Scarred Fletcher chairman Sir Ralph Norris expected a shareholder 'firing squad'

Wednesday, 25 October 2017

Fletcher Chairman Ralph Norris says the company's 'bad experiences' have taught him to not take people's views at face value.

Fletcher Building chairman Sir Ralph Norris says the construction company's financial state is one of the worst situations he has faced in his career, but he feels obliged to fix it.

Following the company's annual shareholder meeting in Auckland on Wednesday, Norris said he turned up expecting a 'firing squad' of upset shareholders, but he left feeling 'not quite as bad' as he anticipated.

But the company's $150 million profit downgrade and multi-million-dollar blow-out of costs in two major building projects had left him scarred, he said.

Norris says he turned up to this year's annual shareholder meeting at the Auckland War Memorial Museum expecting a 'firing squad'.

'You end up with a situation where you have suffered a few slings and arrows… This was a situation where we have had a number of bad experiences which has created a lot of scar tissue, for all of us.'

**READ MORE:

Fletcher Building Bruce Sheppard says the company's financial woes are not Sir Ralph Norris' fault and that Norris is the only one who can turn the company around.

* Fletcher Building says sorry, directors take a pay cut as it warns of $160 million hit this year

* Fletcher's former chief executive defended over construction losses

Ralph Norris took over Fletcher chairman role from Sir Ralph Waters (right) in October 2014.

* Fletcher Buildings expects earnings could be up to $150m less than forecast

* Sir Ralph Norris new Fletcher chairman**

When asked if the board's decision on Tuesday to cut director fees by 20 per cent was strategic to reduce heat from shareholders, Norris said it was not.

'We made the decision yesterday, we only got the KPMG report yesterday. We then became aware of the issues and problems that we had,' Norris said.

'There is obviously questions about director remuneration, that maybe the board should set an example by taking a cut, which we have.'

Norris issued an apology to shareholders ahead of the meeting as the company simultaneously announced a KPMG review forecasting $160m loss to its building and interior division for the current financial year to June 2018.

A stone-faced Norris started the meeting with the same apology, noting the Fletcher board's acceptance of responsibility.

He said the B&I division had caused the company 'a whole lot of grief'.

He assured a questioning shareholder that the $160m forecast loss included any additional losses to come in 2019 given that the troubled SkyCity International Convention Centre was not due to be completed until that year.

When asked if he was reconsidering his role as chairman of the company, Norris said: 'It is very easy for me to say, as chairman of the company, that I should pass this onto some body else. But there is no doubt I have an obligation to actually fix this'.

Shareholder advocate Bruce Sheppard, who attended the meeting dressed as a priest wanting a 'confession' from Fletcher's directors, said Norris was the 'only agent to fix this'.

'It is not his fault.'

During the meeting, Norris went on to say that 'mistakes are the best educators'.

He told Stuff that, 'You learn a lot more from errors and admissions than you do from getting things right'.

Norris said the past nine months at Fletcher Building had taught him to 'not necessarily take people's views at face value'.

'There are a lot of searching questions that have been asked of management who now no longer work for the organisation, who should have been on top of many of the issues that have led to what has actually happened.'

Former Fletcher Building chief executive Mark Adamson left in July, shortly after the company's cost blow-outs were made public.

Before Adamson left, he said the former head of the B&I business Greg Pritchard was 'released' in September last year.

Ross Taylor was announced the new chief executive on Wednesday. Taylor will start in the role late November.

Looking over his business career, Norris said he had 'never had a situation as bad as this'.

He compared Fletchers' situation to the challenge he faced as chief executive of Air New Zealand in the early 2000s.

He said the airline 'nearly failed' then and 'had to be resuscitated', but that Fletcher's did not need the same treatment.

'The bulk of the company is in great shape… The company is very stable.'

Norris said he had given more attention to his Fletcher's role in the past nine months than he had to any other board position he has held previously.

'I would like to say that the board at Fletcher is committed to improving the company's performance. We are very much aware that we need to be transparent and I hope that people understand that we are people with integrity.'