Financial Reporting And Unusual Items

AUCKLAND, 17 May 2001 - Fletcher Building Limited Interim Chief Executive, Michael Andrews, today confirmed a pro-forma set of accounts will be prepared for the Building Operations for the 12 months to 30 June 2001, in addition to the accounts for Fletcher Building for the period from 23 March to 30 June 2001.

“Fletcher Building was established on 23 March 2001 and is required to report for the period from that date to 30 June but the pro-forma accounts will enable year-on-year analysis of our performance," he said.

“There will be a number of unusual items included within these pro-forma accounts for the 12 month period to 30 June 2001. These are in addition to those disclosed in the Fletcher Challenge Building interim results for the period to 31 December 2000 and Fletcher Building’s Information Memorandum dated 30 January 2001.”

These unusual items will impact operating earnings and include:

- A charge of $5 million for restructuring and redundancy costs incurred by the Building Operations to achieve a leaner organisation.

- A $10 million charge being the additional amount required as a result of the $50 million settlement of the dispute with AXA Pacific related to a co-generation power project in Victoria.

- Impairment reviews of certain assets, including some New Zealand manufacturing activities, and the investments in South America, are being undertaken. Potential writedowns (non-cash) in the carrying values of these assets in the order of $70 to $100 million are expected. This is as a result of:

ƒ{ a reduction in value of certain manufacturing activities in New Zealand.

ƒ{ the likely impact on asset values in South America of both the Peruvian and Bolivian economies performing below our previous expectations.

Whilst asset writedowns are required under New Zealand GAAP where the fair market value of assets is assessed to be less than their carrying value, it is relevant to note that certain of the Company’s businesses and associated assets are currently carried in the Company’s accounts at well below “fair value”.

The above charges are in addition to the unusual items noted in Fletcher Building’s Information Memorandum being:

- An estimated (non-cash) write off of $110 million in Fletcher Challenge Building’s financial statements as a consequence of the transfer of tax benefits to Fletcher Challenge Energy for fair value, and of the write off of other tax benefits attributed to Fletcher Challenge Building which no longer exist after separation.

- The costs of restructuring and separating Fletcher Building from Fletcher Challenge Limited estimated at $45 million, $12 million of which were expensed in the interim accounts.

We are currently in the first quarter of trading as Fletcher Building and are very pleased to say that we are seeing an improvement in earnings.

At this point in time our expectations are that the earnings before interest, tax, and unusual items for second half (January to June 2001) will be approaching twice the level of the first half earnings.

An asset sales programme is underway and divestments will be announced as they occur.

Ends

Note: A copy of the Strategy Update will be available on the Fletcher Building Website.

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