Annual Report for the financial year ended 30 June 2018

Steel & Tube Holdings Limited
Annual Report 2018

Our goal is to be the
leader in buying, selling,
processing and placing steel
products in New Zealand.

On behalf of the Board and Management
team of Steel & Tube Holdings Limited
(Steel & Tube), we would like to thank our
shareholders for their support during what
has been a very challenging year. We have
been working hard to address legacy issues
and are now seeing early benefits from our
business transformation initiatives, as well as
improving sales. The capital raise announced
on 7 August 2018 will strengthen our balance
sheet and we are committed to delivering
better value to our shareholders. We invite
you to read more about our company,
our goals and our progress in this year’s
Annual Report.
Susan Paterson
Chair
30 August 2018
Mark Malpass
Chief Executive Officer
CONTENTS
02 Our Business
03 FY18 At A Glance
04 Chair’s Report
06 CEO’s Review
10 Committed to
Safety and Quality
11 Putting the Customer
at the Heart of Our Business
12 Operational and
Supply Chain Excellence
13 Support A Winning Team
14 FY18 Financial
Measures Explained
16 Five Year
Financial Performance
18 Leadership Team
20 Board
22 Financial Review
61 Independent Auditor’s Report
68 Governance
84 Directory
01

In excess of 58,000
PRODUCT LINES
A nationwide footprint with
40 SITES from Whangarei to Invercargill
SOLUTIONS DRIVEN
organisation
with more than 65 years of industry
experience
Working with more than

15,000 ACTIVE CUSTOMERS


every year
~$500 MILLION in sales
~1,000 PEOPLE
in the Steel & Tube team
OUR BUSINESS
Steel & Tube is one of New Zealand’s leading
providers of steel solutions, and a proud New Zealand
company, with over 65 years of trading history.
We offer New Zealand’s most comprehensive
range of steel products, services and solutions,
and our stable of best-in-class businesses are
some of this country’s leading steel suppliers.
We distribute and process a range of products from
nuts and bolts, roofing, reinforcing and floor decking
systems through to large structural steel products.
As experts in our field, we pride ourselves in being
able to offer an end-to-end customer experience,
advising, sourcing and supplying customers with
their steel requirements. And underlying everything
we do, is our continued commitment to quality.
Every day, Steel & Tube people are integral to
many of the most important infrastructure
and construction developments
nationally, contributing their skills,
innovation and energy across
many sectors of the economy.
We play a key role in supporting
New Zealand’s economic growth
and development. With a
national network of branches and
distribution centres, we are where-
ever our customers need us.
WHANGAREI
2 SITES
AUCKLAND

8 SITES
TAURANGA & ROTORUA

3 SITES
NAPIER & GISBORNE

4 SITES
PALMERSTON NORTH

2 SITES
WELLINGTON

4 SITES
BLENHEIM

1 SITE
NELSON

1 SITE
NEW PLYMOUTH

1 SITE
HAMILTON

2 SITES
CHRISTCHURCH & TIMARU

9 SITES
DUNEDIN & INVERCARGILL

3 SITES
SECONDARY
MANUFACTURING
DISTRIBUTION
CENTRES
02
STEEL & TUBE ANNUAL REPORT 2018

FY18 AT A GLANCE
REFRESHED BOARD:
Appointment of two further Directors
with industry expertise, taking Board
to five independent Directors.
NEW LEADERSHIP:
Mark Malpass appointed as CEO and
Greg Smith appointed as CFO.
Refreshed the executive team.
DEPLOYMENT OF NEW ERP
(ENTERPRISE RESOURCE PLANNING)
IT SYSTEM:
Implementation issues impacted in
FY18 but have now been resolved.
ALIGNMENT OF
BUSINESS INTO DIVISIONS:
Distribution and Infrastructure.
INITIATED CHANGE PROGRAMME:
Right sizing of inventory, facilities and
staff; integration of acquired businesses;
rationalisation of distribution and
reinforcing operations.
COMMENCED ‘PROJECT STRIVE’:
Business transformation initiatives delivered
under Steel & Tube’s four strategic pillars, with
benefits expected in FY19 and onwards.
OPENED NEW FACILITIES:
New coil processing facility and new
distribution centre, both in Christchurch.
RESET AND REBUILD:
Company-wide review commenced
in late 2017.
REVISED GUIDANCE
RESETTING THE BUSINESS:
In May 2018, announced inventory write downs
and impairments along with other non-trading
costs of up to $54 million. Normalised EBIT
expected to be around $16 million.
EXIT FROM S&T PLASTICS:
Planned exit due to downturn in long term
outlook for irrigation market along with need
for further capital investment in the business.
RESULTS SLIGHTLY
AHEAD OF GUIDANCE:
Revenue $495.8 million, Operating Earnings¹
(EBIT) $(36.2) million and FY18 Normalised EBIT
$16.5 million, Net Loss $(32.1) million.

