Fletcher Building Limited (FBU) Earnings Call Transcript & Summary

[Foreign Language] I am Bruce Hassall, Chair of your company. Good afternoon from New Zealand, ladies and gentlemen. On behalf of the Board, it's my pleasure to welcome you to Fletcher Building's 2020 Annual Shareholders Meeting. Today's meeting is being held online. Part of our commitment to shareholders is making our meetings as accessible as possible regardless of physical location. This provides an opportunity for wider participation and engagement. All attendees can watch a live webcast of the meeting. In addition, shareholders and proxies have the ability to ask questions and submit votes. Questions can be submitted at any time, and I encourage you to do so as early as you would like and at any time. If you are a shareholder, you will be able to see a speech bubble icon on your screen. To ask a question, press that icon. This will open a new screen. At the bottom of that screen, there is a section for you to type your question. Once you have finished typing, please hit the arrow symbol to send it. Please note that while you can submit questions from now on, I will not address them until the relevant time in the meeting. Please also note that your questions may be moderated. So I -- so if I receive multiple questions on 1 topic, they can be amalgamated together to provide a better meeting for everyone. And I encourage you to start submitting your questions now. Voting today will be conducted by way of a poll on all items of business. In order to provide you with enough time to vote and allow you to vote at any time, I will shortly open voting for all resolutions. When I do so, if you are eligible to vote at this meeting, a new polling icon will appear on your screen. Selecting this icon will bring up the list of resolutions and present you with voting options. To cast your vote, simply select the option you prefer. There is no need to hit a submit or enter button as the vote is automatically recorded. You do, however, have the ability to change your vote up until the time I declare voting closed. I now declare voting open on all items of business. The polling icon will soon appear on the screen of shareholders. Please submit your votes at any time. I will give you a warning before I move to close voting. I'll now introduce my fellow directors. On my right, your left, we have Doug McKay and Barbara Chapman; on my left, we have Cathy Quinn and Rob McDonald; Martin Brydon joins us via video conference from Perth; and Peter Crowley from our business office in [ Burnt Hill ]. And you'll see Ross Taylor also joins us via video conference from our Sydney office. As a result of the pandemic, Ross is balancing his time between our operations in Australia and New Zealand while also observing the necessary quarantine protocols, which he loves. Back here at Auckland, Group General Counsel and Company Secretary, Andrew Clarke, is seated to my right. We also have in attendance members of our leadership team, our lawyers, Bell Gully, and our auditors, EY. Moving on to the agenda for today's meeting. We'll commence with addresses from me as Chair and Ross Taylor as CEO. We'll then move on to the resolutions that are outlined in the notice of meeting. The resolutions will be decided by poll. Questions on a resolution will be dealt with before they are voted on. At the conclusion of the formal business, we'll then take the opportunity for your online questions. We reserve the right not to address questions that, in my opinion, are not reasonable in the context of this meeting or that repeat previous questions. Thank you also to the shareholders who have submitted their questions in advance. Ross and I will speak to the more frequently asked ones in our addresses. There's no doubt that 2020 has been an extraordinary year. As with all organizations and industries, the COVID-19 pandemic presented some unique challenges for Fletcher Building, which we comprehensively and effectively dealt with. On Slide 8, we highlighted the 3 areas we've been focused on to deal with the impacts of the COVID-19 pandemic. Firstly, we needed to act swiftly to respond to a full lockdown in New Zealand and partial business restrictions in Australia. We then needed to get the business positioned for the market uncertainty of FY '21 and beyond. And finally, we wanted to move quickly on these activities to ensure we remain focused on our overall plans. I'm extremely proud of our Board and management and our people as we navigated the challenges. We work very closely and at a rapid tempo to ensure this was managed well. I want to take this opportunity to say thank you to the people of Fletcher Building for everything they've done to guide our business through this period and to ensure that we are strongly positioned to play a key role in the economic recovery. Slide 9 highlights our immediate response to the COVID-19 pandemic. Our focus was on 4 key areas: ensuring everything we did was done safely; delivering strong customer performance and support; looking after our people; and remaining acutely focused on costs, cash and our balance sheet. Through March and April, we needed to respond to a full lockdown in New Zealand, safely shutting down over 400 locations across the country which was no small feat. And we recorded virtually no revenue during this time. We also adhered to the necessary social distancing and other safety requirements through the partial business restrictions in Australia. Importantly, we maintained our focus on customer service and performance. To support the health and well-being of our people through this time, we quickly put in place a support hub app, implemented multiple channels of communication, and we established a financial hardship fund. We also put in place a bridging pay program for some 90% of New Zealand employees during lockdown. The timing of the COVID shutdown coincided with what is traditionally our busiest and most profitable quarter and, in particular, could not have been worse from the perspective of our construction business. It occurred in the middle of the earthworks season on the major roading projects and just days before the planned opening of Commercial Bay. The impacts of these factors were the main driver of $150 million increased provisions across our legacy infrastructure and B+I projects. While I appreciate the need for additional provisioning is disappointing, I believe FCC is now increasingly well positioned to focus on its future, which Ross will cover off in his presentation shortly. While all these actions were unable to prevent a material earnings impact, we had a $200 million reduction in earnings in quarter 4 and incurred significant losses for the year overall. Our cash and cost management focus resulted in strong operating cash flows, and we've preserved our strong balance sheet position. Then as we looked ahead, we had to take decisive action to ensure we are effectively set up for FY '21 and beyond. This was in view of the overall uncertainty while still maintaining a focus on our plans for Fletcher Building. We made some tough but necessary decisions to reduce our cost base, which included a reduction in property footprint, rationalization across our supply chain and logistics and procurement activities. Regrettably, our workforce was reorganized to match the expected market uncertainty. These were not decisions that were taken lightly. In doing this, we understand that it had a large impact on many people, and we put in place a range of actions to provide as much assistance as we could. The cost of implementing this, combined with the impairments to the Rocla business in Australia that we are divesting and the repayment of some of our USPP debt resulted in $276 million of significant items during FY '20. We expect a further $90 million in FY '21 as final cost-out actions are completed. The Board also exercised discretion in applying 30% pay reductions for Board and CEO for 6 months. Our exec team and our General Managers pay was reduced by 30% and 15%, respectively, from 25th of March to 17th of June and no bonuses were paid under our STI scheme in FY '20. We also reduced planned CapEx spend, canceled our share buyback program and we also proactively renegotiated our debt covenants