Fletcher Building Limited Annual Report 2018
Building a stronger, more focussed Fletcher Building.
Fletcher Building is currently one of the most diversified building materials companies in the world. In FY18 we announced a new strategy to improve our performance by focussing and simplifying our business.
01 Fletcher Building Limited Annual Report 2018
New strategic focus
Our vision is to be the undisputed leader in New Zealand and Australian building solutions with products and distribution at our core. 1. Refocus on the core 2. Stabilise Construction 3. Strengthen Australia 4. Exit non-core businesses
02 Fletcher Building Limited Annual Report 2018
Enabled and driven by:
• Highly engaged and capable people who deliver results for our customers. • A simpler and leaner decentralised operating model. • An increased focus on innovation, to achieve continuous improvement and take advantage of global trends. • Disciplined performance improvements in safety, sustainability, procurement and operations. • Capital directed behind strategically important, high-return businesses that align with our vision. • Targeted acquisitions and organic growth to fill gaps in our supply chain or move into adjacent categories.
03 Fletcher Building Limited Annual Report 2018
Contents
Results at a Glance Chairman’s Report
05 06 08 10 12 14 18 20 22 24 26 28 30 32 34 36 38 38 42 43 46 49 50 52 53
The directors are responsible for preparing the annual report, including the financial statements and ensuring that the financial statements comply with generally accepted accounting practices. The directors believe that proper accounting records have been kept in accordance with the requirements of the Financial Markets Conduct Act 2013, and these accounting records enable Fletcher Building to ensure that the Company’s financial statements comply with the requirements of the Companies Act 1993 and the Financial Markets Conduct Act 2013. The financial statements have been independently audited, and EY has issued an unqualified audit report. When used in this annual report, references to the ‘Company’ are references to Fletcher Building Limited. References to ‘Fletcher Building’ or the ‘Group’ are to Fletcher Building Limited, together with its subsidiaries and its interests in associates and joint ventures. All references to financial years (e.g. FY17 and FY18) in this annual report are to the financial year ended 30 June. References to $ and NZ$ are to New Zealand dollars unless otherwise stated. In certain sections of this report the Group has chosen to present certain financial information exclusive of the impact of Significant Items and / or the results of the Building + Interiors (B+I) business unit, consistent with previous market guidance. Where such information is presented, it is readers of this report to better understand the underlying operations and performance of the Group. Any reference to documents and information included on external websites, including Fletcher Building’s website, are provided for convenience alone and none of the documents or other information on those websites is incorporated by reference in this annual report. An electronic copy of this annual report is available to view on our website www.fletcherbuilding.com The Annual Report is dated 22 August 2018 and is signed on behalf of the board by: clearly described and marked with an appropriate footnote. This allows the
CEO’s Report
Strategy
Our Board
Executive Team
Group Performance
Divisions
Building Products
Distribution
Steel
Concrete
Residential and Development
Construction
Australia
Formica and Roof Tile Group
Business Sustainability
Our People
Our Communities Health and Safety
Environment
Contribution to the NZ Economy
Innovation
Trend Statement
Financial Statements
Independent Auditor’s Report
101 105 110 117 126
Remuneration Report
Sir Ralph Norris Chairman
Governance
Statutory Disclosures Corporate Directory
Bruce Hassall Director
04 Fletcher Building Limited Annual Report 2018
Our Year in Review Strategy
Our Leadership
Divisions
Business Sustainability
Financials and Governance
BACK HOME
Results at a Glance
Chairman's Report
CEO's Report
Results at a Glance
Revenue $9,471m 2017 $9,399m ▲ 1% EBIT – reported $(118)m 2017 $273m Trading cash (excluding B+I) 1 $924m 2017 $635m ▲ 46%
Net earnings/(loss) – reported $(190)m 2017 $94m EBIT (excluding B+I) before significant items 1 $710m 2017 $817m ▼ 13% EBIT % (excluding B+I) before significant items 1 7.5% 2017 8.7% ▼ 1 ppts
ROFE (excluding B+I) 1 12.6% 2017 14.6% ▼ 2 ppts
Capital expenditure $304m 2017 $319m ▼ 5%
Safety TRIFR 2 5.1 2017 6.9 ▼ 26%
Employee engagement 70% 2017 67% ▲ 3 ppts
Customer NPS 3 33 2017 26 ▲ 7 ppts
1 Measures (excluding B+I) before significant items are non-GAAP measures used by management to assess the performance of the business and have been derived from Fletcher Building Limited’s financial statements for the year ended 30 June 2018.
2 Total recordable injury frequency rate. Measured by the total number of recordable injuries per million hours worked. 3 Net Promoter Score is a measure of how satisfied our customers are with our business.
