $120 million of assets under development (2023: $82 million). Included in the
amount are costs associated with Group's Digital@Fletchers (D@F) ERP project. D@F is a multi-year process to transition all the Group’s
manufacturing and distribution business units to a single integrated ERP.
As at 30 June 2024, the Group had capitalised $114 million of costs associated with the project, including $5 million of capitalised
borrowing costs, with $44 million of costs capitalised to the project during the current year. In June 2024, the project was paused for
25 months, with only four of the Group’s business units having transitioned to the platform by 30 June 2024. Amortisation of $1 million
has been recognised on the Group Template of the D@F asset during the year, with the annual amortisation of the Group Template
to increase as it is leveraged and utilised by other business units when they transition. For impairment testing purposes the costs
capitalised are treated as a “corporate asset” and have been allocated to business units (CGUs) on a reasonable and consistent basis to
determine if they are recoverable, based on original expected use. $9 million of capitalised costs allocated to Tradelink® are no longer
considered recoverable and therefore have been impaired, with the impairment recognised as a Significant Item.
Notes to the Consolidated Financial Statements 2024 (Continued)
119
Fletcher Building Limited Annual Report 2024
CONTENTS
Significant intangible balances within cash-generating units (CGUs)
Goodwill
2024
NZ$M
Goodwill
2023
NZ$M
Brands
2024
NZ$M
Brands
2023
NZ$M
Laminex® Australia
157
157
124
124
Higgins® New Zealand
24
114
19
19
Iplex® New Zealand
105
105
7
7
Stramit®
61
62
41
41
Tradelink®
62
53
PlaceMakers®
56
56
Waipapa Pine
57
57
Humes®
49
49
Other
134
161
43
43
643
823
234
287
The goodwill allocated to significant CGUs accounts for 79% (2023: 80%) of the total carrying value of goodwill. The remaining 'other'
CGUs, which comprise 12 (2023: 12) in total, are each less than 6% of total carrying value. The significant brand assets account for 82%
(2023: 86%) of the total carrying value of brands. The remaining 'other' brand assets are each less than 5% of total carrying value (2023:
5%).
16. LEASES
The Group leases various offices, warehouses, retail stores, equipment and vehicles. Rental contracts are typically made for fixed periods,
but may have extension options.
Lease terms are negotiated on an individual basis and contain a wide range of terms and conditions. The lease agreements do not impose
any covenants other than the security interests in the leased assets that are held by the lessor. Leased assets may not be used as security for
borrowing purposes.
Assets and liabilities arising from a lease are initially measured on a present value basis. The lease payments are discounted using the
interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for property leases in the Group, the
lessee’s incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to
obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.
Right-of-use assets are measured at cost and include, after consideration of the initial measurement of the lease liability, any lease
incentives, initial direct costs and any make-good costs associated with the lease. Right-of-use assets are generally depreciated over the
shorter of the asset's useful life and the lease term on a straight-line basis. If it is reasonably certain the Group will exercise a purchase
option, the right-of-use asset is depreciated over the underlying asset’s useful life.
Payments associated with short-term leases of equipment and vehicles and all leases of low-value assets are recognised on a straight-line
basis as an expense in the Consolidated Income Statement. Short-term leases are leases with a lease term of 12 months or less. Low-value
assets comprise IT equipment and small items of office furniture.
The Group has some lease contracts that include extension options. The Group assesses at lease commencement date whether it is
reasonably certain it will exercise the extension options. The Group reassesses whether it is reasonably certain it will exercise the options
if there is a significant event or significant change in circumstances within its control. These options provide flexibility in managing the
leased-asset portfolio and align with the Group’s business needs. Management exercises significant judgement in determining whether these
extension and termination options are reasonably certain to be exercised.
As at 30 June 2024, the 6 largest property lease contracts (2023: 4) have all related extension options included in the estimated lease term
(where management is reasonably certain to exercise the options), resulting in future lease payments being included in the measurement of
the lease liability recorded in the Consolidated Balance Sheet.
Notes to the Consolidated Financial Statements 2024 (Continued)
120
Fletcher Building Limited Annual Report 2024
Right-of-use assets
2024
Land
NZ$M
Buildings
NZ$M
Plant &
machinery
NZ$M
Total
NZ$M
Opening net book value at the beginning of the year
12
1,102
210
1,324
Additions and renewals
1
152
108
261
Acquisitions from business combination
Depreciation
(1)
(124)
(75)
(200)
Impairment
(2)
(2)
Terminations / revisions of extension options
(71)
(2)
(73)
Classified as held for sale
(96)
(26)
(122)
Currency translation
2
1
3
Closing balance at the end of the year
12
963
216
1,191
2023
Opening net book value at the beginning of the year
12
1,135
204
1,351
Additions and renewals
102
75
177
Acquisitions from business combination
1
24
25
Depreciation
(1)
(126)
(67)
(194)
Impairment
Terminations / revisions of extension options
(31)
(1)
(32)
Currency translation
(2)
(1)
(3)
Closing balance at the end of the year
12
1,102
210
1,324
Lease liabilities
2024
NZ$M
2023
NZ$M
Opening balance
1,596
1,655
Additions and renewals
258
177
Acquisitions from business combination
25
Classified as held for sale
(143)
Repayments
(206)
(196)
Terminations / revisions of extension options
(74)
(59)
Currency translation
5
(6)
Closing balance
1,436
1,596
Current portion
164
192
Non-current portion
1,272
1,404
Carrying amount at the end of the year
1,436
1,596
Notes to the Consolidated Financial Statements 2024 (Continued)
121
Fletcher Building Limited Annual Report 2024
CONTENTS
Reconciliation of liabilities arising from financing activities
The table below details changes in the Group’s net debt arising from financing activities, including both cash and non-cash changes.
2023
NZ$M
Cash flows
NZ$M
Currency
translation
NZ$M
Other non-cash
movements
(including hedge
accounting)
NZ$M
2024
NZ$M
Private placements
484
(3)
8
489
Bank loans
946
355
1
1,302
Capital notes
343
(46)
297
Other loans
30
(10)
20
Carrying value of borrowings (as per Consolidated
Balance Sheet)
1,803
299
(2)
8
2,108
Less: value of derivatives used to manage changes in
hedged risks on debt instruments
(26)
(10)
5
(31)
Economic debt
1,777
299
(12)
13
2,077
Less: Cash and cash equivalents
(365)
54
(311)
Net debt
1,412
353
(12)
13
1,766
Funding and Financial Risk Management
This section includes details on the Group's funding and outlines the market, credit and liquidity risks that the Group is exposed to and
how these risks are managed, including the use of derivative financial instruments.
Capital risk management
The Group's objectives when managing capital are to provide returns to shareholders and benefits for other stakeholders and to
maintain an optimal capital structure that safeguards the Group's ability to continue as a going concern. In order to maintain or adjust
the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, undertake
share buybacks, issue new shares or sell assets to reduce net debt.
The Group has various debt facilities and covenants in place. A key measure is a through-the-cycle net debt to EBITDA ratio (leverage).
Net debt represents the value of the Group's drawn borrowings adjusted for debt hedging activities and available cash funding. The
target leverage ratio range for the group is 1.0 to 2.0 times. It is intended that the Group will not be materially outside the target leverage
ratio range on a long-term basis.
Credit rating
On 3 October 2023, the Group announced that it has been assigned an investment grade credit rating from an accredited rating
agency, Moody’s Investors Service, of Baa2 with a stable outlook.
On 5 June 2024, the Group has been notified that credit rating agency Moody’s Ratings has amended the Company’s credit rating from
Baa2 on a stable outlook to Baa3 on a negative outlook. This amendment also applies to the rating for the Company’s medium-term note
(MTN) program. The amended rating does not have a material impact on the Company’s cost of funding in the near-term.
17. BORROWINGS
The Group borrows in the form of private placements, bank loans, capital notes and other financial instruments. Funding costs
associated with the Group's borrowings are shown in note 18.
Borrowings are initially recognised at fair value net of attributable transaction costs, and are subsequently measured at amortised cost
using the effective interest rate method. Any borrowings that have been designated as hedged items (USD and any other foreign currency
borrowings) are carried at amortised cost plus a fair value adjustment under hedge accounting requirements. Borrowings denominated in
foreign currencies are retranslated to the functional currency at each reporting date.
Economic debt represents the face value of drawn borrowings adjusted for foreign currency movements hedged with derivative
instruments. The Group uses cross currency interest rate swaps, interest rate swaps and forward foreign exchange contracts to manage
its exposure to interest rates and borrowings sourced in currencies different from that of the borrowing entity's reporting currency.
Details of debt hedging activities and instruments used are included in note 19.
Notes to the Consolidated Financial Statements 2024 (Continued)
122
Fletcher Building Limited Annual Report 2024
Notes to the Consolidated Financial Statements 2024 (Continued)
2022
NZ$M
Cash flows
NZ$M
Currency
translation
NZ$M
Other non-cash
movements
(including hedge
accounting)
NZ$M
2023
NZ$M
Private placements
481
16
(13)
484
Bank loans
180
773
(7)
946
Capital notes
350
(6)
(1)
343
Other loans
29
1
30
Carrying value of borrowings (as per Consolidated
Balance Sheet)
1,040
768
9
(14)
1,803
Less: value of derivatives used to manage changes in
hedged risks on debt instruments
(19)
(3)
(16)
12
(26)
Economic debt
1,021
765
(7)
(2)
1,777
Less: Cash and cash equivalents
(351)
(16)
2
(365)
Net debt
670
749
(5)
(2)
1,412
Carrying value of borrowings included within the Consolidated Balance Sheet as follows:
2024
NZ$M
2023
NZ$M
Current borrowings
86
88
Non-current borrowings
2,022
1,715
Total borrowings
2,108
1,803
At reporting date, the Group had the following funding facilities:
Utilised facilities
2,077
1,777
Unutilised bank loan facilities
760
1,014
Total facilities
2,837
2,791
Private placements
Private placements comprise loans of US$246 million, CA$15 million, EUR41 million and GBP10 million with maturities between 2026 and
2028.
Capital notes
At 30 June 2024 the Group had issued $297 million of listed capital notes to retail investors (2023: $343 million) with maturities between
2025 and 2029. 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.
Listed capital notes
Listed capital notes are long-term fixed rate unsecured subordinated debt instruments that are traded on the NZDX. On election date,
holders may choose either to keep their capital notes on new terms or convert the principal amount and any interest into shares of
Fletcher Building Limited, at approximately 98% of the current market price. If the principal amount of these notes held at 30 June 2024
were to be converted to shares, 107 million (2023: 65 million) Fletcher Building Limited shares would be issued at the share price as at
30 June 2024, of $2.83 (2022: $5.42).
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 interest.
As at 30 June 2024, the Group held $202 million (2023: $157 million) of its own capital notes.
Bank Loans
Syndicated revolving credit facilities
At 30 June 2024, the Group had a NZ$925 million (2023: $925 million) and AU$674.5 million (2023: AUD674.5 million) syndicated
revolving credit facility on an unsecured, negative pledge and borrowing covenant basis. The participating lenders are both New
Zealand registered and offshore banks. The facility comprises four Tranches as follows: AU$674.5 million expiring in two tranches
including 1 July 2027 and 4 June 2029, NZ$325 million expiring on 22 November 2026, NZ$400 million expiring on 1 July 2027 and
NZ$200 million expiring on 31 May 2028. The funds under the syndicated revolving credit facility can be borrowed in Australian and
New Zealand dollars only.
123
Fletcher Building Limited Annual Report 2024
CONTENTS
On 4 June 2024, the Group announced amendments to its banking agreements which will extend the tenor of its debt facilities, and
enable it to rely on more favourable terms for covenant testing through to the end of calendar 2025 if required. Fletcher Building
Limited has agreed with its Syndicated Facility Agreement lenders to refinance Tranche D of the SFA. This A$674.5m facility was
scheduled to expire in October 2025. The agreement extends the expiry date for this facility into two longer-dated maturities: A$424.5
million will now expire in July 2027, and A$250 million will expire in June 2029. The agreement significantly improves the tenor of the
Group's funding lines, such that the next material debt maturity is in FY27.
Club loan facility
On 18 December 2023, the Group executed a NZ$400 million loan facility with a three-bank syndicate expiring on 30 November 2026.
The three banks are all New Zealand registered. The facility comprises a NZ$310 million revolving credit tranche and a NZ$90 million
term loan tranche. As at 30 June 2024 the facility was fully drawn. This facility replaces and extends a NZ$300 million bi-lateral bank
revolving credit facility with expiry date 31 October 2024, which was repaid in full and cancelled on 18 December 2023.
Other Loans
At 30 June 2024, the Group had other loans of $20 million (2023: $30 million) and all were subject to the negative pledge. Other loans
include bank overdrafts, short-term loans, working capital facilities and vendor loans.
Negative pledge
The Group borrows certain funds based on a negative pledge arrangement. The negative pledge includes a cross guarantee between
a number of wholly owned subsidiaries and ensures that external senior indebtedness ranks equally in all respects and includes the
covenant that security can be given only in very limited circumstances. At 30 June 2024, the Group had debt subject to the negative
pledge of $1,779 million (2023: $1,424 million).
Covenants
The Group’s financial covenants under its senior borrowing arrangements include interest cover and leverage ratio.
During the year, the Group has agreed certain amendments with all of its lenders (SFA, Club Loan, and USPP) which will enable it to rely
on more favourable terms for covenant testing for its Senior Interest Cover and Senior Leverage covenants for the period from June
2024 to December 2025 (inclusive) if required. Should the Group need to rely on the amended covenant levels, it will not pay a dividend
until it agrees to be tested by, and complies with, its existing covenant levels. The Group was in compliance with all financial covenants
during the year and at balance date. The existing and amended covenant levels are shown in the following table:
Existing
level
Amended level
Level
June 2026+
Covenant
Jun 2024
Dec 2024
Jun 2025
Dec 2025
Senior Leverage
<3.25x
<3.25x
<3.5x
<3.5x
<3.25x
<3.25
Senior Interest Cover
>3.0x
>2.5x
>2.25x
>2.25x
>2.25x
>3.0x
Total Interest Cover
>2.0x
Unchanged at >2.0x
>2.0x
Note: NB: the Senior Interest Cover covenant of >3.0x (existing and Jun-26+) is the level contained in the USPP lending agreements. The covenant in the SFA and Club Loan
agreements is >2.75x.
The impact of debt hedging activities on borrowings
2024
Underlying borrowing
exposure
Economic debt
exposure
Currency of borrowings
Fixed rate
NZ$M
Floating rate
NZ$M
Impact of
hedging
NZ$M
Fixed rate
NZ$M
Floating rate
NZ$M
% Fixed
New Zealand Dollar
297
1,080
354
773
958
45%
Australian Dollar
227
104
147
184
44%
British Pound
21
(21)
Canadian Dollar
18
(18)
Euro
73
(73)
United States Dollar
377
(377)
Other
15
15
Total
786
1,322
(31)
920
1,157
44%
Notes to the Consolidated Financial Statements 2024 (Continued)
124
Fletcher Building Limited Annual Report 2024
2023
Underlying borrowing
exposure
Economic debt
exposure
Currency of borrowings
Fixed rate
NZ$M
Floating rate
NZ$M
Impact of
hedging
NZ$M
Fixed rate
NZ$M
Floating rate
NZ$M
% Fixed
New Zealand Dollar
351
727
354
826
606
58%
Australian Dollar
227
103
256
74
77%
British Pound
21
(21)
Canadian Dollar
19
(19)
Euro
74
(74)
United States Dollar
369
(369)
Other
15
15
Total
834
969
(26)
1,082
695
61%
Liquidity and funding risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting its financial commitments as they fall due. Funding risk is
the risk that the Group under normal circumstances, will not be able to refinance its maturing debts in an orderly manner. The Group
manages its liquidity and funding risk by maintaining a target level of undrawn committed credit facilities and an appropriate spread of
maturity dates in respect of the Group's debt facilities that it reviews on an ongoing basis.