to preserve liquidity. Unfortunately for our shareholders, we did not pay a dividend. Clearly, we left no stone unturned. I'd like to take the opportunity now to comment briefly on the situation with the land in Ihumatao, and I know this has been a topic of interest for many of our shareholders. We have continued to take assurances from the government that a solution that is acceptable to all parties is close. The delay to its resolution was one of the inevitable COVID-19 impacts and we are confident the government with us will bring this to a conclusion for all parties in the very near future. Slide 11 summarizes our financial results, which were materially impacted by COVID-19 in FY '20. Revenue for the year was $7.3 billion; EBIT before significant items was $160 million; and we made a net loss of $196 million. Pleasingly, cash flow from operations were well up on last year and were a solid $410 million. Overall, despite the earnings impact of COVID, we ended the year with a strong balance sheet which is testament to the efforts of Board and management going into the pandemic, but also in effectively managing the crisis. Liquidity was maintained at $1.6 billion. Our net debt was only $500 million, resulting in a 0.9x leverage ratio, remaining below the target range. As I've mentioned, the Board paid no dividends for the FY '20 year due to the issues that resulted from COVID-19 and the ongoing uncertain outlook. On Slide 12, I'll provide an update on some of the key nonfinancial metrics on our balanced scorecard. Starting from the top left, we have continued to put a large amount of effort into safety through the year. Of note, our serious injuries reduced from 20 last year to 8 in FY '20. Sustainability is now front and center across all our businesses and embedded into how we think about our future. As part of this focus, we've committed Fletcher Building to reduce carbon emissions by 30% below our FY '18 levels by 2030. This aligns us with aims to limit global warming to below 2%. While employee engagement is good at 71%, we still have work to do to be in the top quartile of companies. We continue to work on improving this, and our target is to be at least 80% across all our businesses. Similarly, with customers. While our present net promoter scores are okay at 39, we absolutely need to get these to be best-in-class across all our operations. We are working on seeing all these measures continue to improve in the period ahead. The Board operates with the support of board committees, 3 of which are noted here. All directors took an active part in the Protect Reset and the launch of Fletcher Building's new Protect Value. We continue to focus on delivering the strategy, and we have been actively listening to shareholder feedback. We understand the concerns held over company performance in recent years, and we are continuing to work very hard to address that with sustainable actions. While we have strong collaboration, we also bring different viewpoints through age and gender diversity and experience. We are well balanced between Australia and New Zealand and have complementary skills across industry, manufacturing, sales, governance and finance capabilities. Steve Vamos stepped down from the Board during the year, and we thank him for his considerable contribution. Steve's departure does leave a vacancy, which we have not yet filled. We will continue to appoint directors who bring the right set of skills and experience to the existing Board. As a priority, our Safety, Health, Environment and Sustainability Committee, always a mouthful, continued its focus on the business-wide Protect Reset safety program, driving the leadership, culture and critical risk approach for success. Our site visits are an example of how we are embedding this. A strong culture has many facets: people -- people engagement, values, purpose, trust, incentives, diversity and inclusion. Our Remuneration Committee has had an unwavering focus on this through COVID. They have focused on ensuring our people are well supported. Importantly, we exercised appropriate discretion on remuneration, ensuring all stakeholders were treated fairly. The team also provided an enhanced remuneration reporting which delivers better transparency. Our Audit and Risk Committee provided strong oversight on the financial complexities resulting from COVID, ensuring that our strong balance sheet remained intact. We also improved disclosure on our risk reporting, driving transparency to all our stakeholders. The long-term success of Fletcher Building is driven not only in financial terms, but also in supporting good outcomes for all our stakeholders. Last year, I presented the sustainability strategy, and we continue to drive our 6 key priorities as it will be critical for delivering long-term and sustainable growth to our shareholders. In FY '20, our initiatives included focusing on reducing the environmental impact of our products, we increased the number of products we manufacture that hold Environmental Product Declarations and Environmental Choice certifications that are recognized within green building standards. We set group-wide science-based targets for carbon reduction. In December 2019, Fletcher Building became the first building materials and construction company in New Zealand and Australia to attain an independently verified science-based target for carbon emission reduction. We published our supply code of conduct, and we published our human rights policy. This includes our commitment to put process in place to prevent unethical practices in our operations and supply chain and continuing to move to full environmental, social and governance reporting. Finally on this slide, I would like to make reference to the Dow Jones Sustainability Index, which is an assessment of the governance, environmental and social performance of our business. As well as retaining the Australian membership that we gained in 2019, we improved our score this year and have just been included in the Asia Pacific index as well. This is a great achievement. Turning finally to Slide 15. FY '20 was without a doubt a tough year for all our stakeholders, and I am very proud of how the team and Board members worked together. We responded quickly to the COVID-19 impacts, set the business up for FY '20, and we remained focused on our strategy and ambitions. While COVID-19's long-term impact remains unclear, we have Fletcher Building well positioned for whatever lies ahead. 2 weeks ago, we provided an update on our 4 months trading to the end of October. Ross will talk in more detail about that result shortly. But I would comment that we are very pleased to see that strong performance as evidence of the success of the strategy being delivered. We are financially sound with a strong balance sheet, good cash flows and liquidity. The strength and resilience this gives our business has never been more important in today's uncertain environment. Finally, with regard to dividends. It is the Board's expectation that the group will resume dividend payments in FY '21. Shareholders will recall that earlier this year, in response to COVID, we moved proactively to agree covenant relief with our lenders, which ensured that we had the additional protection for our funding lines until the end of 2021. Part of this agreement was that if we paid a dividend during that period, then our additional protection would come to an end. This will be a key consideration for the Board in February and means that the payment of an interim dividend for FY '21 is unlikely. As we look to the full year though, it is the Board's expectation that we will resume payment of a final dividend for FY '21. Further, in the event that there is no interim dividend, our expectation is that the final dividend would reflect a full year of dividend payments. We look forward to resuming these returns to our shareholders. Before I hand over to Ross, I would like to say thank you again to all our shareholders for your continued support of Fletcher Building. We appreciate your commitment to the success of our business and I look forward to sharing further details with you on our progress over the coming months. With that, I now invite Ross to address -- to provide his address. Over to you, Ross.

