Fletcher Building Industries H1 2017 Results Announcement

Stock Exchange Listing: New Zealand (FBI)
Auckland, February 22, 2017 – Fletcher Building Industries Limited (the company) is a wholly-owned subsidiary of Fletcher
Building Limited, and is the issuer of capital notes, which are guaranteed by Fletcher Building Limited on an unsecured
subordinated basis.
Financial results Six months ended Six months ended
31 December 2016 31 December 2015
Net profit after tax $28.3 million $27.9 million
Net assets $405.2 million $337.2 million

The net profit after tax of $28.3 million compares with a net profit after tax for the comparable previous period of $27.9
million.
As the company owns 20 per cent of the shares in Fletcher Building Holdings New Zealand Limited, which in turn owns the
shares in Fletcher Building’s New Zealand operating subsidiaries, its investment in that company is equity accounted.
Equity accounted earnings were $39.2 million (December 2015: $39.7 million).
The financial performance of the company should be considered in conjunction with the financial statements of the Fletcher
Building group. The debt to debt plus equity ratio of the Fletcher Building group is sound at 35.4 per cent.
The company has operated in compliance with the terms of the Trust Deed under which the capital notes were issued.


ENDS
For further information please contact:
Rodney Deacon Shannon Huse-Caldwell
Head of Investor Relations External Media Manager
Phone: +64 9 525 9043 Phone: +64 9 525 9085
Mobile: +64 21 631 074 Mobile: +64 27 807 2933
...



NEWS RELEASE
FINANCIAL RESULTS FOR THE
SIX MONTHS ENDING 31 DECEMBER 2016

---

Fletcher Building Industries Limited
Half Year Review December 2016

This report is dated
31 December 2016
and is signed on
behalf of the board
of Fletcher Building
Industries Limited by:
Sir Ralph Norris
Chairman of Directors
Mark Adamson
Managing Director
Letter from the Chairman1
Financial statements2
Notes to the financial statements5
Noteholder information8
Directory9

The financial performance of the company
should be considered in conjunction with the
financial statements of the Fletcher Building
group. The debt to debt plus equity ratio
of the Fletcher Building group is sound at
35.4 per cent.
Sir Ralph Norris
Chairman of Directors
HALF YEAR REVIEW
The directors are pleased to present
the unaudited results for the six months
ended 31 December 2016. The company
made a net profit after tax of $28.3 million
(compared with $27.9 million for the
previous corresponding period). The net
assets of the company were $405.2 million
(December 2015: $337.2 million).
As the company owns 20 per cent of
the shares in Fletcher Building Holdings
New Zealand Limited, which in turn owns
the shares in Fletcher Building’s New Zealand
operating subsidiaries, its investment in that
company is equity accounted. The equity
earnings were $39.2 million (December 2015:
$39.7 million).
Fletcher Building Industries continues to
operate in compliance with the terms of the
Trust Deed under which the capital notes
were issued.
FLETCHER BUILDING GROUP PERFORMANCE
Fletcher Building guarantees all of the capital
notes issued by Fletcher Building Industries
on an unsecured subordinated basis.
The financial performance of the company
should be considered in conjunction with
the financial statements of the Fletcher
Building group. It is relevant to note that
Fletcher Building has reported net earnings
of $176 million for the six months ended
31 December 2016, compared to $172 million
in the previous corresponding period.
Chairman’s
review.
1

Income statement, statement of comprehensive income
and statement of movements in equity
 
 
2







I
ncome statement (Unaudited)
For the six months ended 31 December 2016

Notes
Six months
Dec 2016
NZ$000
Six months
Dec 2015
NZ$000
Year ended
June 2016
NZ$000
Share of profits of associate 6
39,213
39,713 89,598
Earnings before interest and taxation
 
39,213
39,713
89,598
Funding costs
(15,131)
(16,360)
(30,171)
Earnings before taxation
 
24,082
23,353
59,427
Taxation benefit 3
4,237
4,581
8,448
N
et earnings

28,319
27,934 67,875



S
tatement of comprehensive income
For the six months ended 31 December 2016

Notes
Six months
Dec 2016
NZ$000
Six months
Dec 2015
NZ$000
Year ended
June 2016
NZ$000
Net earnings
28,319
27,934 67,875
Share of associate's other comprehensive
income