The following maturity analysis table sets out the remaining contractual undiscounted cash flows, including estimated interest payments
for non-derivative financial liabilities and derivative financial instruments. Creditors and accruals are excluded from this analysis as they
are not part of the Group's assessment of liquidity risk because these are offset by debtors with similar payment terms.
2024
Contractual
cash flows
NZ$M
Up to 1 Year
NZ$M
1–2 Years
NZ$M
2–5 Years
NZ$M
Over 5 Years
NZ$M
Bank loans
1,302
1,302
Capital notes
297
80
55
162
Private placements
516
516
Other loans
20
20
Borrowings - principal cash flows
2,135
80
75
1,980
Gross settled derivatives - to pay
458
458
Gross settled derivatives - to receive
(516)
(516)
Debt derivatives financial instruments -
principal cash flows
(58)
(58)
Total principal cash flows
2,077
80
75
1,922
Contractual interest cash flows
149
58
39
52
Total lease cash flows
1,791
212
191
458
930
Total contractual cash flows
4,017
350
305
2,432
930
2023
Contractual
cash flows
NZ$M
Up to 1 Year
NZ$M
1–2 Years
NZ$M
2–5 Years
NZ$M
Over 5 Years
NZ$M
Bank loans
946
946
Capital notes
343
79
80
184
Private placements
519
283
236
Other loans
30
15
15
Borrowings - principal cash flows
1,838
94
80
1,428
236
Gross settled derivatives - to pay
458
249
209
Gross settled derivatives - to receive
(519)
(283)
(236)
Notes to the Consolidated Financial Statements 2024 (Continued)
125
Fletcher Building Limited Annual Report 2024
CONTENTS
2023
Contractual
cash flows
NZ$M
Up to 1 Year
NZ$M
1–2 Years
NZ$M
2–5 Years
NZ$M
Over 5 Years
NZ$M
Debt derivatives financial instruments -
principal cash flows
(61)
(34)
(27)
Total principal cash flows
1,777
94
80
1,394
209
Contractual interest cash flows
183
63
42
75
3
Total lease cash flows
1,861
224
197
467
973
Total contractual cash flows
3,821
381
319
1,936
1,185
18. NET FUNDING COSTS
Interest income and expense are recognised on an accrual basis in the Consolidated Income Statement using the effective interest method.
Interest costs relating to qualifying assets under development are capitalised as a component of the cost of development or construction.
Where funds are borrowed specifically for qualifying projects, the actual borrowing costs incurred are capitalised. Where the projects are
funded through general borrowings, the borrowing costs are capitalised based on the weighted average cost of borrowing. Borrowing costs
incurred after commencement of commercial operations are expensed to the Consolidated Income Statement.
Funding costs also include the changes in fair value relating to derivatives used to manage interest rate risk, and the associated changes in
fair value of the borrowings designated in a hedge relationship attributable to the hedged risk.
2024
NZ$M
2023
NZ$M
Interest income
(5)
(4)
Interest on borrowings and derivatives
131
87
Interest capitalised to balance sheet
(13)
(5)
Interest expense other
7
4
Net interest expense
120
82
Changes in fair value relating to:
Borrowings designated in a hedging relationship
8
(12)
Derivatives designated in a hedging relationship
(8)
12
Total changes in fair value
Bank fees, registry and other expenses
2
1
Line fees
15
11
Debt restructure fees
5
Net funding costs
142
94
Included in interest on borrowings and derivatives is the net settlement of the Group's interest derivatives. This consists of $49 million
of interest income and $57 million of interest expense (2023: $35 million interest income; $44 million interest expense). Other losses
include credit valuation adjustment (CVA)/debit valuation adjustments (DVA) on derivatives.
Capitalisation of borrowing costs
The Group funds capital projects with general borrowings and, where newly acquired or constructed assets meet qualifying criteria of
NZ IAS 23 - Borrowing costs, interest costs have been capitalised to their cost at a weighted average capitalisation rate of 6.62% (2023:
5.20%), resulting in $13 million of capitalised borrowing costs in the year ended 30 June 2024. The FY24 amount mainly relates to
Winstone Wallboards®'s Tauriko plant ($4 million), Laminex® wood panels plant ($4 million) and the Group's Digital@Fletcher ERP system
build and implementation ($4 million).
Interest rate risk
At 30 June 2024, 44% of the Group's debt was subject to a fixed interest rate (2023: 61% fixed).
(i) Interest rate repricing
The following tables set out the interest rate repricing profile of interest bearing financial liabilities assuming floating rate facilities are
utilised to maintain debt levels.
Notes to the Consolidated Financial Statements 2024 (Continued)
126
Fletcher Building Limited Annual Report 2024
2024
NZ$M
2025
NZ$M
2026
NZ$M
2027
NZ$M
2028
NZ$M
2029
NZ$M
Fixed financial liabilities
920
615
418
185
33
Floating financial liabilities
1,157
1,462
1,659
1,892
2,044
2,077
Economic Debt
2,077
2,077
2,077
2,077
2,077
2,077
% Fixed
44%
30%
20%
9%
2%
0%
The Group's overall weighted average interest rate (based on year end borrowings) excluding fees is 6.22% (2023: 5.74%).
(ii) Interest rate risk
It is estimated a 100 basis point increase in interest rates would result in an increase in the Group's interest costs by approximately $11
million pre-tax on the Group's debt portfolio exposed to floating rates at balance date (2023: $7 million) assuming that all other variables
remain constant.
19. FINANCIAL RISK MANAGEMENT
Exposures to credit, liquidity, foreign currency, interest rate and commodity price risks arise in the normal course of the Group’s
business. The principles under which these risks are managed are set out in policy documents approved by the Board. The policy
documents identify the risks and set out the Group’s objectives, policies and processes to measure, manage and report the risks. The
policies are reviewed periodically to reflect changes in financial markets and the Group’s businesses. Risk management is carried out in
conjunction with the Group's central treasury function, which supports compliance with the risk management policies and procedures.
Derivative financial instruments, including forward foreign exchange contracts, interest rate swaps, foreign currency swaps, cross
currency interest rate swaps, options, forward rate agreements and commodity price swaps are utilised to reduce exposure to market
risks. All the Group’s derivative financial instruments are held to hedge risk on underlying assets, liabilities, and forecast and committed
trading and funding transactions. The Group policy specifically prohibits the use of derivative financial instruments for trading or
speculative purposes.
The table below summarises the key financial market risks to the Group and how these risks are managed:
Financial risk
Description
Management of risk
Foreign
currency trade
transaction risk
(
(i))
Arises on the conversion of a business
unit’s foreign currency revenue and
expenditure to its functional currency,
such that a material loss or a gain may be
incurred. This covers imports, exports,
capital expenditure, and foreign currency
bank accounts balances that are not in a
business unit’s functional currency.
It is a Group policy that no currency exchange risk may be entered
into or allowed to remain outstanding should it arise on committed
transactions. The Group uses foreign currency forward contracts and
foreign currency options to manage the risk on firm commitments and
recognised material trade related exposures. The majority of these
transactions have maturities of less than one year from the reporting
date.
Foreign
currency
balance sheet
translation risk
(
(ii))
Arises due to the translation of the
Group’s foreign denominated assets
and liabilities, overseas operations and
subsidiaries to the company’s functional
currency of NZD, such that the Group’s
reporting of financial ratios would be
materially affected.
It is the Group's policy to hedge this foreign currency translation risk
by borrowing in the currency of the asset in proportion to the Group's
target debt to debt plus equity ratio.
Where the underlying debt in any currency does not equate to the
required proportion of total debt, debt derivatives, such as foreign
exchange forwards, swaps and cross currency interest rate swaps are
entered into. These are designated as net investment hedges where
the borrowings or contracts are in a different currency from that of the
business in which they are recognised.
To manage the net exposure to foreign currency borrowings, the
Group enters into cross currency interest rate swaps (CCIRS). CCIRS
are used to manage the combined foreign exchange risk and interest
rate risk as they swap fixed rate foreign currency borrowings and
interest payments into equivalent New Zealand and Australian dollar-
denominated amounts of principal with floating and fixed interest rates.
Notes to the Consolidated Financial Statements 2024 (Continued)
127
Fletcher Building Limited Annual Report 2024
note 19.1
note 19.1
CONTENTS
Notes to the Consolidated Financial Statements 2024 (Continued)
Financial risk
Description
Management of risk
Interest rate
risk
(
&
)
The risk that the value of borrowings or
cash flows associated with the borrowings
will change due to changes in market
rates.
The Group manages the fixed interest rate component of its borrowings
by entering into CCIRS, interest rate swaps, forward rate agreements
and options. It aims to maintain fixed interest rate borrowings between
certain ranges over specific time periods.
Commodity
price risk
Arises from committed or highly probable
trade transactions that are linked to
commodities.
The Group manages its commodity price risk depending on the
underlying exposures, economic conditions and access to active
derivatives markets. Cash flow hedge accounting is applied to
commodity derivative contracts.
At 30 June 2024, the Group has hedged a portion of its electricity and
diesel usage for the period 1 July to 31 December 2028 and 30 June 2025
respectively. The average hedged electricity price is NZ$144/MWh and
the average hedged diesel price (ex-Singapore) is NZ$1.01/Litre.
A 10% increase in the New Zealand electricity spot price at balance
sheet date would result in an increase to equity of approximately $4
million and no material impact on the Consolidated Income Statement.
A 10% increase in the New Zealand diesel spot price at balance sheet
date would not have a material impact on the Group's earnings or equity
position.
Disclosure about the credit risk associated with financial instruments and fair value measurement of financial instruments is included in
notes 19.3 and 19.4.
Derivative financial instruments and hedge accounting
Derivatives are recorded at fair value with the resulting gain or loss on remeasurement recognised in the Consolidated Income Statement
unless the derivative is designated into an effective hedge relationship as a hedging instrument, in which case the timing of recognition
in the Consolidated Income Statement depends on the nature of the designated hedge relationship. 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.
This relationship is documented from inception of the hedge. The fair values of derivative financial instruments are determined by applying
quoted market prices, where available, or by using inputs that are observable for the asset or liability.
The Group may designate derivatives as:
– Fair value hedges (where the derivative is used to manage the variability in the fair value of recognised assets and liabilities);
– Cash flow hedges (where the derivative is used to manage the variability in cash flows relating to recognised liabilities or forecast
transactions); or
– Net investment hedges (where borrowings or derivatives are used to manage the risk of fluctuation in the translated value of its
foreign operations).
The Group holds derivative instruments until expiry except where the underlying rationale from a risk management point of view changes,
such as when the underlying asset or liability that the instrument hedges no longer exists, in which case early termination occurs.
Fair value hedges
Where a derivative financial instrument is designated as a hedge of a recognised asset or liability, or of a firm commitment, any gain or
loss on the derivative (hedging instrument) is recognised directly in the Consolidated Income Statement, together with any changes in
the fair value of the hedged risk (hedged item).
Cash flow hedges
Where a derivative financial instrument is designated as a hedge of the variability in cash flows of assets or liabilities, or of a highly
probable forecasted transaction, the effective part of any gain or loss is recognised directly in the cash flow hedge reserve within equity
and the ineffective part is recognised immediately in the Consolidated Income Statement. The effective portion is reclassified to the
Consolidated Income Statement when the underlying cash flows affect the Consolidated Income Statement.
If the hedge no longer meets the criteria for hedge accounting, hedge accounting is discontinued. The cumulative gain or loss
previously recognised in the cash flow hedge reserve remains there until the forecast transaction occurs, or is immediately recognised
in the Consolidated Income Statement if the transaction is no longer expected to occur.
Net investment hedges
Where the derivative financial instruments are designated as a hedge of a net investment in a foreign operation, the derivative financial
instruments are accounted for on the same basis as cash flow hedges through the foreign currency translation reserve (FCTR) within equity.
Cost of hedging
The forward elements of foreign exchange forwards and swaps are excluded from designation as the hedging instrument and the foreign
currency basis spreads of CCIRS are separately accounted for and recognised in Other Comprehensive Income as a cost of hedging.
128
Fletcher Building Limited Annual Report 2024
note 18
note 19.2
Derivatives that do not qualify for hedge accounting
Where a derivative financial instrument does not qualify for hedge accounting, or where hedge accounting has not been elected, any
gain or loss is recognised directly in the Consolidated Income Statement.
19.1 FOREIGN CURRENCY RISK
(i) Currency transaction risk
Cash flow hedge accounting is applied to forecast transactions and short-term intra-Group cash funding. The Group designates the spot
element of foreign exchange forwards and swaps to hedge its currency risk and applies a hedge ratio of 1:1. The Group's policy is for the
critical terms of the foreign exchange forwards and swaps to align with the hedged item. The main currencies hedged are the Australian
dollar, the United States dollar and the Euro. The gross value of these foreign exchange derivatives at 30 June 2024 was $542 million
(2023: $592 million).
(ii) Currency translation risk
The effect of the Group’s hedge accounting policy in managing foreign exchange risk related to the Group’s net investments in foreign
operations is presented in the table below:
Hedged investments and hedging instruments used
2024
Maturity:
0-49 months
NZ$M
2023
Maturity:
0-61 months
NZ$M
Amount of investment hedged
Foreign currency AUD
104
103
Notional amount
Cross currency interest rate swaps (25-49 months)
(104)
(103)
Foreign currency swaps (0-1 months)
Hedge effectiveness
Change in value used for calculating hedge ineffectiveness
1
1
Net investment hedge (gain)/loss recognised in Other Comprehensive Income
It is estimated a 10% weakening of the New Zealand dollar against the foreign currencies that the Group is exposed to on the net assets
of its foreign operations, would result in an increase to equity of approximately $88 million (2023: $104.7 million) and no material impact
on the Consolidated Income Statement.
The Group applies hedge accounting to foreign currency denominated borrowings that are managed by CCIRS. The hedge ratio
applied is 1:1. The hedge relationship may be designated into separate cash flow hedges and fair value hedges to manage the different
components of foreign currency and interest rate risk:
–
fair value hedge relationship where CCIRS are used to manage the interest rate and foreign exchange risks;
–
currency risk in relation to foreign currency denominated borrowings with fixed interest rates; and
–
cash flow hedge relationship where CCIRS are used to manage the variability in cash flows arising from interest rate movements on
floating interest rate payments and foreign exchange movements on payments of principal and interest.
The Group determines the existence of an economic relationship between the hedging instrument and hedged item based on the
currency, reference interest rates, tenors, repricing dates and maturities and the notional amounts. The Group assesses whether the
derivative designated in each hedging relationship is expected to be effective in offsetting changes in the fair value of the hedged item
using the hypothetical derivative method.
In these hedging relationships, the main sources of ineffectiveness are:
–
changes in counterparty credit risk and cross currency basis spreads that are not reflected in the change in the fair value of the
hedged item; and
–
differences in repricing dates between the cross currency interest rate swaps and the borrowings.