Fletcher Building Limited Annual Report 2018 05
Our Year in Review Strategy
Our Leadership
Divisions
Business Sustainability
Financials and Governance
BACK HOME
Chairman's Report
Results at a Glance
CEO's Report
Chairman’s Report
Dear Shareholders, FY18 was a very challenging year for Fletcher Building, characterised by the deteriorating performance of the Building + Interiors (B+I) business of our Construction division. As I described at our last annual shareholders’ meeting (ASM), we had taken on too many large-scale and complex projects too quickly, in a hot market, and experienced failings within the core capabilities of the business across a range of projects. At the same meeting I announced the appointment of Ross Taylor as chief executive officer (CEO), who then started with the business in November 2017. Ross is a proven performer who has led business turnarounds and improved performance and shareholder returns for businesses that operate in Fletcher Building’s core sectors – including housing, manufacturing and construction. Since his appointment Ross has embedded himself in the business quickly, undertaking further reviews of the B+I business and implementing a comprehensive review of the Group strategy. The B+I review resulted in an additional large provision for losses announced on 14 February 2018. Understanding that shareholders expect accountability from the board for all aspects of the Company’s performance, I thought it was appropriate to announce that I would stand down as chairman no later than the 2018 ASM. This would allow me to first ensure I supported Ross as he led the finalisation of a new strategy for the Company, while also providing an orderly transition of the board. As the Group strategy was progressed, the board and executive undertook a full review of our capital structure, which resulted in the decision to undertake an equity raising. The $750 million entitlement offer was successfully completed in May 2018, and served to strengthen our financial position and allow us to more effectively execute our new Group strategy. On 21 June 2018 a new Group strategy was announced to the market, which focusses Fletcher Building’s operations on the New Zealand and Australian markets, and in particular, its core operations of building products and distribution.
Sir Ralph Norris CHAIRMAN
The theme of this year’s annual report is focus. This is fitting for a year that was completed with the launch of a new, focussed strategy and the announcement of a refreshed board, ready to support Fletcher Building as the new strategy is implemented.
06 Fletcher Building Limited Annual Report 2018
Our Year in Review Strategy
Our Leadership
Divisions
Business Sustainability
Financials and Governance
BACK HOME
Chairman's Report
Results at a Glance
CEO's Report
With this new focus, divestment processes have commenced for Formica and Roof Tile Group.
TOTAL SHAREHOLDER RETURNS In the last 12 months total shareholder returns for Fletcher Building have been disappointing, reflecting the market’s reaction to the downgrades made through the year, and the curtailment of dividend payments Encouragingly, in the last three months of the financial year the Fletcher Building share price increased 20%, as the market reacted positively to our equity raising, debt restructure and the announcement of our new strategy. We believe these initiatives will hold the Company in good stead and, as the new strategy is executed, our improved performance will be reflected in returns to shareholders. It has been a privilege to serve as chairman of the Fletcher Building board and in departing I offer my sincere thanks to our shareholders for their support during my tenure. While the last financial year has been a difficult one for the Company, the underlying performance of the business remains strong and with new leadership and a clear strategy, I am confident Fletcher Building will reach its full potential and deliver the returns our shareholders deserve. Thank you for your support and my best wishes to you, the Company and its people.
It has been a privilege to serve as chairman of the Fletcher Building board and in departing I offer my sincere thanks to our shareholders for their support during my tenure.
The new strategy sets a very clear path for the business, leveraging our strengths to deliver more value for our customers and improved returns for our shareholders. BOARD APPOINTMENTS On 22 June 2018 I announced Bruce Hassall as my successor and the appointment of four new directors, effective 1 September 2018. Barbara Chapman, Rob McDonald, Doug McKay and Cathy Quinn are high calibre individuals, who bring a mix of commercial, operational and governance expertise, which will greatly enhance the experience and diversity of the board. shareholders’ meeting, following nine years of service. In addition, Cecilia Tarrant made the decision to resign from the board effective 1 September 2018, following seven years’ service. I would like to thank Alan and Cecilia for their considerable contributions to Fletcher Building and wish them every success in the future. To finalise the board refresh it is expected that another director from Australia will be appointed in the near term. DIVIDEND Fletcher Building’s dividend policy is to pay dividends in the range of 50%–75% of net earnings before significant items, with consideration of available cash flow in the same period. Given the financial performance of the Company in FY18, and in line with this policy, the board has resolved not to declare a final dividend. The board expects, subject to satisfactory trading performance, to be in a position to resume dividends in respect of FY19. Dr Alan Jackson will retire at the conclusion of the 2018 annual
Sir Ralph Norris
Sir Ralph Norris Chairman
07 Fletcher Building Limited Annual Report 2018
Our Year in Review Strategy
Our Leadership
Divisions
Business Sustainability
Financials and Governance
BACK HOME
CEO's Report
Results at a Glance
Chairman's Report
CEO’s Report
We have strengthened the business by refocussing our Construction division on project completion, undertaking a capital raising that has significantly strengthened our balance sheet, and launching a new Group strategy. As a result, we have started FY19 on strong foundations and with clear priorities. • Refocussing the Construction division A detailed analysis of all B+I projects in February this year resulted in a $486 million increase in our provisioning and ultimately, a total B+I loss of $660 million in FY18. Subsequently we decided to cease bidding in the vertical construction sector to reduce future risk to the business from the current market dynamics. While it was not an easy decision to make, we believe that it was the right course of action to provide more certainty for our shareholders and the business as a whole. We have committed to completing our remaining B+I projects within these new provisions, while refocussing our bidding on lower- risk, higher-margin sectors such as infrastructure and roading. • Review of capital structure and equity raising The increase in B+I provisioning resulted in breaches of our debt covenants and triggered a full review of our capital structure. On 17 April 2018 we announced a 1 for 4.46 accelerated entitlement offer to both institutional and retail investors for $750 million, and a new standby loan facility with three of the banks in our commercial lending syndicate. The offer was very well received by investors, with a 98% acceptance of entitlements by institutional shareholders and a 56% acceptance by retail shareholders. In both cases shareholders who did not take up their entitlements, or were not eligible to do so, received a significant premium to the offer price for the shares sold on their behalf – ensuring all shareholders were treated equitably.