(114)
(536) (703)
Total comprehensive income
28,205
27,398 67,172



S
tatement of movements in equity
For the six months ended 31 December 2016

Notes
Six months
Dec 2016
NZ$000
Six months
Dec 2015
NZ$000
Year ended
June 2016
NZ$000
Total equity at the beginning of the year
376,987
309,815
309,815
Total comprehensive income
28,205
27,398
67,172
T
otal equity 405,192
337,213
376,987



The accompanying notes form part of and are to be read in conjunction with these financial statements.
2

Balance sheet
 
 
 
3






B
alance sheet (Unaudited)
As at 31 December 2016


Notes
As at
Dec 2016
NZ$000
As at
Dec 2015
NZ$000
As at
June 2016
NZ$000
Assets


Current assets:
 

Debtors and prepayments 
 
21 14
Amounts owed by related companies
37,946
50,645 52,247
Current tax asset
12,685
14,211 8,448
Total current assets
 
50,631
64,877 60,709

 

Non-current assets:
 

Investment in associate
6
863,433
812,616 824,334
Total non-current assets
863,433
812,616 824,334
Total assets 914,064
877,493 885,043
Liabilities
Current liabilities:
 

Amounts owed to related companies
 
14

Accrued interest
 
8,858
8,960 8,056
Capital notes
100,000
94,463 100,000
Total current liabilities
 
108,872
103,423 108,056
 
 

Non-current liabilities:
 

Capital notes
400,000
436,857 400,000
Total non-current liabilities
400,000
436,857 400,000
Total liabilities
508,872
540,280 508,056
Equity
Reported capital
346,000
346,000 346,000
Reserves
59,192
(8,787) 30,987
T
otal equity
405,192
337,213 376,987
Total liabilities and equity
914,064
877,493 885,043
 
The accompanying notes form part of and are to be read in conjunction with these financial statements.



On behalf of the board 22 February 2017




 
Sir Ralph Norris
Chairman of Directors
 
Mark Adamson
Managing Director
3

Statement of cash flows and reconciliation of net earnings
to net cash from operating activities
 
 
 
 
 
4



S
tatement of cash flows (Unaudited)
For the six months ended 31 December 2016


Six months
Dec 2016
NZ$000
Six months
Dec 2015
NZ$000
Year ended
June 2016
NZ$000
Cash flow from operating activities:


Prepayments
14
30
37
Dividend received

53,000
Interest paid
(14,329)
(16,486)
(31,201)
Ne
t cash from operating activities (14,315)
(16,456)
21,836


Cash flow from investing activities:

Purchase of investments

(15,000)
Ne
t cash from investing activities

(15,000)


Cash flow from financing activities:

Maturity of capital notes

(31,320)
Advances from related companies
14,315
16,456
24,484
Ne
t cash from financing activities 14,315
16,456 (6,836)
Net movement in cash held

Add opening cash and liquid deposits

C
losing cash and liquid deposits

 
 
 
R
econciliation of net earnings to net cash from operating activities
For the six months ended 31 December 2016

 
Six months
Dec 2016
NZ$000
Six months
Dec 2015
NZ$000
Year ended
June 2016
NZ$000
Cash was received from net earnings
28,319
27,934 67,875
Adjustment for items not involving cash and other
items:

Share of profits from associate
(39,213)
(39,713) (89,598)
Dividend received from associate 53,000
Taxation
(4,237)
(4,581) (8,448)
Prepayments
14
30 37
Accruals
802
(126) (1,030)
Ne
t cash from operating activities (14,315)
(16,456) 21,836


Statement of cash flows and reconciliation of net earnings
to net cash from operating activities
 
 
 
 
 
4



S
tatement of cash flows (Unaudited)
For the six months ended 31 December 2016


Six months
Dec 2016
NZ$000
Six months
Dec 2015
NZ$000
Year ended
June 2016
NZ$000
Cash flow from operating activities:


Prepayments
14
30
37
Dividend received

53,000
Interest paid
(14,329)
(16,486)
(31,201)
N
et cash from operating activities (14,315)
(16,456)
21,836


Cash flow from investing activities:

Purchase of investments

(15,000)
N
et cash from investing activities

(15,000)


Cash flow from financing activities:

Maturity of capital notes

(31,320)
Advances from related companies
14,315
16,456
24,484
N
et cash from financing activities
14,315
16,456 (6,836)
Net movement in cash held

Add opening cash and liquid deposits

C
losing cash and liquid deposits

 
 
 
R
econciliation of net earnings to net cash from operating activities
For the six months ended 31 December 2016

