Fletcher Building dismisses BGC claims and provides update

Fletcher Building Limited, Private Bag 92114, Auckland 1142, 810 Great South Road, Penrose, Auckland 1061, New Zealand

Fletcher Building dismisses BGC claims and provides detailed update
on causation research to date

• Plumbing failures confined to Perth
• Evidence clearly points to installation as causation
• Testing to date proves no manufacturing defect
• Iplex supporting with AUD$15m interim fund, working with regulator
to assist with industry solution
• Recall is not justified and would be an unnecessary impact on
homeowners
• BGC’s repair estimate is misleading & sensationalist

Auckland, 13 October 2023: Fletcher Building Limited has today issued a
detailed update on the cause of the plumbing failures that have occurred in a
number of homes built in Perth during the period 2017 – 2022, along with the
activities Iplex Australia is undertaking to support industry and homeowners in
finding the right solution.

The announcement also provides a detailed rebuttal, backed by multiple
Australian laboratories and international scientific experts, which exposes critical
inaccuracies and inadequacies in claims levelled by BGC about the cause of the
plumbing failures.

Due to the nature of BGC’s release and concern regarding the factual basis of
the information, Fletcher Building implemented a trading halt on Wednesday 11
October 2023. It has today addressed each of the concerns put forward by BGC.

Fletcher Building also updated the market on the Company’s thorough testing
and evidence gathering processes, including a proposed joint home inspection
protocol that it is in the process of agreeing with the WA Government’s State
plumbing authorities (Building & Energy, Department of Mines, Industry
Regulation and Safety - DMIRS).

We reaffirm that evidence to date clearly points to installation as the cause of the
plumbing failures – with no evidence suggesting manufacturing is at fault. The
data and information provided by product merchants, builders and plumbing

Fletcher Building Limited, Private Bag 92114, Auckland 1142, 810 Great South Road, Penrose, Auckland 1061, New Zealand
contractors confirms that the plumbing failures are limited to Western Australia
and no abnormal leak rates have occurred elsewhere in Australia, contrary to
claims made by BGC.

CEO Ross Taylor said: “Despite BGC’s attempts to blame shift, Iplex AU and
Fletcher Building remain committed to our course of action in helping the
industry resolve the plumbing failures in Perth. We will continue to scientifically
work through causation of the failures and support the industry to put in place
the best solutions for affected homeowners in Perth.

“BGC’s allegations are unfounded - their view on causation has changed over
time. Our independent expert advice is that the methodology and hypothesis
BGC used is gravely flawed and their findings unsupported.

“Notably, the various recent tests completed by BGC weren’t done to replicate
comparable real-life conditions whereas our testing is doing just that. BGC has
not performed any tests which measure the performance of the pipes against
Australian or international standards. Ultimately, none of their claims help
regulators or homeowners get to either an accurate understanding of the root
cause of the failures in Perth, nor do they provide a practical, timely solution for
all homeowners affected.”

The plumbing failures are limited to Perth, it is not national.

• Significant plumbing failures are only evident in Perth, despite the same
quantity of pipe being sold nationally outside of Perth, pointing to region-
specific installation practices as the cause of the failures.

• We have proactively spoken with our major east coast product merchants,
builders and plumbing contractors who are by far the biggest users of Pro-
Fit pipe and therefore, provide a valid comparison to the use of Pro-Fit in
Perth over the same period.

• They have not advised us of any abnormal concerns, despite being aware
of the circumstances in Perth.

• See slides 7 and 16 for more detail

Fletcher Building Limited, Private Bag 92114, Auckland 1142, 810 Great South Road, Penrose, Auckland 1061, New Zealand

The evidence points to installation as the root cause of the Perth plumbing
leaks.

• Iplex’s investigation has identified extensive evidence of poor installation.
For every plumbing failure we have seen, there is one or more readily
observable installation failures that are in breach of Australian Standards,
the Plumbing Code and/or Iplex’s installation instructions. These failures
are of the type that generate stress and radial cracking.

• Of the homes investigated, 96% had at least one installation failure. The
remaining 4% relate to failures which are either unrelated to the issue in
question (e.g. rodent chew and fittings) or inaccessible pipes.

• The abnormal plumbing failure rates are only occurring in the Perth area,
but the rates of failure are different across participants.

• Over the last five months, we have funded the repair of 383 homes through
our fund. For 170 of these homes, our expert plumbing team attended the
house prior to repairs being done and carried out a full inspection and
rigorous data capture on both the installation and to provide pipe for
testing. In 100% of these cases the installation failure was of a type that
generates leaks.

• We are well progressed on our testing, having completed tests across
circa 900 pipes, using six local and international external labs and experts,
and conducting 24 different types of tests. These tests show that the Pro-
Fit pipe performs as well as or better than its predecessor pipe.

• Examples of poor installation were also illustrated in BGC’s own evidence
pack. Comparisons can be found on slide (14).

• See slides 10-15 for more detail

Fletcher Building Limited, Private Bag 92114, Auckland 1142, 810 Great South Road, Penrose, Auckland 1061, New Zealand
Fletcher Building and our global polymer experts consider the Scheirs
report not credible.

Resin

• BGC’s allegations that the resin change causes the substandard
performance is unsupported.

• Iplex tested the BGC hypothesis with tests conducted by independent
laboratories, in conditions that deal with clean and failed pipe and various
scenarios. Relevantly, those independent laboratory tests disprove the
results key to Dr Scheirs' conclusions.

• Ylem is one of the major manufacturers of polybutylene resin in the world.
They have not experienced any issues of this nature elsewhere including
Korea, Japan, China, Europe, New Zealand and Australia other than Perth.

Molecular Weight Distribution Theory

• The tests required to measure Molecular Weight Distribution theory as
proposed by BGC are highly specialised and require a sensitive testing
regime which is why Iplex has obtained results from an international
laboratory in the UK qualified to perform these tests. As a result of a testing
error, BGC has been given results that are significantly lower than the
results Iplex has obtained from its independent laboratory which has many
years of experience testing polyolefin materials such as PB-1.

• In any event, based on the testing results received to date, Iplex believes
the Pro-Fit pipe, when manufactured with Typlex resin, has a molecular
weight distribution in excess of the "threshold" PD Index number of 3.5 that
BGC says is necessary and most are in the "target range" that BGC
believes is preferred.

Fletcher Building Limited, Private Bag 92114, Auckland 1142, 810 Great South Road, Penrose, Auckland 1061, New Zealand
Environmental stress cracking

• To test BGC’s theory that the environmental stress crack resistance of the
Typlex pipe is inferior to that of the previously used LYB pipe, Iplex
engaged an independent qualified laboratory in Spain to perform a 'crack
round bar' testing which measures the crack resistance of a polymer.

• The results received to date are in line with Iplex’s internal view that there
is no material difference between the crack resistance of LYB and Typlex.
In fact, it appears that Typlex might be slightly more resistant to cracking.

• Independent experts believe the environmental stress crack resistance
testing carried out by Dr Scheirs was not in full accordance with the
referenced ASTM test methods and cannot be relied upon for making a
determination of either materials’ true environmental stress crack
resistance.

