Steel & Tube Capital Raising Investor Presentation

Steel & Tube
Equity Raise Investor Presentation
7 August 2018

Important Information
Information of a general nature
The information in this document and any information provided during any presentation of this document (collectively, Information) has been compiled by Steel & Tube Holdings Limited (Steel & Tube)
solely to provide interested parties with further information about Steel & Tube. No part of it may be reproduced or provided to any person or used for any other purpose.
The Information is of a general nature and does not constitute financial product advice, investment advice or any recommendation by any person (including the underwriter). Nothing in the Information
constitutes legal, financial, tax or other advice.
Not financial product advice
The Information does not constitute, or contain, an offer of securities or financial products to any person. This document does not constitute a product disclosure statement or other disclosure document
for the purposes of the Financial Markets Conduct Act 2013. No legal or other obligation will arise between an interested party and any of Steel & Tube, its related companies, or any other person, in
relation to the Information.
The Information does not purport to contain all the information that an interested party may require. An interested party should conduct its own analysis of the Information and should not rely on it
without independent verification.
Forward-looking statements
The Information may contain forward looking statements about the financial condition, results of operations, business prospects, and business strategy of Steel & Tube. Steel & Tube gives no assurance
that the assumptions upon which Steel & Tube based its forward looking statements on will be correct, or that its business and operations will not be affected in any substantial manner by other factors
not currently foreseeable by Steel & Tube or beyond its control. Accordingly, Steel & Tube can make no assurance that the forward looking statements will be realised.
Financial information
All dollar values are in New Zealand dollars unless otherwise stated. This presentation includes unaudited management accounts for Steel & Tube for its financial year ended 30 June 2018. As such, this
presentation should be read in conjunction with, and subject to, the explanations and views of future outlook on market conditions, earnings and activities given in the announcements relating to the
results for the year ended 30 June 2017, the six months ended 31 December 2017 and any relevant market announcement released since the six month results were released on 23 February 2018.
FY18P as included is taken from management accounts and, accordingly, is not audited and has not been reviewed by Steel & Tube’s external auditors. Following the audit process, FY18P figures in the
presentation may change. Steel & Tube expects to release its audited financial statements for FY18 on 31 August 2018.
Disclaimer
To the maximum extent permitted by law, none of Steel & Tube, First NZ Capital Securities Limited, First NZ Capital Group Limited or any of their respective subsidiaries, related companies, shareholders,
directors, officers, employees, partners, agents or advisers, or any other person, makes any representation or warranty, or provides any undertaking, in relation to any Information and they shall have no
liability (including for negligence) for: any errors or omissions in the Information; or failure to correct or update the Information, or any other written or oral communications provided in relation to the
Information; or any claim, loss or damage (whether foreseeable or not) arising from the use of any of the Information or otherwise arising in connection with the Information.
Distribution of presentation
This presentation must not be distributed in any jurisdiction to the extent that its distribution in that jurisdiction is restricted or prohibited by law or would constitute a breach by Steel & Tube of any law.
None of Steel & Tube, any person named in this presentation or any of their affiliates accept or shall have any liability to anyperson in relation to the distribution or possession of this presentation from or
in any jurisdiction.
This presentation is not for distribution or release in the United States. This presentation does not constitute an offer to sell, or the solicitation of an offer to buy, any securities in the United States. The
Rights and the New Shares have not been, and will not be, registered under the US Securities Act of 1933, as amended, or the securities laws of any state or other jurisdiction of the United States, and may
not be offered or sold in the United States except in transactions exempt from, or not subject to, registration under the US Securities Act and applicable US state securities laws.
Non-GAAP financial information
Steel & Tube uses several non-GAAP measures when discussing financial performance. These include Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA), normalised EBITDA, Earnings
Before Interest and Tax (EBIT) and normalised EBIT. Management believes that these measures provide useful information on theunderlying performance of Steel & Tube’s business. Non-GAAP financial
measures should not be viewed in isolation nor considered as a substitute for measures reported in accordance with NZ IFRS.
2

OVERVIEW OF STEEL
& TUBE

Presenting today...
Mark Malpass
CEO
Previous experience:
-Chief Executive of Fletcher Building’s largest division,
Infrastructure Products, which included transforming
cement, concrete and steel businesses
-ExxonMobil Corporation for over 19 years in NZ and
overseas, roles included Managing Director Mobil NZ
Appointed as an Independent Director in March 2017
Stepped down from the board to become interim CEO in
September 2017, and appointed full-time CEO in February
2018
Greg Smith
CFO AND COMPANY SECRETARY
Previous experience:
-Financial and senior level leadership experience across
the telco, dairy, electricity and infrastructure sectors
-CFO for Wellington Electricity Lines and International
Infrastructure Services since 2011
-Held senior finance role with Opus International
Consultants
-Senior member of KPMG’s audit practice
Joined Steel & Tube in October 2017
4

