Fletcher Aluminium and NALCO, “Becoming One”Customer Update

July 2016

Hello Everyone,

As we arrive at 1 July it heralds the start of a new beginning in our industry, the joining together of two good businesses with great people and Customers. Marty and I, along with others in both businesses have been working together for some months now, in a very constructive way on anything that we are legally allowed to work on. This point is very important due to the fact we have been competitors, however as of 1 July that changes.

The Joint Venture between Fletcher Aluminium and NALCO is an exciting venture which has the potential to deliver benefits for years to come. The rational for this business model is well understood and we are hugely appreciative of the support it has gained from our respective Customers.

A lot has happened over the last 5 months, but we are steadfast about one goal, our commitment to transition the business with as little interruption or impact to our Customers. This commitment is very much at the forefront of our internal discussions and plans in both businesses.

Over the last few months I have managed to get in front of most Fletcher Aluminium Customers, either at the Branch meetings or face-to-face at your premises. The same has applied across our

Issue 1

Nulook Customers as well, with recent Regional Meeting programmes being the ideal forum for me to explain more on the JV progress.

Thank you for the way I have been received, I must say the feeling was very positive and encourages me that this can be the beginning of a larger entity, with size and scale to do things neither could do previously.

An example of the above is the new vertical paintline just signed off by the Joint Venture Steering Committee (now to become the Board). We cover this in a separate article on page 2.

Our focus over the coming few months is very much business as usual for both Fletcher Aluminium and NALCO. I will be working with Marty, who will continue as General Manager for Fletcher Aluminium, and I have appointed Prasad Balan into a General Manager role for NALCO. This enables me to focus on the important decisions we have ahead of us, which includes working closely with Steven Bodt who is leading the Projects Office for the integration.

As we head through this year the appointment process for the Senior Leadership Team will be getting worked on. Human Resource, and Health, Safety & Environmental roles are, in fact, already underway as early appointments.

Communication will be a key aspect of what we all need to focus on for both our internal people and our Customers – we will be updating you on a regular basis.

To bring two businesses together is no small task, as I am sure you can appreciate, there is significant work to do including getting Joint teams coming together. Plans are underway for this work already.

Kind regards,Ron Holden

There has been a JV Steering Committee governing the JV business integration process up until 1 July. The JV Steering Committee will become “the Board”, effective 1 July. This was not legally possible until the JV is ready to do business.

We have set up nine different work-streams to work on the important projects happening in the business, there is a brief outline on this that follows with names of people leading those workstreams.

Joint Venture Steering Committee

The Board is made up of:

• Matt Crockett (Chairman & Chief Executive of Fletcher Building - Building Products)

• David Thomas (Winstone Wallboards - General Manager)

• Bill Bradnam (Bradnam’s, Australia)

• Ron Holden (FANALCO - Managing Director)

Workstreams

I will sign off here and hand over to Marty. Should Customers need to contact me the method for that is as follows:

Mobile: 0274685000Email: ron.holden@nalco.co.nz

Workstream Leads

There are nine Workstream Teams underway and people appointed to lead them are as follows:

Customers - James Murphy (FAL Sales Leader)

Finance - Mark Woodward (FAL CFO)

Health, Safety and Environmental - Sen Chen (FAL HS&E Manager)

IT and Infrastructure - Carlo Bussen (NALCO Information Systems Manager)

Legal - Prasad Balan (NALCO General Manager)

Operations and Supply Chain - Ian Bickerton (NALCO Manufacturing)

People - Suliana Mailangi (FAL HR Manager)

Product Innovation - Michael Petersen (NALCO Building Products Manager)

Property - Steve Newland (NALCO Industrial Manager)

Hi,

Well, the formation day is upon us, and as this era at FAL comes to an end, a new one emerges in the shape of the JV. Since we last met at the brand meetings there has been an enormous amount of work to do to get the JV ready. The financial year has flown by. With record manufacturing volumes and sales demand. The support services of technical, franchise support, design and marketing have all been stretched as the building boom continues to be in effect. In terms of the forward view it is very positive and, with your loyal support, we are looking forward to continuing to grow the business across the coming months and years. There has also been a significant amount of business as usual activity going on around the launch of V6, the continued development of the SmartFit offer, new CNC’s being commissioned all over the country and several new appointments made to drive our Customer Engagement Programme as we head forward.