• See slides 24-26 for more detail

Why do we have confidence in our evidence gathering, our testing +
inspection regime?

• The BGC hypothesis cannot be relied on for causation. Iplex has
undertaken more tests over significantly more samples.

• Iplex testing to-date in both its accredited NATA laboratory and multiple
independent laboratories shows the Pro-Fit pipe is compliant with
Australian standards.

• To-date Iplex has also collected evidence from in excess of 270 individual
inspections of homes in Perth constructed by 12 different builders and
plumbers. This has identified significant installation failures, in breach of
Australian Standards, the Plumbing Code and installation guidelines.

• See slides 19-21 for more detail.

Fletcher Building Limited, Private Bag 92114, Auckland 1142, 810 Great South Road, Penrose, Auckland 1061, New Zealand
Fletcher Building and Iplex are committed to helping homeowners affected
by the plumbing failures

• On 17 April 2023 Iplex Australia also committed AUD$15m to an interim
support fund to establish causation and inform appropriate fixes for
homeowners and help Perth builders and plumbers to complete repairs
(both leaks and resulting property damage) as well as ceiling pipe
replacement in homes.

• To date, circa 383 homes have been completed through our fund at a cost
of approximately AUD$1m.

• We are very focused on ensuring the safety of the homeowner, and our
interim fund is designed to provide funding and resources available to
allow the plumbers and builders to respond urgently to any leak while root
cause is established.

• We are trialing leak detection units on houses which automatically detect
a leak event and shut off the water supply to the house – if these trials are
effective then they may also be available to the builders.

• Iplex has also established a dedicated team on this project. This includes
local qualified, specialist plumbing team in Perth to support builders and
plumbers in investigating causation and innovative solutions to address
the issue.

• Iplex believes that every effort should be exerted by the industry to find
options that are efficient and effective for the benefit of affected
homeowners. In the interests of assisting the industry and homeowners to
address this issue in a timely and efficient way, Iplex continues to provide
technical support to builders to assist them in understanding causation.

• The total expenditure in the fund to date sits at circa AUD$3m and beyond
the $1m spent on installation fixes, the remainder covers costs for our
dedicated WA plumbing team, testing and trials of various technologies
such as house leak detectors and pipelining systems.
• See slide 5 for more detail.

Fletcher Building Limited, Private Bag 92114, Auckland 1142, 810 Great South Road, Penrose, Auckland 1061, New Zealand

Against this backdrop, a product recall is not justified and would create
needless disruption to unaffected homeowners with perfectly good pipe
and pipe installations.

• A recall is also totally impractical given capacity constraints in the
industry.

• There are a number of less costly, less intrusive, and more rapid fix
options for those homes that have been affected.

• Iplex is currently exploring multiple approaches that may be used to
provide a solution including leak detectors, wall pipe mapping and pipe
re-lining.

• See slide 34 for more detail.

BGCs estimated repair cost is misleading and sensationalist

• BGC’s estimate is based on a full house re-piping which is not justified.

• Realistic scenarios that better align with the facts, suggest that an
industry cost to repair Perth houses, could be a fraction of that, perhaps
in the order of AUD$50m to $100m.

• See slide 35 for more detail.

“While not a product failure, we want to support the industry and homeowners to
come up with the optimum suite of fix solutions that minimise inconvenience,
time and cost for all involved. This work is being supported by our interim fund of
AUD$15m to ensure the repair work gets done in an effective timely fashion for
homeowners, and that the industry is supported financially, while the industry
develops an effective way forward,” Ross Taylor said.

"Moving forward, we will continue to undertake the industry collaboration
necessary to agree the best way forward. Iplex has agreed to jointly inspect

Fletcher Building Limited, Private Bag 92114, Auckland 1142, 810 Great South Road, Penrose, Auckland 1061, New Zealand
house leaks with the WA plumbing regulator to get an aligned data set. We will
also finalise our testing and expert report during this period.

“Despite BGC’s position to work independently of the industry and ourselves,
including refusing access to the funding available and allowing independent
inspections of their homes, we will continue to share our ideas and
methodologies with them in an attempt to help them help their customers,” he
said.

ENDS

Authorised by:
Ashleigh Harding
Company Secretary

For further information please contact:

MEDIA
Christian May
General Manager – Corporate Affairs
+64 21 305 398
Christian.May@fbu.com
INVESTORS AND ANALYSTS
Aleida White
Head of Investor Relations
+64 21 155 8837
Aleida.White@fbu.com

---

Western Australia
Plumbing Issues Update
13 October 2023

Fletcher Building Limited
Agenda
Overview
Support to Customers and Homeowners
Safety
Establishing Causation
Industry Solution
Next Steps
Q&A
All financials are in AUD

Summary
Page 3| Fletcher Building Limited | © October 2023
➔Fletcher Building is committed to helping the industry get to the bottom of the plumbing failures that have arisen in Perth.
➔We have been supporting customers and homeowners with our $15m fund while causation, best fix methods and an industry solution are developed
➔We dispute many aspects of BGC’s presentation.
➔There are no abnormal leak issues on the pipe installed on the East Coast of Australia. We are not aware of any issues from this resin in other geographies
➔Evidence points to installation as the reason leaks are occurring in some houses in Perth, and that installation practices have deteriorated over time
➔Our testing on the product is well advanced. Our tests to date continue to show that our Pro-fit product is code compliant and fit for purpose
➔The evidence does not support the BGC extrapolation that all homes in Perth will be affected by these installation failures
➔A product recall against this backdrop is not justified and would be an unnecessary impact on homeowners with perfectly good pipe and pipe installations. There are a
number of less costly, less intrusive, and more rapid fix options for those homes that have been affected that will help
➔BGC’s estimated repair cost is sensationalist –scenarios that better align with the current evidence suggest that an industry cost to repair affected Perth houses could be a
fraction of that, something in the order of $50m to $100m
➔We will continue to work with the regulator and other stakeholders over the coming months to complete the fact base, agree the fix approach, and assist in developing an
industry solution

How have we been approaching the plumbing failures
❶Support for Customers & Homeowners, ❷Establishing Causation, and ❸Industry solution
Page 4| Fletcher Building Limited | © October 2023
As an industry leader with deep expertise in pipe manufacture and performance, Iplex is committed to its role in engaging with the
industry to identify the cause of the failures and develop a pragmatic solution as quickly and efficiently as possible and one that
minimises inconvenience to the homeowner. Engaging with 29 builders and plumbers across Perth(the only exception being BGC who
refuses to do so). Iplex has three workstreams underway:
❶
SUPPORT FOR
CUSTOMERS &
HOMEOWNERS
❷
ESTABLISHING
CAUSATION
❸
INDUSTRY SOLUTION

