Investigation finds Fletcher Building kept investors informed through horror year

Thursday, 18 January 2018

Fletcher Building boss Mark Adamson left the company as it was revealed the cost of two projects had blown out.

An NZX investigation into Fletcher Building has determined that it did not withhold from investors information that would affect its share price.

NZX Regulation started investigating after the company disclosed material forecast earnings downgrades in March and July last year.

Fletcher Building downgraded its profit expectations twice last year.

In March, it said its profit for the year could be up to $150 million less than had been indicated just three weeks earlier as the cost of two projects blew out.

One analyst called it a 'serial underperformer'.

In July, chief executive Mark Adamson left as delays were confirmed to the International Convention Centre in Auckland.

The company's share price fell as it said its operating profit for the year to the end of June would be another $100m less than forecast in March.

The investigation by the stock exchange operator focused on whether Fletcher Building breached its continuous disclosure obligations under the NZX Main Board Listing Rules.

These rules require that listed companies report information as they receive it so that investors can make informed decisions, and all interested parties have access to the same information.

In this case, the NZX wanted to know what information was material to Fletcher Building, and when the company's senior executives and directors became aware of it.

It also considered the market rumour and speculation during the period, alleging that people within the building and construction industry were aware of issues with the performance of certain projects, and losses arising from those projects, prior to the downgrade.

The NZX considered whether that might have triggered the continuous disclosure obligation, too – but said there was no evidence the directors were in possession of material information as a result of those rumours.

As a result, the NZX investigation determined that Fletcher Building did not breach its obligations.

It released the information promptly and without delay.

Fletcher Building issued a statement in which it said it welcomed the findings.

- Comments on this story have been closed