Processing and distributing New Zealand’s most
comprehensive range of processed steel
Value chain positionSteel & Tube locations
Secondary
processing of New
Zealand primary
processed
products
Distribution
Secondary
Processing
Primary
processing
Secondary
processing of
imported primary
processed
products
Mining
Primary processing
-Primary processing of steel in New Zealand is by
BlueScope and PacificSteel
Distribution of
primary
processed
products (Some
customers prefer
to process
themselves)
Direct importationof some secondary
processed products to distribute
Distribution of secondary
products to end customer
Installationof secondary
products forend customer
Steel & Tube core business
AUCKLAND
8 SITES
HAMILTON
2 SITES
NEW PLYMOUTH
1 SITE
NELSON
1 SITE
CHRISTCHURCH & TIMARU
9 SITES
DUNEDIN & INVERCARGILL
3 SITES
BLENHEIM
1 SITE
TAURANGA & ROTORUA
3 SITES
NAPIER & GISBORNE
4 SITES
PALMERSTON NORTH
2 SITES
WELLINGTON
4 SITES
Nationwide footprint with 40
sites from Whangarei to
Invercargill
Strong heritage and longevity
having operated in the New
Zealand market for more than
65 years
Modern processing and
manufacturing capabilities
Imports
from
small number of pre
-
qualified Asian
suppliers
5
WHANGAREI
2 SITES
DISTRIBUTION CENTRES
40 LOCATIONS
15,000+ CUSTOMERS
~1,000 STAFF
SECONDARY MANUFACTURING

Construction
Steel & Tube is exposed to Infrastructure,
Commercial (non-residential) and Residential
Construction
Construction expected to drive demand for
reinforcing, piping and structural steel
Manufacturing
Steel &Tube is also exposed to the
manufacturing sector
Growth expected to drive demand for plates,
coils, sections and fasteners
Ruralsector
Driving demand for stainless steels
Strong industry fundamentals
Steel & Tube’s exposure is well balanced across construction, manufacturing and
rural sectors
6
Food
manufacturing
15%
Non-food
manufacturing
26%
Retailing / wholesaling
(inc Rural)
13%
Residential
construction
9%
Non-residential
construction
25%
Infrastructure
11%
Steel & Tube Group Sector Exposure 2018
Sales data, based on March YTD figures

Forecast is for strong long-term growth:
For the first time in the history of the
National Construction Pipeline report,
the national forecast does not predict
a construction peak during the
forecast period
Instead the 2018 forecast is for
consistent building and construction
activity in the next few years with
stronger growth expected toward the
end of the forecast period
Construction fundamentals remain supportive
The 2018 National Construction Pipeline report forecast indicates a smoothing of
the boom bust cycle
(1)
7
1)Source: Guide to the 2018 National Construction Pipeline Report
2)Source: BRANZ / Pacifecon
All construction nationally (by activity type)
(2)
Total construction is expected to grow steadily to a forecast high of $41.4 billion in 2023
Residential building value is expected to hold steady in the next few years before increasing to a forecast high at $26.6
billion in 2023
Dwelling consents are expected to increase year-on-year to a forecast high at 43,100 in 2023
Non-residential building value is expected to peak at $8.4 billion in 2019
Infrastructure is forecast to remain relatively unchanged, increasing marginally to $7.3 billion in 2023
NZ$ (billions) (rolling year)

Estimated market share by volume
(1)
8
Others
Others
Others
Others
Others
Others
Others
Others
Others
Others
Others
Long ProductsFlat ProductsSpecialsSteel Structures
MESH
REBAR
STRUCTURAL
HOLLOWS
PLATE & COIL
ROOFING
SPLL STEEL
FASTENERS
WIRE
CHAIN & RIGGING
STRUCTURES
& OTHER
MERCHANT
STAINLESS
Steel & Tube
1)Market share based on Steel & Tube estimates and assumptions as per ASM presentation November 2017
Well invested footprint, leading supplier in all segments, acquisitions have provided
access to higher value segments