[Foreign Language] Thanks, Bruce, and I'd also like to add my welcome to those joining our ASM today. Like Bruce, I feel FY '20 was a tough year for the business but one that we handled well. Importantly, we responded quickly and effectively to the COVID crisis across the shutdowns, the restrictions and then the progressive restarts. We then got the business set up for what were and which continue to be uncertain times. And critically, this work sets us up to continue to deliver against the strategies we've been working on for the last 2 years. Unfortunately, these necessary actions came with consequences for all stakeholders, and I wanted to acknowledge these impacts on you, our shareholders, on our partners and on our people as we work through these challenges. I found it a privilege to work in the business through this period and see everyone lean into this adversity and get on with what was necessary with little complaint. This was a trait I saw from the shop floor right through to the Board. And I'd also like to add my thanks and appreciation to everyone that helped us navigate FY '20 and enter FY '21 as well as we have. As I mentioned, this good work sets us up well to continue on with the plans we laid out back in mid-2018 and which are summarized on this slide. Our aspiration for Fletcher Building is to be the leader in building products and solutions across New Zealand and Australia. Back in mid-2018, we set ourselves a timetable to move the company convincingly towards this over a 5-year period. Through FY '19, we successfully stabilized the business. We got our arms around the construction issues; we refocused the business on New Zealand, Pacific and Australian geographies; we achieved the successful sale of our various international businesses outside of these areas; and ended the FY '19 year with a materially stronger balance sheet. Through FY '20, we're then able to focus on what I call the self-help issues and look to drive performance improvements across all areas of our business. This included some major interventions: an organization-wide safety reboot; the complete overhaul of Fletcher Construction; and the major reset of our Australian business. But it also covered a drive to get better at the basic operational disciplines across all our businesses, making it clear what was expected and providing the training to support this. The unexpected twist in FY '20 was COVID-19. But because we dealt with its consequences quickly and firmly, it has allowed us to stay on track with our plans to keep driving performance and growth across the entire business. I'll spend the balance of my presentation talking to what we are now focused on and look to bring it to life for you with examples as I go. Across each area of our business, we're constantly looking at 5 main things: firstly, getting everyone who works for us or with us home safely each and every day; secondly, having the customer at the center of everything we do. We have to ensure we're providing market-leading customer services, customer solutions and customer performance all of the time; thirdly, is our drive to operational excellence. We want to be lean and efficient with competitive cost structures across all areas of our business; next, we want all our go-forward businesses producing economic returns in the top quartile of their respective industry; and finally, we want to lead the market and our competition in innovation and sustainability, effectively using both these as levers to achieve growth above market and to ensure we're doing the disrupting to others. The progress we are making across these 5 areas, there are a number of factors that set us up well to drive strong shareholder returns into the future. We're a much more focused company, with the bulk of our operations now only in New Zealand and Australia. We're running similar businesses across both these geographies, and this means there is a lot of consistency in what we need to get right across all of Fletcher Building. There is still a large chunk of improvement that can come from what I call self-help, and this means there is significant upside improvements available to us from what is in our control. We have a strong balance sheet and good cash flows underpinning these endeavors, and the longer-term trends are tailwinds. Population and integration growth will reboot and should continue, and the relative isolation of both countries means that in-country scale positions have a good competitive advantage and that we can be a fast follower and still be the first with the introduction of new technologies and innovation in our region. All this positions us well for a strong future. Against this backdrop, I remain confident we can deliver against the FY '23 targets, we set ourselves back in mid-2018, and these are: to achieve revenue growth above the background market growth; to grow margins across all businesses, such that the group profitability gets to at least 10%; and with this, to get our returns on fund employed above 15%. I want to now move on to the 4-month trading update for FY '21 that we provided to the market on the 10th of November. Starting firstly with safety. Our serious injury rates and total recordable rates are running at similar levels to this time last year. That said, through FY '21, we are targeting to improve on last year as we expect to see the benefits from our safety programs flowing through to the outcomes we are achieving. Our particular emphasis through this year is to ensure our people have the skills to identify and eliminate critical risks. These are the risks that, should they occur, that would cause a serious injury or fatality. The trading update also showed we're making good progress on improving the operating performance across all of our businesses. Through the first 4 months, we saw: group revenues up slightly by 1%; group EBIT of $227 million, up $80 million; the group EBIT margin up 2.9 percentage points to 8.4% due to improved operating efficiency; and our cash flows and balance sheet remains strong with net debt at $388 million and available liquidity at $1.4 billion as at the 31st of October 2020. Looking forward, we want to build on this progress. And in the coming slides, I'll outline where our focus and emphasis will be in each of our major business areas. Starting with our New Zealand core businesses, which cover our building products, distribution and concrete divisions. Unsurprisingly, our focus across these 3 business areas will continue in 3 key areas: firstly, continue to drive operational excellence; secondly, building a greater tempo and cadence in driving innovation and sustainability across our products and services; and finally, moving at pace to improve our customer offerings, particularly around e-commerce and digital interfaces. Digging into each of these areas a bit more, the graphic on the left of this slide brings to life the progress we have been making on driving margin improvements across our core New Zealand businesses. Here, you can see that through the first 4 months of FY '21, we achieved a margin increase of 2.4%. On the right-hand side, we've picked out a few examples of innovation that are occurring across these businesses that are driving both revenue and cost improvements. Dimond Steel has developed a methodology that allows the steel roof to be rolled at the site and up at the roof level. This is a unique process that removes all the joints across a long span roof, making installation easier, safer and the roof far less susceptible to leaks. This methodology was recently used with great success at a large distribution center in Auckland. Iplex has introduced a mobile production plant for polyethylene pipes in the South Island. And again, this allows for much longer pipe lengths to be produced, reducing both the number of joints and the installation costs. Winstone Wallboards' weather line product continues to see good uptake and increasing volumes, particularly across the residential sector. And our focus on sustainability continues. 