 
Six months
Dec 2016
NZ$000
Six months
Dec 2015
NZ$000
Year ended
June 2016
NZ$000
Cash was received from net earnings
28,319
27,934 67,875
Adjustment for items not involving cash and other
items:

Share of profits from associate
(39,213)
(39,713) (89,598)
Dividend received from associate
53,000
Taxation
(4,237)
(4,581) (8,448)
Prepayments
14
30 37
Accruals
802
(126) (1,030)
Net cash from operating activities (14,315)
(16,456) 21,836


4

Notes to the financial statements
 
 
 
5

 
 

1.
Basis of presentation
The condensed interim financial statements presented are those of Fletcher Building Industries Limited, and its associate (together, the
‘‘Group’’). The Company is domiciled in New Zealand and is a Financial Markets Conduct Act 2013 reporting entity in terms of the Financial
Reporting Act 2013. The group is a profit orientated entity. The interim 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 comply with NZ IAS 34 Interim Financial Reporting and should be read in conjunction with the 30 June 2016 annual report available on the
group website at: www.fbu.com

2
.Changes in accounting policies
The International Accounting Standards Board has issued a number of standards, amendments and interpretations which are not yet effective.
The company has not applied these in preparing these financial statements and while the application of these standards, amendments and
interpretations would require further disclosures, they are not expected to have a material impact on the group’s results.
There have been no changes in accounting policies in the six months ended 31 December 2016.

Notes to the financial statements



5



1.Basis of presentation
The condensed interim financial statements presented are those of Fletcher Building Industries Limited, and its associate (together, the
‘‘Group’’). The Company is domiciled in New Zealand and is a Financial Markets Conduct Act 2013 reporting entity in terms of the Financial
Reporting Act 2013. The group is a profit oriented entity. The interim 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 comply with NZ IAS 34 Interim Financial Reporting and should be read in conjunction with the 30 June 2016 annual report available on the
group website at: www.fbu.com


2.Changes in accounting policies
The International Accounting Standards Board has issued a number of standards, amendments and interpretations which are not yet effective.
The company has not applied these in preparing these financial statements and while the application of these standards, amendments and
interpretations would require further disclosures, they are not expected to have a material impact on the group’s results.
There have been no changes in accounting policies in the six months ended 31 December 2016.

5

Notes to the financial statements
 
 
 
6


 
Fletcher Building Industries Group
 
Six months
Dec 2016
NZ$000
Six months
Dec 2015
NZ$000
Year ended
June 2016
NZ$000



3
. Taxation benefit


Earnings before taxation
24,082
23,353 59,427



Taxation at 28 cents per dollar
(6,743)
(6,539) (16,640)
Adjusted for:


Non assessable income
10,980
11,120 25,088

4,237
4,581 8,448


4.
Contingencies and commitments
There were no contingent liabilities or capital commitments as at 31 December 2016 (December 2015: nil; June 2016: Nil).

5
. Fair value measurement
No financial instruments are measured and recognised at fair value.
Notes to the financial statements
 
 
 
6


 
Fletcher Building Industries Group
 
Six months
Dec 2016
NZ$000
Six months
Dec 2015
NZ$000
Year ended
June 2016
NZ$000



3. Taxation benefit


Earnings before taxation
24,082
23,353 59,427



Taxation at 28 cents per dollar
(6,743)
(6,539) (16,640)
Adjusted for:


Non assessable income
10,980
11,120 25,088

4,237
4,581 8,448


4. Contingencies and commitments
There were no contingent liabilities or capital commitments as at 31 December 2016 (December 2015: nil; June 2016: Nil).

5. Fair value measurement
No financial instruments are measured and recognised at fair value.
6

Notes to the financial statements
 
 
7

 
Six months
Dec 2016
NZ$000
Six months
Dec 2015
NZ$000
Year ended
June 2016
NZ$000



6
. Investment in associate


C
arrying amount of associate --- Fletcher Building
Ho
ldings New Zealand Group


Carrying amount at the beginning of the year
824,334

773,439 773,439
Share of profits of associate
39,213
39,713 89,598
Share of associate's other comprehensive income/(loss)
(114)
(536) (703)
Investment in Fletcher Building Holdings New Zealand
Limited