The effect of the Group’s hedge accounting policies in managing both its foreign exchange risk and interest rate risk related to
borrowings denominated in foreign currency is presented in the table below:
Notes to the Consolidated Financial Statements 2024 (Continued)
129
Fletcher Building Limited Annual Report 2024
CONTENTS
2024
USD
25-49
months
Floating
NZD/USD
0.6944
NZ$M
CAD*
49 Months
Fixed - 4.43%
AUD/CAD
0.927
NZ$M
EUR*
25 Months
Fixed - 4.30%
AUD/EUR
0.684
NZ$M
GBP*
49 Months
Fixed - 4.80%
AUD/GBP
0.568
NZ$M
Total
NZ$M
Cash flow hedging and fair value hedging
Cross currency interest rate swaps
Nominal amount of the hedging instrument
404
18
73
21
516
Carrying amount
18
5
1
24
Accumulated cost of hedging recognised in Other
Comprehensive Income
(4)
(4)
Change in value used for calculating hedge ineffectiveness
5
1
1
7
Hedging (gain)/loss recognised in Other Comprehensive
Income
3
(1)
(1)
1
Fair value hedge gain in the Consolidated Income Statement
(8)
(8)
* Designated in cash flow relationship only
2023
USD
37-61 Months
Floating
NZD/USD
0.6944
NZ$M
CAD*
61 Months
Fixed - 4.43%
AUD/CAD
0.927
NZ$M
EUR*
37 Months
Fixed - 4.30%
AUD/EUR
0.684
NZ$M
GBP*
61 Months
Fixed - 4.80%
AUD/GBP
0.568
NZ$M
Total
NZ$M
Cash flow hedging and fair value hedging
Cross currency interest rate swaps
Nominal amount of the hedging instrument
405
19
74
21
519
Carrying amount
14
1
6
21
Accumulated cost of hedging recognised in Other
Comprehensive Income
(3)
(3)
Change in value used for calculating hedge ineffectiveness
(8)
(3)
(2)
(13)
Hedging (gain)/loss recognised in Other Comprehensive
Income
(4)
3
2
1
Fair value hedge loss in the Consolidated Income Statement
12
12
* Designated in cash flow relationship only
Notes to the Consolidated Financial Statements 2024 (Continued)
130
Fletcher Building Limited Annual Report 2024
19.2 INTEREST RATE RISK
The Group applies hedge accounting to the borrowings and the associated interest rate swaps, for movements in benchmark market
interest rates. Hedge accounting is applied to these instruments for floating-to-fixed instruments as cash flow hedges or for fixed-to-
floating instruments as fair value hedges. The Group applies a hedge ratio of 1:1.
The Group determines the existence of an economic relationship between the hedging instrument and hedged item based on the
reference interest rates, tenors, repricing dates and maturities and the notional amounts.
The Group assesses whether the derivative designated in each hedging relationship is expected to be effective in offsetting changes in
the fair value of the hedged item using the hypothetical derivative method.
In these hedging relationships, the main sources of ineffectiveness are:
–
the effect of the counterparty and the Group's own credit risk on the fair value of the interest rate swaps that is not reflected in the
change in the fair value of the hedged item; and
–
differences in repricing dates between the interest rate swaps and the borrowings.
2024
NZD Borrowings
13-48 Months
4.34%
NZ$M
AUD Borrowings
31 months
4.11%
NZ$M
Total
NZ$M
Cash flow hedging
Interest rate swaps
Nominal amount of the hedging instrument
475
44
519
Carrying amount - derivative assets/(liabilities)
4
4
Change in value used for calculating hedge ineffectiveness
(3)
(2)
(5)
Hedging (gain)/loss recognised in Other Comprehensive Income
3
2
5
2023
NZD Borrowings
25-60 Months
4.34%
NZ$M
AUD Borrowings
7 months
1.91%
NZ$M
Total
NZ$M
Cash flow hedging
Interest rate swaps
Nominal amount of the hedging instrument
475
153
628
Carrying amount - derivative assets/(liabilities)
7
2
9
Change in value used for calculating hedge ineffectiveness
6
(1)
5
Hedging (gain)/loss recognised in Other Comprehensive Income
(6)
1
(5)
There was no hedge ineffectiveness recognised in the Consolidated Income Statement during the year.
Notes to the Consolidated Financial Statements 2024 (Continued)
131
Fletcher Building Limited Annual Report 2024
CONTENTS
19.3 CREDIT RISK
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual
obligations. 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 and arises principally from receivables from customers, derivative financial instruments and the investment of cash.
(i) Impairment of financial assets
The Group has a credit policy in place under which customers are individually analysed for credit worthiness and assigned a purchase
limit. If no external ratings are available, the Group reviews the customer's financial statements, trade references, bankers' references
and/or credit agencies' reports to assess credit worthiness. These limits are reviewed on a regular basis. Owing to the Group’s industry
spread at balance date, there were no significant concentrations of credit risks in respect of trade debtors. Refer to note 9 for debtor
balances and ageing analysis.
The Group has two types of financial assets that are subject to the expected credit loss model:
–
Debtors (including trade debtors, contract debtors and contract retentions) (note 9)
–
Construction contract assets (note 3)
While cash and cash equivalents are also subject to the impairment requirements of NZ IFRS 9 Financial Instruments, the identified
impairment loss was immaterial.
Most goods are sold subject to retention of title clauses, so that in the event of non-payment the Group may have a secured claim.
Credit risks may be further mitigated by registering an interest in the goods sold and the proceeds arising from that supply. The Group
does not otherwise require collateral in respect of trade receivables.
Debtors and construction contract assets
The Group applies the NZ IFRS 9 simplified approach to measuring expected credit losses (ECL) which uses a lifetime expected loss
allowance for all trade debtors and contract assets.
To measure the expected credit losses, trade receivables and contract assets have been grouped based on shared credit risk
characteristics and the days past due. The construction contract assets relate to unbilled work in progress and have substantially the
same risk characteristics as the trade debtors for the same types of contracts.
The Group has therefore concluded that the expected loss rates for trade debtors are a reasonable approximation of the loss rates for
the contract assets.
The expected loss rates are based on the payment profiles of historical sales and the corresponding historical credit losses experienced
within this period. The historical loss rates are adjusted to reflect current and forward looking information on macroeconomic factors
affecting the ability of the customers to settle the receivables. The Group has identified the GDP and the unemployment rate of the
countries in which it sells its goods and services to be the most relevant factors, and accordingly adjusts the historical loss rates based
on expected changes in these factors.
The table below provides movement in the Group's expected credit loss provision:
2024
NZ$M
2023
NZ$M
Opening provision for expected credit losses
(20)
(20)
Increase in provision for doubtful debts recognised in the Consolidated
Income Statement
(1)
1
Receivables written off during the year as uncollectible
1
Unused amount reversed
2
(1)
Reclassified to held for sale
3
Closing provision for expected credit losses
(15)
(20)
Notes to the Consolidated Financial Statements 2024 (Continued)
Trade receivables and contract assets are written off where there is no reasonable expectation of recovery. Indicators that there is no
reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with the Group.
Impairment losses on trade debtors and contract assets are presented as net impairment losses in the Consolidated Income Statement.
Subsequent recoveries of amounts previously written off are credited against the same line item.
(ii) Derivative financial instruments and the investment of cash
The Group enters into derivative financial instruments and invests cash with various counterparties in accordance with established
Board approved credit limits as to credit rating and dollar value but does not require collateral or other security except in limited
circumstances. In accordance with the established counterparty limits, there are no significant concentrations of credit risk in respect
of these financial instruments and no loss is expected.
The Group has not renegotiated the terms of any financial assets that would otherwise be overdue or impaired. The carrying amount of
non-derivative financial assets represents the maximum credit exposure. The carrying amount of derivative financial assets is at their
current fair value.
132
Fletcher Building Limited Annual Report 2024
19.4 FAIR VALUES
The estimated fair value measurements for financial assets and liabilities compared to their carrying values in the Consolidated Balance
Sheet, are as follows:
2024
2023
Classification
Carrying
value
NZ$M
Fair value
NZ$M
Carrying
value
NZ$M
Fair value
NZ$M
Financial assets
Cash and liquid deposits
Amortised cost
311
311
365
365
Debtors
Amortised cost
799
799
1,109
1,109
Forward exchange contracts - fair value through profit or loss
Fair value
2
2
2
2
Forward exchange contracts - cash flow hedge
Fair value
1
1
8
8
Cross currency interest rate swaps - split designation
Fair value
32
32
30
30
Cross currency interest rate swaps - cash flow hedge
Fair value
7
7
7
7
Interest rate swaps - cash flow hedge
Fair value
6
6
13
13
Commodity price swaps - cash flow hedge
Fair value
8
8
2
2
Total financial assets
1,166
1,166
1,536
1,536
Financial liabilities
Creditors and accruals
Amortised cost
1,024
1,024
1,197
1,197
Bank loans
Amortised cost
1,302
1,302
946
946
Private placements
Amortised cost
489
486
484
480
Other loans
Amortised cost
20
20
30
30
Capital notes
Amortised cost
297
274
343
315
Forward exchange contracts - fair value through profit or loss
Fair value
1
1
1
1
Forward exchange contracts - cash flow hedge
Fair value
3
3
Cross currency interest swaps - split designation
Fair value
13
13
16
16
Interest rate swaps - cash flow hedge
Fair value
2
2
4
4
Commodity price swaps - cash flow hedge
Fair value
1
1
Total financial liabilities
3,152
3,126
3,021
2,989
Total financial instruments
(1,986)
(1,960)
(1,485)
(1,453)
Fair value measurement
All of the Group's derivatives are in designated hedge relationships and are measured and recognised at fair value.
All derivatives are level 2 valuations based on accepted valuation methodologies. Forward exchange fair value is calculated using
quoted forward exchange rates and discounted using yield curves derived from quoted interest rates matching maturity of the contract.
The fair value of commodity price swaps is measured using a derived forward curve and discounted using yield curves derived from
quoted interest rates matching the maturity of the contract.
Interest rate derivatives are calculated by discounting the future principal and interest cash flows at current market interest rates that are
available for similar financial instruments.
Level 1
Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2
Inputs that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) other than
quoted prices included within level 1.
Level 3
Inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Fair value disclosures
The fair values of borrowings used for disclosure are measured under level 2, by discounting future principal and interest cash flows
at the current market interest rate plus an estimated credit margin that is available for similar financial instruments with a similar credit
profile to the Group.
The interest rates across all currencies used to discount future principal and interest cash flows are between 2.6% and 10.3% (2023: 2.7%
and 7.5%) including margins, for both accounting and disclosure purposes.
Notes to the Consolidated Financial Statements 2024 (Continued)
133
Fletcher Building Limited Annual Report 2024
CONTENTS
Group Structure and Related Parties
This section details the Group's capital, non-controlling interest of subsidiaries, investments in associates and joint ventures and
information relating to transactions with other related parties.
20. DIVIDENDS AND SHAREHOLDER TAX CREDITS
Dividends
2024
NZ$M
2023
NZ$M
Full year dividend paid October 2022 (22.0 cents per share)
172
Interim dividend paid April 2023 (18.0 cents per share)
139
Full year dividend paid October 2023 (16.0 cents per share)
124
124
311
The Board determined that it would not declare a final dividend for the 2024 financial year.
Shareholder tax credits
Imputation and franking credits allow the Company to transfer the benefit from the tax it has paid in New Zealand and Australia respectively
to its shareholders when it pays dividends.
2024
NZ$M
2023
NZ$M
Imputation credit account
Imputation credits at the beginning of the year
37
67
Taxation paid
3
58
Imputation credits attached to dividend paid
(37)
(92)
Taxation payable
4
Imputation credits available for use in subsequent accounting periods
3
37
2024
NZ$M
2023
A$M
Franking credit account
Franking credits at the beginning of the year
38
38
Taxation paid
Franking credits received
Franking credits available for use in subsequent accounting periods
38
38
21. CAPITAL
Ordinary shares are classified as shareholders’ funds. Costs directly attributable to the issue of new shares or options are shown in
shareholders’ funds as a reduction from the proceeds. Acquired shares are classified as treasury stock and presented as a deduction from
share capital under the treasury stock method, as if the shares are cancelled, until they are reissued or otherwise disposed of.
2024
NZ$M
2023
NZ$M
Share capital at the beginning of the year excluding treasury stock
2,993
3,003
Repurchase of shares
(13)
Vested share-based payment
2
3
Share capital at the end of the year excluding treasury stock
2,995
2,993
All ordinary shares are issued and fully paid and carry equal rights in respect of voting, dividend payments and distribution upon
winding up.
Notes to the Consolidated Financial Statements 2024 (Continued)
134
Fletcher Building Limited Annual Report 2024
2024
2023
Number of ordinary shares issued and fully paid
Number of shares on issue at the beginning of the year
783,043,596
783,043,596
Repurchase of shares
Total number of shares on issue
783,043,596
783,043,596
Less shares accounted for as treasury stock
(6,322,384)
(6,655,828)
776,721,212
776,387,768
22. NON-CONTROLLING INTERESTS
Non-controlling interests are allocated their share of profit for the year in the Consolidated Income Statement and are presented separately
within equity in the Consolidated Balance Sheet. The effect of all transactions with non-controlling interests that change the Group’s
ownership interest but do not result in a change in control are recorded in equity.
2024
NZ$M
2023
NZ$M
Share capital
9
14
Reserves
2
13
11
27
23. INVESTMENTS IN ASSOCIATES, JOINT VENTURES AND JOINT OPERATIONS
A joint arrangement is an arrangement where two or more parties have joint control. The Group classifies its joint arrangements as either
joint operations or joint ventures depending on the legal, contractual and other rights and obligations.
Investment in joint ventures and associates
Investments in associates and joint ventures are measured using the equity method. The equity method has been used for associate entities
over which the Group has significant influence but not control.
Equity accounting
Under the equity method of accounting, the investments are initially recognised at cost and adjusted thereafter to recognise the Group’s
share of the post-acquisition profits or losses of the investee in the Consolidated Income Statement, and the Group’s share of movements of
the investee’s other comprehensive income in the Consolidated Income Statement. Dividends received or receivable from associates and
joint ventures are recognised as a reduction in the carrying amount of the investment.
Where the Group’s share of losses in an equity-accounted investment equals or exceeds its interest in the entity, including any other
unsecured long-term receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on
behalf of the other entity.
Joint operations
The Group recognises its direct right to the assets, liabilities, revenues and expenses of joint operations and its share of any jointly held
or incurred assets, liabilities, revenues and expenses. These have been incorporated in the Consolidated Financial Statements under the
appropriate headings.
2024
NZ$M
2023
NZ$M
Investment by associate/joint venture:
Wespine Industries Pty Ltd
71
72
Hexion Australia Pty Ltd
24
23
Altus NZ Limited
82
78
NX2 Hold LP
24
28
Other
20
24
221
225
Notes to the Consolidated Financial Statements 2024 (Continued)
135
Fletcher Building Limited Annual Report 2024
CONTENTS
Equity accounted earnings comprise:
2024
NZ$M
2023
NZ$M
Sales - 100%
257
596
Earnings before taxation - 100%
49
117
Earnings before taxation - Fletcher Building share
13
42
Taxation expense
(3)
(8)
Earnings after taxation - Fletcher Building share
10
34
Interest in joint operations
The Group recognises its interest in the assets, liabilities, revenue and expenses of joint operations.
