2004-FBL-Annual-Report1.Pdf

BUILDING STRENGTH AND PERFORMANCE ANNUAL REPORT 2004 INTRODUCTION FLETCHER BUILDING IS A BROADLY-BASED BUILDING MATERIALS GROUP WITH OPERATIONS PRINCIPALLY IN NEW ZEALAND, AUSTRALIA AND THE PACIFIC. OUR DIVERSE GEOGRAPHICAL AND INDUSTRY BASE IS A SOLID PLATFORM ANNUAL REPORT 2004 FOR PERFORMANCE AND GROWTH. 02 Highlights 04 Chairman’s Report 07 Chief Executive’s Report 13 Concrete With a range of market leadership positions in manufacturing and distribution, we generate good returns through the value 18 Distribution chain. We seek to align the interests of our customers, shareholders, employees and communities so that each benefi ts from 22 Laminates & Panels the company’s success. 29 Construction We aim to produce reliable earnings over the long term, irrespective of economic and industry cycles. Our near-term priorities 35 Building Products centre on growth from internal investment to improve performance and unlock capacity constraints, and on ensuring we have 40 Sustainability Review the fi nancial capacity for profi table growth by acquisition when opportunities arise. 48 Board of Directors 52 Corporate Governance 64 Financial Review 01 68 Financial Statements Success requires alignment of opportunity, preparation and performance. Our opportunity comes from market 128 Audit Report leadership and growth. Our preparation is the constant upgrading of knowledge, skills, attitudes and physical assets. 130 Trend Statement Performance – our primary focus – results only from delivering valued outcomes to our customers. 132 Regulatory Disclosures 148 Investor Information 150 Directory GO DIRECTLY TO A SECTION OF THE REPORT BY CLICKING ON THE NUMBER < back next > HIGHLIGHTS RECORD EARNINGS DRIVEN BY STRONG DEMAND THROUGHOUT THE YEAR, BENEFITS FROM ACQUISITIONS AND ONGOING PRODUCTIVITY IMPROVEMENTS Net profi t after tax and minority interests rose 43 percent to $240 million Operating earnings were up 39 percent to $460 million, with all divisions increasing for the third successive year ANNUAL REPORT 2004 Earnings growth was assisted by a full year’s contribution from the Laminex business and nine months from Tasman Building Products 02 Highlights Cashfl ow from operations rose from $276 million to $424 million 04 Chairman’s Report Economic value added was $139 million 07 Chief Executive’s Report The total dividend was up from 19 to 25 cents per share with tax credits 13 Concrete Total shareholder return for the year was 33 percent 18 Distribution Return on average funds employed was up from 24.4 to 24.7 percent. 22 Laminates & Panels 29 Construction 35 Building Products 40 Sustainability Review 48 Board of Directors 52 Corporate Governance HIGHLIGHTS 64 Financial Review % % $M 02 68 Financial Statements 150 25 300 20 200 128 Audit Report 120 15 100 90 10 130 Trend Statement 0 60 5 –100 132 Regulatory Disclosures 0 30 148 Investor Information –5 –200 0 –10 –300 150 Directory 01 02 03 04 01 02 03 04 01 02 03 04 CUMULATIVE TOTAL SHAREHOLDER RETURN RETURN ON AVERAGE FUNDS NET EARNINGS GO DIRECTLY TO A SECTION OF THE REPORT BY CLICKING ON THE NUMBER DIVIDEND SHARE PRICE APPRECIATION < back next > HIGHLIGHTS A RANGE OF INITIATIVES TO BROADEN THE OPERATING BASE OF THE COMPANY AND BUILD THE PLATFORM FOR CONTINUING PERFORMANCE The acquisition of Tasman Building Products increased the proportion of revenue from Australia to 22 percent for the 2004 year The integration of Laminex and the New Zealand wood panels businesses was completed, delivering signifi cant savings The fi rst stage of a major upgrade to the Golden Bay Cement plant was commissioned ANNUAL REPORT 2004 The fi rst stage of a major PlaceMakers store refurbishment programme was commenced A record construction work backlog secured 02 Highlights A range of opportunities were identifi ed to create value through capital investment within the company 04 Chairman’s Report A number of training and development programmes were launched to match employees’ personal aspirations with the company’s 07 Chief Executive’s Report need for knowledge and skills 13 Concrete Health and safety awareness was lifted across the company, along with a drive for further improvement in performance. 18 Distribution 22 Laminates & Panels STRONG PERFORMANCE LIKELY TO CONTINUE 29 Construction 35 Building Products Any softening in residential building markets should be largely offset by stronger non-residential building and infrastructure work 40 Sustainability Review Earnings are expected to be similar to the record level achieved in the 2004 year. 48 Board of Directors 52 Corporate Governance 64 Financial Review $M ¢PS ¢PS 03 68 Financial Statements 500 25 75 400 50 128 Audit Report 20 25 300 130 Trend Statement 15 0 200 10 -25 100 132 Regulatory Disclosures -50 5 148 Investor Information 0 -75 -100 0 -100 150 Directory 01 02 03 04 01 02 03 04 01 02 03 04 OPERATING EARNINGS (EBIT) DIVIDENDS EARNINGS PER SHARE GO DIRECTLY TO A SECTION OF THE REPORT BY CLICKING ON THE NUMBER < back next > ANNUAL REPORT 2004 CHAIRMAN’S REPORT 02 Highlights 04 Chairman’s Report 07 Chief Executive’s Report Fletcher Building has enjoyed another good year, in which opportunity 13 Concrete 18 Distribution and endeavour converged to produce success. The board’s primary focus 22 Laminates & Panels is on ensuring that the elements of good performance remain in alignment. 