In terms of the JV this is the single most important strategic decision we have made in the last 20 years. The reasons for the JV are well understood, however it is worth reminding everyone that the primary reason for doing this has been to build a sustainable and profitable future platform. With the size and scale of the JV comes the ability to take on competition at

a level that neither FAL nor NALCO could have accomplished alone.

As we move into the first three months I will be working closely with Ron, the management teams, and wider team members across the two businesses, to drive the changes that will need to be made, to capitalize on this opportunity. We absolutely understand that the integration needs to be carefully thought through and I know many of you will be keen to hear what plans we have around support, new products and service improvements. We will also be working hard to ensure that the business as usual requirements are met and that we have the resources to be able to support you as we go into the next phase.

Finally, I want to thank all our Customers and Team members for your support, loyalty and efforts over, not just the past year, but the many years before that as well. I know that you will benefit from the new JV, and that together with our new NALCO friends we will be able to build something together; the best business in the industry and a true force to be reckoned with.

Regards,Marty

What is our branding in the interim?

Each business will continue with our current trading names being Fletcher Aluminium Ltd and NALCO (so, no National Aluminium Ltd any longer). The rational is that rather than confuse the market with FANALCO (which is not a trading name) it is better to go through a short two or three month period of retaining our respective trading names and caption the FANALCO Ltd details in a limited way. This relates to covering the legal aspects on written collateral (and some digital) there will be a discrete, footnote reference at the bottom, “a FANALCO Ltd business”.

Our letterhead and business cards will change to reflect the branding stated above.

Our email signatures will be updated to reflect the Joint Venture on 1 July.

Both businesses are updating legal documents and contracts to reflect the new entity, for example Credit Application forms, Invoices, Terms and Conditions and Warranties.

On the digital/IT/Online side there are updates underway to reflect the new entity.

Answering the phone:From 1 July, we will answer the phones by combining both names, being “Good morning, Fletcher Aluminium – NALCO”.• Reception• Customer Services• Trade Centres (NALCO)

Changes that you will notice:

What is not changing?• Corporate clothing• Personal Protective Equipment• Street or building signage• Vehicles – cars, vans, ute’s and

trucks• Email addresses• Phone and fax numbers• Website addresses

1 July represents something special (the “buzz”) for all of us in Fletcher Aluminium and NALCO. “Becoming One” has arrived. We are reliant on the ability of our people to serve and support customers in a meaningful way – this makes a difference to enjoying coming to work each day and doing business with our great customers.

We have some special arrangements underway to celebrate. We will provide a follow up in the next Newsletter.

1 July Celebrations

F L E T C H E R A L U M I N I U M & N A L C O / / 0 1 . 0 7 . 1 6

The daw n of a new beg inning i s upon us .

On Fr iday 1 July 2016, two g reat businesses w il l “become one” even g reater business .

United we w il l innovate and deliver rel iabi l ity to become “the best in the business” .

Please join us in celebrating in tradit ional kiw i fashion w ith Fr iday Fi sh & Chips .

1 July 2016

WE ARE ONEThe future begins now

Tower on

Prestigious business awards for NALCO

Playing fair in pink

Cardboard Cathedral

WE ARE ONE | Friday, July 01, 2016 | Fletcher Aluminium & NALCO Joint VentureWE ARE ONE | Friday, July 01, 2016 | Fletcher Aluminium & NALCO Joint Venture

Today represents something special for us all in both Fletcher Aluminium and NALCO – today we’ve reached a position of “Being ONE”.As we reflect on this Industry we are in, it’s a good Industry but fiercely competitive and so reliant on the ability of people to serve and support Customers well, to make a difference to their world.We should be immensely proud of the quality we have in our collective people as we enter this space of “being ONE”. Combined we’re capable of “being the best in the industry”.Going forward Fletcher Aluminium and NALCO will gel together in a way that’s very powerful. There’s a very common denominator in both - we “CARE ABOUT OUR PEOPLE” and that is significant.SAFETY and caring for our people features strongly in both organisations, along with ACCOUNTABILITY and RESPONSIBILITY, these are core values, we all play a part in how we arrive at work and then go home safely to our families.We’re now a business with the size and scale capable of achieving market-leading outcomes in innovative design, manufacturing, marketing and sales and being the #1 Supplier and Employer of Choice. This will drive success in our window and door brands, and our shapes and industrial business.INNOVATION is in our blood – our innovations will be disruptive and always with the goal of improving what we do today for both our people and our customers. An example in itself is forming the JV, a brave revolutionary initiative that will change our Industry forever.We have a vision for this new business that revolves around “BEING THE BEST”. It’s about being Strong, Reliable, Customer-Driven and building a business we are all proud of. The past 3 months have been unsettling but we

