Fletcher Building : Western Australia Plumbing Issues Update Presentation

Western Australia

Plumbing Issues Update

13 October 2023

Agenda

Overview

Support to Customers and Homeowners

Safety

Establishing Causation

Industry Solution

Next Steps

Q&A

All financials are in AUD

Fletcher Building Limited

Summary

• 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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How have we been approaching the plumbing failures

• Support for Customers & Homeowners, ❷Establishing Causation, and ❸Industry solution

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	❷	❸
SUPPORT FOR	ESTABLISHING	INDUSTRY SOLUTION
CUSTOMERS &	CAUSATION
HOMEOWNERS

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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.

$15m	A	Inspect the failures and capture
relevant data for the fix

B	Implement a suite of options for the
builders and plumbers

• 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 homes and 3rd 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.

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