What have we been doing to support customers and homeowners
Given the complexity, Iplex established a $15m fund to support the industry and homeowners while the issues are worked through.
Inspect the failures and capture
relevant data for the fix
Implement a suite of options for the
builders and plumbers
AB
$15m
➔29 builders registered for the Fund with>383 repairs completed (leak repair and ceiling re-pipes)
➔To date, ~$3m of the Fund has been spent.Of this, ~$1.5m has been on repairs, so an average of ~$4k per repair: this is a combination of
~$1k for a simple leak repair and ~$5k-$6k with a full ceiling pipe replacement.
➔The remainder of the Fund spent to date has been on investigating innovative fix solutions and management costs.
➔BGC, for its own reasons, has not sought access to the Fund to support repairs
➔Detailed data collected on ~170 homesand 3
rd
party data collected on a further ~100 homes => data for ~270 homes in total
The provision ($15m) set aside for this interim support fund was made in FY23 and treated as a Significant Item. Iplex has not adjusted that
provision but will continue to review treatment as facts and circumstances evolve.
Page 5| Fletcher Building Limited | © October 2023

Safety is a core value to Fletcher Building and Iplex
▪Safety is a core value to Iplex, and the well-being of homeowners is a clear priority for all participants in the home building
industry
▪We acknowledge that BGC has been advised that some homeowners have raised concerns that are said to be related to plumbing
failures in their houses.BGC to date has refused to work with us to understand and effectively solve these problems, instead
preferring to work on its own.
▪We are however working with the rest of the Perth industry on this and are actively:
▪Helping builders expedite plumbing fixes
▪Using our interim Fund to support a larger scope of fixes than just the leak, including ceiling pipe replacements
▪Looking at other interim technologies such as leak detection devices
▪Installations are required to have electrical circuit breakers which trip and cut off electricity if there is a fault such asa water leak
impacting electric circuits and switches.
▪In any event, any homeowner who has any safety concern should immediately contact their builder to rectify the matter.
Page 6| Fletcher Building Limited | © October 2023

The plumbing failures are a Perth issue –not a national issue
Page 7| Fletcher Building Limited | © October 2023
➔Similar volumes of Pro-Fit sold in Perth and rest of AU from 2017-
2022
➔Iplex has reached out to all our merchants and major plumbers /
builders on the East Coast –they report no abnormal leak rates
➔Over the last 2 years, we have been made aware of only 28 homes
in the rest of AU that have been impacted by plumbing failures
involving Iplex pipe in homes built since mid-2017.
➔Of these 28 homes, only 1 was determined to have a
manufacturing defect with 8 yet to be determined/tested
➔BGC is misrepresenting the role of the failures it refers to in Victoria.
These are known to Iplex and captured in our data. All tests
completed on samples provided so far from that builder have not
found any manufacturing fault.
➔BGC’s assertions that there could be thousands of unreported leaks
on the East Coast totally lack credibility –homeowners and
customers would report them rapidly.
➔The plumbing failures are a Perth issue, not a national one
Note –Dataas at 9
th
Oct; houses built with Pro-fit are estimates from the builders
Homes built with Pro-Fit (mid 2017 –2022)
65%
35%
35%
20%
45%
PerthRest of AU
c.17.5K homesc.15K homes
Homes leaked in
last 2 years
10.9%
0.19%
Others
Others
3 builders
(c.3000 homes)
1 builder
(c.5250 homes)
1,908
28

The abnormal plumbing failure rates are only occurring in the Perth area
but rates of failure are very different across participants
Page 8| Fletcher Building Limited | © October 2023
10%
15%
2%
6%
3%
0.6%
5%
9%
3%
BGCBuilder 1Builder 2Builder 3Builder 4Builder 5Builder 6Builder 7Builder 8
Plumbing failure rates
(% of plumbing failures
1
/ homes built between 2017-22)
HOUSES BUILT~11.5k~3.0k~750~700~650~650~350~300~160
PLUMBING
GROUP
BGC
Plumbing
Group 1
Plumbing
Group 2
Plumbing
Group 2
Plumbing
Group 2
OtherOther
Plumbing
Group 1
Plumbing
Group 2
BGC and two
plumbing groups
account for 94%
of leaks
❶
Significantly
different plumbing
failure rates
between builders
❷
SMALL BUILDERS
Note –Dataas at 9
th
Oct; houses built with pro-fit are estimates from the builders
(1) Homes impacted

Plumbing standards AS/NZS 3500.1&4
and Iplex installation instructions note
that care should be taken to ensure pipes
are not damaged during normal building
activities.
Plumbing standard AS/NZS 3500.1&4
and Iplex installation instructions state
that pipes in chases shall be continuously
wrapped with an impermeable flexible
material.
Iplex installation instructions state that
care must be taken during install to allow
for potential thermal movement of the
pipe. Additionally, Australian standards
require pipes to be supported with
adequate brackets, clips or hangers with
defined maximum spacings.
The Iplex Pro-fit Technical Guide states
that the minimum bending radius be 10
times the outside diameter of the pipe. If
this is not possible an IPLEX Pro-fit®
elbow should be used.
We are consistently seeing four types of poor installation practices in Perth
BGC only referred to bending radius. However, there are multiple examples of different non-compliant plumbing
practices in Perth that are of the type that generate leaks
Page 9| Fletcher Building Limited | © October 2023
❷INADEQUATE MOVEMENT
❸POOR LAGGING
❹DAMAGE / WORKMANSHIP
❶OVER-BENDING
Pipe overbentPipe fixed in the wall through rigid
mortar
Lagging not impermeable
(and at timesnon-existent)
Pipe bend across metal nail and
kinked, resulting in a stress point
~92%~80%~100%~65%
% of repaired homes which have had the poor installation practice
%

Iplex investigation has identified extensive evidence of poor installation
96% of homes have at least 1 installation failure. 86% have multiple installation failures
86%
10%
4%
2+ plumbing installation failures1 plumbing installation failureOther issues
Plumbing installation failings seen across home inspections
▪Iplex has worked with Perth builders since the announcement of
the interim Fund to support them in fixing and replacing pipe –
frustratingly, BGC has refused to participate
▪Iplex has a dedicated team of qualified plumbers who are
available to attend each failure, on site and at the time of
occurrence. When they are invited to attend, they collect data
about that plumbing failure, including the associated plumbing
installation practices
▪Data has been reviewed by our external independent plumber
expert. In addition, he has personally been to some affected
homes and completed his own assessment
▪The 4% of homes in the “other issues” group relate to either:
failures not connected with the issue in question (e.g. rodent
chewandfittings) or inaccessible pipes.
Data as at 24
th
September
Page 10| Fletcher Building Limited | © October 2023

Further examples of installation non-compliant with standards and specifications
~92% of homes we have inspected / repaired have had non-compliant radial bends
Page 11| Fletcher Building Limited | © October 2023
Minimum bending radius must be 10 times the outside diameter of the pipe. All of the pipes shown here have been over-bent

Further examples of installation non-compliant with standards and specifications
Multiple issues of kinking, inadequate lagging and insufficient allowance for thermal expansion and movement
Page 12| Fletcher Building Limited | © October 2023
Kinked or damaged pipes,
pipes overlapping; tight bend
on back pipe
Pulled hard against timber not
allowing for lineal thermal
expansion per guidelines
Pinch/pressure point caused by
pegging creating localised high
stresses
Kinking or damaged pipe not
replaced per guidelines

Iplex has observed a small number of failures on straight pieces of pipe.
Each shows installation failure leading to the leaks
Page 13| Fletcher Building Limited | © October 2023
Inadequate movement and damage to pipe caused by pegging left in chase
Iplex has heard claims that plumbing failures are occurring ‘on the straights’.The implication
is that leaks are occurring in straight pieces of pipes that are not under excessive strain due to
over-bending.
Our inspections have revealed only a small number of failures occurring on ‘straights’.
Where these have occurred, most of them have pegging in wall chase which does not allow
for adequate movement in the pipe.
‘Pegging’ is a process that uses a fixed object to hold the pipe during installation which that
installation instructions require to be removed prior to the system being put into service.
The assertion that leaks are occurring on straights, without an installation failure, is not
believed to be correct.