Principal activity
Principal place of
business
2024
NZ$M
2023
NZ$M
Liveable Streets
Maintenance
Auckland
50%
50%
P2W Construction JV
Construction
Auckland
50%
50%
Eastern Busway Alliance
Construction
Auckland
60%
60%
Waterview Connection Joint Operations
Construction
Auckland
23%
23%
Kirkbride Alliance
Construction
Auckland
56%
56%
Hamilton Expressway
Construction
Waikato
61%
61%
Mackays to Peka Peka
Construction
Wellington
75%
75%
Transport Rebuild East Coast
Maintenance
Hawke's Bay
33%
Ground Improvement
Construction
Canterbury
50%
24. RELATED PARTY DISCLOSURES
The disclosures below set out transactions and outstanding balances that Group companies and other related parties have with each other.
Key management personnel are defined as the Executive Committee and Board of Directors.
Sales to
related parties
NZ$M
Purchased from
related parties
NZ$M
Amounts owing
from related
parties (within
debtors)
NZ$M
Amounts owing
to related
parties (within
creditors)
NZ$M
2024
Wespine Industries Pty Ltd and Hexion Australia Pty Ltd
39
5
Altus NZ Limited
4
NX2 Hold LP
19
Others
3
2
2023
Wespine Industries Pty Ltd and Hexion Australia Pty Ltd
42
6
Altus NZ Limited
15
NX2 Hold LP
72
Others
4
6
As at 30 June 2024, the Group held no cash deposits on behalf of 2 alliances/joint operations (Mackays to Peka Peka and Hamilton
Expressway). The Group holds 75% and 61% respective interest in these alliances/joint operations.
Notes to the Consolidated Financial Statements 2024 (Continued)
136
Fletcher Building Limited Annual Report 2024
2024
NZ$M
2023
NZ$M
Key management personnel compensation
Directors' fees
2
2
Executive committee remuneration paid, payable or provided for:
Short-term employee benefits
12
18
Long-term employee benefits
2
2
Fletcher Building Retirement Plan
As at 30 June 2024, Fletcher Building Nominees Limited (the New Zealand retirement plan) held $2.1 million of shares in Fletcher
Building (2023: $3.5 million of shares).
Notes to the Consolidated Financial Statements 2024 (Continued)
137
Fletcher Building Limited Annual Report 2024
CONTENTS
Other Information
This section provides additional required disclosures that are not covered in the previous sections.
25. CAPITAL EXPENDITURE COMMITMENTS
Capital expenditure commitments are those where future expenditure has been committed at year-end, but not recognised as liabilities
as follows:
2024
NZ$M
2023
NZ$M
Committed at year end
Property, plant and equipment and other long-term assets
114
284
26. CONTINGENT LIABILITIES
Contingent liabilities are possible legal or constructive obligations arising from past events and whose existence will be confirmed only by
occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group. A contingent liability may
also be a present obligation arising from past events but is not recognised on the basis that an outflow of economic resources to settle the
obligation is not viewed as probable, or the amount of the obligation cannot be reliably measured. When the Group has a present obligation,
an outflow of economic resources is assessed as probable and the Group can reliably measure the obligation, a provision is recognised.
The Group, in the normal course of business, may be subject to legal claims and other exposures in respect of which no provision has been
made. Obligations assessed as having probable future economic outflows capable of reliable measurement are provided for at reporting
date and matters assessed as having possible future economic outflows capable of reliable measurement are included in the total amount of
contingent liabilities below.
Individually significant matters, including narrative on potential future exposures incapable of reliable measurement, are disclosed below, to
the extent that disclosure does not prejudice the Group.
Guarantees
In certain circumstances, the Group guarantees the performance of particular business units in respect of their obligations. This includes
bonding and bank guarantee facilities used primarily by the construction business as well as performance guarantees for certain Group
subsidiaries.
Contingent liabilities in relation to guarantees, claims and others
2024
NZ$M
2023
NZ$M
Contingent liabilities with respect to guarantees extended on trading transactions,
performance bonds and other transactions
426
391
Contingent liabilities with respect to claims
30
40
456
431
Product claims
As noted in prior disclosures, including the 2023 Annual Financial Results, the 2024 Interim Financial Results and NZX announcements on
17 April 2023 and 13 October 2023, issues have been raised in respect of the hot and cold water polybutylene pipe product Iplex® Australia
previously manufactured (under the name "Pro-fit").
The issues relate to water leaks in homes, primarily built by group home builders in Western Australia, which have required repair or
replacement of the Pro-fit pipes and, in some cases, repair to damage to the affected homes.
Iplex® Australia started manufacturing Pro-fit with Typlex resin from mid-2017 and those products represented the bulk of sales after that
time. Iplex® Australia ceased the sale of Pro-fit in mid-2022. The Pro-fit product was sold into other states of Australia but not New Zealand.
Iplex® Australia is dependent on builders for information about the failures. Reports to Iplex® Australia are that, to date, about ~2,600 of the
houses constructed in Western Australia using Pro-fit with Typlex resin have experienced leaks. This represents ~98% of the total impacted
homes across Australia. Iplex® Australia estimates that there could be about 15,000 homes in Western Australia and another 15,000 in other
states that were built with Pro-fit with Typlex.
The Western Australia building regulator investigated the matter and, as earlier advised to the market, informed Iplex® Australia in August
2023 that "concerns were identified" regarding the manufacturing process used for Pro-fit by Iplex® Australia. That regulator also said it had
ruled out plumbing installation practices as being the cause of the leaks.
On 31 October 2023, WA Consumer Protection advised Iplex® Australia that it had commenced an investigation into whether there was
sufficient evidence to recommend that the WA Minister compulsorily recall Pro-fit which was manufactured using the Typlex resin. That
inquiry is on-going.
As previously advised, third party plumbers and builders in Western Australia have asserted that the cause of the Pro-fit plumbing failures is a
manufacturing defect by Iplex® Australia.
Iplex® Australia has undertaken or commissioned a substantial battery of tests to identify the cause of the plumbing failures. None has
identified a manufacturing defect. The information available to Iplex® Australia and the advice it has received from experts after completing
all the tests they require, clearly point to plumbing installation failures as the cause of the “leaks in homes”.
Notes to the Consolidated Financial Statements 2024 (Continued)
138
Fletcher Building Limited Annual Report 2024
Notes to the Consolidated Financial Statements 2024 (Continued)
For some months, Iplex® Australia has participated in mediated discussions with relevant builders and the WA Government about whether an
industry response to the circumstances in Perth can be established.
As at the time of preparing these statements:
– while the mediated discussions remained constructive from Iplex® Australia’s perspective, they had not concluded and no time frame for
their conclusion has been set; and
– Iplex® Australia is not aware of what the outcome of the WA Consumer Protection’s investigation referred to above will be, what
recommendation it may make, when it may do so or how the WA Minister will respond to any such recommendation.
Under the relevant law, a recall is not dependant on whether the Pro-fit product is defective but, instead, whether the WA Minister
appropriately determines that it will or may injure a person and whether the suppliers are doing enough to prevent that. Iplex® Australia
believes a recall is not an available remedy in the circumstances and, in any event, would be manifestly inappropriate.
If there is a recall, the path forward and the implications for Iplex® Australia (and the Group) will be determined by the terms of that recall,
including geographic scope, timing and cost. A recall would also not preclude litigation or exposure to other legal risks.
If there is no recall, the path forward will be informed by the cause(s) identified, whether those matters are agreed or contested, whether an
industry response can be agreed with builders and Government (and, if so, its terms) , whether builders participate in that response or not,
whether regulator(s) and homeowners accept any proposed response plan and the availability of resources in the market to undertake work.
The range of outcomes of that work programme may include full or partial product replacement in the homes where Pro-fit was installed,
including in homes that have not and may not experience any leaks.
Class Action commenced: On 6 August 2024, a class action was served against Iplex® Australia in the Federal Court of Australia. The claim is
against Iplex® Australia only – not any builder or other supplier. The members of the class action are persons who acquired Pro-fit pipe using
Typlex-1050 resin between 1 July 2017 and 5 August 2024. The claim is not limited to homes built in Western Australia.
The claim alleges Iplex’s® pipes have an unusual propensity to experience crazing; slow crack growth; fracture of the polymer; rupture or
leakage; and/or escape of water. Two claims have been made against Iplex®:
– the affected pipes do not comply with the statutory guarantee that the product was “of acceptable quality” at the time of supply, pursuant
to section 54 of the Australian Consumer Law; and
– Iplex® engaged in misleading or deceptive conduct with respect to representations and omissions made in the course of selling the
affected pipes, pursuant to sections 18, 29 and 33 of the Australian Consumer Law.
The claim seeks a monetary award, comprising damages and interest. The loss claimed is broad and includes loss suffered as a result of
the reduction in the value of the relevant affected pipe; loss or damage suffered by reason of the breach (such as the costs of removing,
repairing, replacing and disposing of the affected pipe); actual and incidental costs of repair or replacement of any part of a building,
building part and/or possession damaged by the affected pipe; the reduction in any value of any building; and loss of amenity, vexation,
distress and disappointment.
– Members do not need to actually incur leaks to be eligible to participate in the class action.
– Iplex® Australia intends to defend the proceedings.
– Other legal claims against Iplex® Australia may arise, including via additional or competing consumer class actions or claims from builders
or regulators.
– Iplex® Australia’s exposure to future costs, if any, will depend on the final determination of a number of matters, including:
– whether a recall order is issued and, if so, the geographic scope and nature of its terms;
– the determination as to cause(s) of the leaks and the allocation of responsibility between Iplex® Australia and other parties, including
under the class action referred to above;
– whether Iplex® Australia is found to have liability on other grounds, such as under consumer protection laws, including under the class
action referred to above;
– whether an industry response is implemented, which industry players participate, and how costs are borne between the parties;
– the reason for, and the type and scale of remediation required, including the cost of undertaking it;
– other losses suffered by third parties as a result of the failures;
– if and how any relevant insurance policies respond;
– whether third party recovery or cross claims are possible and successful; and
– the time frames over which remediation/payments may be required.
At balance date, given current facts and circumstances, Iplex® Australia has concluded that the evidence obtained by it to date does not
establish it is responsible for the matter and it has no present obligation to any party beyond the Investigation Fund it has put in place (see
note 12). On that basis, no additional provision for any settlement relating to the matter is made in these financial statements.
If the mediated discussions referred to above result in an agreement to which Iplex® is party, it will announce that at the time, including its
estimate of the financial cost to it of such participation.
Ultimately, if Iplex® Australia is ordered to compulsorily recall the product or it is found to bear full or part responsibility for this issue, the
cost to it in performing a recall order, rectifying homes with Pro-fit installed and/or meeting any damages claims, fines and other costs could
have a material impact on the Group’s financial position. Disclosure of any possible impact would be materially prejudicial to the Group’s
commercial interests.
Construction defects
As part of its business, the Group’s Construction division has exposure for defects in construction projects post their completion. That exposure
arises either from the terms of the relevant contract or at law. As at 30 June 2024, the Group was subject to claims of this type. In assessing
them, the Group has applied estimates and judgements, including assessing the merits of the claim, the cost to repair and the likelihood of
receipt of payment or other recovery. These estimates and judgements may change as the claim or repair work progresses. The Group has
considered its exposure to the claims received to date and, where it considers appropriate to do so, has provided for them. There remains a risk
that, ultimately, the final exposure of the Group to these claims will be greater than the amount allowed.
139
Fletcher Building Limited Annual Report 2024
CONTENTS
Class action proceedings
On 13 March 2023, the Group announced that class action proceedings had been filed against it in the Supreme Court of Victoria making
allegations that between 17 August 2016 and 23 October 2017 the Group misrepresented the performance and financial position of its
Building + Interiors (B+I) business and failed to disclose information as to its true financial position. The claim is brought on behalf of
shareholders who acquired an interest in fully paid ordinary shares in the Group on the Australian Securities Exchange or NZX Main Board
between those dates.
The Group is defending the proceedings. Based on current status of the proceedings, the claims made on behalf of shareholders have not yet
been and are not required to be quantified. As at 30 June 2024, it is not practicable to provide: (a) an estimate of the financial effect; (b) an
indication of the uncertainties relating to the amount or timing of any outflow; or (c) the possibility of any reimbursement.
27. TAXATION
The provision for current tax is the estimated amount due for payment during the next 12 months by the Group. The provision for deferred
tax has been calculated using the balance sheet liability method.
Deferred tax is recognised on tax losses, tax credits and on the temporary difference between the carrying amount of assets and liabilities
and their taxable value where recovery is considered probable. Deferred tax is not recognised on the following temporary differences:
– The initial recognition of goodwill; and
– The initial recognition of asset and liabilities for a transaction that is not a business combination and, at the time of the transaction, affects
neither the accounting nor taxable profit or loss.
There are no significant deferred tax liabilities in respect of the undistributed profits of subsidiaries and associates.
Judgements are required about the application of income tax legislation. These judgements and assumptions are subject to risk and
uncertainty as there is a possibility of future changes in the interpretation and/or application of tax legislation. This may impact the amount
of current and deferred tax assets and liabilities recognised in the Consolidated Balance Sheet and the amount of other tax losses and
temporary differences not yet recognised. In such circumstances, some or all of the carrying amounts of recognised tax assets and liabilities
may require adjustment, resulting in a corresponding credit or charge to the Consolidated Income Statement.
The Organisation for Economic Co-operation and Development’s (OECD)/G20 Inclusive Framework on Base Erosion and Profit Shifting
(BEPS) addresses the tax challenges arising from the digitalisation of the global economy. The BEPS Pillar Two model rules seek to apply a
15% global minimum tax across all jurisdictions and is expected to apply to the Group from 1 July 2024.
The Group has applied the exception to recognising and disclosing information about deferred tax assets and liabilities related to Pillar Two
income taxes. The Pillar Two rules are enacted in countries in which the Group operates but not yet in effect. Since the Group does not have
significant operations in low-tax jurisdictions, the rules are not expected to have a material impact.
