Page 1

Fletcher Analysts Briefing

Pipelines Division Overview

21 May 2013

http://www.google.com.au/imgres?imgurl=http://upload.ecvv.com/upload/Product/20097/China_Ductile_Iron_Pipe20097131706298.JPG&imgrefurl=http://www.ecvv.com/product/1904854.html&usg=__EbvVPO7Euk78VyGtHx59ByvJiEU=&h=1106&w=1015&sz=97&hl=en&start=9&zoom=1&tbnid=PMkSgZmgqlocsM:&tbnh=150&tbnw=138&ei=M9ZqTfu6BILsvQOCm8TkAg&prev=/images?q=ductile+iron+pipe&um=1&hl=en&sa=N&rlz=1G1GGLQ_ENAU391&tbs=isch:1&um=1&itbs=1http://www.iplex.com.au/iplex.php?page=lib&lib=3

Page 2

Business: Plastic Pipe & Fittings Systems

Plastic pipe and fittings systems for distribution of Water,

Gas & Conduits for Telecommunications & Electrical

Page 3

Locations: Australia and New Zealand

PVC Factory x5

PVC Fittings Factory x1

PE Factory x5

Aust. Locations x 16

Warehouse x4

Metals Factory x1

Northern

Territory

South

Australia

New South

Wales

Victoria

Tasmania

Brisbane

Townsville

Albury

Melbourne

Adelaide

Darwin

Toowoomba

Sydney

Queensland Western

Australia

Perth

Black Coal Basin

(CSG)

Innisfail

Launceston

Christchurch

Palmerston

North

New Zealand

Iplex NZ x2

NZ Locations

Page 4

Factory Layouts

PVC Pipe Plant – Reservoir VIC

PE Plant – Welshpool WA

Adelaide PVC Fittings Plant

Palmerston North, NZ Plant

Page 5

Product Overview

PVC Pipe and Fittings

• Higher pressure ratings – diameters up to 600mm

• Joined using rubber-ring sealed fittings

• Lower cost raw material than PE

PE Pipe and Fittings

• Lower pressure ratings - diameters up to 2,000mm

• Joined by a butt-weld process or electro-fusion fittings

• More robust - better in areas with unstable/moving ground

Other Products

• Ductile Iron Pipe and Fittings (manufactured and purchased)

• Glass Reinforced Pipe

• BlackMAX (Polybutylene)

• Plastic Hot and Cold Water Systems (K1, K2 and Pro-fit)

http://www.google.com.au/imgres?imgurl=http://upload.ecvv.com/upload/Product/20097/China_Ductile_Iron_Pipe20097131706298.JPG&imgrefurl=http://www.ecvv.com/product/1904854.html&usg=__EbvVPO7Euk78VyGtHx59ByvJiEU=&h=1106&w=1015&sz=97&hl=en&start=9&zoom=1&tbnid=PMkSgZmgqlocsM:&tbnh=150&tbnw=138&ei=M9ZqTfu6BILsvQOCm8TkAg&prev=/images?q=ductile+iron+pipe&um=1&hl=en&sa=N&rlz=1G1GGLQ_ENAU391&tbs=isch:1&um=1&itbs=1http://www.iplex.com.au/iplex.php?page=lib&lib=3

Page 6

Distribution Capability

• National coverage

• 110 local fleet & 40 semi trailers loaded per day.

• We ship pipe from 1m to 25m length (18mm to 2metre diameter), coils,

metals, fittings

• RF technology for pick-pack

• Truck route planning tools used at major sites

• Order tracking and E-pod

• National & State Civil call centres with ~14,500 inbound calls and ~10,000

outbound calls per month

• Merchant deliveries operate under an agreed delivery frequency schedule

• We also offer a Next Day delivery schedule for contractors (incl early AM)

Page 7

Markets Trends - Australia

CSG

Mining

Telco &

Energy

Rural

Civil

Building/

Plumbing 0

50

100

150

200

250

300

350

400

450

500

550

600

2012 2011 2010

A$M

Pipelines Australia

Base market conditions in Australia are trending toward levels lower than FY10 – Mining drop the most

pronounced

• Base market conditions weak – trending down over the three year period

• Our Plumbing sales have deteriorated 10% CAGR over the last three years

• Mining drop in F13 pronounced

• CSG business in F12 and F13 has proven a real success - helped mitigate a weaker base

business

Page 8

Markets Trends - New Zealand

Export

Telco & Energy

Rural

Civil

Building/

Plumbing

NZ$M

Pipelines New Zealand

Strong economic conditions in NZ and the Christchurch rebuild activity are both driving solid sales growth

• Rural sector strengthening - partly off some market growth and also due to Iplex business

initiatives

• Civil performance very strong - driven by improved Council capital programs, Christchurch rebuild &

an extension to our large bore PE capacity

• After three flat years between F10-F12 Plumbing activity is seeing modest lift in FY13

0

10

20

30

40

50

60

70

80

90

2012 2011 2010

Page 9

Key Stories Emerging from Business Results

• A subdued Australian economy is impacting our base market sectors:

– Spare Industry capacity and annual cost escalations requires the forming of several business

‘reset’ initiatives in order to drive profit growth in flat markets

• CSG demand has provided a strong earnings opportunity for Iplex:

– CSG volumes expected to be steady over the medium term - but dip next financial year due to the

current status of various customers CSG development projects

• New Zealand is performing well in a strengthening economy:

– Civil & Rural are key strength areas, with ChCh recovery also starting to come through

Page 10

The CSG Demand Story

CSG Developer Distance from:

Toowoomba

Brisbane Townsville Albury

Santos 360km 500km 1,000km 1,350km

QGC 160km 300km 1,200km 1,450km

Origin 210km 350km 1,150km 1,500km

Arrow 60km 200km 1,300km 1,375km

Avg

~200km ~350km ~1,200km ~1,400km

Albury

Brisbane

Melbourne

Townsville

QUEENSLAND

NEW SOUTH

WALES

Sydney

Toowoomba

Surat Basin (CSG)

1

2 1

2

1

2 1

2

Miles Roma

Toowoomba

Dalby

Brisbane

Bowen Basin (Coal)

The emerging CSG market is generating immediate demand in QLD with NSW evolving

Page 11

The CSG Process

• Gas extracted by drilling into coal seams

• Well depth generally 400-700m meters

• Both gas and water is released

• New well head in field at Santos

• Up to 500-1,000 in typical gas field

• Well life up to 5-10 years

• PE Pipe used to connect wells

• Gas transported to field compression stations

• Gas then transported through steel pipelines to LNG plants

Gas Extraction Process

Gas Well Head

PE Pipe Being Laid

Page 12

Iplex Expansion for CSG

• Produced 30,000T in FY12 and Forecast 35,000 in FY13

• Initial production at Albury - now moved to new Toowoomba plant

• Toowoomba plant built on time & on budget (A$12M + site lease)

• Installed new technologies improve energy efficiency and outputs

• Producing above rated throughputs

• Quality demands and expectations beyond anything done before

• Every pipe and weld is tested with new technologies both post production and infield

• Iplex have invested in field and technical capabilities

First Loads ex-Toowoomba

Toowoomba Plant

Iplex CSG Field Services

Page 13

Strategy & Initiatives

Vision

Number 1 supplier in all our major markets through a

lowest delivered cost position and targeted customer value creation

Closer Customer

Relationships

Merchant

Sector

Performance

Manufacturing

Capability

Order

Fulfillment

Performance