S&T Annual Meeting

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S&T Annual Meeting 16 November 2017
Chair’s Address

Good morning ladies and gentlemen and welcome to today’s meeting. My name is Susan
Paterson and I am the chair of Steel & Tube.
I am joined today by my fellow directors – Chris Ellis, Steve Reindler, Anne Urlwin,
Rosemary Warnock and Dean Pritchard, as well as Interim CEO, Mark Malpass and Interim
CFO, Steve Armstrong.
I would also like to welcome representatives from the company’s auditors,
PricewaterhouseCoopers, our solicitors, Buddle Findlay, and other advisers.
Before we get underway, in the event of any emergency, the alarm bells will ring.
Please remain seated and calm until a warden arrives and leads you out of the exit and
down the emergency stairwells to the assembly point.
The designated assembly point is outside the Fujitsu Tower on the northern side of the
Hotel.
The Notice of Meeting and the 2017 Annual Report and financial statements have been
made available to shareholders, a quorum is present and I therefore declare the meeting
open.
Today you will have an opportunity to hear from both myself and from Mark Malpass on
Steel & Tube’s progress and our aspirations for the future.
There will then be an opportunity for discussion and any questions on our presentations.
We will then move to the formal part of the meeting. We will cover each resolution in turn
and invite questions, specific to those resolutions. There are a number of directors up for
election or re-election by shareholders today, including myself, and you will have the
opportunity to hear from each of us at that time.
Following the resolutions, there will be time for any further questions or discussion.
At the close of the meeting, I hope you will all stay and join us for refreshments.

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[Slide: A Modern and Innovative Company]
I joined Steel & Tube year and would like to share with you a few of my thoughts on the
company so far.
Steel & Tube has over 60 years’ of trading history – not many businesses in New Zealand
that can claim that sort of heritage. For a company to have that length of successful
commercial operation, it has to be adaptable to change. And one thing is certain – change
never stops.
The last five years in particular have seen our company transform. We have implemented
new hardware and software platforms, refined our business structure, and grown the service
and product offering to our customers.
The highlights have been our acquisitions of the Tata Stainless, MSL Fasteners and CFDL
businesses. That said, net of acquisitions, Steel & Tube’s core businesses have been under
pressure with intensifying competition.
We have worked with the Commerce Commission regarding the mesh labelling and testing
issues, however, as this is before the courts we are unable to comment on this further.
We acknowledge that recent company performance has been below the expectations of our
shareholders and ourselves. This, and investor market sentiment around our sector, has
been reflected in the share price.
The Board and Management take this very seriously, and have spent considerable time
putting remedial actions in place to improve our performance.
We are now developing and implementing an improvement programme which we believe will
put us back on track to realise our potential. We appreciate your support while we make
these necessary changes. We are totally committed to delivering greater value to our
shareholders.
[Slide: Delivering For New Zealanders]
Steel & Tube provides product and services that supports the needs of New Zealand’s
increasing population and economic growth as well as supporting a range of community
initiatives. Some examples of this include:
 The Mangere wastewater treatment plant (pictured), which is one of the world’s most
advanced water treatment facilities. The upgrade for this plant is to cater for an
additional 250,000 people as Auckland grows. Steel & Tube supplied 7 kilometres of
stainless steel pipework, 400 metres of large bore carbon pipe work along with over
18,000 individual items, including valves, fittings, bolts and gaskets.
 The new Kapiti Expressway has delivered a key section in the 100 kilometre Wellington
Northern Corridor, a major upgrade to this ‘road of national significance’. Working
collaboratively with the construction alliance and NZTA, our innovative technical team
helped overcome some challenging supply requirements. Along with 1500 tonnes of
cut and bent reinforcing, hundreds of thousands of stirrups were designed and bent by
our amazing staff.
 Our sponsorship of the First Foundation continues. We are now in our fifth year and
are supporting 7 teenagers from employees families realise their education goals
through scholarships providing financial assistance, paid work experience and
coaching.