2 good examples include the modification of our Portland Cement Works to consume old tires as fuel. This prevents up to 60% of waste tires going to New Zealand landfill and displaces coal as a fuel source, a double win for the environment. And secondly, the addition of solar panels to the rooftop of our Laminex manufacturing plant in Hamilton. This makes it one of New Zealand's largest solar rooftop installations. As I mentioned, our customer focus across our New Zealand core is on improving our capability and offers across the e-commerce, digitization and data analytics space. And the impacts from the COVID-19 pandemic have only amplified the need for speed in this area. Pleasingly, we are starting to make some good progress across a number of fronts. In PlaceMakers, we've continued to build on our back-of-house in-store digital customer interfaces and have now added Uber-style track-and-trace capabilities to over 70% of our from-branch deliveries. We've also ramped up our online presence, where we expect to have more than 50,000 of our products online for sale by January '21. The upgrade of our Firth ready-mix concrete truck fleet continues and we now have 35% of its fleet digitally enabled. This means we bypass the need for physical paperwork with the customer now receiving electronic delivery dockets directly. And Laminex New Zealand has deployed our successful Laminex Australia e-commerce portal and is already achieving around $1.2 million of sales per month since its launch late last year. All this, however, is only the beginning, and we'll continue to work hard in this space across all of our New Zealand businesses. Our residential and development business continues to perform strongly and remains well positioned to pursue a number of growth initiatives. Firstly, we are confident we can continue to grow our present low-rise residential business from around 750 to 1,000 houses a year over the coming years. Secondly, we want to progressively scale up Clever Core, our off-site manufacturing business, such that it's manufacturing at least 500 houses per year. And thirdly, we look to also scale up our mid-rise apartments business. We see this as a good opportunity that follows the trend of increasing densification of housing in larger cities. This year, our residential housing business will deliver between 700 to 800 houses. And with around 3,500 future lots under our control, the business remains well positioned to continue performing at this level. The speed with which we can then grow to 1,000 houses per year will be dependent on accessing sufficient land at the right price and on how strong the overall market is. Our land development business pipeline remains robust. And this business should continue to generate at least $25 million per annum into the future. This year, our key sales are second half-weighted, and they're likely to include sales of land from 2 sites: in Brisbane -- 1 in Brisbane and 1 in Sydney. And these are sites we no longer are using to operate our businesses in Australia from. Clever Core is our off-site manufacturing plant for residential housing. This is an important investment for us, both as a business opportunity in its own right, but it also allows us to directly participate in the construction macro trend for increasingly more modularization and off-site manufacturing components. Clever Core provides us with an opportunity to disrupt ourselves in this space and adapt our manufacturing, distribution and on-site construction techniques to suit where the industry is heading over the coming years. And finally, with the increasing trend to housing densification in major cities, we're well placed to scale up our apartments business. Like our low-rise housing business, we'll position ourselves in the mid-market range and focus on producing a high-quality and good-value-for-money product for our customers. Market permitting, we would expect to take around 3 years to get this business to a meaningful scale and annual throughput. While we remain intent on finishing the legacy construction projects to a high-quality and within provisions, pleasingly, our focus across Fletcher Construction is increasingly about building its future rather than clearing up the mistakes of the past. The teams continue to make good progress in lifting the skills, the operating disciplines and the governance across all the construction businesses. The best evidence of the success of this is with our customers, where we continue to successfully build our forward order book, winning the right work with the right risk profile and margins. This progress is well evidenced on this slide. The graph on the left shows the progress we've been making in completing the legacy projects. We now have under $600 million of work remaining and, while at the same time, we've successfully built a forward order book of over $2.4 billion with much better risk and margin profiles. Unsurprisingly, with the New Zealand government's focus on infrastructure sector investment, much of this new work is focused in this area. A pleasing recent win was the AMETI Eastern busway Alliance project in Auckland. This is a major multiyear project, and the consortium we are part of has now been announced as the preferred partner with Auckland Transport. Our Australian business has been through a tough few years as we dealt with a contracting market, the impacts of COVID-19 and many of our own home made operational issues. Over this period, the team in Australia stayed focused on what was needed to work through this, and we're now seeing improvements in both profits and profitability. That said, there remains much to do and, with that, further upside and opportunity for us to deliver. To ensure we complete the Australian turnaround and capture these further improvements, we continue to focus across 3 main areas: driving and improving operational excellence; ensuring we have a strong pipeline of product innovation and sustainability improvements; and really lift our customer service proposition and performance with a particular emphasis on e-commerce and digital. The progress we're making in Australia is brought to life well on this slide. The graphic on the left, you can see the profitability improvements we are now delivering. EBIT profits were 4% for the first 4 months of FY '21. This compares to 2.3% for the same period last year, a pleasing increase. And the pictures on the right showcase some of what we're doing around product innovation and sustainability. In Laminex, we've completed our biggest product launch in 25 years, which saw us refresh the entire brand and range. This has been very well received by our customers and is a big part of what is driving the performance improvements we're seeing across this business. In Fletcher Insulation, we've completely refreshed and upgraded our packaging, our range of products and introduced new and innovative products such as the FirmaSoft wall and ceiling insulation batts. And these contain 80% recycled content, have better thermal and acoustic properties and are much easier for people to handle. In Stramit, we've introduced new steel roofing ranges, the SharpLine roof and the InfinitiLine gutter, both of which have a more modern profile, is our own product and, therefore, we earn better margins. And in Oliveri, we've recently launched a whole new bathroom category. And this means we now have a good, better and best option across our own range and brands in bathroom products. And in Australia, very much like our focus in New Zealand, we're putting a significant effort into our customer-facing e-commerce and digital capabilities. We show 2 good examples of progress on this slide. In Laminex, we're now seeing around 27% of our sales occurring through our e-commerce portals, and this has occurred in only an 18-month period. And in Tradelink, our new website just went live, and this now provides the ability for customers to purchase and transact online. This has been a critical missing piece in our Tradelink customer offer. These and the other steps we're taking around e-commerce platforms across Australia are critical components of getting our business competitive and fighting fit across the country. To finish, I'd now like to move to the outlook. As we covered in our recent trading update, we expect first half volumes to remain very resilient and continue in line with the strong trading we've seen so far through FY '21. The second half remains less certain. But from what we can tell from our present quote activity and order books, we expect a reasonable start. We also feel our lower cost base positions us well for the remainder of the year. But as a result of the ongoing uncertainty caused by COVID-19, we'll only be providing half year guidance today. In line with this, we expect our half year EBIT to be in the range of $305 million to $320 million, and this compares favorably to the $219 million we made in the first half of last year. We'll also continue to keep a tighter rein on CapEx through this year. And as such, we continue to expect the full year CapEx to be around $200 million. In closing, I'd like to thank our employees, suppliers, and customers for their commitment and all they have done through the last 12 months. I also want to thank you, our shareholders, who continue to support Fletcher Building. This has been a challenging year for us, which I feel we've navigated well. And even more pleasing for me is we're now seeing the benefits of the work we've been doing over the last 2 years start to sharpen our performance and results. [Foreign Language]

