Hi. I've used formply with a marine grade finish for a balustrade on a house in Sydney. It had slots cut out from the sheet to give it some decorative treatment and allow the owners to see through to the street while providing privacy. Unfortunately the builder did not treat the cut edges and the surface finish delaminated into unsightly bubbles. It had to be replaced entirely.

Be wary of exposed edges. Ensure they are encapsulated or capped with non corrosive metal.

Thanks for this. The more I look into it the more I think the risk of bubbling/peeling over time is too high. Any suggestions on what would make a nice smooth backing to a panel with thin pine slats nailed on - fibre cement/exterior plywood or something else? Thanks again for any help on this shed project.

Well, HU-115348458. After learning what can happen to ply in my project here in Oz, I worked in the UAE where high temperatures and arid climate means that timber screens dry out and warp. For screens there, I used aluminium sheet with slots cut out. No twisting, shrinkage or need to repaint etc.

This is Al Muneera in Abu Dhabi .

However, your problem is exterior cladding. I would suggest that you use fibrous cement sheet with a suitable paint then attach your battens with screws through nylon washer spacers so that the battens are not hard against the fibro and rainwater has a chance to dry out. The below image shows this methodology used on the end of a RV toilet block I designed here in Eumundi.