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[Slide: Strategy Refresh]
We have refreshed our strategy to maximise the value of the investments made over the past
five years.
We have grown, mainly through the acquisition of businesses that have strengthened
our customer offer and created market leading positions, opening up new and
complementary opportunities for our company. We have expanded our products and
services, allowing us to meet more of our customers’ needs.
We will continue to focus on initiatives that leverage our scale and size, and the breadth
of our product offering.
 Our company ethos - ‘One Company’ which allows us to collectively present the full
suite of our capabilities to customers - is well established and we are now positioned
to provide more effective supply chain solutions.
We are exploring ways to add value for our customers to make their businesses more
efficient.
 Our national property network has been made fit for purpose, providing better and safer
work places for our people and more efficient hubs for our businesses.
We will continue to modernise our facilities, equipment and systems to enhance our
customer offer and deliver products cost effectively.
 We have invested in technology with new hardware and software platforms across the
Group. These will deliver multiple benefits for both our customers and our business.
Technology will be an enabler to make our company more agile, responsive and
connected.
Safety, health and quality remain at the forefront of all we do.
[Slide: Strong Board and Leadership Team]
Since joining the Board, I have worked with my colleagues on a number of fronts. One of our
first tasks was to complete a competency matrix for the Board. This identified the skills needed
to take the company forward, where we were strong and where we had current or pending
gaps, given Dean Pritchard’s decision to retire at the end of his current term.
We believe we are today, proposing to our shareholders an extremely competent Board, well
qualified to enhance our strategic vision, and drive excellence in execution.
Anne Urlwin will remain on the Board – Anne has years of governance experience, is strong
financially and commercially and Chairs our Audit & Risk committee. Construction and
infrastructure are key markets for Steel & Tube and Anne has deep knowledge of these
markets as a chairperson or director of construction and infrastructure companies, including
the Naylor Love Construction Group, City Rail Link, Chorus and Summerset.
Rosemary Warnock is standing for re-election. Rosemary has Chief Executive and
international supply chain experience from Europe, Australia and Asia. She also brings an
understanding of the steel sector through her directorship with Arrium Ltd (OneSteel-Australia)
and has a rural background and experience. Rosemary is Principal of Adelante Group which
provides mentoring services to senior executives. In addition to providing continuity and
institutional knowledge of Steel & Tube, Rosemary’s Australian and international market

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knowledge, people insights and in-depth Health and Safety expertise add real strength to our
Board. Rosemary chairs the Health and Safety Committee.
Steve Reindler was appointed to the Board to add further industry expertise. He has a
background in large scale infrastructure and steel manufacturing, with executive positions at
Auckland Airport and NZ Steel. An engineer, Steve also brings relevant construction,
infrastructure, and supply chain knowledge from directorships with Naylor Love, Meridian, Port
of Napier and Stevenson Group.
Chris Ellis further demonstrates the Board’s commitment to having New Zealand building
products, supply chain and distribution expertise on the Board. After five years as General
Manager of first, Fletcher Construction Engineering Division then Winstone Aggregates, Chris
spent over four years as chief executive of the Building Products division of Fletcher Building.
His current Directorships of Hiway Group and NZ Transport Agency bring understanding of
major infrastructure projects. Both Chris and Steve are on the Board of Worksafe NZ,
reflecting our total commitment to a healthy and safe workplace for our people.
Finally, myself. Back in the early 90’s I took on a special project to raise the performance of
the seven steel businesses at Fletcher’s, including scrap, manufacturing at Pacific Steel,
roofing, pipes, fencing, mesh and finally distribution through the-then Fletcher Steel. I then
moved into the role of General Manager at Wiremakers which manufactured and distributed
fencing, mesh, and nails – many of Steel & Tube’s products of today. Strategic use of
information technology is another key area of focus for me – going back to the UK and USA
where I worked for a very bright group of consultants out of Massachusetts Institute of
Technology, to today where I chair Theta, a team of over 200 consultants adding real value to
New Zealand with the smart use of IT. I also bring construction knowledge from my
directorships at Goodman Property and Arvida.
I trust this gives you an understanding of the work that has gone into researching and attracting
people of the calibre we believe will best serve the interests of you, our shareholders.
After determining the competencies of directors we required, we used the Institute of Directors
to give the Board an independent benchmark of our Board fees, as these were last increased
by shareholders over 10 years ago. It is in shareholders’ best interests that fees are at a level
to attract competent directors, given the significant impact on performance good directors can
make, and, competent directors do have choices with regards to the Boards they join. While
the Board was recommended to increase base fees to between $80,000 and $85,000, after
consultation with the shareholders association and institutions, we decided that, as returns to
shareholders over the past years had not been at a level shareholders deserved, to
recommend directors fees $7,500 below the median of this range, to be set at $75,000, with
the Chair’s fees to be $20,000 below the median of the recommended range.
Your Board is very engaged and putting considerable time into understanding and overseeing
the performance and strategy of the company. We meet regularly with members of the
executive to understand the opportunities and issues in their areas, to constructively challenge
proposals and offer sage wisdom and guidance from our past and current experience in the
marketplace.
There are also a number of changes to the leadership team and we are very excited about the
new talent coming into the company.
An essential ingredient of good governance is to attract and retain excellent executives. It is
important that remuneration is market competitive and aligned to shareholder returns. The
Board has undertaken extensive work on this and engaged PWC to benchmark our CEO