Ross Taylor CEO
I was delighted to join Fletcher Building as CEO in November 2017. While the year has not been without its challenges, we have completed FY18 meeting our earnings guidance, while containing our B+I losses within the provisions we announced to the market in February 2018.
08 Fletcher Building Limited Annual Report 2018
Our Year in Review Strategy
Our Leadership
Divisions
Business Sustainability
Financials and Governance
BACK HOME
CEO's Report
Results at a Glance
Chairman's Report
ongoing implementation of our Protect safety programme and the introduction of a new real-time risk and incident management tool, RADAR. People engagement In FY18 we were pleased to see an increase in our people engagement score from 67% to 70%, which is on-par with our peer group. In future years we will seek to drive engagement above 80%, which will put us in the upper quartile of our industry. Customer satisfaction It was pleasing to see an increase in our Net Promoter Score (NPS) over the last year, which is a measure of how satisfied our customers are with our business, from 26 in 2017 to 33 in 2018. Our aim for future years is to drive to a best-in-class NPS of greater than 55. Sustainability and Innovation We see sustainability and innovation as critical drivers of our performance and through the next financial year we will refine our strategies and targets in both areas, to provide more detailed reporting on our year-on-year progress in the future. OUTLOOK As we outlined at the launch of our new strategy in June 2018, we expect Group earnings to be stable in FY19 and then growing from FY20. In FY19 we will remain focussed on our building materials and distribution businesses; divesting Formica and Roof Tile Group; stabilising the Construction division, by progressively closing out our remaining B+I projects; and embedding our new strategy and structure in Australia, while continuing our turnaround momentum. We expect to provide detailed FY19 guidance at the 2018 annual shareholders’ meeting. I thank our shareholders, people, customers and suppliers for their continued support of Fletcher Building and I look forward to updating you on our progress during FY19 and beyond.
In FY18 we reported total revenues of $9,471 million, a 1% increase on FY17. Group operating earnings before interest and tax (EBIT) excluding B+I and significant items was $710 million, in the top half of our guidance range of $680 million to $720 million. B+I losses were contained to the projected $660 million announced in February 2018. In New Zealand our Residential and Development division performed strongly, growing revenue and earnings and significantly increasing the volume of units sold. We also realised revenue gains in Distribution, Building Products, Concrete and Steel; however, this was offset in certain areas by input cost pressures and the need to invest in our supply chain ahead of planned timelines to meet increased market demand. In Construction, outside B+I, while we saw continued strong earnings growth in Higgins, the timing of major projects in the Infrastructure and South Pacific businesses reduced earnings across the division. In Australia market conditions were mixed. The residential market softened, while the Eastern Seaboard infrastructure pipeline grew. While many of our Australian businesses made progress against their turnaround strategies, particularly Iplex Australia and Tradelink, earnings across the division were impacted by increased input costs, particularly in energy and resins. Internationally, a positive performance by Formica in North America and Asia was offset by difficult trading conditions in Formica Europe and a number of our Roof Tile Group export markets. OUR BALANCED SCORECARD Beyond our financial performance we remain focussed on continuous improvement across our balanced scorecard. Safety The health and safety of our people is paramount, so it was pleasing to see that our total recordable injury frequency rate (TRIFR) reduced from 6.9 in FY17 to 5.1 in FY18 and serious incidents reduced from 33 in FY17 to 21 in FY18. This is an encouraging trend but still too high. We remain focussed on driving TRIFR below five across all our businesses and we have made good headway, with the
As a result of the equity raising, our balance sheet has been strengthened; we have agreed a permanent solution with our banking syndicate in relation to the breaches of the covenants; and we confirmed our US private placement (USPP) debt facilities in line with our target terms, with no redemption required. • Launch of new Group strategy We announced a new Group strategy to the market on 21 June 2018. Our vision is for Fletcher Building to be the undisputed leader in New Zealand and Australian building solutions – with products and distribution at our core. In New Zealand we will grow our building products and distribution businesses and leverage our strong positions in the concrete value chain and residential construction. Alongside this we will return Construction to sound operating performance by completing the remaining B+I projects In Australia our focus is on improving the operating and financial performance of our current businesses. In time, we will seek to grow our market share and expand our portfolio as we have done in New Zealand through targeted acquisitions. As a result of our decision to focus on the New Zealand and Australian markets, it was logical to then begin a process to divest our international businesses, Formica and Roof Tile Group. We expect to complete both of these transactions during FY19. With our strategy decided we then implemented a new operating model, which has reduced corporate costs by $30 million per annum. The new operating model included a new divisional structure and the reorganisation of our individual businesses into seven divisions. It went live on 1 July 2018. FY18 PERFORMANCE During a year of significant change, our divisions and businesses remained focussed on delivering on their commitments. within provisions and profitably growing our infrastructure and roading businesses.