Below is the reconciliation of earnings before taxation to taxation expense:
2024
NZ$M
2023
NZ$M
Earnings before taxation - continuing operations
(24)
337
Taxation at 28 cents per dollar
(7)
94
Adjusted for:
Difference in tax rates
2
Non-assessable income
(5)
(13)
Non-deductible expenses
34
4
Tax in respect of prior years
(1)
1
Removal of building depreciation
34
Tax expense on earnings - continuing operations
55
88
Income tax expense on continuing operations is attributable to:
Tax on earnings before Significant Items
119
172
Tax benefit on Significant Items
(64)
(84)
Tax expense on earnings - continuing operations
55
88
Notes to the Consolidated Financial Statements 2024 (Continued)
140
Fletcher Building Limited Annual Report 2024
2024
NZ$M
2023
NZ$M
Income tax expense on discontinued operations is attributable to:
Tax on earnings before Significant Items
1
1
Tax benefit on Significant Items
(15)
Tax expense on earnings - discontinued operations
(14)
1
Income tax expense is attributable to:
Total current taxation expense
(3)
130
Total deferred taxation benefit
44
(41)
Tax expense on earnings
41
89
Current tax assets/(liabilities)
Included within the Consolidated Balance Sheet as follows:
Current tax assets
28
6
Current tax liabilities
28
6
Movement during the year:
Opening provision for current tax assets
6
(107)
Taxation expense - current tax
(10)
(130)
Taxation expense - prior period adjustments
13
Transfer from deferred taxation
50
Non-controlling interest share of taxation expense
4
Tax recognised directly in reserves
1
(2)
Net tax payments
15
191
Other tax movements
3
Currency movement
28
6
Provision for deferred tax assets
Included within the Consolidated Balance Sheet as follows:
Deferred tax assets
136
193
136
193
Movement during the year:
Opening deferred tax assets
193
209
Taxation expense - current year movement
3
41
Taxation expense - prior period adjustment
(13)
Taxation expense - removal of building depreciation
(34)
Transfer from current tax
(50)
Tax recognised directly in reserves
3
Acquisitions
(5)
Reclassification to held for sale
(17)
Currency movement
1
(2)
136
193
Notes to the Consolidated Financial Statements 2024 (Continued)
141
Fletcher Building Limited Annual Report 2024
CONTENTS
Notes to the Consolidated Financial Statements 2024 (Continued)
2024
NZ$M
2023
NZ$M
Composed of:
Provisions and other liabilities
101
167
Inventories
15
16
Debtors
4
6
Property, plant and equipment
(68)
(37)
Brands
(69)
(85)
Tax losses
91
53
Right-of-use assets
(326)
(369)
Lease liabilities
393
444
Other
(5)
(2)
136
193
The net deferred tax asset balance of $136 million at 30 June 2024 largely comprises New Zealand and Australia carried forward tax
losses incurred in the current and prior periods, timing differences on the Group's provisions and net deferred tax asset on the Group's
right-of-use assets/liabilities. It is expected there will be sufficient future earnings in New Zealand and Australia to utilise the deferred tax
asset in each of these jurisdictions.
Removal of building depreciation (New Zealand)
During the year, the New Zealand Government passed legislation to remove commercial building depreciation for tax purposes, the
main asset impacted by the new legislation is the Winstone Wallboard's recently commissioned plasterboard plant in Tauriko (Bay of
Plenty, New Zealand). As a result, the Group's deferred tax liabilities have increased by $34 million with a one-off tax expense of $34
million recognised, as the tax base of the Group’s buildings in New Zealand reduced to nil.
28. RETIREMENT PLANS
Fletcher Building Limited is the principal sponsoring company of a plan that provides retirement and other benefits to employees of
the Group in New Zealand and Australia. Participation in this plan has been closed for a number of years, although defined contribution
savings plans have been made available.
The Group’s plan assets and liabilities in respect of individual defined benefit retirement plans are calculated separately for each plan by an
independent actuary, as being the fair value of the plan’s assets less the present value of the future obligations to the members. The value
of the asset recognised cannot exceed the present value of any future refunds from the plans or reductions in future contributions to the
plans, unless a constructive right to a refund of the surplus exists, in which case the amount to be refunded is recognised as an asset. In the
Group’s Consolidated Balance Sheet, plans that are in a surplus position are not offset with plans that are in a liability position. The refund of
the New Zealand surplus is subject to Financial Markets Authority (FMA) approval under FMCA 2013 Section 177.
Principal assumptions made in the actuarial calculation of the defined benefit obligation relate to the discount rate, rate of salary inflation
and life expectancy. The calculation of the defined benefit obligations is 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. A discount rate of 4.82% has been applied in 2024 on benefit obligations (2023: 4.76%). In applying
sensitivity analysis, a 1% lower discount rate assumption increases the defined benefit obligation by $12 million, whilst adding one additional
year of life expectancy of scheme members increases the obligation by $7 million.
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:
2024
%
2023
%
Assumed discount rate on benefit obligations
4.82
4.76
Annual rate of increase in future compensation levels
2.39
2.37
Fletcher Building Limited has an obligation to ensure that the funding ratio of the New Zealand plan's assets is at least 115% of the plan's
actuarial liability. At 31 March 2024, the value of the plan assets was 199% of the actuarial liability and the funded surplus was $146
million (31 March 2023: 184%, $122 million).
During the year the Group contributed less than $1 million (2023: less than $1 million) in respect of its Australian defined benefit plans.
It contributed $51 million (2023: $58 million) in respect of its defined contribution plans worldwide, including Kiwisaver and Australia
Superannuation.
142
Fletcher Building Limited Annual Report 2024
Notes to the Consolidated Financial Statements 2024 (Continued)
The net period pension cost recognised in the year in earnings before interest and taxation was $4 million (2023: $2 million). The Group
expects to contribute less than $1 million to its New Zealand and Australian defined benefit plans during the year to 30 June 2024. The
Group is currently not contributing to the New Zealand plan.
2024
NZ$M
2023
NZ$M
Recognised net asset
Assets of plans
367
348
Projected benefit obligation
(215)
(222)
Funded surplus
152
126
Asset ceiling effect
Recognised net asset
152
126
Movement in recognised net asset
Recognised net asset at the beginning of the year
126
124
Currency translation
(1)
Actuarial movements for the year
21
Net periodic pension cost
5
3
Recognised net asset
152
126
Assets of the plans
Assets of plans at the beginning of the year
348
360
Actual return on assets
38
7
Total contributions
2
2
Benefit payments
(20)
(21)
Currency translation
(1)
367
348
Assets of the plans consist of:
Australasian equities
30
29
International equities
141
136
Property
109
12
Bonds
20
93
Cash and short-term deposits
47
23
Other assets
20
55
367
348
Projected benefit obligation
Projected benefit obligation as at the beginning of the year
(222)
(236)
Service cost
(2)
(2)
Interest cost
(10)
(9)
Actuarial loss arising on changes in demographic assumptions
(1)
(1)
Actuarial gain arising on changes in financial assumptions
9
Actuarial loss arising on other assumptions - experience adjustments
(1)
(3)
Benefit payments
20
22
Currency translation
1
(2)
(215)
(222)
143
Fletcher Building Limited Annual Report 2024
CONTENTS
Notes to the Consolidated Financial Statements 2024 (Continued)
29. SHARE-BASED PAYMENTS
The Group has a number of employee incentive schemes, and whilst some are offered to all employees, others are offered only to specific
individuals.
All schemes are equity-settled share-based payment arrangements, accounted for under NZ IFRS 2 Share-based Payments and are measured
at fair value at grant date. The fair value of shares or options granted to employees is recognised as an employee expense in the Consolidated
Income Statement over the restrictive period, with the restrictive period being the period over which the service requirement of the
particular scheme is met, with a corresponding increase in the employee share-based payment reserve.
When shares or options vest and shares are awarded to employees, the amount in the share-based payment reserve relating to those
instruments is transferred to share capital. When share-based payments do not vest as a result of a market conditions not being met,
the amount in the share-based payment reserve is reclassified to retained earnings. When share-based payments do not vest due to a
performance condition not being met, any amount previously recognised is released to the Consolidated Income Statement.
Long-term incentive (LTI) share scheme
The Group has a long-term share-based performance incentive scheme targeted at selected employees most able to influence the
results of the Group (invited to participate at the discretion of the Company). The aim is to drive long-term, sustainable results and
create shareholder value by aligning our most senior people with the shareholders' interests, ensuring value is only created for our
people where relative Total Shareholder Return (TSR) is realised.
The long-term share scheme allows scheme participants to acquire shares in the Company at market price (i.e. face value at the time of
grant), funded by an interest-free loan from the Group. The scheme participants are entitled to vote on the shares and to receive cash
dividends, the proceeds of which are used to reduce the loan. The shares are held in trust for the scheme participants by the Trustee,
Fletcher Building Share Schemes Limited.
Entitlement under the scheme is dependent upon the Group's TSR exceeding the 51st percentile of the TSR of the comparator Group
over a three year restricted period. Scheme participants can elect to extend the restrictive period for an additional year if the Group's
TSR means that the vesting level is between the 51st and 75th percentile of the comparator Group. The three-year restrictive period is
automatically extended for an additional year if the minimum vesting threshold is not met.
At the end of the restrictive period or any extension, the Group will pay a bonus to the executives to the extent that performance hurdles
have been met, the after-tax amount of which will be generally sufficient for the scheme participants to repay the balance of the loan in
respect of the shares which are to be transferred.
During the 2022 year, there was an introduction of a return on funds employed (ROFE) measure in addition to the current relative Total
Shareholder Return (rTSR) measure. The use of ROFE in the LTI share scheme aligns to the Group's focus on performance and growth.
The weighting of rTSR has been adjusted from 100% to 50% with ROFE sitting at 50%. For both measures, 0% vests at threshold
and 100% at maximum (i.e. up to 50% for each measure) with straight-line vesting in between. All ROFE grants do not include the
opportunity to extend the restrictive period.
If the TSR performance hurdles are not met or are only partially met and the shares do not transfer to the scheme participants, the
amount in the share-based payments reserve will remain in equity and will not be released to earnings, with the trustee acquiring the
beneficial interest in some or all of the relevant shares. No expense is recognised (and any previously recognised expense is reversed)
for awards that do not vest because ROFE and/or service performance conditions have not been met. The loan provided in respect
of those shares which do not transfer to the scheme participants (the unvested shares) will be novated to the trustee and will be fully
repaid by the transfer of the unvested shares.
The following are details with regard to the scheme:
2023
Award
2022
Award
2021
Award
2020
Award
Grant date
1 September 2023
1 September 2022
1 July 2021
1 July 2020
Number of shares granted
745,440
616,654
395,085
1,998,635
Market price per share at grant date
$4.88
$5.61
$7.48
$3.66
Total value at grant date (NZ$)
$3,637,747
$3,459,429
$2,955,236
$7,315,004
Vesting date
31 August 2026
31 August 2025
30 June 2024
30 June 2023
Number of shares:
Number of shares originally granted
745,440
616,654
395,085
1,998,635
Less forfeited/unvested over life of scheme
(32,544)
(52,570)
(663,058)
Less vested over life of scheme
(40,803)
Number of shares held at 30 June 2024
712,896
564,084
395,085
1,294,774
Cumulative number of shares held
2,966,839
2,253,943
1,689,859
1,294,774
* As of 1 July 2024, the 2020 award scheme did not vest. The Group has also assumed that the ROFE component of the 2022 scheme will not vest.
144
Fletcher Building Limited Annual Report 2024
2024
NZ$M
2023
NZ$M
Total fair value expense in year for LTI
2
4
Amount recognised at year end in the share based payment reserve
10
16
Fair value has been determined using Monte Carlo valuation methodology.
Deferred short-term incentive (STI) plan
A senior short-term incentive (STI) share-based payment scheme has been put in place for selected senior employees (invited to
participate at the discretion of the Company), which is recognised on the achievement of the Group and individual performance
objectives using a balanced scorecard. The aim is to align the financial interests of participating senior employees with the Company’s
shareholders and recognise the differing priorities, and development phases in which our businesses are operating through individual
targets and measures.
The scheme grant date is 1 July each year, with 1 July 2021 being the first scheme offered. Following the release of the final audited
financial year results, the selected employees STI's are split between a cash payment and a deferred STI portion entitling the employee
to share rights. Achievement is calculated based on various non-market conditions specific to the individual, safety goals, as well as
financial goals and is performed one year after grant date, generally in September, with the cash component settled at this time. The
share rights portion of award convert into Fletcher Building ordinary shares two years from achievement date, where the number of
share rights awarded are determined based on the share price at 30 June, one year after grant date. For most employees, the award is
subject to the participant remaining employed with the Group for three years.
2024
NZ$M
2023
NZ$M
Total fair value expense in year for deferred STI
3
5
Employee retention share scheme
The employee retention share scheme is a special retention arrangement in the form of one-off share-based payments that have been put
in place for certain senior management and executives.
2024
NZ$M
2023
NZ$M
Total fair value expense in year for employee retention share scheme
1
Employee share purchase scheme - FBuShare
FBuShare is Fletcher Building’s employee share purchase scheme available to all eligible Group employees. The plan aims to connect
our people with our performance, and to promote employee engagement and retention. Employees purchase shares (purchased shares)
at market prices in the Group and, if they continue to be employed after a three-year qualification period, they become entitled to
receive one bonus award share for every two shares purchased in the first year of each qualification period and still owned at the end
of that period. FBuShare does not require any performance criteria to be met. FBuShare has a minimum contribution rate of NZ$250
per annum and a maximum contribution rate of NZ$5,000 per annum (or the equivalent currency in other countries) of the employees'
after-tax pay. Directors are not eligible to participate in FBuShare.
Dividends paid will be re-invested in additional shares. Employees will receive award shares on any additional shares, subject to the
same conditions set out above. The employees are responsible for any income tax liability payable on dividends and on the value of any
award shares.
At the end of each three-year qualification period, employees may continue to hold any purchased, additional and award shares or they
may sell some or all of the shares.
During the year, approximately 0.4 million award shares vested. At 30 June 2024, approximately 1.8 million shares would be required to
satisfy the obligation to provide award shares to FBuShare participants based on the purchased share balances.
2024
NZ$M
2023
NZ$M
Total fair value expense in year for employee share purchase scheme
2
1
30. SUBSEQUENT EVENTS
Divestment of Tradelink®
On 12 August 2024, the Group announced that it has entered into an agreement with Metal Manufactures Pty Limited to sell 100% of the
shares in Tradelink® for A$170 million. As a result, an additional impairment of $36 million (A$32.5 million) was recognised at 30 June
2024, refer to note 2.2 and note 2.3 and note 2.4.
Divestment of Higgins® Fiji
On 31 July 2024, following receipt of regulatory approvals, the Group successfully completed the transaction to divest 50% of the
Higgins® Fiji construction business. The Group also fully repaid and cancelled the FJ$20 million term loan with ANZ Fiji, the loan was
fully drawn as at 30 June 2024, refer to note 2.3 and note 2.4.
Notes to the Consolidated Financial Statements 2024 (Continued)
145
Fletcher Building Limited Annual Report 2024
CONTENTS
Independent Auditor's Report
Independent Auditor's Report to the Shareholders of Fletcher Building Limited
Opinion
We have audited the financial statements of Fletcher Building Limited (the “Company”) and its subsidiaries (together the
“Group”) on pages 87 to 145, which comprise the consolidated balance sheet of the Group as at 30 June 2024, and the
consolidated income statement, consolidated statement of comprehensive income, consolidated statement of movements
in equity and consolidated statement of cash flows for the year then ended of the Group, and the notes to the consolidated
financial statements including material accounting policy information.
In our opinion, the consolidated financial statements on pages 87 to 145 present fairly, in all material respects, the consolidated
financial position of the Group as at 30 June 2024 and its consolidated financial performance and cash flows for the year then
ended in accordance with New Zealand Equivalents to International Financial Reporting Standards and International Financial
Reporting Standards.
This report is made solely to the Company’s shareholders, as a body. Our audit has been undertaken so that we might state to
the Company’s shareholders those matters we are required to state to them in an auditor’s report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the
Company’s shareholders, as a body, for our audit work, for this report, or for the opinions we have formed.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand). Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our
report.
We are independent of the Group in accordance with Professional and Ethical Standard 1 International Code of Ethics for
Assurance Practitioners (including International Independence Standards) (New Zealand) issued by the New Zealand Auditing
and Assurance Standards Board, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Ernst & Young provides agreed upon procedures, taxation compliance and financial statement preparation services to the
Group. Partners and employees of our firm may deal with the Group on normal terms within the ordinary course of trading
activities of the business of the Group. We have no other relationship with, or interest in, the Group.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
consolidated financial statements of the current year. These matters were addressed in the context of our audit of the
consolidated financial statements as a whole, and in forming our opinion thereon, but we do not provide a separate opinion
on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the financial statements section
of the audit report, including in relation to these matters. Accordingly, our audit included the performance of procedures
designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of our
audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion
on the accompanying consolidated financial statements.