Thank you, Ross. I now move on to the formal business of the meeting, which is to vote on the resolutions outlined in the Notice of Meeting sent to all shareholders in October. All resolutions are ordinary resolutions. To be passed, they require the approval of a simple majority of the votes of those shareholders entitled to vote and who vote on the resolution. I'm advised at the beginning of the meeting that we will vote on the resolutions by way of a poll. And undirected proxy votes given to the Chair of the Meeting of any Director -- or any director will be voted in favor of the 3 resolutions. Any directed proxies given to you by the shareholder will automatically be cast as directed when the poll is closed. Voting on the resolutions is open, and you can vote at any time until I declare the voting closed. I will close the voting after all resolutions have been considered and voted on. We'll also take questions on each of the resolutions, and please note that given the usual slight delay to the broadcast, should your question not reach us in time, we'll make sure these are answered at the end. We'll begin first with the ordinary resolutions. It is now my pleasure to move that Martin Brydon be reelected as a Director of the company. Martin was appointed to the Board on 1 September 2018. He is a member of the Nominations Committee and a member of the Safety, Health, Environment and Sustainability Committee and is considered by the Board to be an independent director. His credentials are outlined in the explanatory notes to the notice of meeting. The Board unanimously recommends that shareholders vote in favor of the election of Martin Brydon. I now extend to Martin the opportunity to speak about his reelection before we proceed to a discussion on the resolution. Please note that this address has been prerecorded last night to limit any technical difficulties.