A cursory look at BGC’s presentation suggests a number of concerning
plumbing installation practices in their affected homes
Page 14| Fletcher Building Limited | © October 2023
Lagging material (wrapping around pipe), which appears to be permeable –this
is not compliant with the relevant Australian Standard
The bend of these pipes are likely to be outside of Iplex Pro-fit instructions
(too tight), placing stress on the pipes

BGC presented photos of houses inspected on the Gold Coast which highlights key
differences in building methods and reinforces the reasons for the failures in Perth
Timber frames allow the pipe to be
installed within the open space of the
wall cavity, allowing for adequate
movement due to thermal expansion
and contraction, while still being
supported with sufficient clipping.
While tight bends are still visible in
these images, the pipes are able to
freely expand and contract within
the open wall cavityduring expected
regular changes in the pipe’s
temperature and pressure (e.g. water
hammer).
Holes cored in the top plate allow for
adequate movement of the pipe due
to thermal expansion and contraction
without being held tightly by a
mortar fill.
➢Perth walls are double-brick
and a chase is created in one of
the brick walls where the pipe is
laid and then mudded in
➢If the pipe is not lagged
correctly with an impermeable
layer, the pipe is effectively
fixed in place and does not
allow for adequate movement,
creating stresses on the pipe
➢This is not in compliance with
Iplex installation instructions,
which state that care must be
taken during install to allow for
potential thermal movement of
the pipe
BGC PHOTOS OF HOUSES ON THE GOLD COAST
1
Page 15| Fletcher Building Limited | © October 2023
1
The bends in these photos appear to be non-compliant with Iplex’s installation instructions
and Iplex does not endorse or waive compliance by its statements above.

Why are the failures occurring in Perth and why now? (I)
The evidence is pointing to a deterioration in installation practices
Page 16| Fletcher Building Limited | © October 2023
▪We know that poor installation can result in a shortened lifespan of pipe (rather than instant
failure), which can take time to identify
▪Critical analysis of market practice is required, as we believe the quality of installation has
eroded at a time when (some) larger home builders were seeking to reduce costs
▪Questions need to be raised as to whether the cost model for these plumbing groups rewards
speed without quality oversight.
POOR INSTALLATION
PRACTICES THAT ERODED
OVER TIME
▪Further investigations are required to determine whether:
➢appropriately trained and skilled persons were used to conduct the installations
➢the WA plumbing self-certification system, combined with extremely low levels of
compliance assessments, contributed to the problem. Iplex is aware that other states may
have more robust certification policies in place
➢education and training standards are appropriate.
POOR PLUMBING GOVERNANCE
PRACTICES, AND LOWERING
EDUCATION & TRAINING STANDARD

Why are the failures occurring in Perth and why now? (II)
The evidence is pointing to a deterioration in installation practices
Page 17| Fletcher Building Limited | © October 2023
▪The Iplex Pro-fit Technical Guide states that the minimum bending radius be 10 times the outside
diameter of the pipe. If that is not possible, an IPLEX Pro-fit® elbow should be used.
▪Iplex’s investigations reveal that inadequate numbers of Pro-fit elbows may have been purchased
by Plumbers in Perth.
▪Perth has the lowest ratio of elbows to pipe purchased in Australia.
ELBOWS NOT USED FOR TIGHT
BENDS EVEN THOUGH REQUIRED
BY BUILDING DESIGNS
▪Questions should be asked as to whether purchasing activities by builders contributed to the
installation issues experienced.
▪Iplex understands that some Group home builders began to purchase plumbing systems in bulk
lots and delivered them directly to the home for the plumbing crew to use.
▪It is unclear if appropriate materials were provided to plumbers to correctly install at each
property, such as sufficient elbows.
PROCUREMENT PRACTICES HAVE
CHANGED IN PERTH WITH A FOCUS
ON SPEED AND COST REDUCTION

Why are the failures predominately occurring in cold water pipe?
WA houses contain significantly more cold water pipes than hot, and cold water is used much more frequently
Ratio of pipes installed in a home that carry cold
water
~65%
How often cold water pipes are used, measured
by usage of water
~71%
How often cold water pipes are used, measured
by the number of usage cycles (i.e. times a
tap/valve is turned on/off)
~85%
(or approximately equal
to the failure rate)
Page 18| Fletcher Building Limited | © October 2023
The measurements and findings are based on assessments by Iplex's qualified plumbers. Only cold water pipes feed
washing machines, dishwashers, toilets and evaporative air conditioners.These appliances have a high frequency of
valve movements, incurring higher water hammer impacts through the pipes that feed them
➔As of October 2023, approximately 85% of failures are occurring in cold
water pipes.
➔This percentage should be considered in the context of the high
prevalence and typical usage of cold water pipes in homes.
➔Investigations suggest that cold water does not appear to be influenced
by other environmental factors.
➔We are aware of misleading assertions regarding Pro-fit's WaterMark
certification; it was certified by SAI Global Pty Limited on January 21,
2015, and this certification was held continuously until Pro-fit
manufacturing ceased.
➔SAI conducted annual surveillance audits to ensure that products,
including Pro-fit, continued to meet relevant standards.
➔Despite having the authority to do so, SAI never suspended or canceled
Iplex's StandardsMarklicense or WaterMarkcertification; instead, they
consistently recommended that "certification continues" in their annual
audit reports.
Effective Pipe Ratio Percentages in a House

EXPERTEXPERTISE
Robert LeHunt
•Civil Engineer
•Polymer Engineer
•Failure investigations
Ross Brown –Hydraulic
Engineer
•Plumbing
•Hydraulic Systems Consultant
Prof. Graeme George AM
•Leading polymer scientist
Dr Lucy Baker
•Materials scientist
•Failure investigations
Prof. Kerrie Mengersen
•Statistician
COUNTRYEXPERTISEROLES
UK
•Gel permeation
chromatography
•Testing to characterise molecular
weight and molecular weight
distribution of material used in
pipes
NETHERLANDS
•Standards testing, failure
investigation
•Pipe Material Specialist
•Investigation of the mode of
failure of in-service pipe samples
that have leaked
•Tensile elongation testing
AUSTRALIA
•FTIR microscopy testing
•FTIR microscopy testing –polymer
form transformation
AUSTRALIA
•Mechanical pipe testing
including in accordance
with AS/NZS
•Thermal and pressure cycling
•Hydrostatic pressure testing
•Testing in accordance with and in
excess of Standards
USA
•Analytical Chemist •Antioxidant testing
SPAIN
•Polymer properties
including resistance to
cracking
•Cracked round bar tests
•Flexural modulus testing
•Dynamic Mechanical Analysis
Product testing program undertaken by Iplex
Iplex has used multiple external laboratories from across the globe, and several independent experts across polymer
science, plumbing regulations and statistics professors
Independent experts
External laboratories
Page 19| Fletcher Building Limited | © October 2023