NALCO won the Westpac Business of the Year Supreme Award on Friday 18 September. The award was presented to Ron Holden, Managing Director NALCO by the Prime Minister, John Key and Ian Blair, General Manager of Business Banking at Westpac.After many weeks of intense scrutiny from the judging panel, celebrations took place at the Dinner of the Westpac Manukau Business Excellence Awards. “The awards have had a record number of entries this year, and are now the largest business award event in New Zealand, ” says Gaelle Deighton, CEO of Enterprising Manukau. “This year’s winners have really raised the bar and set some new standards for us all to aspire to.”NALCO scored an award hat-trick: as well as winning the coveted 2009 Westpac Business of the Year Supreme Award, the company also won the Cogita Excellence in Innovation & Strategy Award for the exciting work they have done in the development and commercialisation of unique aluminium window and door systems for Bradnam’s and Nulook. Ron Holden said, “NALCO have developed and released more new products in the last 5 years than all our competitors. We have superior products and designs supported by the best people in the industry. Our recently released SovereignSeries™ Inline bifold is one example of product innovation at the highest level”.

Fletcher Aluminium Auckland and Christchurch went all out for the NZ Breast Cancer Society’s ‘Pink Day’ - Playing Fair by raising over $1000 for the charity and creating awareness for the health and wellbeing of their fellow work colleagues.Breast Cancer affects over 3000 kiwis a year and results in over 600 deaths - October is Breast Cancer Awareness Month in New Zealand.On 10 October, the NZ Breast Cancer Society held their nationwide ‘Pink Day’, which encouraged workplaces and people to wear pink and fundraise for the society so they can continue to educate people about the breast cancer, fund research into finding a cure, and support people living with breast cancer.

The judges were impressed that this company had seen opportunities rather than problems within their sector to develop new and leading edge products and services. Despite the impact of the tough trading environment, the team had the confidence to continue to invest in developing innovative solutions. Their goal is to create a strong position for the business when the market rebounds Ron Holden said “ NALCO’s sponsorship with Nulook of RMBF House of the Year is all about supporting and celebrating quality. By witnessing the success of the RMBF awards I was encouraged to enter to benchmark NALCO against other businesses and see how well we fair when judged. I never expected to win. I saw it as a learning opportunity for NALCO”.NALCO also won the EMA Excellence in Manufacturing Award for the development and achievements at Bradnam’s East Tamaki, one of 5 NALCO owned window fabrication businesses. Bradnam’s ET has led New Zealand fabricators in the use of NALCO’s patented connection systems to significantly improve on the weathertight integrity of aluminium joinery and also delivers much better residential joinery quality. The Judges said “This company uses lean manufacturing principles in their business with a high level of innovativeness. They have managed their way through the recession which has hit

The FAL wellness committee fully support the work of the foundation, so put the challenge out to the business unit to wear pink on the Friday and get in behind a great cause.There were plenty of laughs throughout the day as both FAL’s Manufacturing and Business departments wore pink and held raffles of donated Hampers, vouchers, and baked goods to raise money. There was even a best dressed category over the two sites. The day played an important part of Fletcher Aluminium Wellness initiatives for promoting health and wellbeing of staff and the NZ Breast Cancer Association also provided promotional health and advocacy resources for staff.

their industry hard. They have demonstrated strong financial management, with low debt levels, as well as quality manufacturing.”The above strengths led NALCO to invest in an independent quality assurance program for Bradnam’s and we proudly hold the mantle of NZ’s only BRANZ Appraised aluminium joinery system in NZ. The company gains from the patented technology has been enormous due to the leaky homes issues that has been so prevalent in the building industry. Bradnam’s builders and architects clients have been impressed by the quality. So much so that Bradnam’s has an impressive list of growing customers. In a market where price is so important it provides an important point for differentiation, along with Bradnam’s service offer and support.