Ross Taylor CEO
09 Fletcher Building Limited Annual Report 2018
Our Year in Review Strategy
Our Leadership
Divisions
Business Sustainability
Financials and Governance
BACK HOME
Strategy
FOCUS
1. Refocus on the core
To support the strategy we have also made changes to how we work and are now very clear on the enablers of successful execution. There are six key enablers of our strategy: 6 1. We will continue to increase the engagement and capability of our people to deliver results for our customers. 2. We have introduced a simpler and leaner decentralised operating model. 3. We will increase our focus on innovation, to achieve continuous improvement and take advantage of global trends. 4. We will seek disciplined performance improvements in safety, sustainability, procurement and our operations. 5. We will direct our capital into strategically important, high-returning businesses that align with our vision and what we’re trying to achieve. 6. We will fill gaps in our
Our new vision is to be the undisputed leader in New Zealand and Australian building solutions with products and distribution at our core. We will defend and grow our New Zealand building products and distribution businesses and leverage our positions in concrete and residential, which are complementary to our core and strong performers in their own right. With only a 15% share of the New Zealand market, 1 there is plenty of opportunity to deliver more from our existing operations, and grow into adjacent sectors. 2. Stabilise Construction We will stabilise the Construction division by closing out our remaining B+I projects within our provisions and then growing our infrastructure and roading businesses. We have already made progress here, with seven of our 16 key loss making B+I projects now completed. 3. Strengthen Australia In Australia, we are targeting a significant improvement in the operating and financial performance of our existing businesses. We have just a 1% share 1 of the Australian market and the majority of our businesses hold number one or two market positions – therefore we have a strong base to build from and we do not believe there are any structural reasons that will prevent us from getting our portfolio performing. In time, we will seek to expand our portfolio as we have done in New Zealand through targeted acquisitions. 4. Exit non-core businesses With a new vision and focus, we will exit non-core businesses and divest Formica and Roof Tile Group.
On 21 June 2018 we announced a new strategy and operating model to our shareholders. Fletcher Building is one of the most diversified building materials companies globally, with operations across multiple geographies, sectors, value chains and product lines. While our performance in New Zealand has been strong across our core building products and distribution businesses, this has been offset by recent losses in the B+I business unit of our Construction division. Improving the performance of Formica has been slow and capital intensive, while our performance in Australia and the progress of our turnaround strategies have been mixed. This has led to share price underperformance versus our peers, which is something other highly diversified companies around the world have experienced. It was clear that continuing to manage multiple platforms across multiple geographies from both a capital and capability perspective was unlikely to be successful. This is why we have introduced a more focussed strategy, which will help Fletcher Building reach its full potential. The first strategic decision we made was to refocus the business on our core markets of New Zealand and Australia and divest Formica and Roof Tile Group. With this decided, our strategy is then defined by four key principles:
portfolio or move into adjacent categories both organically and through acquisition.
1 Sources: FBU Management estimates, Infometrics WPIP, BIS Oxford Economics (Residential, Non- Residential Work Done), ABS (Value of Engineering Work Commenced).
10 Fletcher Building Limited Annual Report 2018
Our Year in Review Strategy
Our Leadership
Divisions
Business Sustainability
Financials and Governance
BACK HOME
In safety, we will drive TRIFR 2 below five across all businesses and pivot our focus onto managing and removing serious and high-potential incidents from our day to day activities. We want to lead in sustainability and will look to embed sustainability measures and outcomes into our products and practices. We want our employees to remain engaged and we will aim to get all businesses performing in the top quartile. We continue to head in the right direction, with our FY18 people engagement score for the total business increasing to 70%. Finally, we will assess everything we do through a customer lens, ensuring our businesses embed transparent and measurable customer service promises that differentiate us from the competition and drive high levels of customer satisfaction. We believe the new Fletcher Building strategy is focussed, clear and uncomplicated and will ultimately better enable us to deliver more value for our shareholders.
Our continuous improvement activities will be moved closer to the businesses to improve accountability, drive manufacturing excellence, reduce procurement costs, enhance customer service and support a culture of innovation. Right across our portfolio we will be looking at how our business can respond to, and lead, global trends in our local markets. Some key trends currently influencing our industries are product innovation (particularly around the sustainability of our products), service and channel innovation (which speaks to how we serve our customers), labour productivity and the global shift to offsite manufacturing, and global supply chains, including lower-cost country sourcing for certain inputs. The strategy will be delivered over three broad stages. In FY19 the focus is on stabilising the go-forward businesses and exiting non-core businesses. Done well this should set us up for a solid FY20, with momentum building so that in FY21 and beyond we achieve above market growth. With clear strategic focus areas in place, and a new operating model to support our aspirations, we are in a stronger position to grow in the coming years. But no business can grow without strong foundations in safety, people engagement, sustainability and customer engagement – and we will remain focussed on growing our performance across these fundamentals.
Our new operating model was announced on 21 June and has been effective since 1 July 2018. It will reduce overheads across the Group by $30 million per annum, empower businesses at the frontline and the new divisional structure aligns businesses to our new strategy. This new structure includes seven divisions, each with its own chief executive who reports to our CEO Ross Taylor. This structure reflects a logical grouping of our businesses in New Zealand and establishes a new stand-alone division in Australia. The Australian division groups all our Australian businesses together for the first time, under one chief executive Dean Fradgley who will be based in the country. This will provide more focus, integration and capability sharing, better positioning us to achieve our turnarounds, identify and pursue cost-efficiencies and take advantage of customer and market opportunities. Formica and Roof Tile Group will continue to operate as a separate division, under the leadership of chief executive Francisco Irazusta, as the assets are prepared for divestment. In terms of innovation, we will have a dual focus on continuous improvement, which is in line with our Fletcher Building value of ‘better every day’, and taking advantage of global trends influencing our markets.