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remuneration and make recommendations on our Long Term Incentive Scheme. The Board
is making changes in both areas, and our new remuneration frameworks will be best practice
and more closely aligned with shareholder value creation.
With Steve and Chris new to the Board last month, we are giving them a couple of months to
develop their views on what we need in our new permanent CEO. In the meantime Mark
Malpass, who was appointed as a director in March this year, has stepped down from the
Board and taken on the role of interim CEO.
Mark has had significant executive experience both in NZ and overseas. He worked with
ExxonMobil Corporation for over 19 years and was Chief Executive of Fletcher Building’s
largest division, Infrastructure Products. His time there included transforming their steel
distribution businesses. We are not standing still and Mark is putting in place the foundations
to greatly enhance the performance of Steel & Tube.
We have also welcomed Greg Smith as CFO, with interim CFO, Steve Armstrong, currently
handing over the reins.
We have been fortunate to have Steve’s strong experience and leadership skills as our interim
CFO since the beginning of July, and thank him for his excellent contribution in the time he
has been with us.
Greg joined the Company on 30 October, and is in the audience with us today. A chartered
accountant, Greg has financial and senior level leadership experience across the energy,
infrastructure, consultancy and telecommunications sectors. He commenced his finance
career with KPMG’s audit team in Wellington in 1996 and has held senior finance roles with
Opus International Consultants and since 2011, as Chief Financial Officer with Wellington
Electricity Lines Limited.
I firmly believe that Steel & Tube’s refreshed Board and management team have the ability to
work well together to deliver value to our customers, staff, the communities in which we work,
and shareholders.
I would also like to take this opportunity to acknowledge and thank Dave Taylor for his
contribution to Steel & Tube as CEO. Dave was instrumental in modernising Steel & Tube,
and acquisitions during his tenure as CEO have strengthened the company, and positioned it
to create value moving forward. The Board is grateful for Dave’s valuable contribution, and we
wish him well in his future endeavours.
Finally, long serving director and former Chair, Dean Pritchard, will be retiring as an
Independent Director, with effect from this meeting. Dean has been a director since 2005, and
served as Chair from 2005 to 2012. He has brought wide ranging experience and sound
judgment to the Board as we worked through a number of critical milestones in developing our
‘One Company’ strategy and then delivering our refreshed strategy in 2016. Thank you Dean.
[Slide: Delivering Shareholder Value]
An essential focus for the Board is to deliver value for our shareholders.
Our aspiration is to be an excellent, supply chain player of scale in a number of complementary
channels, delivering extraordinary value.
We want to be seen as a leading provider and to do this, we need to balance high dividend
yields with investing for growth.