Spanning 32 stories, the façade of the Vinaconex office building in Hanoi, Vietnam, is characterised by external box fin details that, when lit at night, provide architectural impact.Reaching 115 metres high, the building’s façade system had to be able to withstand considerable loads and forces, while also delivering on the design intent.As façade supplier, the Fletcher Aluminium Oakley team created a bespoke design, which was delivered by fabrication partners TID, resulting in a high quality finish that fully delivered on the architect’s vision – all within the tight six month project time frame.

have a future full of opportunities. We should be proud of the integrity and on-going support we’ve shown in this busy period of full-on ‘business as usual’ with record months and a highly active marketplace, along with the busy JV work for many of our people.These are exciting - and no doubt challenging - times ahead.

A final word from Ron Holden, “I’m very confident we’ll create a business that’s a real force in the market and I want to thank everyone in advance for the support that I know will be there. I’ll leave you to your team celebrations with a personal statement I’ve lived by for many years - “Achieving is Believing” - let’s make it happen. Thank you everyone.”

In 2014 Raylight Aluminium won the WANZDesign Flair Commercial Building over $100,000 Category Award, followed by the 2014 WANZ Design Flair Supreme Award. Raylight’s entry was the Cardboard Cathedral designed by architect Shigeru Ban in conjunction with Warren and Mahoney Architects. The Rose Window joinery creates a meaningful reference to the old Cathedral’s history with a striking, colourful play on light and an experience for everyone to enjoy.Delivering on unique projects is rewarding for the Raylight Team and Directors, this reflects back on product knowledge, expertise and successful management of significant commercial projects.

THE NUMBERS

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What is Smartfit®• Smartfit® is a ready-to-fit window system.• Smartfit® is an alternative solution method

of compliance with clause E2 of the NZBC.

• Smartfit® offers superior weathertightness.• Codemark Certified & BRANZ appraised.• Award winning window system.

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Ron Holden said, “these awards recognize the incredible talent we have in our business.. The effort the team have put in over the last 7 years has been nothing short of amazing. We came into a business that was downsizing and had suffered from a lack of investment over a long period. NALCO have found and developed great people in this business, and that along with a huge focus on good systems, processes and disciplines has made a great difference. Innovation is the core of our business, we established an internal training academy that leverages off the immense experience we have throughout the business. The feedback from our people has been awesome, people are hungry to learn and it provides fantastic enthusiasm and motivation for our people to deliver on our vision – “A better world for our Customer” .

575

16

8”

40%

#1

114

20,000sqm

staff nationwide

sites nationwide

press - capable of 9” extrusion

market share

NZ aluminium supplier

franchisees & licensees

hamilton mill site

New Extrusion Line (Press)

The new extrusion plant is looking amazing, and the plan is for our first hot billet to be pushed in very early July; this will be a very special moment for all of us. Currently, the plant is heavily populated with specialists from Italy, along with Electrical Engineers from Hennessy, Technicians from Pace Engineering in New Plymouth and many other sub-trades.

The new press brings excitement, it is going to provide our new business with expanded capability and “make real” the service and capability vision. One very important facet is being able to reassure Customers of the capability we will have, the reliability they can look forward to

New Vertical Paint Line

The JV Steering Committee have shown the businesses they “don’t muck around”, and after some good work by the Operation Workstream around justifying the investment in a new Vertical Paint Line for Hamilton, the decision has been made to push on and get this underway.

This demonstrates our cohesion (“Becoming One”) with the size and scale of the new business now, as neither business could have justified this investment on their own.

For those who may be unfamiliar with how a

Vertical Paint Line works, here is a description that will hopefully help.

Vertical powder coating allows us to hang the profiles from only one end and is an in-line process eliminating the movement between pre-treat and powder coat. The profiles are jigged/un-jigged from and on to a horizontal table, reducing manual handling risk and fatigue for the operators.