146
Fletcher Building Limited Annual Report 2024
Independent Auditor's Report (Continued)
Long-term fixed price construction contracts
Why significant
How our audit addressed the key audit matter
A substantial amount of the Group's revenue
relates to revenue from construction
contracts. Where these contracts are fixed
price and have a long-term duration, revenue
and margin are recognised over time as the
services are performed. This is calculated
based on the proportion of total costs
incurred at the reporting date compared
to the Group's estimation of total costs of
the contract, applied to the total expected
revenue from the relevant contract. Expected
revenue comprises fixed contractual revenue
and where relevant other amounts, for
example variations due to scope changes
or extension of time claims. Where the
unavoidable costs of meeting the obligations
under a contract exceed the economic
benefits expected to be received under that
contract, an onerous contract provision is
recorded for the difference between these
amounts.
There is a high level of management
judgement and estimation involved in
accounting for the Group's fixed price and
long-term duration construction contracts, in
particular relating to:
•
initial forecasting of total cost to
complete, including the estimation of
cost contingencies for contracting risks,
and revisions to these forecast costs as a
result of events or conditions that occur
during the performance of the contract
or are expected to occur to complete the
contract;
•
the recognition of variable consideration
based on an assessment by the Group
as to whether it is highly probable that
the amount will be approved by the
customer and therefore recovered; and
•
the consideration of the unavoidable
cost and economic benefits expected
when a contract has become onerous.
Disclosures regarding the Group's
construction contracts are included in notes
3, 4, 12 and 26 of the financial statements.
In obtaining sufficient appropriate audit evidence, we:
• confirmed our understanding of the Group's processes regarding
accounting for contract revenues and costs. We tested controls including:
– the performance of monthly project reviews, which involves management
assessing key aspects of contract performance; and
– the project reviews undertaken by the divisional and Group management
and Audit & Risk Sub-Committee.
• selected a sample of contracts for testing based on a number of quantitative
and qualitative factors. These qualitative factors included known or expected
to be onerous contracts, those with significant deterioration of forecast
margin, significant unapproved variations and claims and other factors which
might indicate a greater level of judgement was required by the Group. For
the contracts selected, where relevant and appropriate, we:
– read the key contract terms and conditions to evaluate and address any
identified risks arising from the specific contract type;
– tested controls as they pertain to contract costs incurred in the year
and validated a sample of costs incurred in the year to supporting
documentation;
– sample tested the estimated costs to complete, where material, by
agreeing key forecast cost assumptions to underlying evidence such
as subcontractor quotes, historical costs, employment records or
agreements with subcontractors;
– evaluated the Group's ability to forecast total cost to complete by
analysing the accuracy of previous forecasts to actual outcomes or to
current estimates of cost to complete, assessing the reason for changes
to the estimate;
– evaluated, utilising our legal specialists where appropriate, external legal
and construction experts' reports on contentious matters, to identify
factors which might influence the recognition of variable consideration or
liquidated or other damages included in management's assessment of the
least net cost to fulfil onerous contracts;
– checked variable consideration to supporting documentation taking into
account relevant contractual terms, and where appropriate, executive
leadership team and Board approvals;
– evaluated the competence, capabilities and objectivity of the external
experts utilised by the Group to support the best estimate of onerous
contract provisions;
– evaluated contract performance in the period since year end to the date
of this report to assess the Group's year end judgements in respect of
revenue recognition and forecast costs to complete; and
– evaluated any insurance recoveries relevant to the expected value of
onerous contract provisions. In these situations, we considered whether
forecast recovery assumptions were appropriate and whether incurred
and costs claimed and expected to be claimed were within the total
indemnity limits and the sub limits, if relevant; and
• considered the adequacy of the associated disclosures in the financial
statements including whether they appropriately describe the assumptions
made and uncertainties in estimating the onerous contract provisions.
147
Fletcher Building Limited Annual Report 2024
CONTENTS
Independent Auditor's Report (Continued)
Goodwill and intangible assets with indefinite useful lives impairment assessment
Why significant
How our audit addressed the key audit matter
The Group holds goodwill and intangible assets
with indefinite useful lives of $877 million at 30
June 2024. An impairment of $222 million has been
recognised during the year ended 30 June 2024.
The recoverable amount of the Group’s Cash
Generating Units (“CGUs”) is determined each
reporting period by reference to valuations
prepared using discounted cash flow models
(“DCF models”). DCF models contain significant
judgement and estimation in respect of future cash
flow forecasts, discount rate and terminal growth
rate assumptions. Changes in certain assumptions
can lead to significant changes in the assessment of
the recoverable amount.
Disclosures regarding the Group’s key assumptions
adopted and the sensitivity to reasonably possible
changes in key assumptions which could result in
impairment for higher risk CGUs are included in
note 2.3 of the financial statements.
Disclosures regarding the Group’s impairment
recognised are included in note 2.2 and note 2.3 of
the financial statements
In obtaining sufficient appropriate audit evidence, we:
• understood the Group's goodwill and intangible assets with
indefinite useful lives impairment assessment process and
identified relevant controls;
• assessed the Group's determination of CGUs and those CGUs
considered to have a higher risk of impairment based on our
understanding of the nature and financial performance of the
Group's business units;
• obtained the Group's DCF models and, for those CGUs with a
higher risk of impairment, agreed earnings before interest and
tax forecasts to a combination of the Board approved FY25
budget and the FY26 - FY27 strategic plan;
• assessed key inputs to the DCF models including future cash
flow forecasts, allocation of corporate costs, discount rates
and terminal growth rates;
• considered the accuracy of previous Group cash flow
forecasting to inform our evaluation of forecasts included in
the DCF models;
• for those CGUs with a higher risk of impairment, involved
our valuation specialists to assess the Group's discount and
terminal growth rates. Our valuation specialists were also
involved in benchmarking the Group's assessed recoverable
values with relevant market multiples and assessing the
clerical accuracy of the DCF models;
• performed sensitivity analysis in relation to the discount rate,
terminal growth rate and forecast cash flows to consider the
potential impact of changes in these assumptions;
• for the CGU's where goodwill and intangible assets with
indefinite useful lives were determined to be impaired and an
impairment was recognised, where relevant we:
– assessed the output of the DCF models against the
carrying value of the CGUs to assess the calculation of the
impairment recognised;
– assessed indicative bids for CGUs classified as held for sale
to assess the impairment recognised, if any;
– assessed signed sale and purchase agreement(s) and
verified any impairment loss recognised for CGUs disposed
of subsequent to balance date; and
• considered the adequacy of the associated disclosures in the
financial statements particularly focusing on the disclosure
of the CGUs where the impairment assessment is sensitive
to reasonably possible changes in assumptions and the
disclosure related to the CGUs where an impairment has been
recognised.
148
Fletcher Building Limited Annual Report 2024
Independent Auditor's Report (Continued)
Information other than the financial statements and auditor’s report
The directors of the Company are responsible for the annual report, which includes information other than the consolidated
financial statements and auditor’s report.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our
knowledge obtained during the audit, or otherwise appears to be materially misstated.
If, based upon the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Directors’ responsibilities for the financial statements
The directors are responsible, on behalf of the entity, for the preparation and fair presentation of the consolidated financial
statements in accordance with New Zealand Equivalents to International Financial Reporting Standards and International
Financial Reporting Standards, and for such internal control as the directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the directors are responsible for assessing on behalf of the entity the Group’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless the directors either intend to liquidate the Group or cease operations, or have no realistic alternative
but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with International Standards
on Auditing (New Zealand) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated financial statements.
A further description of the auditor’s responsibilities for the audit of the financial statements is located at the External Reporting
Board’s website: https://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-1/.
This description forms part of our auditor’s report.
The engagement partner on the audit resulting in this independent auditor’s report is Brent Penrose.
Chartered Accountants
Auckland
21 August 2024
149
Fletcher Building Limited Annual Report 2024
CONTENTS
Statutory Disclosures
DISCLOSURE OF INTERESTS BY DIRECTORS
The following are particulars of general disclosures of interest by directors during the 12 months ending 30 June 2024, pursuant
to section 140(2) of the Companies Act 1993. The director will be regarded as interested in all transactions between Fletcher
Building and the disclosed entity. Changes to entries disclosed during the year to 30 June 2024 are noted in brackets, for the
purposes of section 211(1)(e) of the Companies Act 1993.
Barbara Chapman
Fletcher Building Industries Limited
(Director, appointed Acting Chair 4 March 2024)
Acting Chair
Genesis Energy Limited
Chair
NZME Limited
Chair
The New Zealand Initiative Limited
Deputy Chair
Bank of New Zealand
Director
Two Tin Pigs Limited
Director
Martin Brydon
(stepped down
30 June 2024)
Duratec Limited
Chair
Brydon Investment Holdings Pty Limited
Director
Fletcher Building Industries Limited (stepped down 30 June 2024)
Director
Rytysh Pty Limited
Director
Peter Crowley
Barrambin Trading Company Pty Limited
Director
Fletcher Building Industries Limited
Director
The Riverside Coal Transport Company Pty Limited
Director
Sandra Dodds
Beca Group Limited (resigned 31 March 2024)
Director
Contact Energy Limited
Director
Fletcher Building Industries Limited
Director
OceanaGold Corporation
Director
Snowy Hydro Limited
Director
Bruce Hassall
(stepped down
4 March 2024)
Fletcher Building Industries Limited (stepped down 4 March 2024)
Chair
Prolife Group Holdings Limited
Chair
The Farmers' Trading Company Limited
Chair
Fonterra Co-operative Group Limited
Director
Vector Limited (appointed 31 October 2023)
Director
Rob McDonald
(stepped down
30 June 2024)
Contact Energy Limited
Chair
The University of Auckland Business School Advisory Board
Chair
AIA New Zealand Limited (resigned 1 October 2023)
Director
Chartered Accountants Australia and New Zealand
Director
FleetPartners Group Limited (appointed 15 November 2023)
Director
Fletcher Building Industries Limited (stepped down 30 June 2024)
Director
RSMcDonald Services Limited
Director
McDonald Family Trust
Trustee
The University of Auckland Council
Member
Cathy Quinn
Fertility Associates Holdings Limited
Chair
Tourism Holdings Limited
Chair
Fletcher Building Industries Limited
Director
Fonterra Co-operative Group Limited
Director
Rangatira Limited
Director
Pin Twenty Limited (corporate trustee of Kintyre Trust)
Director / Shareholder
MinterEllisonRuddWatts
Consultant
The University of Auckland Council
Pro-Chancellor
150
Fletcher Building Limited Annual Report 2024
There were no specific disclosures made during the year of any interests in transactions entered by Fletcher Building or any of its
subsidiaries by a director.
INFORMATION USED BY DIRECTORS
There were no notices from directors of the Company requesting to disclose or use Company information received in their
capacity as directors.
INDEMNITY AND INSURANCE
In accordance with section 162 of the Companies Act 1993 and the constitution of the Company, Fletcher Building has continued
to indemnify and insure its directors, executives and employees acting on behalf of the Company, against potential liability or
costs incurred in any proceeding, except to the extent prohibited by law. The insurance does not cover liabilities arising from
criminal actions.
DIRECTORS' HOLDING OF SECURITIES
The policy of the Board is that non-executive directors (or their associates) hold at least 40,000 shares in the Company, or a
number equivalent to a director’s base fee at the time of joining the Board, to demonstrate their commitment and alignment with
the Company. Directors have three years from their date of appointment to accumulate that holding. Non-executive directors do
not participate in any Company share or option plan.
DISCLOSURE OF DIRECTORS’ INTERESTS IN SECURITIES
Securities of the Company in which each director has a relevant interest at 30 June 2024.
Director
Ownership
Ordinary Shares
Capital Notes
Barbara Chapman (Acting Chair)
Beneficial
50,000
Martin Brydon(1)
Beneficial
30,000
Peter Crowley
Beneficial
50,000
Sandra Dodds
Beneficial
15,000
Rob McDonald(1)
Beneficial
60,000
Cathy Quinn
Beneficial
40,000
Non-Beneficial(2)
121,197
25,185,500
(1) Martin Brydon and Rob McDonald stepped down from the board effective 30 June 2024.
(2) Cathy Quinn also held a non-beneficial interest in securities as a director/shareholder of Pin Twenty Limited (corporate trustee of Kintyre Trust).
DISCLOSURE OF DIRECTORS’ INTERESTS IN SHARE TRANSACTIONS
Directors disclosed, pursuant to section 148(2) of the Companies Act 1993, the following acquisitions or disposals of relevant
interests in Fletcher Building securities during the year ended 30 June 2024.
Director
Date of transaction
Nature of relevant interest
Consideration
Number of
securities
Sandra Dodds
30 October 2023
On-market purchase of ordinary shares
NZ $59,586
15,000
Barbara Chapman
1 November 2023
On-market purchase of ordinary shares
NZ $43,888
10,000
Peter Crowley
1 November 2023
On-market purchase of ordinary shares
AU $39,867
10,000
Cathy Quinn(1)
15 March 2024
Redemption on maturity of Fletcher Building
Industries capital notes
NZ $6,350,000
(3,175,000)
(1) Non-beneficial interest in securities as a director/shareholder of Pin Twenty Limited (corporate trustee of Kintyre Trust).
Statutory Disclosures (Continued)
151
Fletcher Building Limited Annual Report 2024
Statutory Disclosures (Continued)
STOCK EXCHANGE LISTINGS
Fletcher Building’s ordinary shares are listed and quoted on the Main Board of NZX Limited and the Australian Securities
Exchange (ASX) under the company code ‘FBU’. Fletcher Building’s listing on the ASX is as a Foreign Exempt Listing. Fletcher
Building must comply with the NZX Listing Rules but is exempt from almost all of the ASX Listing Rules. For the purposes of ASX
Listing Rule 1.15.3, Fletcher Building confirms that it continues to comply with the NZX Listing Rules.
In addition, Fletcher Building Limited maintains a sponsored Level 1 American Depositary Receipt (ADR) programme with
Deutsche Bank Trust Company Americas (Deutsche Bank). The ADRs trade over the counter in the United States of America (US)
under the ticker code ‘FCREY’, with each ADR representing two ordinary Fletcher Building shares. US investors may prefer to
purchase ADRs rather than ordinary shares in Fletcher Building’s home market because ADRs trade, clear and settle according to
US market conventions.
EXERCISE OF NZX DISCIPLINARY POWERS
Neither NZX or ASX has taken any disciplinary action against Fletcher Building during the financial year ended 30 June 2024 and
there was no exercise of powers by NZX under NZX Listing Rule 9.9.3 (relating to powers to cancel, suspend or censure an issuer)
with respect to Fletcher Building during the reporting period.
NZX WAIVERS
There were no waivers granted by NZX or relied on by Fletcher Building Limited in the 12 months preceding 30 June 2024.
DISTRIBUTION OF SHAREHOLDERS AND HOLDINGS AS AT 30 JUNE 2024
The total number of voting securities of Fletcher Building at 30 June 2024 was 783,043,596 fully paid ordinary shares, each
conferring on the registered holder the right to one vote on a poll at a meeting of shareholders.