15,000
Dividend received from associate

(53,000)
In
vestment in associate
863,433
812,616 824,334



As
sociate information --- Fletcher Building Holdings
Ne
w Zealand Group


B
alance sheet information for associate --- 100%


External assets
3,303,542
2,615,817 2,716,878
External liabilities
(1,017,124)
(992,316) (998,466)
Debt
(110,044)
988,809 (27,578)
Intercompany
674,455
(15,807) 966,396
Non-controlling interest
(16,148)
(15,910) (18,047)
Eq
uity
2,834,681
2,580,593 2,639,183
E q u i t y --- Fletcher Building Industries Limited share --- 20%
566,936
516,119 527,837
Goodwill acquired at cost
296,497
296,497 296,497
In
vestment in associate
863,433
812,616 824,334




Eq
uity accounted earnings for Fletcher Building
Ho
ldings New Zealand Group comprise:



S
ummarised income statement for associate ---
10
0%



Sales
3,244,631
2,775,809 5,765,321



Earnings before interest and tax
249,706
239,509 537,846
Interest income
23,407
39,567 83,966
Foreign exchange gain (loss)
1,582
(2,761) (2,445)
Earnings before tax
274,695
276,315 619,367
Taxation expense
(78,629)
(77,752) (171,379)
Net earnings
196,066
198,563 447,988
 


Ne
t earnings --- Fletcher Building Industries Limited
s
hare --- 20%
39,213
39,713 89,598
 
 
 
 
Notes to the financial statements
 
 
7

 
Six months
Dec 2016
NZ$000
Six months
Dec 2015
NZ$000
Year ended
June 2016
NZ$000



6. Investment in associate


Carrying amount of associate --- Fletcher Building
Holdings New Zealand Group


Carrying amount at the beginning of the year
824,334

773,439 773,439
Share of profits of associate
39,213
39,713 89,598
Share of associate's other
comprehensive income/(loss)
(114)
(536) (703)
Investment in Fletcher Building Holdings New Zealand
Limited

15,000
Dividend received from associate

(53,000)
I
nvestment in associate
863,433
812,616 824,334



Associate information --- Fletcher Building Holdings
New Zealand Group


Balance sheet information for associate --- 100%


External assets
3,303,542
2,615,817 2,716,878
External liabilities

(1,017,124)
(992,316) (998,466)
Debt

(110,044)
988,809 (27,578)
Intercompany

674,455
(15,807) 966,396
Non-controlling interest

(16,148)
(15,910) (18,047)
E
quity
2,834,681
2,580,593 2,639,183
E q u i t y --- Fletcher Building Industries Limited share --- 20%
566,936
516,119 527,837
Goodwill acquired at cost
296,497
296,497 296,497
I
nvestment in associate
863,433
812,616 824,334




Equity accounted earnings for Fletcher Building
Holdings New Zealand Group comprise:



Summarised income statement for associate ---
100%



Sales
3,244,631
2,775,809 5,765,321



Earnings before interest and tax
249,706
239,509 537,846
Interest income

23,407
39,567 83,966
Foreign exchange gain (loss)

1,582
(2,761) (2,445)
Earnings before tax

274,695
276,315 619,367
Taxation expense
(78,629)
(77,752) (171,379)
Net earnings

196,066
198,563 447,988
 


Net earnings --- Fletcher Building Industries Limited
share --- 20%
39,213
39,713 89,598
 
 
 