The process allows for vertical spraying of powder up and down the vertical lengths of extrusion and delivers improved coverage and quality.

offering, and the product offer, that will lead to greater Customer confidence.

Well done to our Hamilton Team on the progress so far; there will be some very proud and excited people on site over the coming weeks.

The new press under construction at the Hamilton site in early May 2016

In 2002, Ron & Wendy Holden, Bill & Jan Bradnam and Capral Aluminium Australia formed NALCO to take over the assets of Capral Aluminium NZ Ltd in a joint venture. In 2006, Capral’s remaining shareholding was purchased and the Holden/Bradnam partnership became the outright owners of NALCO.

NALCO has become a leading designer of Aluminium window and door systems for both residential and commercial sectors through innovative and ground breaking research.

2002 - NALCO formed in JV with Capral

Bradnam’s was established in New Zealand

Early pioneers of V6

2003 - The launch of the WeatherTight™ suite of windows and doors

2005 - Invested in large CNC Router for industrial business

2009 - NALCO wins the Manukau Supreme Business Excellence Award

Visit by Princess Anne followed

2009 - The launch of the Sovereign Series™ suite of windows and doors

2011 - The Launch of the AllSeasons™ suite of windows and doors

2012 - Shifted to larger site in Highbrook - Auckland

2014 - The Launch of the 41Architectural™ suite of windows and doors

Decision made to extend Hamilton factory and invest in new extrusion operation

2015 - Nulook Windows & Doors celebrates 50 Years

Order placed for new press

The Stellar Doors innovative Selector is launched on the NALCO, Nulook and Bradnam’s websites

ERP investment for window business

2016 - Announced proposed Joint Venture with Fletcher Aluminium Ltd

The MD’s or GM’s overseeing our progress during the last 20 years: Bill Roest, Vicki Brannigan, Mark Eglington, David Haslett, Alex Mandis (interim), Lou Cadman & Martin Storey

1 April 1996 Fletcher Building purchases Camalco Carter Hart Harvey Aluminium

1997 - “The Way Forward Together” programme initiated

1998 - Transact client launched

NALCO has been around for 14 Years

Fletcher Aluminium History

1999 - Hamilton plant sold to Capral, Windows & Doors assets and staff transferred to Auckland

Became one plant operation

2000 - Fisher, Nebulite, Rylock & Vistalite began manufacturing the newly launched

‘New Residential Suite’

2001 - Fletcher Aluminium Service Centres sold to Ullrich Aluminium

Lyte brand discontinued

2002 - Bitexco Building, 30 storey project – Vietnam

2003 - Euroslider®, Eurostacker® & Foldback® Bifold launched

Remelt plant closed down, space converted to fabrication area

Transact website launched

2004 - Fusion Costing System launched

2005 - Plant upgrade – new Omav run out gear installed, Vickers press de-commissioned

Suva Central project – Fiji

2006 - Iceland Towers project – Sri Lanka

TRACS (time recording and controlled scheduling) launched to franchise network

2007 - Residential Suite re-named to Pacific Suite®

Atlantic Suite® launched

2008 - Malta Hardware range developed

Fletcher Aluminium wins the Fletcher Building Business Unit Award for

H&S Performance Excellence

2009 - Pacific Architectural development and testing begins

2010 - Vickers press scrapped

Design Resource website

Thermal suite launched

Stacey Jones Roadshow

2011 - Main Office building at Bowden Road refurbished

Sheer® anodised launched

Fletcher Building Innovation Award for culture transformation (Dualglaze)

Launched Pacific Suite TVC

Salesforce launched to franchise network

2012 - Fletcher Aluminium wins the Auckland Chamber of Commerce Award for Excellent Workplace

Safety

Began sponsorship of The Block

Christchurch millstore & fabrication facility opened

2013 - FWDS brand launched

Franchise induction programmes introduced

Launched FWDS TVC

2014 - Launched the LevelStep® Sill

2015 - Smartfit® launched

NZ Innovation Awards – finalist for Smartfit®

DINZ Best Awards – Bronze for Smartfit®

TVNZ Marketing Awards – Finalist for FWDS brand

2016 - Product rationalisation project begins

V6 launched

Multiple WANZ awards won

JV with NALCO formed

Logo Matrix