STAGE 1 | FY19 Turnaround / Exit
STAGE 2 | FY20 Solid Performance
STAGE 3 | FY21 – 23 Growth
Ongoing refinement of operating model and governance
Innovating to achieve continuous improvement and take advantage of key macro trends
New Zealand businesses strong and growing
NZ
Construction returned to profit
Construction turnaround complete
Australia turnaround underway
Performance improvement advancing strongly Profitable market share gains in Australia
AU
Formica and Roof Tile Group sold
$
Fill network gaps and enter new adjacencies with M+A 3
2 Total recordable injury frequency rate. Measured by the total number of recordable injuries per million hours worked.
3 Mergers and acquisitions.
11
Fletcher Building Limited Annual Report 2018
Our Year in Review Strategy
Our Leadership
Divisions
Business Sustainability
Financials and Governance
BACK HOME
Our Board
Executive Team
Our Board
SIR RALPH NORRIS FNZIM, HFIITP, KNZM, Hon.DBus (University of New South Wales) Chairman and Independent Non-Executive Director Term of office Appointed director 1 April 2014, last re-elected 2016 annual meeting Board committees
ANTONY CARTER BE (Hons), ME, MPhil (Loughborough)
BRUCE HASSALL BCom, FCA (CAANZ)
Independent Non-Executive Director Term of office Appointed director 1 September 2010, last re-elected 2016 annual meeting Board committees Member of the Audit and Risk Committee, Member of the Nominations Committee and Member of the Remuneration Committee Tony Carter has extensive experience in retail management having served as managing director of Foodstuffs (Auckland) and Foodstuffs (New Zealand), New Zealand’s largest retail organisation. Prior to this he owned and operated several Mitre 10 hardware stores, later serving as a director and chairman of Mitre 10 New Zealand Limited. Tony is the chairman of Air New Zealand Limited and Fisher & Paykel Healthcare Corporation Limited, a director of ANZ Bank New Zealand Limited and Avonhead
Independent Non-Executive Director Term of office
Appointed director 1 March 2017, last elected 2017 annual meeting Board committees
Chairman of the Audit and Risk Committee and Member of the Nominations Committee Bruce Hassall has had a distinguished career with broad and deep commercial and strategic experience and connections across the New Zealand economy, including in the small medium enterprise (SME), commercial, government and export sectors. As former senior partner and chief executive officer of PwC New Zealand he has extensive advisory background and knowledge of the corporate environment. Bruce is the chairman of The Farmers’ Trading Company Limited and Prolife Foods Limited and is a director of Bank of New Zealand and Fonterra Co-operative Group Limited. Bruce Hassall assumes the role of chairman of Fletcher Building Limited effective 1 September 2018.
Chairman of the Nominations Committee Sir Ralph Norris has over 40 years’ business and banking experience, having led large organisations through transformational changes in both New Zealand and Australia. During his career, he has held a number of senior executive roles, including managing director and chief executive officer of Commonwealth Bank of Australia and chief executive officer of Air New Zealand Limited and ASB Bank. Sir Ralph is the chairman of Contact Energy Limited and a director of RANQX Holdings Limited. As previously announced, Sir Ralph Norris will step down from the board effective 1 September 2018.
Mall Limited and a trustee of the Maurice Carter Charitable Trust.
NEW BOARD MEMBERS EFFECTIVE 1 SEPTEMBER 2018
BARBARA CHAPMAN , BCom Barbara Chapman has had an impressive executive career, serving most recently as managing director and chief executive officer of ASB Bank for seven years and previously as group executive Human Resources and group services for the Commonwealth Bank of Australia. Barbara recently joined the boards of Genesis Energy and NZME as an independent director.
ROBERT McDONALD , BCom, FCA Rob McDonald has a strong track record in financial and risk management, developed over two decades with Air New Zealand Limited and most recently as the airline’s chief financial officer. Rob currently serves as an independent director of Contact Energy Limited, taking up the role of chairman on 1 September 2018, and is a director of the Chartered Accountants of Australia and New Zealand. Rob will assume the role of chairman of the audit and risk committee upon appointment as a director of Fletcher Building.