Comprehensive range of structural steel, bar and plate
products, and hollow steel sections to meet the requirements
of demanding new building designs
Pipes, valves and fittings for New Zealand’s petrochemical,
power generation, mining, irrigation, fire protection, building
services, water and wastewater industries
High-quality lifting, loading and lashing equipment, services
and solutions. Also offers design, testing and certification
services to ensure safety and compliance
Manufacturer and distributor of reinforcing,
fencing, wire, gates and nail products for use
in primary industries and rural construction sector
Diverse range of metal fastening solutions
for construction, manufacturing, general
engineering and fabrication sectors
Stainless steel products, including coil, sheet, plate, pipe,
hygienic tube and associated fittings as well as a variety of
structural bar, handrail and architectural products
Overview of key business units
DistributionInfrastructure
(1)
STEEL
STAINLESS STEEL
PIPING SYSTEMS
CHAIN & RIGGING
RURAL PRODUCTS
FASTENINGS
Manufacturer and supplier of profile metal roofing,
cladding and rainwater products to provide a range
of roofing thicknesses, materials and finishes
Galvanised, aluminised, enamelled and Colorsteel
sheet/coil solutions for the manufacturing,
construction, steel framing and sheetmetal sectors
HST Steel Purlins, Girts and Tophats are high strength
lipped profile sections which are supplied punched
and cut to a specified length as required
ComFlor® is the new
generation in composite
steel floor decking systems
Market leading technical expertise in
installation of floor decking systems and
sole distributor of S&T Comflor® in NZ
CFDL
ROOFING
COIL PROCESSING
PURLINS
COMFLOR®
Products are sourced from preferred steel mills and distributed
through Steel & Tube’s national network of branches
FY18P
(2)
:
-~55% of revenue
Products are processed before sale and typically on a contract or
project basis, including onsite installation services
FY18P
(2)
:
-~45% of revenue
9
Composite Floor Decks Ltd.
Fabricated reinforcing steel meshes, bars, ties, piles,
beams and columns for the building and construction
industry, as well as engineered reinforcing solutions
REINFORCING
Roll
-
forming
REO / CFDL
1)Excludes S&T Plastics which Steel & Tube plans to exit following its strategic review.
2)FY18P is based on management accounts and accordingly are unaudited and have not been reviewed by Steel & Tube’s auditors.

Strong board with extensive, relevant experience
Industry and GovernanceExperience
Executivein
sector
experience
Audit /
Risk
ITPrior listed
company
experience
Susan Paterson
Chair and
Independent
Director

Professional director since 1996

Worked in Steel Sector at Fletcher Challenge, asGeneral Manager
of Wiremakers

Currentboards include Theta Systems (Chair), Sky TV, Goodman
NZ, Arvida, Les Mills NZ, the Electricity Authority and the Tertiary
Education Commission; previously on board of Abano Healthcare,
Transpower, Ports of Auckland and Airways (Chair)


Steve Reindler
Independent
Director

Engineering background in large-scale infrastructure and heavy
industry manufacturing

Previous executive roles at NZ Steel and Auckland Intl. Airport

Currentboards include Meridian Energy, Broome Intl. Airport, Z
Energy, WorkSafe, Waste Disposal Services, Yachting NZ,LUAGRJF
GP Limited
(1)
; previouslyon the Board of Naylor Love


Anne Urlwin
Independent
Director

Chartered Accountant,business consultant and professional
director (Steel & Tube since June 2013)

Currentboards include Chorus, Southern Earthquake Services,
Summerset Group, OnePath Life NZ, City Rail Link and Tilt
Renewables; previously on board of Naylor Love (Chair), Meridian
Energy, Airways Corp. and NZ Blood Service (Chair)

Chris Ellis
Independent
Director

Extensive experience in the manufacturing, heavy construction
and engineering sectorsas CEO of Brightwater Group and of
Fletcher Building’s Building Products Division

Currentboards include Hiway Group (Chair), WorkSafe, Horizon
Energy,Steelpipe Limited and the NZTA; previously Chair of Energy
Works Holdings

Rosemary Warnock
Independent
Director

Senior leadership experience with the BP Group including as CEO
of Castrol Asia Pacificand founding Partner of Adelante Group;
provider of executive leadership development services

Currentboards include Adelante Group, The Buttery and former
Chair of the Thinc Group (globalconsultants in major capital
works); previously director of Arrium (in administration)


10
Subset of skills matrix
1)LUAGRJF GP Limited is 61.3% owned by Lincoln University and 38.7% owned by AgResearch Limited

OPERATIONAL REVIEW
AND REFRESH

Operational review and refresh
In late calendar 2017 Steel & Tube embarked on an extensive company wide reset
to drive long-term sustainable earnings improvement
Change Programme Initiated
Susan Paterson and Mark
Malpass’ appointments to the
board represents the beginning of
Steel & Tube’s movement towards
refreshed leadership, strategy and
direction
Late calendar 2017
extensive company
wide review by board
and management
Right sizing of inventory, facilities and staff
Integration of M&A and rationalisation of
Distribution & Reinforcing facilities
Refreshed Leadership
Detailed Organisational
Review
FebMarAprMayJunJulAugSepOctNovDecJanFeb
Susan Paterson
appointed to the
boardin Jan-17
becomingChair
effective Feb-17
Mark Malpass
appointed to
the board
MarAprMay
Mark Malpass
appointed CEO
Steve Reindler
appointed to the board
Chris Ellis appointed
to the board
20172018
Mark Malpass steps
down from board and is
appointed Interim CEO
Jun
Operational reset initiated
New Christchurch coil
processing facility opened
New purpose built
distribution centre in
Christchurch
12
Formally aligned business into
two divisions (1) Infrastructure
and (2) Distribution
ComCom charges
filed against S&T in
relation to historical
issues (see page 19
for further details)
New Dunedin
facility opened
Deployment of new
ERP system
Change programme initiated
GregSmith
announced as
CFO (effective
Oct-17)
Company wide stock
takes undertaken
Review of legacy
issues complete
Marc Hainenappointed
as GM Distribution