[Foreign Language] Good afternoon, everyone. It's my pleasure to be here today speaking to you from Perth. I joined the Fletcher's Board in 2018, 2 years ago, and I would consider it a privilege to continue as part of your Board. I bring more than 40 years experience in the Australian building products and construction material sectors, having started my career as an engineering cadet with BHP. I joined Cockburn Cement as an electrical engineer and was the CEO of that company when it was merged into Adelaide Brighton Limited in 1999. I retired from Adelaide Brighton Limited in 2018 after 5 years as a CEO and 3 years as its CEO and Managing Director. In between, I've held a variety of roles, including engineering, operation, sales and marketing, general management and strategy and business development. Being 1 of the 2 Australian-based directors on the Fletcher Building Board, I bring valuable perspective on the Australian market. International travel restrictions mean I'm attending this meeting remotely, like all of you. While my preference would be that we met in person, the digital technology we have in 2020 makes it easier than ever for the Board to operate remotely. Certainly, our ability to operate effectively as a Board during the COVID-19 pandemic has been seamless in my experience. More broadly, the company has been through a significant transformation, of which you are no doubt aware. The Board has worked closely with the management team to ensure focus on the agreed business strategy while at the same time, respond to the challenges of COVID-19. By this, I mean, the imperative of ensuring the health and safety of our people and everyone we work with as well as maintaining robust corporate governance in an environment of local and global uncertainty. A key factor in my original decision to accept the invitation to join the Board was the strong commitment and focus I witnessed towards creating value for shareholders in a sustainable way. I stand for reelection, confident that the Board is steering this great Trans-Tasman company along that path. Demonstrations of this include: the simplification of the footprint of the business through the sale of Formica and RTG for a very good price; the repositioning of the Construction division to have a strong forward order book at lower risk, better margin work; and investments in the company's core businesses. The company is now investing in the right places with innovation and sustainability at the core of these decisions. For example, the new Winstone Wallboards facility at Tauriko will ensure one of New Zealand's favorite building products continues to be locally made, using the best available technology with lower carbon emissions, continue to provide jobs and deliver the great customer service that GIB is synonymous with. You can be confident in that any decision of this nature, I will do the necessary homework and will ask the difficult questions to ensure value is delivered to all shareholders. Thank you for your consideration of my reelection. And with your support, I look forward to continuing to serve as the Director of your Board. Thank you.