29 Construction 35 Building Products Results Dividend 40 Sustainability Review The company has again produced a record result. The improvement in earnings has yet again enabled 48 Board of Directors Net profi t after taxation was $240 million – an directors to declare an increased dividend. The fi nal 52 Corporate Governance increase of 43 percent on the previous year’s dividend for the year, of 14 cents per share, refl ects 64 Financial Review $168 million. the company’s fi fth consecutive dividend increase in the little over three years since Fletcher Building 04 68 Financial Statements We have made further progress on strategies to became a stand-alone company. Along with the 128 Audit Report increase the reliability of earnings over the long interim dividend of 11 cents per share, it increases 130 Trend Statement term, and we are well placed to do so again in the full year dividend to 25 cents, compared to 132 Regulatory Disclosures the current year. 19 cents in the previous year. New Zealand and 148 Investor Information Australian tax credits are attached to the dividend 150 Directory to improve shareholder returns. GO DIRECTLY TO A SECTION OF THE REPORT BY CLICKING ON THE NUMBER < back next > CHAIRMAN’S REPORT Acquisitions Governance The makeup of the company has changed The board continues to operate in an effective substantially over the past two years – fi rstly and collegial manner, and benefi ts from the blend through the acquisition of Laminex, a predominantly of skills, experience and knowledge of the business Australian-based business which was acquired in contributed by all directors. There have been no November 2002; and then through the purchase changes to the composition of the board this year. on 30 September 2003 of the Tasman Building In addition to the normal board schedule, directors ANNUAL REPORT 2004 Products group of businesses, which also have a substantial Australian presence. The 2004 fi nancial visited all major operations in the South Island and year was the fi rst full year of Laminex ownership. completed a range of site visits in Australia and 02 Highlights Auckland. The board also attended the annual two 04 Chairman’s Report Both of these purchases have been successful. day strategy review with management. 07 Chief Executive’s Report The integration of Laminex with our existing panel The company’s corporate governance practices 13 Concrete businesses is now complete. Substantial synergies are now disclosed fully on our website. A summary 18 Distribution have been realised and earnings arising from of these is included in the corporate governance 22 Laminates & Panels this signifi cant acquisition have exceeded our expectations at the time the decision was made section of this report. As required by the Australian 29 Construction to acquire the business. Tasman Building Products’ Stock Exchange, we highlight in that part of the 35 Building Products excellent nine months’ contribution has been a key report any variances from its best practice guidelines. 40 Sustainability Review factor in the 61 percent improvement in operational 48 Board of Directors Apart from a modest $2,500 increase last year, earnings from the Building Products division. 52 Corporate Governance directors’ base fees have not changed since the company listed in March 2001. Fletcher Building’s 64 Financial Review These are excellent acquisitions from a strategic directors are not entitled to retirement allowances, 05 68 Financial Statements perspective, bringing leading market positions and even though most Australasian companies 128 Audit Report strong management while lessening our reliance historically have provided them. In line with new 130 Trend Statement on the New Zealand market. Fletcher Building is fi nancially positioned to undertake other similar corporate governance guidelines recommending 132 Regulatory Disclosures acquisitions should the opportunity arise and against retirement allowances, these are increasingly 148 Investor Information the case for doing so be compelling. being abolished and replaced by a commensurate 150 Directory increase in directors’ annual fees. GO DIRECTLY TO A SECTION OF THE REPORT BY CLICKING ON THE NUMBER < back next > CHAIRMAN’S REPORT Fletcher Building sought external professional Outlook advice on current market remuneration for directors Your directors, like many economic forecasters, on the basis that there would be no retirement have been expecting a slowdown in activity. allowances payable. This confi rmed that our levels of To the end of our 2004 fi nancial year this had remuneration were substantially behind the average not eventuated. Recently, residential consents for companies of our size. The board has thus decided have slowed in New Zealand and Australia while to move, over a two-year period, to close this gap.

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