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We recognise that dividends are important to our shareholders. So to, is share price
appreciation driven by profitable growth.
In recent years, borrowings have grown to fund acquisitions and to position the company to
create shareholder value. During this period, the company has maintained a consistently high
dividend pay-out. We are now focussed on optimising the company’s balance sheet to ensure
that it is well placed to profitably grow.
Accordingly, we have set out to develop a set of capital structure guidelines, to balance the
choices we make around investment, managing financial risk, and paying dividends.
The Board has agreed the following capital structure targets:
 A dividend pay-out ratio target, of between 60% and 80% of ‘normalised’ net earnings,
being net earnings adjusted for any material non-ordinary items, and subject to
relevant factors at the time including working capital and opportunities for growth
 Net debt to EBITDA to be less than 2.75 times
 Net debt to net debt + equity to be within the target range of 30-35%
The Board has committed funding lines in place, with its banking partners BNZ and HSBC.
After a review of the best use of, and returns on, its capital, we have decided to market the
Stonedon Drive property in Auckland, on a sale and lease back arrangement. Proceeds from
any divestment will go towards reducing leverage.
By strengthening our balance sheet, and growing earnings, we consider that the total returns
to shareholders, being dividends and share price appreciation, will be optimised and, over
time, we expect shareholders will realise greater value from their investment in Steel & Tube.
[Slide: Fit for the Future]
Steel & Tube is a diversified company with customers in multiple sectors of the New Zealand
economy namely; construction, infrastructure, rural and manufacturing. It operates across
most of the New Zealand steel sector - from small item, high value, retail through to
specialised steel solutions and large, commodity, structural steel.
Competition is intense in some sectors and a finite pool of resources is leading to cost
pressures. However, in this increasingly challenging market, the company has continued to
deliver a profitable performance.
We work with more than 23,000 customers every year, and we are committed to delivering
them the best possible service and products.
Equally important are the hundreds of great people who work for Steel & Tube. Our focus is
on making sure they are safe, and well at work, and building a culture where they are
recognised and rewarded for their efforts. I would like to take this opportunity to thank all our
people for their contributions in the past year.
The investments made in the last five years have positioned Steel & Tube to build profitable
share in key market segments.
Your board and management team are working hard to maximise these investments and
deliver value to our shareholders.

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We are committed to open, and transparent communications, and we are looking at new
opportunities to engage with you, and the investment market, and keep you informed.
Steel & Tube is a Kiwi company through and through. We have been part of the fabric of
New Zealand industry for more than 60 years, and we are committed to playing our part in
creating a stronger country.
I would now like to hand over to Mark to talk further on our new initiatives, and continuous
improvement program.
[Refer to Interim CEO Address]
[Slide: Board’s Focus]
Thank you Mark. Before we move onto the business of the meeting, I’d like to summarise the
Board’s key priorities for the next year.
The capital investment made into acquisitions, and the business, in the past five years has
created a strong platform for Steel & Tube. However, we are very aware that the company
now needs to realise the significant benefits and value from these.
We are firmly focused on the financial and operational performance of the company, and are
fully engaged to support the management team, in delivering exceptional customer service,
and returns to our shareholders, with lower overhead and operating costs.
We will finalise the appointment of a permanent CEO.
And finally we will focus on risk management, including a clear understanding, and oversight
of, the risks relevant to our business, including a strengthened focus on quality, and
continued focus on health and safety.
We recognise our responsibility to keep our shareholders informed. Your Board is committed
to transparent communication and engagement, and we welcome feedback and discussion
from our shareholders.
[ENDS]
Note this speech was made in conjunction with the AGM PPT presentation. You can view
the presentation by clinking on this link

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S&T Annual Meeting 16 November 2017
Interim CEO’s Address

Thank you Susan.
Good afternoon. Firstly, I’d like to say as someone who’s observed Steel & Tube from a
number of perspectives that it’s been a real privilege leading the business over the last 6
weeks.
There is no question in my mind that this is a great business that has significant intrinsic
value. This afternoon, I will explain why the new management team and I have complete
conviction that this business can be quickly improved.
I’m going to cover the following topics
 2017 financial summary
 Market positions and sector exposure
 Resetting the business; and
 Licence to operate
[Slide: FY17 Financial Summary]
The company has already provided a lot of detail and comment on the FY17 financial results
in our results announcement and presentation as well as the annual report, all of which you
can find on our website.
In brief, Steel & Tube delivered a reasonable result with a $20 million NPAT, benefitting from
acquisitions made over the past four years.
As reported, at the close of the year, we were impacted by external project delays, outside of
our control, which increased both inventory and working capital, and reduced operating
cash-flow.
We also had issues with the manufacturing processes in S&T Plastics which resulted in
higher scrap rates than expected. This has now been resolved and our extruders are
operating at capacity and scrap rates have significantly improved.