Size of holding
Number of shareholders
% of shareholders
Number of ordinary shares
% of ordinary shares
1 - 1,000
15,376
46.03
6,470,174
0.83
1,001 - 5,000
12,132
36.32
29,708,580
3.79
5,001 - 10,000
3,096
9.27
22,433,312
2.87
10,001 - 100,000
2,624
7.86
62,339,225
7.96
100,001 Over
174
0.52
662,092,305
84.55
Total
33,402
100.00
783,043,596
100.00
SUBSTANTIAL PRODUCT HOLDERS
According to notices given under the Financial Markets Conduct Act 2013, the following persons were a substantial product
holder of the Company as at 30 June 2024. The total number of voting securities of Fletcher Building Limited at 30 June 2024
was 783,043,596 fully paid ordinary shares.
Substantial product holder
Number of ordinary shares in
which relevant interest is held
Date of notice
Allan Gray Australia Pty Ltd (Allan Gray
Australia) and its related bodies corporate
110,889,910
17 April 2024
152
Fletcher Building Limited Annual Report 2024
20 LARGEST SHAREHOLDERS AS AT 30 JUNE 2024
Holder Name
Number of
ordinary shares
% of issued capital
Citicorp Nominees Pty Limited
91,736,544
11.72
HSBC Custody Nominees (Australia) Limited
69,756,597
8.91
JP Morgan Nominees Australia Limited
62,456,649
7.98
Citibank Nominees (New Zealand) Limited - NZCSD
58,848,137
7.52
BNP Paribas Nominees (NZ) Limited - NZCSD
40,975,420
5.23
HSBC Nominees (New Zealand) Limited A/C State Street - NZCSD
39,326,882
5.02
HSBC Nominees (New Zealand) Limited - NZCSD
33,210,076
4.24
JPMorgan Chase Bank NA NZ Branch - Segregated Clients Acct - NZCSD
27,287,852
3.48
Accident Compensation Corporation - NZCSD
25,737,310
3.29
HSBC Nominees A/C NZ Superannuation Fund Nominees Limited - NZCSD
22,982,951
2.94
BNP Paribas Nominees Pty Ltd
19,350,170
2.47
New Zealand Depository Nominee Limited
15,661,549
2.00
TEA Custodians Limited Client Property Trust Account - NZCSD
15,354,737
1.96
JBWere (NZ) Nominees Limited
13,737,011
1.75
ANZ Wholesale Australasian Share Fund - NZCSD
12,686,104
1.62
Custodial Services Limited
9,684,845
1.24
Simplicity Nominees Limited - NZCSD
7,860,025
1.00
FNZ Custodians Limited
6,245,967
0.80
BNP Paribas Noms Pty Ltd
5,960,019
0.76
ANZ Custodial Services New Zealand Limited - NZCSD
5,332,911
0.68
Total
584,191,756
74.61
New Zealand Central Securities Depository Limited (NZCSD) provides a custodial depository service which allows electronic
trading of securities to members. It does not have a beneficial interest in these securities. As at 30 June 2024, total holding in
NZCSD was 298,220,139 or 38.08% of shares on issue.
AUDITOR FEES
EY has continued to act as auditors of the Group. Please refer to note 7 of the consolidated financial statements for audit fees
paid to EY in the financial year to 30 June 2024.
CREDIT RATING
The Group was assigned a rating of Baa2 from Moody’s Investors Services with a stable outlook in October 2023. This was
amended to a Baa3 with a negative outlook in June 2024.
DONATIONS
Please refer to note 7 of the consolidated financial statements for donations made in FY24. All political donations must be
approved by the Board.
Statutory Disclosures (Continued)
153
Fletcher Building Limited Annual Report 2024
SUBSIDIARY COMPANY INFORMATION
The persons listed below respectively held office as directors of Fletcher Building Limited or one or more of its subsidiary
companies as at 30 June 2024, or in the case of those persons with the letter (R) after their name ceased to hold office during the
year. Except where shown below, Fletcher Building’s indirect ownership interest in these companies as at 30 June 2024 was 100%.
No employee of Fletcher Building appointed as a director of a Fletcher Building Limited company 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 in the Employee Remuneration section. Except where shown below, no other director of any
subsidiary company within the Group receives director’s fees or other benefits as a director.
Company
Directors
Amatek Holdings Pty Limited
M Brodie (R), B McKenzie, G O’Reilly
Amatek Industries Pty Limited
M Brodie (R), B McKenzie, G O’Reilly
Amatek Investments Pty Limited
M Brodie (R), B McKenzie, G O’Reilly
Approach Signs Limited
P Boylen, B McKenzie
Bandelle Pty Limited
M Brodie (R), B McKenzie, G O’Reilly, N Sekul (R)
Baron Insulation Pty Limited
B McKenzie, G O’Reilly, A Rowe
Brian Perry Civil Limited
P Boylen, B McKenzie
Building Prefabrication Solutions Limited
J Jang, B McEwen (R), B McKenzie
Burnham 2020 Limited
B McKenzie, N Traber
Cleaver Building Supplies Limited (75%)
M Cleaver, J Jang, B McEwen (R)
Clever Core New Zealand Limited
S Evans, B McKenzie
Crane Enfield Metals Pty Limited
M Brodie (R), B McKenzie, G O’Reilly
Crane Group Pty Limited
M Brodie (R), B McKenzie, G O’Reilly
Crane Share Plan Pty Limited
M Brodie (R), B McKenzie, G O’Reilly
Crevet Pipelines Pty Limited
P Lavelle, B McKenzie, G O’Reilly
Crevet Pty Limited
M Brodie (R), B McKenzie, G O’Reilly
CTCI Pty Limited
J Burgess (R), S Leagh-Murray, B McKenzie, J Nicolazzo (R),
G O’Reilly, K Taneja (R)
Delcon Holdings (No. 11) Limited
D Fradgley (R), H McBeath, B McKenzie
ee-Fit Pty Limited
B McKenzie, G O’Reilly, A Rowe
FBHS (Aust) Pty Limited
B McKenzie, G O’Reilly, D Orr
FBII (Puhoi) Limited
P Boylen, B McKenzie
FBSOL Pty Limited
B McKenzie, G O’Reilly, D Orr
Fletcher Building (Australia) Pty Limited
M Brodie (R), A Clarke (R), B McKenzie, G O’Reilly, N Sekul (R)
Fletcher Building (Fiji) Pte Limited
P Boylen, A Henderson, A Kumar, A Morton (R)
Fletcher Building Educational Fund Limited
C Carroll, J McDonald, P Muir (R), R Rendle
Fletcher Building Holdings Limited
A Clarke (R), B McKenzie, H Wong
Fletcher Building Holdings New Zealand Limited
A Clarke (R), B McKenzie
Fletcher Building Industries Limited
M Brydon, B Chapman, P Crowley, S Dodds, B Hassall (R),
R McDonald, D McKay (R), C Quinn
Fletcher Building Limited
M Brydon, B Chapman, P Crowley, S Dodds, B Hassall (R),
R McDonald, D McKay (R), C Quinn
Fletcher Building Nominees Limited
M Binns, J Chapman, G Clarke (R), H McKenzie, C Munkowits,
G Niccol, T Williams
Fletcher Building Products Australia Pty Limited
M Brodie (R), B McKenzie, G O’Reilly
Fletcher Building Products Limited
H McBeath, B McKenzie
Fletcher Building Share Schemes Limited
J Chapman, G Niccol
Statutory Disclosures (Continued)
154
Fletcher Building Limited Annual Report 2024
Statutory Disclosures (Continued)
Company
Directors
Fletcher Building Welfare Fund Nominees Limited
D Lucas, S Schulz, D Sixton, C Stewart
Fletcher Challenge Building UK Limited
S Evans, B McKenzie
Fletcher Challenge Forest Industries Limited
S Evans, B McKenzie
Fletcher Concrete and Infrastructure Limited
H McBeath, B McKenzie, N Traber
Fletcher Construction (Solomon Islands) Limited
P Boylen, A Henderson, A Morton (R)
Fletcher Construction Buildings Limited
P Boylen, B McKenzie
Fletcher Construction Company (Fiji) Pte Limited
P Boylen, A Kumar, J Matthews (R)
Fletcher Construction Holdings Limited
P Boylen, B McKenzie
Fletcher Construction Infrastructure Limited
P Boylen, B McKenzie
Fletcher Construction Management Services Limited
P Boylen, B McKenzie
Fletcher Development Limited
S Evans, B McKenzie
Fletcher Distribution Limited
J Jang, B McEwen (R), B McKenzie
Fletcher Industries Australia Pty Limited
M Brodie (R), B McKenzie, G O’Reilly, N Sekul (R)
Fletcher Insulation Pty Limited
B McKenzie, G O’Reilly, A Rowe
Fletcher Morobe Construction Limited
P Boylen, R Simpson
Fletcher Property Limited
A Clarke (R), B McKenzie
Fletcher Residential Limited
S Evans, B McKenzie
Fletcher Steel Limited
H McBeath, B McKenzie
Fletcher Wood Products Limited
H McBeath, B McKenzie
Gatic Pty Limited
P Lavelle, B McKenzie, G O’Reilly
Geraldton Independent Building Supplies Pty Limited
J Burgess (R), S Leagh-Murray, B McKenzie, J Nicolazzo (R),
G O’Reilly, K Taneja (R)
Higgins Contractors Limited
P Boylen, B McKenzie
Higgins Group Holdings Limited
P Boylen, B McKenzie
Higgins Holdings (Fiji) Pte Limited
P Boylen, A Kumar
Homai MFR General Partner Limited (51%)
S Evans, P Majurey
Homai MFR Limited Partnership (51%)
HotForm Products Limited (51%)
S Hansen, J Mainwaring, R Sutherland, D Sutton
Iplex Pipelines Australia Pty Limited
P Lavelle, B McKenzie, G O’Reilly
Iplex Pipelines NZ Limited
H McBeath, B McKenzie
Iplex Properties Pty. Limited
P Lavelle, B McKenzie, G O’Reilly
Kaipatiki FRL General Partner Limited (51%)
S Evans, P Majurey
Kaipatiki FRL Limited Partnership (51%)
Key Plastics Pty. Limited.
P Lavelle, B McKenzie, G O’Reilly
Kingston Bridge Engineering Pty Limited
P Lavelle, B McKenzie, G O’Reilly
Kinsey Kydd Building Supplies Limited
S Kinsey (R), B McEwen (R), B McKenzie
Kusabs Building Supplies Limited (75%)
J Jang, G Kusabs, B McEwen (R)
Laminex Group Pty Limited
J Burgess (R), S Leagh-Murray, B McKenzie, J Nicolazzo (R),
G O’Reilly, K Taneja (R)
Leary Building Supplies Limited (75%)
J Jang, B Leary, B McEwen (R)
Macready Building Supplies Limited (75%)
J Jang, J Macready, B McEwen (R)
Matt Orr Building Supplies Limited (75%)
J Jang, B McEwen (R), M Orr
155
Fletcher Building Limited Annual Report 2024
Company
Directors
McGill Building Supplies Limited (75%)
J Jang, B McEwen (R), J McGill
McInnes Building Supplies Limited
B McEwen (R), B McKenzie
Mico New Zealand Limited
J Jang, B McEwen (R), B McKenzie
Milnes Holdings Pty Limited
M Brodie (R), B McKenzie, G O’Reilly
Moire Road General Partner Limited (51%)
N Donnelly, S Evans, S Rapson
Moire Road Limited Partnership (51%)
Morinda Australia Pty Limited
B McKenzie, G O’Reilly, D Orr
New Zealand Ceiling & Drywall Supplies Limited
D Thomas
Northern Iron and Brass Foundry Pty. Ltd.
P Lavelle, B McKenzie, G O’Reilly
Ōkahukura GP Limited (51%)
D Clay, S Evans
Ōkahukura Limited Partnership (51%)
Oliveri Solutions Pty Limited
B McKenzie, S Naish (R), G O’Reilly, J Woodcock
Paul Robinson Building Supplies Limited (75%)
J Jang, B McEwen (R), P Robinson
Pavement Technology Limited
P Boylen, B McKenzie
Penny Engineering Limited
P Boylen, B McKenzie
Penrose Retirement Nominees Limited
M Binns, J Chapman, G Clarke (R), H McKenzie, C Munkowits,
G Niccol, T Williams
PlaceMakers Christchurch Limited (75%)
D Close (R), J Jang, B McEwen (R), B McKenzie
PlaceMakers Gisborne Limited (75.28%)
J Jang, B McEwen (R), B McKenzie
PlaceMakers Invercargill Limited
J Jang, R Jeffcoat (R), B McEwen (R), B McKenzie
PlaceMakers Hawkes Bay Limited (93.34%)
J Jang, B McEwen (R), B McKenzie
PlaceMakers Limited
J Jang, B McEwen (R), B McKenzie
PlaceMakers Supply, Fix & Install Limited
J Jang, B McEwen (R), B McKenzie
PlaceMakers Waiheke Limited (75%)
D Banks, J Jang, B McEwen (R)
PlaceMakers Wanaka Limited (80%)
J Jang, B McEwen (R), B Stanley-Joblin
Polymer Fusion Education Pty Limited
P Lavelle, B McKenzie, G O’Reilly
Raylight Aluminium Limited (80%)
M Buckenham, D Close (R), J Jang, B McEwen (R)
Reece Building Supplies Limited (75%)
J Jang, B McEwen (R), J Reece
Renewable Wood Fuels Limited
H McBeath, B McKenzie
S Cubed Pty Limited
B McKenzie, G O’Reilly, D Orr
Selwyn Quarries Limited
B McKenzie, N Traber
Shed Boss NZ Limited
D Fradgley (R), H McBeath, B McKenzie
Stanley Building Supplies Limited
J Jang, B McEwen (R), B McKenzie
Stramit Corporation Pty Limited
B McKenzie, G O’Reilly, D Orr
Tasman Australia Pty Limited
M Brodie (R), B McKenzie, G O’Reilly, N Sekul (R)
Tasman Building Products Pty Limited
M Brodie (R), B McKenzie, G O’Reilly, N Sekul (R)
Tasman Insulation New Zealand Limited
H McBeath, B McKenzie
Tauoma FRL GP Limited (51%)
S Evans, P Majurey
Tauoma FRL Limited Partnership (51%)
TBP Group Pty Limited
M Brodie (R), B McKenzie, G O’Reilly, N Sekul (R)
Te Tau Waka General Partner Limited (51%)
D Clay, S Evans
Te Tau Waka Limited Partnership (51%)
156
Fletcher Building Limited Annual Report 2024
Statutory Disclosures (Continued)
Company
Directors
Terrace Insurances (PCC) Limited
K Burke, J Crowder, B McKenzie
The Fletcher Construction Company (Fanshawe Street)
Limited
P Boylen, B McKenzie
The Fletcher Construction Company Limited
P Boylen, B McKenzie
The Fletcher Organisation (Vanuatu) Limited
P Boylen, A Care
The Fletcher Trust and Investment Company Limited
P Boylen, B McKenzie
Tradelink Pty Limited
B McKenzie, S Naish, G O’Reilly
Tumu Dannevirke Limited
J Jang, B McEwen (R), B McKenzie
Tumu Frame & Truss Limited
J Jang, B McEwen (R), B McKenzie
Tumu Hastings Limited
J Jang, B McEwen (R), B McKenzie
Tumu Havelock North Limited
J Jang, B McEwen (R), B McKenzie
Tumu Masterton Limited
J Jang, B McEwen (R), B McKenzie
Tumu Napier Limited
J Jang, B McEwen (R), B McKenzie
Vivid Living Limited
S Evans, B McKenzie
Waipapa Pine Limited
H McBeath, B McKenzie
Water Filters Australia Pty Limited
B McKenzie, S Naish (R), G O’Reilly, J Woodcock
Wednesday Pte Limited
P Boylen, A Kumar
Winstone Wallboards Limited
H McBeath, B McKenzie, D Thomas
As at 30 June 2024, Fletcher Building held an indirect ownership interest in the following associates and joint ventures.