Thank you, Martin. I now invite discussion on the resolution. Are there any questions that shareholders would like to ask Martin Brydon? I'll just pause for a second. Okay. There are no questions for Martin -- there appears to be no questions for Martin. Thank you. Please cast your vote on resolution 1, the reelection of Martin Brydon. We'll now move to the next resolution. It's now my pleasure to move that Barbara Chapman be reelected as a Director of the company. Barbara was appointed to the Board on 1 September, 2018. She's a member of the Remuneration Committee and the Nominations Committee and is considered by the Board to be an Independent Director. Her credentials are outlined in the explanatory notes to the Notice of Meeting. The Board unanimously recommends that shareholders vote in favor of the reelection of Barbara Chapman. I now extend to Barbara the opportunity to speak about her reelection before we proceed to discuss on the resolution. Barbara?

[Foreign Language] I'm delighted to be here for my third Fletcher Building Annual Shareholders' Meeting. As a Director, I bring my experience as the former CEO of ASB Bank here in New Zealand as well as experience from across the Tasman on the executive team at the Commonwealth Bank of Australia. From these roles, I have strong commercial experience as well as specific expertise in leadership, innovation, digital transformation, risk management and consumer marketing. I also bring a deep understanding of the importance of culture and diversity to a strong organization. I'm currently the Chair of Genesis Energy Limited and NZME, which is New Zealand Media and Entertainment Limited, and Deputy Chair of the New Zealand Initiative. My commitments are thoughtfully selected, and you have my word on the time, energy and focus I have for the Fletcher Building Board. When I first sought your support for my directorship in 2018, I shared my 2 ambitions for the company with you. The first being my focus on corporate culture and values, the second being company performance. These 2 things are linked. As a Board director and in my role as Chair of the Remuneration Committee, I take a wide-angled view of the performance of our business and how that should be reflected in the remuneration of our people and, in particular, the incentives they can potentially earn. This year presented challenges to our people and our executives that we could never have foreseen. In response to the COVID-19 pandemic, we rapidly reshaped our operations, said farewell to many excellent colleagues and made a number of difficult decisions that impacted the remuneration of our people, including our senior executives. The increased workload shouldered by Ross and his team as they worked through the COVID impacts were significant. But incentive schemes that are truly aligned to shareholder value do not just focus on hard work, they focus on outcomes. So in response to COVID and other factors, this year, the rem committee made the following 5 key decisions: we exercised discretion and did not make any award under our short-term incentive scheme, even though in some areas payment based on the scorecard was merited; we canceled the annual rem review process and did not increase salaries, except where particular agreements required us to do so; we implemented a 6-month 30% pay cut for directors and for Ross; we strengthened the safety metrics and outcomes in the short-term incentive scheme; and we significantly improved our rem reporting, which you will have seen in our annual report. While strengthening the link between business performance and REM outcomes has been a key focus of mine this year and will continue to be so, there is also more work to do in areas where I can make a key contribution in culture, in diversity, risk maturity and digital transformation. With your support, I look forward to continuing to focus on making sure we have the right measures and incentives in place to drive the best outcomes for our customers, for our people and for you, our shareholders. [Foreign Language]

Thank you, Barbara. I now invite discussion on the resolution. Are there any questions that shareholders would like to ask Barbara Chapman? I'll just pause for a second.