DOUGLAS McKAY , BA, ONZM, CMinstD Doug McKay has considerable business leadership and commercial experience, as the former chief executive of major manufacturing and distribution businesses in New Zealand and Australia, such as Lion Nathan Limited, Carter Holt Harvey Limited, Goodman Fielder Limited, Sealord and Independent Liquor. As chief executive of Auckland Council, he led the amalgamation of eight territorial authorities into the one
12 Fletcher Building Limited Annual Report 2018
Our Year in Review Strategy
Our Leadership
Divisions
Business Sustainability
Financials and Governance
BACK HOME
Our Board
Executive Team
DR ALAN JACKSON BEng (Hons), PhD (Auckland),
CECILIA TARRANT BA, LLB (Hons), LLM (Berkeley)
STEVE VAMOS BE (Hons)
MBA (IMD Management Institute), F Eng NZ Independent Non-Executive Director Term of office Appointed director 1 September 2009, last re-elected 2016 annual meeting Board committees Chairman of the Remuneration Committee, Member of the Nominations Committee and Member of the Safety, Health, Environment and Sustainability Committee Dr Alan Jackson has over 35 years’ international business experience across a wide spectrum of industries and disciplines. He has worked across a range of industries, construction sectors. Alan is the chairman of New Zealand Thoroughbred Racing Inc. and a director of Delegat Group Limited and Aurora Vineyard Limited. He has served as managing partner and subsequently chairman of The Boston Consulting Group Australasia and on the global executive committee of The Boston Consulting Group and has also chaired Housing Corporation of New Zealand. Dr Alan Jackson retires at the conclusion of the 2018 annual shareholders’ meeting following nine years’ service. including the resources, diversified industrials, building products and
Independent Non-Executive Director Term of office Appointed director 10 October 2011, last re-elected 2017 annual meeting Board committees Chairman of the Safety, Health, Environment and Sustainability Committee, Member of the Audit and Risk Committee and Member of the Nominations Committee Cecilia Tarrant is a professional company director. She has over 20 years’ experience in international banking and finance, having worked as a lawyer and an investment banker in the USA and Europe. Cecilia is the chairman of the Government Superannuation Fund Authority, a director of Annuitas Management Limited, Payments NZ Limited and Seeka Limited and a trustee of The University of Auckland Foundation. She previously held a number of senior management positions with Credit Suisse First Boston and Morgan Stanley in New York and London. Cecilia Tarrant resigns from the board effective 1 September 2018 following seven years’ service. CATHY QUINN , LLB, ONZM Cathy Quinn is one of New Zealand’s foremost commercial and corporate lawyers. She leads the mergers and acquisitions and private equity teams and the China practice at MinterEllisonRuddWatts, and served as chairman of the firm for eight years. Cathy is currently a director of Tourism Holdings Limited, and a board member of New Zealand Treasury and the New Zealand China Council.
Independent Non-Executive Director Term of office
Appointed director 6 July 2015, last elected 2015 annual meeting Board committees
Member of the Audit and Risk Committee, Member of the Nominations Committee and Member of the Remuneration Committee Steve Vamos has more than 30 years’ experience in the information technology, internet and online media industries. He is the chief executive officer of Xero Limited, a global online platform providing accounting software for businesses and their advisors. Steve is a member of the Advisory Board of the University of Technology Sydney Business School, as well as a director of Telstra Corporation Limited (although will retire from the Telstra board on 16 October 2018). He has held senior management roles at IBM, Apple Computers, ninemsn in Australia and Microsoft Corporation in Australia and the USA.
‘super city’ it is today. He is the chair of the Bank of New Zealand and Eden Park Trust and serves as an independent director on the boards of Genesis Energy, IAG New Zealand and National Australia Bank.
13 Fletcher Building Limited Annual Report 2018
Our Year in Review Strategy
Our Leadership
Divisions
Business Sustainability
Financials and Governance
BACK HOME
Executive Team
Our Board
Executive Team
ROSS TAYLOR
Chief Executive Officer
Ross Taylor joined Fletcher Building as CEO on 22 November 2017. Previously, Ross was CEO of UGL, an international engineering, services, construction and product manufacturing business, operating across the rail, transport and technology systems, power, resources, water and defence sectors, and headquartered in Australia. Prior to this he was managing director and CEO of Tenix, a privately held engineering and construction services company and held senior leadership roles at Lendlease across a 23-year period. Ross has proven experience leading business turnarounds and improving performance and shareholder returns and has direct experience across a range of Fletcher Building’s core sectors, including housing, manufacturing and construction. Ross holds a Bachelor of Engineering from the University of Queensland.
A simpler, leaner decentralised operating model was introduced on 1 July 2018. This included a new divisional structure that aligned our individual businesses to our new strategic priorities. These changes resulted in a number of new appointments to the Fletcher Building executive team, which were also effective from 1 July 2018. The executive team is comprised of proven performers with deep experience in their industries and functional disciplines and will provide strong leadership as we progress our new strategy. FOCUS
BEVAN MCKENZIE
Chief Financial Officer
Bevan McKenzie was appointed chief financial officer in November 2016, having joined Fletcher Building as general manager of Group Strategy in January 2014. Bevan has led several significant portfolio changes, including completion of the Higgins acquisition. Prior to this, he worked for the Boston Consulting Group in Australia and New Zealand and for Roquette Frères in France. At Roquette Frères, Bevan’s roles included head of mergers and acquisitions and responsibility for the rest-of-world commercial team. Bevan holds a Masters of Business Administration from the International Institute for Management Development in Lausanne, Switzerland and a Master of Arts (Hons) in Political Science from the University of Auckland.
Our plan is clear, it has improved our focus as a business, and we are now putting it into action.