 
7

Enquiries
Noteholders with enquiries about transactions
or changes of address should contact:
Computershare Investor Services Limited
Private Bag 92119
Auckland 1142
Level 2, 159 Hurstmere Road
Takapuna, Auckland 0622
New Zealand
T. +64 9 488 8777
F. +64 9 488 8787
E. enquiry@computershare.co.nz
Other investor enquiries
Fletcher Building Industries Limited
Private Bag 92114
Auckland 1142
New Zealand
T. +64 9 525 9000
F. +64 9 525 9032
E. moreinfo@fbu.com
W. fbu.com
Interest payment dates
Interest on capital notes is paid semi-annually
on 15 March and 15 September.
The company recommends that all noteholders
have their interest payments direct credited
to a bank account to ensure security and
promptness of receipt. If you do not already
have your payments direct credited, please
contact Computershare Investor Services
to register your bank account details.
Quotation and transfers
The Fletcher Building Industries capital notes
are quoted on the NZX and may be bought
and sold through sharebrokers. No transfer will
be registered if it would result in the transferor
or the transferee holding capital notes with
an aggregate principal amount of less than
$2,000. Subject to this minimum holding,
transfers must be in multiples of $500.
Fletcher Building website
Details on Fletcher Building and its operations
for the year ended 30 June 2016 can be
viewed at the Fletcher Building website,
at fbu.com. This website contains all news
releases to the NZX and ASX and financial
presentations made by Fletcher Building.
Regulatory Disclosures
There were no entries in the interests register
during the period.
Fletcher Building Industries has no quoted
voting products under the Financial Markets
Conduct Act 2013.
Notice pursuant to clause 30 of Schedule 4
of the Financial Markets Conduct Act 2013
Pursuant to clause 30 of Schedule 4 of
the Financial Markets Conduct Act 2013
(the FMCA), Fletcher Building Industries
Limited notifies its security holders that
it has transitioned to the FMCA with effect
from 1 December 2016. Accordingly, from
1 December 2016, the requirements of the
FMCA will apply to Fletcher Building
Industries Limited.
NZX waivers
Fletcher Building Industries has been granted
a waiver from NZX Listing Rule 10.4 on the
condition that:
a) the company send to noteholders copies
of Fletcher Building’s annual and half-
yearly report or a notice containing the
statements referred to in section 209(3)
of the Companies Act 1993; and
b) Fletcher Building Industries’ annual report
includes, where relevant, the information
required by section 211 of the Companies
Act 1993 and NZX Listing Rules 10.4.5(a)
and 10.4.5(e) – (g); and
c) the disclosures required by NZX Listing
Rule 10.5.3(d) and (h) are combined in
the Fletcher Building Annual Report.
Remuneration and expenses
The directors of Fletcher Building Industries
are the directors of Fletcher Building, with no
further remuneration payable. The chairman,
chief executive officer, chief financial officer
and company secretary of Fletcher Building
hold equivalent roles in Fletcher Building
Industries, with no further remuneration.
No donations were made by the company
during the accounting period.
Noteholder Information
8

Directory
Directors
Sir Ralph Norris
Chairman
Mark Adamson
Antony Carter
Alan Jackson
John Judge
Chairman of the Audit and Risk Committee
Kathryn Spargo
Member of the Audit and Risk Committee
Cecilia Tarrant
Member of the Audit and Risk Committee
Steve Vamos
Member of the Audit and Risk Committee
Management
Mark Adamson
Chief Executive Officer
Bevan McKenzie
Chief Financial Officer
Charles Bolt
Company Secretary and General Counsel
Registered office
Fletcher Building Industries Limited
Private Bag 92 114
Auckland 1142
New Zealand
Fletcher House
810 Great South Road
Penrose, Auckland 1061
New Zealand
T. +64 9 525 9000
Trustee
The capital notes are constituted under
a Trust Deed dated 12 November 2002
as consolidated and restated dated
12 November 2015. Noteholders are
entitled to the benefit of, are bound by,
and are deemed to have notice, of the
provisions of the Trust Deed.
The Trustee is:
Covenant Trustee Services Ltd
PO Box 4243
Shortland Street
Auckland 1140
New Zealand
Level 6
191 Queen Street
Auckland 1140
New Zealand
T. +64 9 302 0638
9

---

Appendix 1 (Rule 10.3)
Preliminary Half Year Report
1
PRELIMINARY HALF YEAR REPORT ANNOUNCEMENT
Reporting period
Previous reporting period
Income from ordinary activities
Profit from ordinary activities after tax
attributable to security holder
Net profit attributable to security holder
Final dividend
Comments
PRELIMINARY HALF YEAR REPORT ANNOUNCEMENT
2.1. Preliminary half year report on results for the period ended 31 December 2016 (including the results for the previous corresponding
period) in accordance with Listing Rule 10.3
The financial information presented has been prepared in accordance with NZ IAS 34 Interim Financial Reporting, and
is based on unaudited accounts.
2.3 (a) Statement of Financial Performance
Refer to attachment.
2.3 (b) Statement of Financial Position
Refer to attachment.
2.3 (c) Statement of Cash flows
Refer to attachment.
2.3 (d and e) Dividends
N/a
2.3 (f) Net tangible assets backing per issued capital note

2.3 (g) Control of Entities gained or lost during year
N/a
2.3 (h) Associates
Refer to attachment

(1%)
Results for announcement to the market
Period to 31 December 2015
Period ended 31 December 2016
31 December 2015
Refer Press Release
Imputed amount per security
For the Half Year Ended 31 December 2016
FLETCHER BUILDING INDUSTRIES LIMITED
n/a
Percentage change
1%
Amount NZ$000
Period to 31 December 2016
39,213
28,319
28,319
n/a
1.81 1.63
1%
(referred to in this report as the "current period")
31 December 2016
Amount per security