Corporate heavyweight Sir Ralph Norris said Fletcher Building investors expect the board to be accountable and so announced his resignation as chairman today.
But he also revealed why Fletcher recorded losses of nearly $1 billion from its disastrous Buildings + Interiors division, telling of a combination of factors resulting in $292m losses for the June 30, 2017 year and $660m for the June 30, 2018 year.
"It's not a situation where's there a single point or thing. There are a number of issues that conspired. One of the issues is the information flows through to the board were not as fulsome as they possibly could have been," Norris told the 10am press conference today.
Changes in the contracting environment and risks to the division were a significant factor, he said.
"We have also had a situation where we have had a significant building boom," he said, adding that this was often the most dangerous time for a building business, "worse than a bust because it puts stress on subcontractors, services and the like.
"In calculating the contracts, there was a significant difference between the professional quantity surveyor firms' calculations on what it cost to complete the projects and some of those numbers moved by more than 100 per cent."
Norris added: "There are significant parts of this business that have under-performed and were acquired prior to my arrival that have been questionable."
Asked about the NZ International Convention Centre contract where Fletcher today projected an enormous $410m loss, Norris said: "We will be pursuing all our rights in regard to that particular contract. This is obviously a commercial situation. We will be taking any commercial action necessary."
Asked about when he decided to step down, Norris said: "I have been thinking about this for a bit of time. I decided prior to Christmas I would step down in 2019. Over the weekend, I came to the conclusion I should step down. I had the full support of my board and management as to whether I should step down."
Asked how he felt about resigning, Norris said he was pleased that the company had a strong management team in place "significantly better than it was".
In a written statement, Norris said more.
"The Fletcher Building board understands the disappointment of our shareholders regarding the latest provisioning in the Building + Interiors (B+I) business," Norris said after the company announced $660 million in total losses today.
The result meant that no interim dividend payment would be paid to shareholders for the half-year 2018.
Norris said he was trusted to act in the best interests of the company shareholders.
"I also know shareholders expect accountability from the board for all aspects of the company's performance," he said.
"In this context, I wish to announce that I will stand down as chairman."
Norris has long been aware of trouble brewing at Fletcher and made it a key objective to steer the business through this difficulty.
"I said at our last annual shareholders meeting in October that I felt a sense of obligation to see the business through these challenging circumstances and to complete the CEO transition and board refresh I had commenced," he said.
"We have appointed a new CEO, Ross Taylor, who is now ably leading the business and three new directors and a new chairman will be appointed in the coming months."
Norris said he would leave the business no later than the 2018 annual shareholders meeting.
The resignation brings an end to another role in what has been an illustrious corporate career for Norris.
Ralph Norris career timeline:
• Managing director of ASB (1992-2001)
• Chief executive of Air New Zealand (2002-2005)
• Chief executive of Commonwealth Bank of Australia (2005-2011)
• Board director at Fonterra (2012-2015)
• Chairman of Fletcher Building (2014-2018)
• Chairman at Contact Energy (2015-now)
Awards and honours
• Distinguished Companion of the New Zealand Order of Merit (2006)
• Knight Companion of the New Zealand Order of Merit (2009)
• Chief Executive of the year, 1997 and 2004
• Executive of the Decade in 2010