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In the Reinforcing business, two contracts proved to be more complicated and costly than
originally anticipated. We made a provision for these in FY17 and we have largely resolved
these issues. Importantly the management team in that business has been strengthened,
and improvements have been made to tendering, business processes and account
management. This sector has also been particularly impacted by competition, margin
compression and risk transfer. That said, I am confident the reinforcing business has turned
the corner and is now positioned for growth.
Several businesses delivered record or near record revenue and EBIT performances in
FY17 and, apart from the two issues I’ve mentioned in S&T Plastics and Reinforcing, the
company performed better than in the previous year.
Our overhead, cost structure and working capital management continues to be a focus and I
will discuss shortly the action we have underway to quickly improve these areas.
Our $32 million capital reinvigoration programme will come to an end next year with the
completion of our new Christchurch facility. The program has resulted in fit for purpose
facilities, enhancing health and safety for our employees and where possible bringing
together our operations under one roof. Importantly, not only does this support a better
customer value proposition but it also sets us up to deliver improvements in supply chain
scale and operational excellence. We continue to look for opportunities to optimise our
network and production capacity where there are short-medium term paybacks.
Susan mentioned our new technology platform. As you can imagine, replacing a 22 year old
ERP system with a new fit for the future platform, across every part of our business, has
been a major undertaking. We went live with the new AX Microsoft ERP system early last
month. This is a major milestone and the result of significant efforts by our people and
external parties. Whilst there have been some ‘teething problems’, these are now largely
addressed and AX will allow us to better manage and monitor our business and financial
performance. It will also enable us to standardise practices, improved traceability and
simplify the business.
As with our acquisitions, these investments have been funded by operating cash-flows and
debt.
[Slide: Our Role in the Supply Chain]
As you all know, it’s very easy to overcomplicate businesses and as I step through my
presentation I’d like you to keep this chart and Steel & Tube’s role in the supply chain in
mind.
Simply put, our main role is to add value to our customers. We source steel and steel
products in bulk from the steel mills and we provide a broad range of products and services
to our end customers as and when they need them.
Our role in the supply chain is to:
 Have the scale to access the steel mills’ minimum order quantities
 Hold a wide range of stock for our customers
 Hold and break down bulk products into smaller quantities for our customers

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 Provide competitive pricing and reasonable credit terms to our customers
 Processing and light manufacture for our customers e.g. slitting, REO detailing and
placing
Obviously, our ability to source steel at competitive prices and having a strong national
footprint provides us with a competitive advantage.
[Slide: Sourcing Steel]
We source the majority of our steel supplies from either New Zealand or Asia – it’s a fairly
balanced mix and varies according to product type.
The demand for steel is a dictator of price – the more global demand there is for steel, the
higher the price that can be set by the steel mills.
As you can see here, pricing can be quite volatile and after dropping during 2014 to 2016, it
is now trending back up.
Demand for steel in New Zealand remains high, correlating with global demand trends as
countries such as China invest into large infrastructure projects.
I’ll come back to our specific sector exposures shortly.
[Slide: New Zealand Steel Market Landscape]
This chart provides an overview of the total steel market by product and distributor.
The New Zealand steel market is roughly 900 thousand tonnes and ~$2.3 billion in value.
To provide the whole picture, we have estimated the market broken down into long products
[350 Kt], flat products [375 Kt], specials [80Kt] and non-distributed products [100 Kt]. We’ve
also estimated market shares.
Susan mentioned our aspiration to be a supply chain participant of scale. Aligned with that
vision, Steel & Tube have made excellent progress in extending our reach through the
distribution channels - we are now either number 1 or number 2 in every segment in the
steel market.
We haven’t shown competitor names in each channel for obvious reasons but, as you can
see, not one competitor has the breadth of positions we have.
This is a key point and supports our conviction regarding Steel & Tube’s intrinsic value.
[Slide: Sector Exposure]
We operate in 3 main sectors: construction, manufacturing and dairy, all of which show the
promise of continued growth.
Construction is expected to continue to grow with new initiatives such as the proposed
KiwiBuild programme and the light rail projects in Auckland. This should drive demand for
reinforcing, piping and structural steel.
Equipment and machinery manufacturing is also expected to rise, which will drive demand
for plates, coils, sections and fasteners.