Testing approach taken by Iplex
Iplex has conducted a logical and comprehensive approach to its testing program
OBJECTIVE
To determine the root
cause of failure
All pipes have shown the same type of failure with brittle radial fractures
originating at the bore of the pipe, indicating tensile stresses caused
predominantly by over-bending and inadequate allowance for movement and
thermal expansion/contraction.
Failures are occurring at or near the apex of the bend.
STEP ❶
ENSURE
COMPLIANCE
WITH AS/NZS
STANDARDS
STEP ❷
MECHANICAL
PROPERTIES &
IN-SERVICE
TESTING REGIME
STEP ❸
PIPE
MANUFACTURING
PROCESS TESTING
STEP ❹
PIPE FAILURE
ANALYSIS
STEP ❺
TESTING TO
EVALUATE BGC’s
THEORY
•Thermal stability
•Performance in WA conditions
•Flexural, stress and strain tests
•Hardness, impact, brittle tests
•Analysis on fracture zone
•Combination of tests indicate
bending stresses as a root
cause for failure
•Comparative testing, including
investigating the resistance of
polymer to slow crack growth
•Molecular weight/molecular
weight distribution
Page 20| Fletcher Building Limited | © October 2023

Page 21| Fletcher Building Limited | © October 2023
Testing program and results
Iplexhas conducted a logicaland comprehensive approach to its testing program
STAGETEST TYPEPURPOSE OF TEST#INTERNALEXTERNALRESULTS
1
Hydrostatic Pressure Testing
Polymer strength and long term creep rupture strength24
⚫⚫
Dimensional ConformanceEnsure dimensions conform with Standards154
⚫
Melt Flow RateIndicator of molecular weight127
⚫
2
High-Performance Liquid Chromatography TestingTypes and amounts of antioxidants38
⚫
Oxidation Induction Time TestAntioxidants remaining in pipe post failure163
⚫⚫
Thermal Cycling Testing
Performance in changing temperature conditions4
⚫
Pressure Cycling Testing
Performance in changing pressure conditions8
⚫

Flexural Modulus Determination Testing
Resistance to flexing/stiffness6
⚫

Dynamic Mechanical Analysis Testing
Response to stress and strain and determination of glass transition temperature5
⚫
Cracked Round Bar
Resistance of polymer to slow crack growth6
⚫
Tensile elongation testing
Degree of “stretch” at the point of breaking, indicates level of ductility and flexability4
⚫
Pipe Brittleness Test / Reverse Bend Back Testing
Tests for signs of polymer embrittlement130
⚫
Quantofix(Cu++)Presence of copper irons141
⚫
Tensile Impact Testing
Energy absorbed by the material during impact prior to breaking, provides insights to behaviour
under water hammer
7
⚫
3
Differential Scanning Calorimetry (Enthalpy)Peak melt temperature. Confirm transition from Phase II to Phase I34
⚫
Micro FTIRConfirm transition from Phase II to Phase I16
⚫
4
Fourier Transform Infrared Spectroscopy CI testingAssessing the degree / severity of oxidation4
⚫
Scanning Electron Microscope (SEM) testingObserves fracture surface for microscopic contaminants4
⚫
5
Gel Permeation Chromatography
Determines various molecular weight properties, incl. molecular weight distribution of the
Polymer
26
⚫
Cracked Round BarInvestigating the resistance of polymer to slow crack growth6
⚫

100% of tests passed

Resin change to Ylem managed with extensive QA process
Ylem has not experienced any issues of this nature elsewhere in the world
Page 22| Fletcher Building Limited | © October 2023
Overview of YlemTimelines of eventsResin change process and testing
▪Ylem is a major manufacturer of PB,
alongside LyondellBasell, Mitsui Chemicals,
Shandong HongyeChemical and Chambroad
Petrochemicals.
▪Ylem supply raw materials around the globe
to Korea, Japan, China, Europe, New Zealand
▪Ylem has not experienced any issue similar to
that occurring in Perth elsewhere in the
world.
▪Iplex visited Ylem factory in 2016
▪Iplex technical laboratory testing in Jan-April
2017
▪First order of product April 2017
▪First shipment arrives May 2017
▪First manufacturing run July 2017
▪Iplex NATA technical laboratory undertook
extensive qualification testing for Ylem resin
in certifying compliance of extruded pipes in
accordance with AS/NZS standards
▪Process conducted was as follows:
•Sample raw material received from
Ylem
•Melt flow rate & oxidation induction
time testing
•Samples of trial pipe tested to
Australian Standard AS/NZS 2642.2,
including pressure tests
•Samples manufactured produced and
tested
•Eurofins (external lab) lab engaged to
test trial pipes to Australian Standard
ASNZS4020

Why did we stop manufacturing and supplying Pro-fit?
Pro-fit was an uneconomic product that we stopped manufacturing in 2021
Page 23| Fletcher Building Limited | © October 2023
HIGH MARKET
SHARE ONLY IN WA
Iplex was only supplier
for PB pipes in WA,
hence relatively strong
presence compared to
other states
SMALL % OF SALES,
UNPROFITABLE
Pro-fit represented <1%
of Iplex’s total sales in
FY21, and despite
interest in WA, had
become unprofitable
FULL RANGE REVIEW
OF PRODUCTS
A full range review
recommended that hot
& cold plumbing
products be
discontinued –this
included Pro-fit
PRODUCTION
CEASED IN MAR 2021
Manufacturing ceased in
late 2021. The last sale
to merchants occurred in
2022
The decision to cease
production of Pro-fit was
a COMMERCIAL
DECISION MADE IN 2021.
Once leaks became
evident in 2022, we
recalled all remaining
product from the market
as a precautionary
measure