There appear to be no questions on Barbara's reelection.

Okay. Thank you. Please cast your vote on Resolution 2, the reelection of Barbara Chapman. As the next resolution concerns myself, I'll hand over to Rob McDonald to conduct the resolution. Rob?

[Foreign Language] It is my pleasure to move that Bruce Hassall be reelected as the Director of the company. Bruce was appointed to the Board on the 1st of March 2017 as a member of the Nominations Committee and the Remuneration Committee and is considered by the Board to be an Independent Director. His credentials are outlined in the explanatory note to the Notice of Meeting. The Board unanimously recommends that shareholders vote in favor of the reelection of Bruce Hassall. I now extend Bruce the opportunity to speak about his reelection before we proceed to a discussion on the resolution. Bruce?

Thank you, Rob. It's my pleasure to seek your support for my reelection as a Director of Fletcher Building Board. I joined the Fletcher Building Board in 2017, 3 years ago. It's been an interesting 3 years to say the least. There's no doubt that we've seen significant change and challenges. But what hasn't changed is my absolute passion for this organization and my commitment to the Board. As I reflect on the past 3 years as a Director, the last 2 as Chair, I believe I've set the highest standards and lead with the transparency and directness I promised you when I first joined the Board. To this Board, I bring 30-plus years of business experience in New Zealand and overseas, including as a former CEO and senior partner at PwC. I'm a full-time professional director. I currently also chair the Farmers' Trading Company Limited, Prolife Foods Limited, and I'm a Director of Bank of New Zealand and Fonterra Co-Operative Group Limited. These engagements help me provide experience and currency to our Board. I assure you that I have the time and capacity to chair your company. It's often said that Fletcher Building is an iconic Trans-Tasman company. This is true but this title also must be earned. As Chair, we've done the hard work, made the tough decisions and put the measures in place to live up to this. I've been quoted that profitable growth and success are one and the same in terms of meeting wider stakeholder expectations. Get the balance right between wider stakeholder aspirations and that will drive successful business outcomes. An important part of this from where I sit is listening to and engaging with shareholders. Your questions and observations are heard. I ask the hard questions of my fellow directors and the management team. I know what a high-performing organization looks like, and this is what I'm demanding of this company. As a member of the Board, we have set this company on a new direction with accountable and disciplined governance. We've also achieved significant milestones in the company's strategy. Fletcher Building is an increasingly globally aware company, adopting the best practices and technologies from around the world and our own markets. I also look to Fletcher Building's strong financial position, that as a result of the actions taken by the Board and management and the best interest of shareholders through the significant disruption and uncertainty of COVID-19. The Board never took its eye off our responsibilities, which were critical as the crisis unfolded. In New Zealand, we shut down some 400-plus sites for a 5-week period in an unprecedented countrywide lockdown. We then shifted to preserving the strong balance sheet and liquidity positions we had established and ensuring that people had clarity and were supported. We are a significant employer. We build cities, towns and homes as well as make and supply the products that go into them and the infrastructure that supports them. I am proud of this truly great company, and I'll be honored to be your -- for your vote and support of my reelection as a Director of the Board. Thank you for your time and for considering my reelection today.

Thank you, Bruce. I now invite discussion on the resolution. Are there any questions that shareholders would like to ask Bruce Hassall? Let's pause for a moment.

There appear to be no questions on Bruce's reelection.

Thank you. Please cast your vote on resolution 3, the reelection of Bruce Hassall.

Thanks, Rob. We'll now move to the final resolution. I now move that the directors be authorized to fix the fees and expenses of the auditor. EY is the company's auditor and is automatically reappointed under the Company's Act 1993. This resolution authorizes the Board to fix the fees and expenses of the auditor. EY audit partners are present at the meeting should shareholders have any questions of them concerning the resolution. I now invite discussion on the resolution.

There appear to be no questions on the auditor fees and expenses.

Thank you. Please cast your vote on resolution 4 that the directors be authorized to fix the fees and expenses of the auditor. The voting on all 4 resolutions will close shortly. We'll take a few moments now to allow those people that have not already voted to do so via the Lumi AGM online portal. Please complete your voting now. [Voting]