Fletcher Building hopes for Ihumātao resolution by end of year

Thursday, 28 November 2019

Video footage shows flooding inside the SkyCity Convention Centre after the fire.

Fletcher Building shareholders have been told to expect a resolution to the negotiations on the future of the historic Ihumātao site by the end of the year.

Chair Bruce Hassall said discussions with the Government about the future of Ihumātao, where Fletcher Building had planned to build 480 homes, were continuing.

Hassall was speaking at the Fletcher Building annual shareholder meeting at Auckland's Eden Park, outside which Ihumātao protesters were in a celebratory mood after preventing the development on the land which sits next to the 100ha Ōtuataua Stonefields Historic Reserve.

Fletcher Building shareholders arrived at the meeting to the sight of protesters, led by Pania Newton, celebrating at the entry to Eden Park.

'We have been advised that the Government is hopeful of achieving a resolution by the end of the calendar year,' he said.

**READ MORE:

Security guards were jumpy as protestors from the Protect Ihumatao movement gathered on the road outside Eden Park where Fletchers Building Annual Shareholders Meeting was due to take place. Protest leader Pania Newton stands behind a sign reading: 'It's a Cultural Historical Archaeological Heritage Site!'.

* SkyCity fire's impact - damaged convention centre

* SkyCity Convention Centre fire as it happened**

'The ball is currently in the hands of the Prime Minister,' said Hassall. 'We were asked to pause, and we have.'

Fletcher Building chief executive Ross Taylor expected 'fair compensation' for the land, which the company now appeared to be resigned to selling, with Auckland Council tipped to be the buyer, possibly funded by a loan from central government.

Both Taylor and Hassall would not divulge to shareholders how much the company had been spending on security at Ihumātao.

Taylor told shareholders the company had made 'considerable progress' in turning around after three horrendous years.

The latest blow to long-suffering shareholders was the fire which caused extensive damage to the New Zealand International Convention Centre (NZICC) in October, which Fletcher Building had been close to completing for SkyCity.

Thick black clouds of smoke waft across Auckland after a fire started at the SkyCity Convention Centre building site on October 22.

Taylor also remembered the deaths of five Fletcher Building workers this year.

'Tragically, the year was marked by five fatalities within our business,' Taylor said. 'Through this we ensured that our sympathies, and support have been provided to their colleagues, friends and families.'

'We also made sure we learned all we could from what happened, so incidents like these are not repeated.'

Chairman Bruce Hassall said: 'The death of one of our people is by far the worst thing that can be experienced as a chair, director, executive member, or for anyone working in the business. But it pales in comparison to what is experienced by those who knew these men best.

Prime Minister Jacinda Ardern and Fletcher Building chief executive Ross Taylor speak to media on October 23 as the fire at the New Zealand International Convention Centre still blazes.

Hassall announced Fletcher Building had delivered a solid result.

'We returned to profits, ended the year with a strong balance sheet and importantly we reinstated dividends,' he said.

Revenue for the year was $9.3 billion with net earnings of $164 million.

'These were impacted by $234 million of significant items and there were two main components to these: $140m of write offs associated with the sale of our international businesses - Formica and RTG; and around $78m of costs associated with the intervention and reset of the Australian businesses.'

'Having achieved our aim through the full year 2019 financial year of getting the business both focused and stabilised we now have a good foundation for taking Fletcher Building into the future,' Ross said.

Protesters, led by SOUL leader Pania Newton, on a hikoi to Prime Minister Jacinda Ardern's Mount Albert electorate office.

'We see little change to the full year 2020 outlook we forecast in both June and August this year. We expect EBIT before significant items for the full 2020 financial year, to be in the range of $515m to $565m.'

After making a big loss in 2018, Fletchers moved back into the black in 2019 and opened a giant prefabricated homes factory.

Lawyer, turned protester leader Pania Newton has fought since 2016 to save Ihumātao from development.

But it also saw its plans to develop Ihumātao end as protesters secured the intervention of Prime Minister in July, followed by the devastating convention centre fire.

In February 2018, Fletcher Building shares hit a high of just over $7.60. By early May they were down around $5.50.

By July 2018 they had rallied to just over $7.10, but ended the year at just under $5, and since then haven't broken above $5.50 despite Taylor's strategic refocus on the business on its New Zealand and Australian operations.

Fletcher Building also planned to join other NZX companies in focusing on sustainability, reducing its environmental and climate impact, and increasing diversity among its workers.

'By the end of this financial year we will have a comprehensive gender pay parity plan in place,' said Hassall.

'Becoming the leader in making sustainable building products is critically important and will see us pursue sustainability product certifications across our portfolio,' he said.

2019: ANOTHER 'ANNUS HORRIBILIS' FOR FLETCHERS

January: After having 'kitchen-sinked' $660 million in losses on 16 big construction projects in 2018, Fletcher Building began the year in turnaround mode. But January also saw the deaths of workers at two separate Fletcher Building sites.

February: Announced interim $89m profit after posting a loss in 2018. Chief executive Ross Taylor spoke of working to turn around the company's Australian business. It restarted paying dividends to shareholders.

April: Fletcher Building cut power to the Ihumātao site in South Auckland in a bid to encourage protesters trying to save the site from becoming a huge housing estate.

May: Fletcher planned to block the road to Ihumātao in preparation to begin development.

June: Fletcher sold its US Formica business for $US$840m (NZ$1.2 billion).

July: Fletcher served eviction notice to protesters at Ihumātao, but the eviction does not happen. Prime Minister Jacinda Ardern intervenes.

August/September: Ihumātao becomes a rallying point for mana whenua.

October: Fletcher Building opens new prefabricated homes factory. Just days later fire erupts at the nearly-finished SkyCity New Zealand International Convention Centre (NZICC) which Fletcher Building is building.

November: Crown considers lending money to Auckland Council to buy Ihumātao. Fletcher Building says insurance will pay to rebuild the NZICC.