Why do we consider that BGC’s expert report is not credible? (I)
We and our leading global polymer experts consider the report from Dr Scheirs lacks credibility
Page 24| Fletcher Building Limited | © October 2023
TESTING METHODOLOGY
➔The hypothesis put forward by BGC is just that –a hypothesis.
➔It starts with the premise that Iplex’schange in resin is the cause, and assumes there are fundamental differences between them.
➔Dr Scheirsthen attempts to find any difference between the pipes to justify the hypothesis. He tests and discounts anti-oxidants and
manufacturing conditions. Finally, he lands on ‘molecular weight distribution’ based on a loose reading of patent literature. He
conducts MWD tests and, reliant on what Iplex and its experts believe are aberrant results and a mis-reading of the patent literature,
concludes that his hypothesis is correct.
➔The tests he then undertakes compare failures in pipes made with Typlexresin and LYB resin using a testing regime that isn’t designed
to provide results to replicate actual installation conditions (such as overbending and excessive tightness). His test conditions were
selective and artificial (including because, unlike normal conditions, they relied on highly chlorinated water) and bear no resemblance
to what is happening in a home. He concludes that any differences between the pipes observed in the results of these tests must be a
result of the differences in MWD. He does not show this to be the case, and his test results do not prove a link between cracking in
pipes and his theory on MWD. Dr Scheirsalso makes statements seeking to link small crystal size to pipe brittleness which has no
scientific basis. In any event, his own testing results identify larger crystals in Typlexpipe, as supplied by Iplex. Iplex and its experts
believe Dr.Scheirs’ testing methodologies are flawed and so his findings cannot be relied on for any conclusions as to root cause.
➔Notably, Dr Scheirsdid not in fact test his hypothesis. Iplex has done so as part of its root cause analysis with tests conducted by
independent laboratories, in conditions that deal with unused and failed pipes and various scenarios. It has undertaken
comprehensive mechanical performance testing including in accordance with Australian/New Zealand or International Standards, and
for pipes in bent configurations.
➔Relevantly, those independent laboratory tests disprove the results seminal to Dr Scheirs' conclusions.
➔Dr Scheirsavoided conducting tests measuring the performance of the pipes as defined by the AS/NZS2642.2 PB-1 pipe
manufacturing standard. It follows that BGC’s allegations that the resin change causes the substandard performance is unsupported.
With that, the extrapolation BGC makes that all pipes will fail also is unsupported. Even Dr Scheirsdoes not go that far.
SCHEIRS REPORT IS NOT
CREDIBLE
Iplex’sIndependent Experts’ view is:
BGC’s assertions are based on an
untested hypothesis from Dr Scheirs
The tests regime carried out by Scheirs
are selective and artificial, and do not
reflect actual conditions
From these tests Scheirsdevelops a
flawed hypothesis that the difference he
found in results supports his hypothesis
Iplex has had independent laboratories
actually test the Scheirs/BGC hypothesis
–the results from these tests disprove
this hypothesis

Why do we consider that BGC’s expert report is not credible? (II)
We and our leading global polymer experts consider the report from Dr Scheirs lacks credibility
THE MOLECULAR WEIGHT DISTRIBUTION THEORY
➔Much was made by BGC that, based on LYB patent literature, there is a “target range" for molecular weight distribution in all
polybutylene pipes
➔That is not what the patent literature says and there is no support for such a proposition
➔A plain reading of BGC’s’ results showed that the pipe made with LYB resin and tested by Dr Scheirswas not in the range quoted
by him from LYB’s own literature. That suggests his entire report was based on aberrant test results -on the back of which BGC
has formed incorrect conclusions
➔The tests required to measure this issue are highly specialised and require a sensitive testing regime, which is why Iplex has
sought results from an international laboratory in the UK qualified to perform these tests. As a result of Dr Scheirs’ testing
errors, BGC has been given results that are significantly lower than the results Iplex has obtained from an independent
laboratory based in the UK who has many years of experience testing polyolefin materials such as PB1.
➔In any event, based on the testing results it has received to date, Iplex believes the Pro-Fit pipe, when manufactured with Typlex
resin, has a molecular weight distribution in excess of the "threshold" PD Index number of 3.5 that BGC says is necessary and
most are in the “target range" that BGC believes is preferred.
➔Iplex has said that it is awaiting final results and then a full report on what those tests mean, but those which Iplex has received
from independent laboratories to date do not support BGC’s conclusions
Page 25| Fletcher Building Limited | © October 2023
SCHEIRS TEST RESULTS ARE
FLAWED
The Scheirstests on MWD appear to be
based on the wrong interpretation of
the patent literature and aberrant test
results
At any rate Iplex has had these very
specialised tests carried out in an
international laboratory in the UK
The results coming from these tests
show the pipes manufactured with the
new resin have a MWD in excess of
minimum and are actually in the
optimum range that BGC/Scheirssays
is preferred

Why do we consider that BGC’s expert report is not credible? (III)
We and our leading global polymer experts consider the report from Dr Scheirs lacks credibility
Page 26| Fletcher Building Limited | © October 2023
ENVIRONMENTAL STRESS CRACKING
➔BGC alleges that the mode of failure of the Typlexpipes in WA is “Environmental Stress Cracking”.This does not fit the facts.
➔Environmental Stress Cracking is a form of Slow Crack Growth.It requires three elements to be present: Slow Crack Growth that is
Brittle in nature andthat occurs at a Stress lower than the yield stress of the polymer; and an Environmental factor that attacks or
degrades the polymer.
➔Dr Scheirshas not identified an Environmentalfactor that attacks or degrades the Iplex polymer.Dr Scheirsand BGC agree that
chlorine (a chemical) is not a factor in the Perth plumbing failures. BGC (not its expert) advances cooler water temperaturesasan
Environmental factor.This is not plausible.It assumes the WA water supply is colder than anywhere else in Australia.It is also not
supported by the water sampling data Iplex has received from WaterCorp. Further, Dr. Scheirshas not explained why the hot water
pipes have not failed when environmental degradation is typically worse in hot water compared to cold.
➔Further, the data in Dr Scheirs’ report points to Stress as the dominant factor causing the early failure of the pipes.
-His data suggests that radial bends on Typlexpipes in WA are tighter than for LYB pipes, leading to larger bending stresses on
Typlexpipes. This is an important point as it is consistent with Iplex’shypothesis that installation practices in Perth are
deteriorating.
-The location and direction of the cracks (on bends and in a radial direction) of themselves also point to tensile stress along the
pipe axis as the predominant stress on the pipe.
➔Consistent with its approach of testing each theory proposed as a potential cause, Iplex has engaged an independent laboratory in
Spain to perform a'crack round bar' testing to assess whether there is any difference between the two resins in terms of their
resistance to Slow Crack Growth. Whilst there are still some results still to be calculated, the results received to date areinline with
Iplex’sinternal view that there is no material difference between the resistance of LYB and Typlexto Slow Crack Growth.
➔Additionally, the Environmental Stress Crack resistance testing carried out by Dr Scheirswas modified testing.It was not performed in
full accordance with the reference ASTM Standards and cannot be relied upon for assessing either material’s true Environmental Stress
Crack resistance. In fact, Dr Scheirs’ extreme modifications to the ASTM Standards may have induced a different failure mode.
➔The results of Dr Scheirs' analysis do not, despite assertions to the contrary, support the statement that the Pro-fit pipe is more prone
to Slow Crack Growth or Environmental Stress Cracking.
PRO-FIT TYPLEX PIPES ARE NOT
MORE PRONE TO ENVIRONMENTAL
STRESS CRACKING
ESC requires 3 conditions to be present one
of which is an environmental factor –Dr
Scheirshas not been able to identify one
Dr Scheirsreport points to stress as the
dominant factor causing early failure of the
pipes
He also suggests that the radial bends of
installed pipes with the new resin are tighter
than those seen in installations with the old
resin –this points to a deterioration in
installation practices
The testing he carried out to support his
theory was again an modified test
Iplex has carried out actual testing of this
theory with experts in Spain –these show
there is no material difference between the
old and new resins

Why do we consider that BGC’s expert report is not credible? (IV)
We and our leading global polymer experts consider the report from Dr Scheirs lacks credibility
Page 27| Fletcher Building Limited | © October 2023
➔The comments on the prior three pages are based on the information and testing results available to Iplex at the
current time.
➔Iplex views are aligned with those expressed separately by its independent expert experts, Professor Graeme A.
George AM, Professor Emeritus of Polymer Chemistry at the University of Technology Queensland and Principal
Polymer Scientist at ALS Industrial Services Pty Ltd, and Dr Lucy Baker, Director and Materials Scientist for PATH,
who are leaders in their respective fields.