Legacy issues identified and resolved
The detailed organisational review uncovered a number of legacy issues, materially
impacting FY18 earnings
FY18P EBIT Impact
(1)
Description
Inventory write-downs
$(24.0)m

New ERP increased visibility of inventory management

Extensive stock takes confirmed extent of aged / obsolete inventory

Aged inventory value adjustments of $15.3m and stock take write-offs of $8.7m
Exit from S&T plastics and
associated impairment
$(10.9)m

Downturnin irrigation market and further capex requirements identified

Sale of asset deemed to be best solution for shareholders
Impairment of intangible
assets and ERP system
$(12.1)m

Review of carrying value of intangible assets identified need for impairment

Partial write-downof investment in ERP system
Rationalisation of
Distribution and
Reinforcing
$(2.7)m

Costs incurred to rationalise property footprint to remove unnecessary duplication, lower
operating costs and improve customer service

Costs incurred to rationalise and re-organise manufacturing operations and delivery
logistics to improve efficiency

Independent reviews of operating structure to streamline and improve operations
Organisational
restructuring
$(3.3)m

Improving capabilities, removing duplication and inefficiencies

Capturing synergies from acquisitions
Other
$(0.8)m

Includes increased doubtful debts and contract disputes provisions following detailed
review, offset by net gain on sale of properties and settlement of acquisition earn-out
payments
Total
$(53.8)m
As a direct result of the write-downs and impairments, Steel & Tube breached a banking
covenant –a waiver was subsequently obtained on 29 June 2018
1)FY18P is based on management accounts and accordingly are unaudited and have not been reviewed by Steel & Tube’s auditors.
13

Steel & Tube’s strategy for profitable growth
Commitment to safety and
quality
Strategic Goal: To be the leader in buying, selling, processing and placing steel
products in New Zealand
1

Focus on ensuring a safe and healthy work
environment for all

Commitment to ensuring product quality

Emphasis on quality processes

Focus on continual improvement
Put the Customer at the heart of
our business

Organise the business around our customers

Deliver products and solutions to meet our
customers’ needs

Deliver on time and on spec

Leverage technology to improve sales
effectiveness and lower cost to serve
Operational and supply chain
excellence

Leverage our procurement and supply chain
scale

Improve inventory management

Increase production capacity and site
productivity

Consolidate and remove duplication
Supporting a winning team

Focus on development of strong leaders

Ensure everyone in the organisation matters

Recognise personal and team contributions

Provide a rewarding workplace for all
34
2
14

Commitment to
safety and
quality

Disciplinedcompany-wide
practices

Customer promise

Reputation
Put the
Customer at the
heart of our
business

Sales disciplines

CFDL / C&R new products

Point of difference
Operational and
supply chain
excellence

Pricing & margin growth

Inventory practices

Operational excellence
(Roofing & Reinforcing)

Freight route & recoveries

Acquisitionintegrations /
external warehousing

Steel purchasing
Supporting a
winning team

Retain& attract talent
Project Strive
FY19FY20
Steel & Tube is progressing its Project Strive business transformation initiatives.
Improvements will benefit FY19 performance
15
FY21
Ecommerce and digital platforms
Key Value Drivers
Product investment growth
FY18
Sales account alignment, management and sales excellence programme
Traceability enhancements including barcode scanning
Third party audits of steel mills
Group-wide update to ISO 9001:2015
Call centre activation
Customer loyalty and value growth
Supply Chain improvements
Leverage procurement scale
Facility footprint consolidations
Freight efficiencies
Operational excellence and efficiency
Providing a rewarding workplace
Ongoing employee engagement development programme
Product investment growth

Strong management team focussed on execution
Role
Industry and GovernanceExperience
Role
Industry and GovernanceExperience
Mark Malpass
CEO
Greg Smith
CFO and Company Secretary
Marc Hainen
General Manager
Distribution

Joined Steel & Tube in November 2017

Previous experience:
-
Background in sales, marketing, management,
operations, logistics and supply chain
-
Numerous management and leadership roles in
New Zealand Australia and UK
-
Multiple roles leading various divisions within
Fletcher Building –played an instrumental role
in transforming the steel distribution and
reinforcing businesses
Miki Cooke
National Supply
Chain Manager

Joined Steel & Tube in May 2017

Previous experience:
-
Over 25 years’ experience specialising in
Procurement for a number of multi-national
companies based in NewZealand and Australia
across multipleindustries
-
She has also played an active role in the supply
chain industry, serving as President of APICS
NSW and a director of APICS Australia
Steve Kubala
General Manager
Roll Forming