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The dairy sector is also expected to perform well on the back of demand from consumers in
Asia, with capital investment in the sector traditionally leading to greater demand for
stainless steel.
[Slide: Resetting the Business]
To recap, we are either number 1 or 2 in all of the key steel distribution segments in which
we operate, we have a well invested footprint, and our acquisitions provide access to higher
value segments.
This is a fantastic platform, the problem is we have not captured the earnings growth that
should be flowing to the bottom line. Your board and management team believe there is a
clear opportunity to significantly grow earnings over the next year or two.
We have just started a change programme that will reset the business. The scope is
company-wide and focused on simplifying the business, leveraging our procurement scale
and better servicing our customers.
 We need to better manage our supply chain and utilise our group procurement scale. I
see significant opportunities to optimise our supply chain and leverage our steel
procurement scale both within New Zealand and further afield with high quality approved
Asian steel mills.
 Our brand new ERP system enables both better visibility through our whole supply chain
and also the opportunity to significantly simplify the business which will lead to a
significant improvement in our overhead cost structure.
 We have many deep customer relationships, however we have lost some of our
specialist expertise and we can see an opportunity to use our improved suite of
businesses to provide better service to both existing and new customers.
Both change and program management have not been a strength for Steel & Tube. To
ensure we digest change and capture earnings benefits I have appointed Chris Birkinshaw
to manage the programme and he will report directly to me. Chris is a highly regarded
Commercial Business Manager and has demonstrated ability to work with the businesses to
deliver improvements.
We are quickly working through the size of the opportunity for the 3 areas I mentioned and
will then address the changes required to the business.
[Slide: Aligning People and Structure with Strategy]
We are a new but experienced team. I’ve been in the interim role 6 weeks, starting on the
left of the chart Marc Hainen has had 2 weeks in the business, Ross Pickworth 11 months
and Greg Smith 3 weeks. I’ll talk about each of them shortly.
A key component to quickly delivering the earnings improvements I mentioned earlier is
getting the organisational wiring right.
Over the last couple of weeks I have made changes to our organisation structure to:
 Organise the business around our customers
 Simplify and create a clear line of sight for improved accountability

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 Unlock integration benefits from our acquired businesses
Effectively we have organised our businesses into two streams: Distribution and
Infrastructure.
The Distribution stream is led by Marc Hainen. As well as carbon steel distribution and our
merchant business, fasteners and stainless have also been included in this stream. These
businesses all have common trading activities and having them all under one roof is
important to capture the trading disciplines I mentioned.
Marc is no stranger to steel distribution. He and I led the turnaround of the Fletcher
Easysteel and Reo businesses 4-5 years ago. He is highly commercial and a strong people
leader.
As part of the Distribution changes we are also quickly getting on with integrating the
acquired businesses under the Distribution stream.
 Heritage S&T fasteners is being combined with MSL fasteners creating a Fastenings
business. This will be led by Steve Williams, an existing and very experienced
Manager who came to us with the MSL acquisition
 Heritage S&T stainless is being combined with the acquired Tata stainless creating a
Stainless and Specialty Steels business. This will be led by Keith Wearing, another
existing and very experienced Manager
The second and equally important part of the business is Infrastructure. The Infrastructure
Group was created earlier in the year and is ably led by Ross Pickworth. These businesses
are typically servicing contracting and project type markets.
Ross is an experienced and highly capable leader who joined the business 11 months ago.
 Ross has been actively involved in turning around our Reinforcing business with our
National Reinforcing Manager, Andrew Roche
 The Plastics business has also made excellent progress under Darryn Ross who has
now got this business back into profitability
 Also within the Infrastructure business is our roll forming business which has been
going from strength to strength and led by Steve Kubala
 In addition, Composite Floor Decks Limited just celebrated its first year under Steel &
Tubes ownership and is ably run by Mohammed Afroz.
We now have the right people in place and I’m very confident this combination of businesses
and new talent will lead to significant improvements in our performance.
[Slide: Our Licence to Operate]
How we achieve our results is just as important as the results themselves. Core to this is our
focus on Health & Safety, the Environment and Quality.
Health, Safety and Environment