Why have we not previously responded publicly to BGC’s latest theory –
or other theories that have been put to us? (I)
Page 28| Fletcher Building Limited | © October 2023
➔As we have noted in our previous market releases, both DMIRS (Building & Energy) and BGC have said that they believe the pipefailures are due
to an Iplex manufacturing defect. Their reasoning for this has changed over time.
➔For example, one early theory proffered by both DMIRS (Building & Energy) and BGC was that the pipe lacked sufficient antioxidants. We
responded to that and have proven, through testing and engagement, that not to be the case.
➔DMIRS has engaged a consultant who, while not a polymer chemist, over the last few months has put forward to Iplex two differenttheories of
why Iplex pipes are defective:
➔The first related to concerns about the extrusion and cooling process used during the manufacturing process. Iplex provided evidence to
DMIRS about its extrusion and curing. Iplex also understands DMIRS (Building & Energy) is no longer pursuing this theory.
➔then DMIRS advised Iplex of another theory of defect, which was contained in a report from its consultant and described as a “probable”
theory. It was based on experimental laboratory work and alleged that, under those experimental conditions, failures associated with
isothermal cooling could be produced. Iplex responded to DMIRS (Building & Energy) and its consultant of the concerns it has with
translating the experimental hypothesis to real world manufacturing and installations in WA along with the Iplex’sinvestigations showing
that the temperature of drinking water in Perth in installed conditions is not capable of meet the experimental conditions nor abnormally
different to other parts of Australia. The consultant also confirmed to Iplex that his theory does not apply to any pipe extruded and sold in
straight lengths (as opposed to extruded onto jumbo coils).About 75% of pipe supplied into WA are of the type the consultant’stheory has
no issue with.
➔Each of these theories is different to that currently put forward by BGC.

Why have we not previously responded publicly to BGC’s latest theory –
or other theories that have been put to us? (II)
Page 29| Fletcher Building Limited | © October 2023
➔In June, BGC wrote to us with the theory presented at its briefing, and enclosed extracts of Dr Scheirsreports.
➔On receipt, as it has done with all propositions, Iplex and its polymer experts immediately reviewed that theory and, for reasons described in
previous slides, found it lacking in credibility, and was not a basis for Iplex to change its view about the quality of its product.
➔It is appropriate market practice for allegations to be properly assessed before it is disclosed by us.
➔We have nonetheless put each of the theories in the BGC and DMIRS allegations through testing and not yet found a reason to conclude that
they are a basis for us to change our view about the quality of the Pro-Fit pipe.
➔If any testing had found a theory to be credible, Iplex would have disclosed that to the market as it would have been new information.
However, receipt of yet another theory which lacked credibility and has not been shown to be correct by testing does not change the position
previously advised to the market.
➔Finally, we note that what was provided to us in June by BGC came as a legally privileged and with an invitation to negotiate with BGC under
threat of legal proceedings. While we indicated we were prepared to discuss matters with BGC, but BGC has not engaged in those discussions,
nor has it issued legal proceedings.

A reminder of our prior disclosure on this matter, which remains true
Page 30| Fletcher Building Limited | © October 2023
➔Fletcher Building’s disclosures about the risk of this matter in its Annual Report released on 16 August (see page 77 in particular) remain true:
“Ultimately, if Iplex Australia is found to bear some responsibility, the cost to it in rectifying homes with Pro-fit installed (as well as to meet any
damages claims, fines and other costs) may be a sum that could have a material impact on the Group’s financial position. However, the extent to
which Iplex Australia is ultimately held to have any responsibility and the impact that may have on the Group is not able to be established at this
time. Those matters will depend on resolution of a number of matters, including:
•the final determination as to cause(s) and the allocation of responsibility between Iplex Australia and other parties;
•the type and scale of remediation required, including the cost of undertaking it;
•other losses suffered by third parties ultimately attributable to Iplex Australia;
•if and how any relevant insurance policies respond; and
•the time frames over which payments may be required. For example, removing Pro-fit from houses in Western Australia may take a number
of years to do, given the scale of that task and the constrained resources in the Western Australia market likely to be available to undertake
that work. If Iplex Australia was to become subject to litigation in respect of this matter, final judgment may not be reached for some time.
As these matters may continue to take some time to be identified and settled, Iplex Australia will continue to work with relevant stakeholders
including homebuilders on an appropriate path forward.”

How might the industry respond to and resolve these issues?
Remember: this is a Perth issue, not a national one
Page 31| Fletcher Building Limited | © October 2023
Homes built with Pro-Fit (mid 2017 –2022)
65%
35%
35%
20%
45%
PerthRest of AU
c.17.5K homesc.15K homes
Homes leaked in
last 2 years
10.9%
0.19%
Others
Others
3 builders
(c.3000 homes)
1 builder
(c.5250 homes)
1,908
28

Leak rate by house build period
How might the industry respond to and resolve these issues?
The evidence does not support the claim that all houses in Perth will be affected
Page 32| Fletcher Building Limited | © October 2023
11
24
77
16
23
30
47
68
52
57
10
22
14
10
5
4
000
117
170
160
184
130
122
102
103
68
86
82
113
97
136
159
158
133
161
193
197
9%
12%
4%
4%
11%
16%
23%
31%
50%
38%
41%
8%
18%
9%
6%
3%
3%
0%0%0%
0%
10%
20%
30%
40%
50%
60%
0
50
100
150
200
250
1Q182Q183Q184Q181Q192Q193Q194Q191Q202Q203Q204Q201Q212Q213Q214Q211Q222Q223Q224Q22
% Leaked# of Houses Built
Quarter of Construction Complete
LeakedNot Leaked% Leaked
0
1
00
1
0000
1
0000
1
3
5
33
4
6
5
14
8
18
10
14
15
21
1313
24
14
12
1414
18
12
13
12
8
10
6
8
5
4
9
6
4
6
7
6
1
6
2
4
0
5
333
4
1
3
11
0
5
10
15
20
25
30
0246810121416182022242628303234363840424446485052545658606264
Frequency of Occurence
Months between Date of Construction Completed and 1st Leak
Time from construction completed to 1
st
leak (in months)
▪Graph shows the average period of time from house build date to a home's
first leak is 35 months
▪Houses are unlikely to leak after 5 years have past the construction date
▪Graph show which houses have leaked and not leaked by construction period
▪House built between 4Q19 and 3Q20 have a much higher leak rate (financial years)
▪Homes built prior to 4Q19 are leaking at a much lower rate and those that have not
been affected have a low probability of leaking
Source: Builder Data