First joined Steel &Tube with purchase of Cable
Price Steel in 1989, subsequently leaving to join
Mico Wakefield in 1995 and then returning to Steel
& Tube in 2007

Previous experience:
-
Numerous senior managerial roles across Steel
& Tube including Integration Manager, GM of
Steel & Tube Stainless
Dave Clegg
General Manager
People & Culture

Joined Steel & Tube in June 2010

Previous experience:
-
Over 25 years’ experience in human resources
management
-
Consulting to Contact Energy as GM Human
Resources and as change manager for a major
enterprise transformation project
Damian Miller
Quality Manager

Joined Steel & Tube in mid 2016

20+ years International experience
in North/ South America, South
East Asia, Africa and Europe

Previous experience:
-
Executive roles in Quality
Assurance and Quality, Health,
Safety and the Environment
16
BBUS, PGDIPBUS
BCOM, MM
MBA, BE MECH HONS, NZCE
BCA, CA
MBA

DistributionInfrastructure
Impactof initiatives
Steel & Tube has begun to see positive results from the implementation of its
change program –specifically increasing both volumes and sales
17
Distribution (combined Heritage Distribution, Stainless and
Fasteners)
Roll-forming (Roofing, Coil Processing, Purlins, Comflor) &
Reo/CFDL
300
540
Mar-18Apr-18May-18Jun-18Jul-18
Average Tonnes (Rolling Fortnight)
Distribution volumes (tonnes)
Prior Yr TrendCurrent Trend
1,180
1,250
Mar-18Apr-18May-18Jun-18Jul-18
Average Sales (Rolling Fortnight)
Distribution Sales
Prior Yr TrendCurrent Trend
750
950
Mar-18Apr-18May-18Jun-18Jul-18
Average Sales (Rolling Fortnight)
Infrastructure Sales
Prior Yr TrendCurrent Trend
210
280
Mar-18Apr-18May-18Jun-18Jul-18
Average Tonnes (Rolling Fortnight)
Infrastructure volumes (tonnes)
Prior Yr TrendCurrent Trend

Noticeable improvement in customer satisfaction
18
“We have been a customer of Steel & Tube for over 46 years. It’s a two way, win-win relationship. They have
always been supportive and fair with our business, through the good times and the tough times... They’ve had
their ups and downs recently, but they seem to be on a good course... I’ve met the new management team and
they seem to have what it takes to rebuild the business.”
~ Sir Ken Stevens | Glidepath Group
“We have been a customer of Steel & Tube for about 28 years. We work with them because they are the
largest, most reliable steel provider in New Zealand... We have seen a lot of improvement in the last few
months and our customer relationship manager at Steel & Tube is fantastic to deal with. We also appreciated
meeting with senior management recently.”
~ Brendan McLean | All Steel Services
“We’ve noticed big changes recently with new management, a more stable management team and better
customer service... If we have an issue, we ring up and it’s solved quickly -and that’s all you can ask for...
Management are more involved in the business and that’s definitely delivering a better customer service for us”
~ Tony Thorn | Edwards & Hardy
“When we phone, issues are usually resolved satisfactorily... The ERP conversion caused a lot of problems.
Things seem to be sorted now and have definitely improved... We could easily switch suppliers, but prefer to
stay with Steel & Tube as the preferred supplier for the franchise”
~ Daniel Tan | Think Water Leeston
Financial Controller
“On the whole, our service from Steel & Tube is exceptional... We are pretty fortunate to have a great
customer representative at Steel & Tube. She has been with the company for a long time, her product
knowledge is awesome and we have a valued relationship... Steel & Tube’s prices are competitive, and the
quality of products and their delivery logistics are great now that IT issues have been resolved”
~ Grant Loveday| Nufab Engineering
“Our customer representative has gone above and beyond in resolving issues and ensuring we receive our
products on time and on spec. She really wanted to make things better for us and it’s worked”
“Our parts numbers are now aligned with Steel & Tube to simplify and speed up the ordering and packing
process, ensuring we get the right products, with a quick turn around”
“Having one point of contact has really helped”
“The whole team were invited to visit the new Christchurch facility –it was a great opportunity and we were all
very impressed with the size and set up”
Other Quotes

Specific risk factors and key mitigants
DescriptionMitigantsKey outcomes
ERP
Implementation

Implementation issues negatively impacted sales volumes

Significantimprovements made to ERP system
following identification of key issues

Additional staff training and documentation created
and implemented

Changed and improved business processes

Independentreview undertaken by KPMG

Sales volumes have
increased post
addressing the ERP
issues
Historical
inventory issues

A build up over time of aged inventory, which no longer meets the
market’s needs

A lack of visibility and inconsistent count practices contributing to
poor record keeping