Ross Taylor
14 Fletcher Building Limited Annual Report 2018
Our Year in Review Strategy
Our Leadership
Divisions
Business Sustainability
Financials and Governance
BACK HOME
Executive Team
Our Board
CLAIRE CARROLL
CHARLES BOLT
DAVID THOMAS
Chief People and Communications Officer
Group General Counsel and Company Secretary
Chief Executive Building Products
Claire Carroll was appointed chief people and communications officer in July 2018. Claire joined Fletcher Building in 2013 as the general manager of Human Resources (HR) for the Construction division and was general manager People and Performance for the Building Products division between 2015 and 2017. She has previously held head of HR positions for the Product and Technology and Wholesale divisions of Spark New Zealand, the National Bank of New Zealand and Deutsche Bank and NatWest Markets in the United Kingdom. Claire holds a Bachelor of Commerce from The University of Auckland.
Charles Bolt was appointed to his current role in October 2013, having joined Fletcher Building as corporate legal counsel in 2002. He has been closely involved in the Company’s corporate initiatives in that time, in particular major acquisitions and divestments, and the establishment of the global employee share schemes. He was also instrumental in the establishment of the Fletcher Building Legal and Fletcher Building Property teams. Prior to this, he spent eight years at Bell Gully working on mergers and acquisitions, capital markets and managed funds matters. Charles holds a Bachelor of Laws from Victoria University of Wellington and has completed the Senior Executive Programme at Columbia University in New York.
David Thomas was appointed the interim chief executive of the Building Products division in 2017. He has over 40 years’ experience in the building industry and has led several key business units within Fletcher Building. Most recently he was general manager of Winstone Wallboards, a position he held for 17 years, where he consistently delivered strong business results and maintained high levels of engagement with his people and customers. David is currently on the board of directors of Watercare, is a director of Altus New Zealand Limited and chairman of Ngati Whakaue Tribal Lands Incorporated. As announced on 16 July 2018, David will return to his role as general manager Winstone Wallboards effective November 2018.
JOHN BELL
WENDI CROFT
BRUCE McEWEN
Global Head Environment Health and Safety (EHS) Wendi Croft was appointed the interim Global Head Environment Health and Safety in July 2018, having joined Fletcher Building at the beginning of 2018 as EHS global programmes and governance manager. Wendi has nearly 20 years’ experience in EHS across a variety of industries, including manufacturing, transport, construction and utilities. Prior to Fletcher Building, Wendi held director and global general manager-level roles for Compac and Massey University, in addition to 15 years with AECOM in North America and Asia Pacific. Wendi holds a Bachelor of Science from the University of British Columbia and is a Certified Member of the Board of Canadian Registered Safety Professionals.
Chief Executive Distribution
Chief Information Officer
Bruce McEwen was appointed to chief executive of the Distribution division in July 2018. He joined the Company in 2014 as general manager of Strategy and Commercial Distribution and was part of the team that established the former Distribution division. He became general manager of PlaceMakers in 2015. Between 2009 and 2013, he was the chief financial officer of Coca-Cola Amatil New Zealand responsible for New Zealand and Fiji; and prior to this the chief operating officer for Bendon, during which time he transformed the domestic business into a global export brand. He has also worked for Compaq, Hewlett Packard and Unisys. Bruce holds a Bachelor of Commerce from the University of Canterbury, is a Chartered Accountant and has completed an Advanced Management Course at Babson College in the USA.
John Bell joined Fletcher Building as chief information officer in 2015. John has more than 30 years’ business consulting experience and has held a variety of leadership roles and worked in Canada, Southeast Asia, Australia and New Zealand across both the private and public sectors, including leading the Technology Advisory practice at Deloitte Consulting in Auckland. Since joining Fletcher Building, John has driven significant transformation of Group Technology bringing together 20 teams into a shared service and improving service delivery across 900 locations. John holds a Bachelor in Business Studies and Information Systems and a Diploma of Business Administration, both from Massey University. He is a Chartered Accountant and a member of both Chartered Accountants ANZ and the Institute of Management Consultants.
15 Fletcher Building Limited Annual Report 2018
Our Year in Review Strategy
Our Leadership
Divisions
Business Sustainability
Financials and Governance
BACK HOME
Executive Team
Our Board
Executive Team continued
HAMISH McBEATH
IAN JONES
STEVE EVANS
Chief Executive Steel
Chief Executive Concrete
Chief Executive Residential and Development
Hamish Mcbeath was appointed chief executive of the Steel division in July 2018. He joined Fletcher Building in May 2002, rising from shift manager to general manager of Pacific Coilcoaters in November 2010. He has held several senior roles within the Company since then and was chairman of Sims Pacific Metals, a joint venture between Fletcher Building and Sims Metal Management Group sold in June 2018. Hamish has driven significant growth for Fletcher Steel, with the group almost doubling in size in the past four years. Hamish holds a Master of Business Administration and a Post Graduate Diploma of Operations Management from the University of Auckland and has completed the Mount Eliza Advanced Mergers and Acquisitions Programme.
Ian Jones was appointed chief executive of the Concrete division in July 2018. His experience within the Company totals 27 years, including roles as general manager of Golden Bay Cement (GBC) and Winstone Aggregates and general manager and manufacturing manager for Pacific Steel. His accomplishments include resetting GBC’s distribution model (including a $90 million investment in shipping, storage and South Island distribution), integrating Higgins quarries into Winstone Aggregates, and successfully divesting Pacific Steel to enable the development of James Fletcher Drive.