▪BGC claims the situation is getting worse
and we are only seeing the tip of the
iceberg
▪We are seeing the opposite trend with
other builders who we are working with
▪We have been proactively funding the
replacement of ceiling pipes for 5 months
now with Delstrat. BGC was provided the
same offer, but declined.
▪The builders we are working with have
seen a ~46% reduction in leaks since July
Plumbing failures (Jul 21 –Sep 23)
3
4
8
17
9
12
16
23
30
34
47
54
82
91
116
129
86
82
88
103
85
137
154
178
184
201
4
2
0
2
9
2
5
9
11
13
16
19
37
57
45
48
67
60
33
36
45
39
56
74
84
50
45
0
50
100
150
200
Jul-21
Aug-21
Sep-21
Oct-21
Nov-21
Dec-21
Jan-22
Feb-22
Mar-22
Apr-22
May-22
Jun-22
Jul-22
Aug-22
Sep-22
Oct-22
Nov-22
Dec-22
Jan-23
Feb-23
Mar-23
Apr-23
May-23
Jun-23
Jul-23
Aug-23
Sep-23
BGCAll other builders
How might the industry respond to and resolve these issues?
Failure rates in non-BGC homes outside appear to be on a different trajectory
Page 33| Fletcher Building Limited | © October 2023

Ready to Deploy
How might the industry respond to and resolve these issues?
There are multiple approaches that may be used to provide a solution
Page 34| Fletcher Building Limited | © October 2023
❶
CEILING PIPE
REPLACEMENT
❷
TOP PLATE PIPE
REPLACEMENT
❸
LEAK
DETECTION
❹
WALL PIPE
MAPPING
❺
NON-DESTRUCTIVE
TILE REMOVAL
❻
DATA ANALYTICS
& TRENDS
❼
PIPE RE-LINING
(NEOFIT)
❽
PIPE RE-LINING
(REDLINE)
DESCRIPTION
Replacement of
Pro-fit pipe located
in the ceiling to
prevent future
plumbing failures
in this space
To non-
destructively
extend the Ceiling
Pipe Replacement
down into the top
of the wall chase
Installation of Leak
Detection Unit at
the property water
meter
Detection of pipes
within walls to
minimise damage
when breaking
into chase or
removing tiles
Non-destructive
removal of tiles
that are covering
pipe chases
Using AI and
Predictive data
tools to identify
houses likely to fail
ahead of time
Permanently re-
line pipework in
walls utilising
internal sleeve
Permanently re-
line pipework in
walls utilising an
internal coating
BENEFIT TO
HOMEOWNER
Reduced likelihood
of plumbing
failure. Reduce
damage to
property
Reduced damage
to home during
wall bend
replacement
Reduced damaged
to property
Faster wall pipe
replacement. Less
damage to
property
Reduced damage
to property when
replacing wall
pipes
Provides a fact
base to determine
the houses likely to
require fixes
Reinstatement of
pipe integrity.
Full prevention of
future plumbing
failures
Reinstatement of
pipe integrity.
Full prevention of
future plumbing
failures
SUMMARY
STATUS
UnderwayReady to DeployTrialling
Initial trials
underway
Early development
est. trials late Nov
Some trends
emerging but
larger data set
critical
Initial trial
complete, testing
underway
Trials failed and
solution not
feasible
DEVELOPMENT
TIMELINE

How might the industry respond to and resolve these issues?
A product recall is not justified and would be needlessly disruptive to homeowners
The issue is only occurring in Perth, not nationally.
Suggesting that it is a national issue is creating needless
worry for many thousands of homeowners
Why replace pipes that have been installed properly and
are not leaking? Creating this disruption for
homeowners is madness
In Perth, it is affecting a portion of
homes –those with poor installation
For affected homes, we are working on a range of fix
solutions which are quicker, less costly, and less intrusive
for homeowners
As BGC rightly point out, there is no capacity in the
industry to deal with a product recall. Yet there is better
capacity to implement the alternative fixes
In this context, a product recall...
▪Is not a sensible way to fix to the
issues in a timely way
▪Would create massive, needless
disruption to unaffected
homeowners
▪Is totally impractical given
capacity in the industry
Page 35| Fletcher Building Limited | © October 2023

How might the industry respond to and resolve these issues?
BGC’s estimated repair cost is sensationalist –scenarios that better align with the current evidence suggest that an
industry cost to repair affected Perth houses could be a fraction of that, something in the order of $50m to $100m
Page 36| Fletcher Building Limited | © October 2023
▪~17.5K homeswhere Pro-Fit is installed
Perth only issue
Not all houses in Perth are affected
▪Perth failure rate is ~11%for homes built between
2017-2022
▪Peak leak rate is ~50% of homes builtin1Q20
Range of solutions available
▪Full house re-piping is not needed or justified
▪Our current cost of repairs are averaging ~$4k
▪Simple leak repair is ~$1k and a full ceiling
pipe replacement is ~$5k-$6k
▪Preventative leak detection unit is ~$1k
▪At scale, and depending on type of fix, assume costs
to repair affected houses average ~$10k per home
1
2
3
Scenario A
▪# Perth homes = 17.5K
▪Failure rate = ~25%
▪Avgecost to fix = ~$10k
Scenario B
▪# Perth homes = 17.5K
▪Failure rate = ~50%
▪Avgecost to fix = ~$10k
~$50M ~$100M
▪These scenarios set out assumptions of industry costs to fix
the failures over time, not the liability of Iplex or any other
person
▪Given failures are progressive, these costs to the industry
would likely to spread over several years

1.Continue to support customers and homeowners with our Fund
2.Continue to collect evidence as to causation, including a period of joint inspections with DMIRS as discussed with them in
September
3.Apply data science to the expanded database. With more data, the industry should be able to better predict the likely housing
stock that has had poor quality installs and that are more likely to suffer from a future leak. Also, knowing which installation errors
require fixing should limit the scope of the fix to those with quality issues as opposed to a full house re-pipe.
4.Continue to work on appropriate and proportionate fixes
5.Finalise remaining product testing and analyse reports
6.Engage with WA regulators on findings of the above
Where to from here?
Page 37| Fletcher Building Limited | © October 2023

Summary
Page 38| Fletcher Building Limited | © October 2023
➔Fletcher Building is committed to helping the industry get to the bottom of the plumbing failures that have arisen in Perth.
➔We have been supporting customers and homeowners with our $15m fund while causation, best fix methods and an industry solution are developed
➔We dispute many aspects of BGC’s presentation.
➔There are no abnormal leak issues on the pipe installed on the East Coast of Australia. We are not aware of any issues from this resin in other geographies
➔Evidence points to installation as the reason leaks are occurring in some houses in Perth, and that installation practices have deteriorated over time
➔Our testing on the product is well advanced. Our tests to date continue to show that our Pro-fit product is code compliant and fit for purpose
➔The evidence does not support the BGC extrapolation that all homes in Perth will be affected by these installation failures
➔A product recall against this backdrop is not justified and would be an unnecessary impact on homeowners with perfectly good pipe and pipe installations. There are a
number of less costly, less intrusive, and more rapid fix options for those homes that have been affected that will help
➔BGC’s estimated repair cost is sensationalist –scenarios that better align with the current evidence suggest that an industry cost to repair affected Perth houses could be a
fraction of that, something in the order of $50m to $100m
➔We will continue to work with the regulator and other stakeholders over the coming months to complete the fact base, agree the fix approach, and assist in developing an
industry solution

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