New ERPsystem in place

Regular physical stock counts

Categorisation of inventory and sales and operations
planning improvements

Focus on inventory age profile

Focus on key SKUs

ERP system now in
place providing
enhanced visibility of
inventory

Significantlyenhanced
inventory
management
Steel mesh
prosecution

The Commerce Commission carried out a series of investigations into
steel mesh following a complaint in August 2015, leading to charges
laid against several companies including Steel & Tube

The charges against Steel & Tube related to historical issues
regarding the application and testing methodologies applied to SE62
500E grade seismic steel mesh under the Standard, and inadvertent
use of a testing laboratories logo on the bottom of test certificates

Steel & Tube’s sentencing hearing occurred on 25 May 2018, with
the Judge reserving his decision, outcome pending

Asthe Judge has reserved his decision, we cannot
comment further at this point

The investigation is expected to have no impact on
Steel & Tube’s FY19F guidance provided in this
presentation

Both the MBIE and Structural Engineering Society
New Zealand issued media releases indicating
homeowners should not be concerned

A new quality function
reporting to the CEO
was established in mid-
2016

Since April 2016, our
seismic mesh is
externally tested in
New Zealand by IANZ-
accredited laboratories
Possible class
action

Steel & Tube acknowledged in the Commerce Commission
prosecution that prior to April 2016 there were deficiencies in the
testing of its steel mesh

A party announced their intention to possiblylaunch a class action

This class action would be against steel mesh suppliers who have
supplied products in the past four years that do not meet
earthquake standards. Steel & Tube was named specifically by that
party

Based on information presented at the sentencing
hearing, Steel & Tube believes the mesh will perform
in materially the same way as mesh tested in full
compliance with the requirements of the Standard

Steel & Tube will strongly defend any claim and has
engaged a Queens Counsel to assist in this matter

Steel & Tube does not consider that any loss has
been incurred

Possible court action
In addition to general operational risks, Steel & Tube has identified and looked to
mitigate key specific business risks
19
Steel & Tube is subject to specific risk factors in its business activities and more general risks. Any, or a combination, of these risks mayhave a material impact on Steel &
Tube’s business, operating and financial performance. This section describes some of the specific potential risks. It does not purport to list every risk now or in the future,
and the occurrence of consequences of some of the risks described are partially or completely outside the control of Steel & Tube, its directors and management team. The
selection of risks described above is based on the knowledge of Steel & Tube as at the date of this document, but there is no guarantee or assurance that the importance of
different risks will not change or other risks will not emerge.

TRADING UPDATE
AND GUIDANCE

Trading update –FY18P
(1)
Unaudited Management
Accounts
Revenues impacted in FY18
(1)
by issues with ERP system implementation affecting
customer service
Management are now addressing to improve customer service and stock availability
$53.8m of non-trading impacts recognised as part of clearing up legacy issues
Net debt reflects payment from property sales and funding of previous acquisitions
No FY18 final dividend expected –plan to resume FY19 interim
FY18P Revenue $495.8m
FY18P EBIT $(36.2)m
FY18P Normalised EBIT $16.5m
FY18P Normalised (Adj.) EBIT $17.6m
(2)
FY18P NPAT$(32.0)m
FY18P Net Debt$104.4m
FY18P Final Dividend
(3)
Nil
1)FY18P is based on management accounts and accordingly are unaudited and have not been reviewed by Steel & Tube’s auditors.
2)Adjusted for benefit from the delay in timing of ERP amortisation.
3)Steel & Tube Board has confirmed no final dividend. Dividends likely to be reinstated following 1H19 results.
21
$31.1m
$31.2m
$16.5m
$17.6m
-$36.2m
-$0.4m
+$0.5m
-$9.3m
-$1.5m
+$1.8m
-$0.7m
-$1.1m
-$1.0m
-$3.0m
+$1.1m
-$24.0m
-$10.9m
-$12.1m
-$2.7m
-$3.3m
-$0.8m
(40.0)
(30.0)
(20.0)
(10.0)
-
10.0
20.0
30.0
40.0
EBIT (NZ$m)
EBIT bridge from FY17A to FY18P
(1)
EBIT
Normalised EBIT
EBIT changes

Recent acquisitions (excluding S&T Plastics) continue to
perform favourably
Acquisition
DatePrice
Description / RationalePerformance
Oct-16
$13.25m
(+$3m
earn-out
payments)

As distributor andinstaller of ComFlor, the acquisition
enhanced Steel & Tube’s supply of steel floor decking
systems

Vertically integrated with ComFlor, providing Steel &
Tube with end-to-end manufacturing through to
installation capabilities

Continues to be a leader in composite floor decking
installations, currentlywith a $20m order book
(MSL)
Aug-15$32.0m

MSL (Fortress Fasteners) is one on the largest
fastenings companies in New Zealand

Acquisition for growth, innovationand competitive
advantage in a rapidly changing market

Performing well and now integrated with Steel &
Tube fasteners to form a strong specialist fasteners
business, opportunity to further leverage the Fortress
brand across the Steel & Tube network
Apr-14$27.5m

