SkyCity convention centre fire: Fletcher Building board to front shareholders

Fletcher Building shareholders will be looking for an update on the convention centre fire among other issues at the company's annual meeting in Auckland later this week.

Shareholders are due to meet this Thursday at Eden Park where chairman Bruce Hassall and chief executive Ross Taylor will give presentations.

"It's reasonable to expect some indications," said Harbour Asset Management's Shane Solly of a fire update.

READ MORE:
• Premium - SkyCity convention centre fire: Roof cladding details hit speculation over 'apprentice and the blowtorch'
• SkyCity fire: Video reveals terrifying scene inside convention centre
• SkyCity Convention Centre fire: Exclusive first photo reveals damage inside
• SkyCity Convention Centre fire: Who pays for the damage to $700m construction site?

But the success of Taylor's five-year plan launched last winter and other aspects would also be of interest, he said.

"Some of the issues that investors may be looking at include progress on restructuring, potential asset acquisitions and sales, mixed activity levels and decarbonisation," Solly said.

Grant Swanepoel, head of equities research and institutional equities at Craigs Investment Partners, doubts any update on the fire will be provided, saying it was too soon.

"February," he said when asked when Fletcher would say more about the fire.

"They might ask but they should get the same response as in the release," Swanepoel said, referring to Fletcher statements to the NZX earlier this month on the fire. "It's too early to tell."

Fletcher struck a low $400 million to $500m contract to build the convention centre in Auckland and even before last month's disastrous blaze it estimated it would cost nearly double that, at an eye-watering $887m, to complete the contract.

SkyCity has always referred to the project as having a $703m projected end value - a precise figure, but still $184m short of what Fletcher itself was projecting early last year it would cost to build.

The project loss numbers were in key data released to the NZX at Fletcher's half-year results on February 14, 2018.

Those numbers hold relevance still today because they were referred to earlier this month when Fletcher gave a post-fire NZICC update to the NZX, saying very little more about the damage to the site it has taken back from fire and emergency services.

"Fletcher Building is working to determine the impact of the NZICC fire on the project's delivery timeline and costs, the timing of insurance proceeds and project cash flows, and any potential impact on the Construction provisions announced in February 2018. The company confirms that based on information currently available it remains within these provisions," Fletcher said on November 6.

The loss the builder faced on that disastrous job was taken into the accounts as a loss-making project in Fletcher's Building + Interiors Division. The NZICC was included in 14 loss-making or on-watch projects.

Asked now about those numbers, a spokesperson said: "I can't comment beyond that statement."

Fletcher racked up nearly $1b of losses on major construction contracts over a two-year period. It said it would no longer do high-rise construction but has since said that it might re-enter that sector.

By last February, Fletcher was recording an expected $400m-plus loss on the NZICC. It put the number precisely at $410m.

Yet it still had a further $181m of the value of trades to let - quite some way to go before it could know the true extent of its loss at the end of the contract.

It will not now be till February next year that Fletcher will announce its half-year trading results for the six months to December 31, 2019.

Whether that will contain further loss provisioning on the NZICC project remains unknown.

On November 12, SkyCity announced long-standing director Richard Didsbury would retire from its board effective immediately. Didsbury, of Matakana, has overseen the convention centre and Horizon Hotel projects as chairman of the board's NZICC committee.

But he wanted to avoid a conflict of interest in his role as chairman of the Northern Express Group, working on the northern motorway extension from Pūhoi to Warkworth, where Fletcher has a contract.

"The project will extend the four-lane Northern Motorway (SH1) 18.5km from the Johnstone's Hill Tunnels to just north of Warkworth – the first stage of the Ara Tūhono – Pūhoi to Wellsford project. NX2's equity investors are the Accident Compensation Corporation and Public Infrastructure Partners II LP (managed by Morrison & Co PIP), ACCIONA Concesiones and Fletcher Building," a SkyCity statement said.