Company
Ownership
Altera Apartments General Partner Limited
50%
Altera Apartments Limited Partnership
50%
Altus NZ Limited
50%
Bellus Apartments General Partner Limited
50%
Bellus Apartments Limited Partnership
50%
Greenraft Limited
33.33%
Hexion Australia Pty Limited
50%
Ilico Apartments General Partner Limited
50%
Ilico Apartments Limited Partnership
50%
Interpipe Holdings Limited
50%
JFC Pumps Limited
50%
Kaipara Water Transport Limited
25%
NX2 Hold GP Limited
13.40%
Oamaru Shingle Supplies Limited
33.33%
P2W Services Limited
50%
Rangitikei Aggregates Limited
50%
Rodney Aggregates Supplies Limited
50%
Verto Apartments General Partner Limited
50%
Verto Apartments Limited Partnership
50%
Wespine Industries Pty Limited
50%
157
Fletcher Building Limited Annual Report 2024
Statutory Disclosures (Continued)
Corporate Directory
BOARD OF DIRECTORS
Barbara Chapman (Acting Chair)
Peter Crowley
Sandra Dodds
Tony Dragicevich
Cathy Quinn
EXECUTIVE TEAM
Nick Traber
Acting Chief Executive Officer
Bevan McKenzie
Chief Financial Officer
Wendi Bains
Chief Health and Safety Officer
Phil Boylen
Chief Executive Construction
Claire Carroll
Chief People Officer
Steve Evans
Chief Executive Residential and
Development
Joe Locandro
Chief Information Officer
Hamish McBeath
Chief Executive Building Products
James Peters
Chief Executive Distribution
Gareth O’Reilly
Chief Executive Australia
Thornton Williams
Acting Chief Executive Concrete
Haydn Wong
Group General Counsel and
Company Secretary
REGISTERED OFFICE
New Zealand
Fletcher Building Limited
810 Great South Road, Penrose,
Auckland 1061, New Zealand
Private Bag 92114
Auckland 1142, New Zealand
Phone: +64 9 525 9000
Email: fbcomms@fbu.com
Web: www.fletcherbuilding.com
Australia
1051 Nudgee Road, Banyo,
QLD 4014, Australia
Locked Bag 71, Virginia BC,
QLD 4014, Australia
Phone: +61 2 8311 2588
AUDITOR
EY
PO Box 2146
Auckland 1140, New Zealand
SOLICITOR
Bell Gully
PO Box 4199
Auckland 1140, New Zealand
INVESTOR RELATIONS
ENQUIRIES
Aleida White
Head of Investor Relations
Email: investor.relations@fbu.com
Phone: +64 21 155 8837
COMPANY NUMBERS
NZ Incorporation 1104175
NZBN 9429037065836
ARBN 096 046 936
REGISTRY
Computershare Investor Services
Limited (Computershare) looks after
our share register and is your first
point of contact for any queries
regarding your investment in
Fletcher Building. You can view your
investment portfolio, elect to enrol
in our Dividend Reinvestment Plan,
indicate your preference for electronic
communications, supply your email
address, change your details or update
your payment instructions relating to
Fletcher Building at any time by visiting
the Computershare Investor Centre at
www.investorcentre.com/nz.
New Zealand
Computershare Investor Services
Limited, Private Bag 92119,
Auckland 1142, New Zealand
Level 2, 159 Hurstmere Road,
Takapuna, Auckland 0622,
New Zealand
Phone: +64 9 488 8777
Email: enquiry@computershare.co.nz
Web: www.computershare.com/nz
Australia
Computershare Investor Services Pty
Limited, GPO Box 3329, Melbourne,
VIC 3001, Australia
Yarra Falls, 452 Johnston Street,
Abbotsford, VIC 3067, Australia
Phone: 1800 501 366 (within Australia)
Phone: +61 3 9415 4083 (outside
Australia)
Receiving your communications
electronically
We encourage shareholders to
receive investor communications
electronically as it is faster and better
for the environment.
All you need to do is log in to
www.investorcentre.com/nz
and update your ‘Communication
Preference’ to enable us to send
all your investor correspondence
electronically where possible.
158
Fletcher Building Limited Annual Report 2024
Environmental
Product
Declaration
In accordance with
ISO 14025 and EN 15804+A2:2019 for:
Aluminium & Window Systems
Programme
The International EPD® System | www.envirodec.com
Programme operator
EPD Australasia Limited | www.epd-australasia.com
EPD registration number
S-P-07443
Valid from
2023-07-30
Valid until
2028-07-30
Geographical scope of EPD
New Zealand
Programme:
EPD Australasia, https://epd-australasia.com/
Programme operator:
EPD Australasia Limited
EPD registration number:
S-P-09349
Valid from:
2023-07-31
Valid until:
2028-07-31
Geographical scope of EPD:
New Zealand
Environmental
Product Declaration
In accordance with ISO 14025 and EN 15804+A2:2019 for:
Reinforced Concrete
Pipes (RCP)
WWW.HUMES.CO.NZ
An EPD should provide current information and may be updated if conditions change.
The stated validity is therefore subject to the continued registration and publication at
www.epd-australasia.com
Programme:
EPD Australasia, https://epd-australasia.com/
Programme operator:
EPD Australasia Limited
EPD registration number:
S-P-09351
Valid from:
2023-07-31
Valid until:
2028-07-31
Geographical scope of EPD:
New Zealand
An EPD should provide current information and may be updated if conditions change.
The stated validity is therefore subject to the continued registration and publication at
www.epd-australasia.com
Environmental
Product Declaration
In accordance with ISO 14025 and EN 15804+A2:2019 for:
Precast Concrete
Sleepers
WWW.HUMES.CO.NZ
Programme:
EPD Australasia, https://epd-australasia.com/
Programme operator:
EPD Australasia Limited
EPD registration number:
S-P-09350
Valid from:
2023-07-31
Valid until:
2028-07-31
Geographical scope of EPD:
New Zealand
Environmental
Product Declaration
In accordance with ISO 14025 and EN 15804+A2:2019 for:
Precast Concrete
Products
WWW.HUMES.CO.NZ
An EPD should provide current information and may be updated if conditions change.
The stated validity is therefore subject to the continued registration and publication at
www.epd-australasia.com
ENVIRONMENTAL PRODUCT DECLARATION
1
Environmental
Product
Declaration
For ready-mixed concrete
+
SEPTEMBER 2020
AUSTRALASIA
In accordance with ISO 14025 and EN 15804+A1 for:
FIRTH CERTIFIED READY-MIXED CONCRETE
Programme:
EPD Australasia, www.epd-australasia.com
Programme operator:
EPD Australasia Ltd
EPD registration number: S-P-02050
Publication date:
18/09/2020
Valid until:
18/09/2025
Geographical scope
of EPD:
New Zealand
In accordance with ISO
14025 and EN15804+A2:2019
Programme:
The International EPD® System
www.environdec.com
Programme
operator:
EPD Australasia
www.epd-australasia.com
EPD registration
number:
S-P-09352
Valid from:
2023-07-31
Valid until:
2028-07-30
Geographical
scope:
New Zealand
ASPHALT
ENVIRONMENTAL
PRODUCT
DECLARATION
JULY 2023
Environmental
Product Declaration
For Aggregate and Sand Products
Programme:
Programme operator:
EPD registration number:
Publication date:
Valid until:
EPD Australasia, https://epd-australasia.com/
EPD Australasia
S-P-04664
2022-02-23
2027-02-23
Geographical scope of EPD:
New Zealand
EPD of construction products may not be comparable if they do not comply with EN 15804.
In accordance with ISO 14025 and EN 15804+A1 for WINSTONE AGGREGATES
DECEMBER 2021
EPD - PE PIPES
Environmental Product Declaration
Polyethylene PE 100 & PE 100 Mobile Extrusion
Environmental Product Declaration
Produced under the Australasian EPD
Programme in Accordance with ISO 14025 and
EN15804:2012+A1:2013.
EPD registration number:
S-P-03728
Version:
1.0
Valid until:
2026-12-17
Geographical scope:
New Zealand
Programme operator:
EPD Australasia
Date of publication:
2021-12-17
AUSTRALASIA
DECEMBER 2021
EPD - PVC PIPES
Environmental Product Declaration
Polyvinyl Chloride PVC-O, PVC-M, PVC-U
Environmental Product Declaration
Produced under the Australasian EPD
Programme in Accordance with ISO 14025 and
EN15804:2012+A1:2013.
EPD registration number:
S-P-03729
Version:
1.0
Valid until:
2026-12-17
Geographical scope:
New Zealand
Programme operator:
EPD Australasia
Date of publication:
2021-12-17
AUSTRALASIA
Environmental Product
Declaration for GIB®
Plasterboard
Programme:
Programme operator:
EPD registration number:
Updated version:
Date of publication:
Valid until:
Geographical scope:
The International EPD® System
www.environdec.com
The Australasian EPD®
Programme Ltd
www.epd-australasia.com
EPD International AB
EPD Australasia
S-P-01000
Version 2.1
2023-07-12
2028-07-03
New Zealand
PRODUCED UNDER THE AUSTRALASIAN EPD PROGRAMME IN
ACCORDANCE WITH ISO 14025:2006 AND EN 15804:2012+A2:2019
Whiteboard
Laminex
® Melamine
Panels on MDF Substrate
Environmental Product Declaration
In accordance with ISO 14025:2006 and
EN 15804:2012+A2:2019/AC:2021 for: Melteca® and
Whiteboard on MDF Standard by Laminex® New Zealand
Programme:
The International EPD® System
www.environdec.com
Programme operator:
EPD Australasia Ltd.
www.epd-australasia.com
EPD registration number:
S-P-09357
Version:
1.0
Version date:
2024-01-25
Owner’s Name:
Laminex® New Zealand
Product name:
Melteca® and Whiteboard
Valid from:
2024-01-25
Valid until:
2029-01-25
Geographical scope:
New Zealand
The products covered in the EPD are listed on page 6.
EPD of multiple products, based on worst-case results.
An EPD should provide current information and may be
updated if conditions change. The stated validity is therefore
subject to the continued registration and publication at
https://epd-australasia.com/
Whiteboard
Laminex
® Melamine
Panels on Particleboard
Environmental Product Declaration
In accordance with ISO 14025:2006 and
EN 15804:2012+A2:2019/AC:2021 for: Melteca® and Whiteboard
on Superfine® Standardand MR by Laminex® New Zealand
Programme:
The International EPD® System
www.environdec.com
Programme operator:
EPD Australasia Ltd.
www.epd-australasia.com
EPD registration number:
S-P-09356
Version:
1.0
Version date:
2024-01-25
Owner’s Name:
Laminex® New Zealand
Product name:
Melteca® and Whiteboard
Valid from:
2024-01-25
Valid until:
2029-01-25
Geographical scope:
New Zealand
The products covered in the EPD are listed on page 6.
This EPD is of multiple products, based on worst-case results.
An EPD should provide current information and may be
updated if conditions change. The stated validity is therefore
subject to the continued registration and publication at
https://epd-australasia.com/
Environmental Product
Declaration
Environmental Product Declaration
In accordance with ISO 14025 and EN 15804+A2:2019
for: Superfine® (Standard and MR)
by Laminex® New Zealand
Programme:
The International EPD® System
www.environdec.com
Programme operator:
EPD Australasia Ltd.
www.epd-australasia.com
EPD registration number:
S-P-09355
Owner’s Name:
Laminex® New Zealand
Product name:
Superfine®
Valid from:
2023-11-27
Valid until:
2028-11-27
Geographical scope:
New Zealand
The products covered in the EPD are listed on page 6.
An EPD should provide current information and may be
updated if conditions change. The stated validity is therefore
subject to the continued registration and publication at
https://epd-australasia.com/
E NV IR ONM E NTAL
P R ODUCT DE CLAR ATI O N
In accordance with ISO 14025 and EN 15804:2012+A2:2019 for:
POLY ET HY LENE PIPES
F R O M I P L E X P I P E L I N E S A U S T R A L I A P T Y L I M I T E D
Programme: EPD Australasia, www.epd-australasia.com
Programme operator: EPD Australasia
EPD registration number: S-P-00715
Publication date: 2016-05-30
Valid until: 2027-11-23
Version 2.0: 2022-11-23
Geographic location: Australia
Reference year for data: 2020-2021
An EPD should provide current information and may be updated if conditions change.
The stated validity is therefore subject to the continued registration and publication
at www.environdec.com
EN V I R O N M EN TA L
PR O D U C T D EC L A R AT I O N
In accordance with ISO 14025 and EN 15804:2012+A2:2019 for:
BL A CKM A X ® A ND S E W E R M A X ®
P O LY P RO P YL E NE P I P E S
F R O M I P L E X P I P E L I N E S A U S T R A L I A P T Y L I M I T E D
Programme: EPD Australasia, www.epd-australasia.com
Programme operator: EPD Australasia
EPD registration number: S-P-00714
Publication date: 2015-12-06
Valid until: 2027-11-23
Version 2.0: 2022-11-23
Geographic location: Australia
Reference year for data: 2020-2021
An EPD should provide current information and may be updated if conditions change.
The stated validity is therefore subject to the continued registration and publication at
www.environdec.com
E N VI RON ME N TA L
P ROD U C T D E C LA RAT I ON
In accordance with ISO 14025 and EN 15804:2012+A2:2019 for:
PVC NON-PRESSURE PIPES
F R O M I P L E X P I P E L I N E S A U S T R A L I A P T Y L I M I T E D
Programme: EPD Australasia, www.epd-australasia.com
Programme operator: EPD Australasia
EPD registration number: S-P-00713
Publication date: 2015-12-06
Valid until: 2027-11-23
Version 2.0: 2022-11-23
Geographic location: Australia
Reference year for data: 2020-2021
An EPD should provide current information and may be updated if conditions change.
The stated validity is therefore subject to the continued registration and publication at
www.environdec.com
E N VI RON ME N TA L
P ROD U C T D E C LA RAT I ON
In accordance with ISO 14025 and EN 15804:2012+A2:2019 for:
PVC PRESSURE PIPES
F R O M I P L E X P I P E L I N E S A U S T R A L I A P T Y L I M I T E D
Programme: EPD Australasia, www.epd-australasia.com
Programme operator: EPD Australasia
EPD registration number: S-P-00712
Publication date: 2015-12-06
Valid until: 2027-11-23
Version 2.0: 2022-11-23
Geographic location: Australia
Reference year for data: 2020-2021
An EPD should provide current information and may be updated if conditions change.
The stated validity is therefore subject to the continued registration and publication at
www.environdec.com
Our Environmental Product Declarations are all available on the EPD Australasia website.
Fletcher Building Limited Annual Report 2024
159
This Annual Report uses stock sourced from sustainably managed forests.