Tata StainlessSteel supplies stainless steeland
engineering steels

Composite floor decksupply to the New Zealand and
Pacific Island markets

Tata StainlessSteel is performing well and is now
integrated with Steel & Tube stainless to form a
strong specialist stainless and engineering steels
business

ComFlorcontinues to perform well as Steel & Tube
continues to develop and grow the product range
with its new profile to be launched later this year
Sep-15$8.0m
Steel & Tube has now exited S&T Plastics

Steel & Tube’s investment in plastics was in the narrow irrigation segment of the market, it was the smallest of 5
larger players in that market

Irrigation demand is influenced by funding, dairy farm conversions, resource consents costs, engineering,
compliance and finance costs

As well as uncertain irrigation sector demand the decision to exit was also influenced by the need to relocate to
permanent facilities and further investments required to provide an integrated product offering
Composite Floor Decks Ltd.
22

FY19 guidance
23
Legacy issues behind us and major financial restructuring completed
Beginning journey to significantly improved operating and financial performance
Recent increases in volumes are encouraging as ERP stabilised and focus has
shifted to servicing customers
Structural changes through Strive programme gaining momentum
Operating cost reductions forecast to realign with sales
Safety and quality disciplines underpinning supply chain and operational excellence
FY19F EBIT guidance$25m+
1)FY18P is based on management accounts and accordingly are unaudited and have not been reviewed by Steel & Tube’s auditors.
$16.5
$25.0
+$8.2m
-$2.9m
-$1.9m
+$4.3m
+$0.9m
-
5.0
10.0
15.0
20.0
25.0
30.0
FY18P Normalised
EBIT
Strive / ERP recoverySalaries & wagesRent & operating
leases
Other expenditureDepreciationBudget FY19F EBIT
EBIT (NZ$m)
EBIT bridge from FY18P to FY19F

$25m
$35-40m
+$5m
+$15m
+$6m
-$4m
-$4-5m
-$4-7m
-
10.0
20.0
30.0
40.0
50.0
60.0
FY19F EBITMarket activityStriveERP recoveryExpense
inflation
Other change
costs
HeadwindsFY21F EBIT
EBIT (NZ$m)
EBIT bridge from FY19F to FY21F
Medium term objectives
Steel & Tube expects to achieve normalised EBIT of $35-40m in the next 3 years
24

RECAPITALISATION

Overview of the Capital Raising
Purpose of the Capital Raising
Steel & Tube intends to raise approximately NZ$80.9 million to recapitalise its balance sheet to allow it to execute its business transformation
initiatives and longer term strategic objectives
The Capital Raisingto be undertaken by way of:
-~NZ$20.8 million up front placement at $1.15 per new share, to eligible institutional investors
-~NZ$60.1 million via a pro-rata 1 for 1.9 rights offer at $1.05 per new share, to eligible shareholders
The placement shares issued are cum-rights offer
The Capital Raising will reduce Steel & Tube’s gearing from 4.6x FY18P Net Debt to FY18P Normalised EBITDA to approximately 1.15x FY18P Net Debt
to FY18P Normalised EBITDA
(1)(2)(3)
In addition, Steel & Tube now intends to target Net Debt to Normalised EBITDA < 2.0x
26
1)FY18P is based on management accounts and accordingly are unaudited and have not been reviewed by Steel & Tube’s auditors. Actual audited group financial
statements scheduled to be released to NZX on 31 August 2018
2)FY18P Net Debt is calculated as gross senior bank debt, less cash and cash equivalents as at 30 June 2018. Net debt post-capitalraising reflects net proceeds
received by Steel & Tube from the capital raising
3)FY18P Normalised EBITDA is adjusted for a full year’s impact of the additional operating leases in relation to the sale of Stonedon Drive and Blenheim Road

Key terms of the Capital Raising
Placement
Offer Price

NZ$1.15 per new share, representing a 21.2% discount to last close price on the NZX of NZ$1.46 per share on 6
August 2018
Offer Size

Approximately NZ$20.8million

Approximately 18.1 million shares
Ranking

New Shares issued under the Offer will rank equally with Steel & Tube's existing ordinary shares and are cum-
rights
Eligibility

Certain “Institutional Investors” in New Zealand,Australia, Hong Kong and Singapore, in each case, only to the
extent such institutional investors are entitled to participate in the Placement pursuant to the laws of the
jurisdiction in which they are located without registration, lodgement or other formality and in each case that is
not acting for the account or benefit of a person in the United States
27
1 for 1.9 Rights Offer
Offer Price

NZ$1.05 per new share, which represents a:
-
28.1% discount to last close price on the NZX of NZ$1.46 on 6 August 2018
-
18.3% discount to the Theoretical Ex-Rights and Placement Adjusted Price of NZ$1.28 per share
Offer size