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We continue to strengthen our Health, Safety and Environmental management systems, and
have a robust operating framework focused on engagement within our workforce and
creating a healthy, safe, fair and just culture.
Every year, we identify new initiatives such as:
 The recently completed “Legend” programme for managers and supervisors, to help
them engage more effectively with front line workers
 The Hands Clear initiative, which was developed for the reinforcing business and
resulted in a clever engineering innovation for table bends that was simple to
implement and ensures hands are kept safe during the production process.
Quality Management System
Last year the Board initiated a comprehensive review of quality processes, procedures and
organisation.
A new Quality function has been established with the objective to implement a ‘world-class’
Quality Management System that will set the industry standard and provide customers with
the certainty of a world-class compliance system.
We appointed a new Quality Manager, Damian Miller, about 18 months ago who has
significant international experience in quality and safety leadership. Damian reports directly
to me. We have also engaged with expert independent consultants with experience in QMS
in the steel industry.
The team have made significant progress:
 All Steel & Tube’s seismic mesh is now externally tested by independent, IANZ
accredited laboratories;
 We have implemented quality audits for our international suppliers and mills within
Asia;
 And the progressive business-wide roll-out to ISO 9001:2015 is underway.
Pleasingly, S&T Plastics has already achieved this, as well as Watermark
certification, another highly recognised quality standard.
[Slide: Strengthening the Capital Structure]
As Susan mentioned, we have been working on our capital structure.
Our focus is now on strengthening the balance sheet, including capturing working capital
benefits from our significant scale and technology investments.
Since year end, we have reduced surplus inventory by $14m and further reductions are
planned.
We have also been assessing our property portfolio and use of funds. One example is our
intention to divest our Stonedon Drive property in Auckland.
We are also reviewing other owned properties for similar opportunities. We are a distribution
and contracting company, not a commercial property company. The funds from a sale and

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lease back will generate a better return for shareholders by being used to further grow and
develop our business.
[Slide: Outlook and Guidance]
We are focussed on resetting the performance of the business but none of this will happen
overnight. In 12 to 24 months, the company will be significantly stronger.
In the short term we are expecting Half Year earnings before interest and tax (“EBIT”) for the
2018 Financial Year will be lower than the prior half year by $9 -10 million.
The Half year EBIT will be impacted by working capital review, reorganisation and
restructuring activities, increased depreciation costs for new ERP system and the slow
response by the industry to margin pressures arising from increased costs of supply.
The recent implementation of a new ERP system is a key enabler now available to the
business and has helped assist Management with a review of slow moving inventory.
Approximately half of the expected decrease in half year EBIT is due to a write-down of
inventory.
Reorganisation and restructuring activities will have an unavoidable impact on short term
EBIT, however the benefits from this are expected to offset these costs over the remainder
of the financial year. In the first half of the 2018 Financial Year the company has seen
margin pressures from higher steel purchase prices, which the market took some time to
pass onto customers. The Company has increased selling prices across its portfolio of steel
products from mid- November 2017. Margins are expected to improve in the second half of
the 2018 Financial Year from improved pricing.
Excluding any one-off inventory valuation adjustment, full year EBIT for the 2018 financial
year is expected to be materially the same as the 2017 financial year, as the impacts from
recent price changes and the benefits of change actions are realised.
Whilst the short term impacts on the current half year EBIT result are regrettable, the
Company is well positioned to deliver improved earnings and operational performance going
forward. We have commenced a change programme, with a number of initiatives being
implemented to improve the operational and financial performance of Steel & Tube.
Our new Board and leadership team are focused on delivering these initiatives to deliver
superior value to our customers, grow earnings, improve efficiency and strengthen the
Company’s capital structure.
Thank you for your time, I will now pass you back to the Chair.

[ENDS]
Note this speech was made in conjunction with the AGM PPT presentation. You can view
the presentation by clinking on this link