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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
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