Approximately NZ$60.1 million, 57.2 million New Shares offered (subject to rounding)
Ranking

New Shares issued under the Offer will rank equally with Steel & Tube's existing ordinary shares
Offer structure

A pro rata rights issue followed by a Shortfall Bookbuild

Both Retail and Institutional investorshave the opportunity to participate in the Shortfall Bookbuild and apply for
additional New Shares over and above their entitlement

Any fractional Rights will be rounded down to the nearest whole number
Eligibility

The Offer is only open to Eligible Shareholders in New Zealand andAustraliaand Institutional Investors as at the
Record Date

Capital Raising timetable
28
Importantdates
Announcement of the Offer
Tuesday 7 August 2018
Steel& Tubeannounce FY18 audited resultsFriday 31 August 2018
Placement
Placement conducted under trading haltTuesday 7 August 2018
Trading expected to resumeWednesday 8 August 2018
Settlement and allotment of placement sharesFriday 10 August 2018
RightsOffer
Record date for rights issue5:00pm, Wednesday 15 August 2018
Offer documentexpected to be despatchedThursday16 August 2018
Rights Offer OpensFriday 17 August 2018
Rights Offer Closes5:00pm, Monday 3 September 2018
Shortfall bookbuildWednesday 5 September 2018
Allotment and trading of new sharesFriday 7 September 2018
All dates and times are NZ time and are subject to change without notice

FY18P
(1)
Profit & Loss –Unaudited Management
Accounts
30
1)FY18P is based on management accounts and accordingly are unaudited and have not been reviewed by Steel & Tube’s auditors. Actual audited group financial
statements scheduled to be released to NZX on 31 August 2018
$MFY17FY18P
(1)
Sales revenue511.4 495.8
Other operating income1.7 1.0
Cost of sales(384.9)(398.4)
Operating expenses(96.5)(115.9)
Operating earnings before other gains and financing costs31.6 (17.5)
Impairment of fixed assets and goodwill-(20.1)
Other gains-1.4
Earnings before interest and tax31.6 (36.2)
Interest income0.1 0.1
Interest expense(3.6)(4.7)
Profit before tax28.1 (40.8)
Tax expense(8.0)8.8
Profit for the year attributable to owners of the Company20.0 (32.0)

FY18P
(1)
Balance Sheet –Unaudited Management
Accounts
31
$MFY17FY18P
(1)
Cash and cash equivalents
6.5 5.6
Trade and other receivables
93.5 99.2
Inventories
143.1 116.0
Income tax refund
0.2 5.2
Derivative financial instruments
0.0 1.3
Assets held for sale
-1.6
Current assets
243.3 228.9
--
Property, plant and equipment
102.6 52.7
Intangibles
66.8 57.4
Deferred tax
-6.5
Non-current assets
169.4 116.6
Total assets
412.7 345.5
--
Trade and other payables
54.4 49.9
Provisions
3.5 9.2
Derivative financial instruments
1.7 0.0
Current liabilities
59.6 59.1
--
Trade and other payables
2.2 2.1
Borrowings
133.4 109.9
Deferred tax
4.2 -
Provisions
1.2 1.8
Non-current liabilities
141.0 113.8
--
Share capital
77.8 77.8
Retained earnings
105.6 90.0
Other reserves
28.8 4.7
Equity
212.1 172.6
--
Total equity and liabilities
412.7 345.5
1)FY18P is based on management accounts and accordingly are unaudited and have not been reviewed by Steel & Tube’s auditors. Actual audited group financial
statements scheduled to be released to NZX on 31 August 2018

FY18P
(1)
Cash Flow Statement –Unaudited
Management Accounts
32
$MFY17FY18P
(1)
Cash flows from operating activities
Customer receipts513.0 489.7
Interest receipts0.1 0.1
Payments to suppliers and employees(480.3)(478.6)
Income tax payments(8.2)(5.6)
Interest payments(3.6)(4.2)
Net cash inflow from operating activities20.8 1.3
Cash flows from investing activities
Property, plant and equipment disposal proceeds0.2 52.8
Payment for new business purchase (net of cash acquired)(13.8)-
Property, plant and equipment and intangible asset purchases(18.5)(19.0)
Net cash outflow from investing activities(32.1)33.8
Cash flows from financing activities
Proceeds from partly paid shares0.0 0.0
Issue / (purchase) of Treasury shares 0.1 -
Net proceeds from / (repayment of) borrowings35.5 (23.4)
Dividends paid(20.1)(12.7)
Net cash inflow from financing activities15.4 (36.1)
Net (decrease) / increase in cash and cash equivalents4.2 (0.9)
Cash and cash equivalents at the beginning of the year2.3 6.5
Cash and cash equivalents at the end of the year6.5 5.6
1)FY18P is based on management accounts and accordingly are unaudited and have not been reviewed by Steel & Tube’s auditors. Actual audited group financial
statements scheduled to be released to NZX on 31 August 2018