Steve Evans joined Fletcher Building in 2013 as the chief operating officer for housing in the Construction division and was appointed chief executive Residential and Land Development in 2015. Prior to Fletcher Building, Steve spent more than 12 years in director roles in the development industry for Heron International and First Base. He has worked on landmark projects, including Heron Tower and the Heron, Stratford Olympic Village, East Greenwich Hospital and Old London Park Hotel. His earlier career with Lendlease spanned Australia, Singapore, Taiwan, China and the UK, where he worked on the construction of major residential and commercial developments. Steve was one of the founding directors of an urban regeneration business in London that worked with Government to address affordable, state and key worker housing needs and is leading the development of a new high-tech, fast house-building panelisation factory in Auckland.
Ian has Diplomas in Business Management and Operations Management from the University of Auckland.
New Organisational Structure
CEO – Ross Taylor
Building Products David Thomas 1
Residential and Development
Australia Dean Fradgley
Distribution Bruce McEwen
Steel Hamish Mcbeath
Concrete Ian Jones
Construction Michele Kernahan Building + Interiors Infrastructure Brian Perry Civil Higgins South Pacific
Steve Evans
Laminex AU Iplex AU Fletcher Insulation Tradelink Tasman Sinkware Stramit Rocla
Winstone Wallboards Laminex NZ Tasman Insulation Humes Iplex NZ CSP Pacific Altus (JV)
Pacific Coilcoaters Easysteel Dimond Roofing and Dimond Structural Fletcher Reinforcing Fletcher Wire Products
Winstone Aggregates Golden Bay Cement Firth
Residential Land Development Property Innovation Panelisation
PlaceMakers Mico
Forman Building Systems Snappy
16 Fletcher Building Limited Annual Report 2018
Our Year in Review Strategy
Our Leadership
Divisions
Business Sustainability
Financials and Governance
BACK HOME
Executive Team
Our Board
MICHELE KERNAHAN
DEAN FRADGLEY
FRANCISCO IRAZUSTA
Chief Executive Construction
Chief Executive Australia
Chief Executive Formica and Roof Tile Group
Michele Kernahan joined Fletcher Building in 1998 and was appointed chief executive of the Construction division in 2017. Michele has previously held several general management roles in Fletcher Building, including Laminex Australia, GBC and Fletcher Earthquake Recovery (EQR), where she led the team managing the rebuild efforts in Christchurch. Michele has a Master of Business Administration from the University of Canterbury and has graduated from leadership and management programmes at the Wharton Business School, Stanford University Graduate School of Business and Harvard Business School. As announced on 16 July 2018, Peter Reidy has been appointed chief executive Construction and Michele Kernahan will move into the role of chief executive Building Products, effective November 2018.
Dean Fradgley was appointed chief executive of the Australian division in July 2018. He joined Fletcher Building in 2013 as chief executive New Zealand Distribution and became chief executive of the Trans Tasman Distribution division in 2015. Prior to joining Fletcher Building, he worked for Wolseley UK in several senior positions, including managing director of its commercial and industrial division and prior to that as commercial director. Dean has also worked with a number of blue chip companies, including J Sainsbury, Kingfisher and as Head of Trade for B&Q. Dean has completed studies in Business Management and Strategy through IMD in Switzerland.
Francisco Irazusta joined Fletcher Building in March 2015 as the chief executive of the Light Building Products division and became chief executive of the International division in March 2016. He was Fletcher Building interim chief executive officer from July to November 2017. Francisco has an impressive background, bringing together broad experience across manufacturing, supply chain and sales and marketing, gained from a range of senior leadership roles for global building products companies in North America, Asia, Africa, Middle East and Europe. Francisco holds a Master of Science, Industrial Engineering and Innovation and a Bachelor of Science in Ceramic Engineering, both from the State University of New York.
Formica and Roof Tile Group Francisco Irazusta Formica NA Formica Asia Formica EU Homapal Roof Tile Group
Finance Bevan McKenzie
People Claire Carroll
Technology John Bell
EHS Wendi Croft 1
Legal Charles Bolt
Operating Divisions
Exits
Supporting Functions
1 Interim position
17
Fletcher Building Limited Annual Report 2018
Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32 Page 33 Page 34 Page 35 Page 36 Page 37 Page 38 Page 39 Page 40 Page 41 Page 42 Page 43 Page 44 Page 45 Page 46 Page 47 Page 48 Page 49 Page 50 Page 51 Page 52 Page 53 Page 54 Page 55 Page 56 Page 57 Page 58 Page 59 Page 60 Page 61 Page 62 Page 63 Page 64 Page 65 Page 66 Page 67 Page 68 Page 69 Page 70 Page 71 Page 72 Page 73 Page 74 Page 75 Page 76 Page 77 Page 78 Page 79 Page 80 Page 81 Page 82 Page 83 Page 84 Page 85 Page 86 Page 87 Page 88 Page 89 Page 90 Page 91 Page 92 Page 93 Page 94 Page 95 Page 96 Page 97 Page 98 Page 99 Page 100 Page 101 Page 102 Page 103 Page 104 Page 105 Page 106 Page 107 Page 108 Page 109 Page 110 Page 111 Page 112 Page 113 Page 114 Page 115 Page 116 Page 117 Page 118 Page 119 Page 120 Page 121 Page 122 Page 123 Page 124 Page 125 Page 126 Page 127 Page 128 Page 129 Page 130Made with FlippingBook - professional solution for displaying marketing and sales documents online