Fletcher Building Limited · NZX:FBU
Fletcher Building — Merger or Acquisition (February 2016)
15 slides from Fletcher Building's merger presentation, Feb 2, 2016
Slide 1: Acquisition of Higgins
Fletcher Building Limited Acquisition of Higgins 2 February 2016
Slide 2: Disclaimer
Disclaimer This presentation contains some forward looking statements about Fletcher Building and the environment in which the company operates. Because these statements are forward looking, Fletcher Building’s actual results could differ materially. Media releases, management commentary and analyst
Slide 3: Higgins acquisition overview
Higgins acquisition overview Fletcher Building has reached an agreement to buy the NZ and Fiji road construction and maintenance businesses of Higgins and the Higgins aggregates business and other related activities Total consideration of NZ$315m, EBIT multiple of 7.9x FY16 budget EBIT Completion ex
Slide 4: Higgins: overview of business being acquired
Higgins: overview of business being acquired Revenue FY15* (NZ$m) • Historic core of the business: 16 branches, strong in lower North Island, Auckland, and Waikato / Bay Contracting of Plenty, and Canterbury 1 New Zealand $313m • 3 core segments: maintenance, capital works, and asphalt / bitumen • E
Slide 5: Higgins is a complementary business that deepens Fletcher Building's construction offering
Higgins is a complementary business that deepens Fletcher Building’s construction offering NZ roading market is strong and growing, driven by increasing revenue from road user levies Higgins’ road contracting and maintenance business is highly complementary to Fletcher Construction • Fletcher Constr
Slide 6: Higgins is a strong fit with Fletcher Construction
Higgins is a strong fit with Fletcher Construction Fletcher Construction can add value to the Higgins business by: • Offering a stronger, fully-integrated proposition to win new capital works and maintenance contracts (both local authority and Network Outcome Contracts) • Continuing to improve proje
Slide 7: Purchase price and valuation
Purchase price and valuation Negotiated purchase price of NZ$315m Supported by DCF valuation on existing business, no growth opportunities factored into valuation Conservative synergy assumptions of net $2m EBIT benefit per annum Transaction multiple is 7.9x FY16 budget EBIT Implied ROFE is 13% 7 Fl
Slide 8: Acquisition funding
Acquisition funding Purchase of Higgins will be through mix of cash and debt funding • Proceeds from sale of Rocla Quarries (NZ$212m) • Headroom available within Fletcher Building’s NZ$725m syndicated bank facility Acquisition accounting (before fair valuation exercise): NZ$m Fixed Assets 119 Workin
Slide 9: Higgins Contracting NZ overview
1 Higgins Contracting NZ overview Contracting NZ has 16 branches, incorporating the asphalt and bitumen plants Branches offer both capital works and maintenance services, and pull through bitumen and asphalt Contracting NZ earnings are split roughly as 25% road maintenance and 75% capital works (bas
Slide 10: Higgins Contracting NZ business segments
Higgins Contracting NZ business 1 segments Maintenance Current capital works Asphalt & bitumen • Large maintenance • Bitumen purchased contracts with NZTA Major capital Minor capital All other small primarily from Z (Network Outcome works works works Energy and stored in Contracts) & local • Deliver
Slide 11: Higgins Contracting Fiji: currently has 2 key contracts
Higgins Contracting Fiji: 2 Currently has 2 key contracts Current key contracts: 1. Construction of the Northern Nadi N2 road from Nadi Contract Area township to the airport 2. Western Division maintenance contract Fiji market likely to offer further expansion opportunities: Western Contract • Furth
Slide 12: Fiji business has a strong position in maintenance and capital works
The Fiji business has developed a strong 2 position in both maintenance and capital works Overview Plant operations and premises • Maintenance is the core operation of • Plant and premises are in good condition Contracting Fiji, with Higgins winning the and fit for purpose first-term outsource of th
Slide 13: Aggregates & Other: Higgins' quarries mainly in the lower North Island
Aggregates & Other: 3 Higgins’ quarries mainly in the lower North Island, plus strong Christchurch position 13 Fletcher Building Higgins Acquisition Presentation | © February 2016
Slide 14: Changes to divisional structure after Higgins acquisition and Rocla sale
Acquisition of Higgins and sale of Rocla Quarries accommodated by changes to divisional structure International Distribution: Residential & Land Construction: Building Products: Businesses: Dean Fradgley Development: Graham Darlow Matt Crockett Francisco Irazusta Steve Evans • GBCWinstone (NZ) • For
Slide 15: Fletcher Building Limited Acquisition of Higgins
Fletcher Building Limited Acquisition of Higgins 2 February 2016
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