POST FINANCIAL YEAR-END:
INITIATED $80.9 MILLION
CAPITAL RAISING:
To strengthen the balance sheet and provide
financial flexibility for Steel & Tube to execute
its business transformation initiatives and
achieve longer term strategic objectives.
GREENSHOOTS:
Early benefits already being seen from Project
Strive business transformation initiatives;
positive sales trajectory seen in last quarter
of FY18 has continued into FY19
.
1
Operating earnings is Earnings Before Interest and Tax (EBIT). FY18 normalised operating earnings is EBIT excluding
non-trading adjustments of $53.8m and a $1.1m timing benefit from reduced software amortisation costs due to the
ERP implementation delay (refer to page 14 and 15).
Further information and detail on FY18 financial results can be found in the FY18 Full Year Results Investor Presentation
at www.steelandtube.co.nz/investor/presentations.
03

CHAIR’S
REPORT
It has been a challenging year
for the company and for our
people, as we have worked
hard to reset our organisation
for a stronger future.
The Board had to make some difficult judgements, in
particular around impairments, the write down of inventory,
rationalisation of our nationwide footprint and the exit
from S&T Plastics. While these had a significant impact on
the FY18 results, we believe they were the responsible and
appropriate decisions for the company and for shareholders.
We now have a solid foundation from which to build
Steel & Tube, and with the proceeds from the capital raising
currently underway, we will have the financial flexibility
to implement our business transformation initiatives
and achieve our longer term strategic objectives.
We are focused on the future, with our customers at the fore -
strengthening Steel & Tube’s position as New Zealand’s leading
supplier of steel products and solutions; driving earnings
improvements; and delivering value for our shareholders.
This year has seen greater engagement with the investment
community as we ‘tell our story’ and ensure further
transparency with our key funders.
Our pathway to success is being led by Steel & Tube’s new
CEO, Mark Malpass. Mark was appointed as a Director
of Steel & Tube early in 2017 and stepped down from the
Board in September to take up the role of Interim CEO. He
accepted the permanent position in February this year.
Mark was previously chief executive of Fletcher Building’s
largest division and worked in senior roles for ExxonMobil
Corporation. His strategic and commercial skills, industry
experience and people skills, have seen the introduction of
a new four-pillar strategy that has engaged every employee
across the group and is already delivering positive results.
Mark is being ably supported by CFO, Greg Smith, who joined
Steel & Tube in October last year. Greg has worked hard to
build a strong and robust financial platform for the company
and provided sound advice to the Board on the difficult
financial decisions we needed to make in the last year.
04
STEEL & TUBE ANNUAL REPORT 2018

Mark and Greg are being aided by a new leadership
team, reflecting the changes in the organisational
structure implemented last year. Each of these
leaders is an experienced executive, with strong
expertise in their specialist areas, and their
appointments have been endorsed by the Board.
The Board has benefitted from the addition of two
further Directors with relevant industry expertise and
governance experience. Steve Reindler and Chris Ellis
both joined the Board in October 2017 and their insights,
challenge and support, alongside that of Anne Urlwin
and Rosemary Warnock, have been greatly appreciated.
I would like to acknowledge the eight years of
service of Dave Taylor as CEO and Managing Director
and long serving Director, Dean Pritchard, who
retired at the 2017 Annual Meeting after 12 years
on the Board, including seven years as Chair.
One of Steel & Tube’s strengths is its revenue diversity
across different sectors – rural, manufacturing and
residential/commercial and infrastructure construction.
Non-residential construction makes up about 25%
of our current revenue stream and we are very
cognisant of the challenges being faced by this
sector of the construction industry. Risk allocation
remains a major issue, as does appropriate pricing
of contracts. The New Zealand sector, as a whole, needs
to improve its contracting practices and ensure risk is
assigned where it can best be managed. This will benefit
not just the sector, but the wider New Zealand
economy.
As a company, we do extensive due diligence of
construction projects and carefully assess risk before
taking on jobs. This ensures that we can provide the
best possible level and quality of service and products
to our customers.
Quality has been another area in which we have made
great progress, from establishing a rigorous upstream
supplier audit programme through to quality and
process improvement in everything we do. Safety has
maintained its high priority as we engage with all our
people to ensure they remain safe in all their work.
This has been a year of exceptional effort by our whole
team and we are grateful for their dedication, their
continual seeking for improvement, and for delivering
their best. On behalf of the Board, I would like to extend
our thanks to all Steel & Tube’s people and our key
partners and customers, for their support, hard work
and loyalty during this challenging time. The benefits of
their endeavours are now starting to show and we are
looking forward to a very positive and exciting future.
Susan Paterson
Chair
05

CEO’S REVIEW
A reset of the company is underway and early benefits are now being seen
from a company-wide change programme and business transformation.
On many fronts, the 2018 financial year was
disappointing with a number of legacy issues identified,
a difficult ERP system implementation and the need for
significant write downs and impairments impacting on
our results.
However, the extensive company-wide review
we undertook during the year has allowed us to
address issues and reset our company. We now have
a comprehensive understanding of our business,
our strengths, the opportunities ahead of us and
strategic clarity.
Steel & Tube is a New Zealand business with a long
heritage, great brands and businesses, talented people
and a strong Board providing leadership and support
for Management. We are now beginning the journey
to build value and deliver improved operating and
financial performance.
We have a new strategy in place, Striving for Excellence.
This is focused on the absolute essentials we believe
are fundamental to creating a great business – Safety
and Quality, Operational and Supply Chain Excellence;
a Strong Customer Focus; and Our People. You can
read more on each of our strategic pillars on the
following pages.
We have launched Project Strive – an inhouse
programme of business transformation initiatives based
on our core pillars – and this is already delivering early
benefits. Staff are encouraged to identify opportunities
for improvement across the business and then develop
solutions and pathways to help us achieve our potential.
The organisation has been restructured to improve
capabilities and efficiency, and capture synergies
from acquisitions. In addition, Steel & Tube’s
property footprint continues to evolve, to remove
duplication and improve customer service.
The company decided to plead guilty to the Commerce
Commission case relating to the historical application
of testing methodologies and we are looking forward
to having final resolution on this legacy issue. We are
awaiting a decision on sentencing and do not expect
this to affect FY18 results or guidance. We believe that
the historical mesh will perform in materially the same
way as mesh tested in accordance with the standard,
and this is supported by information we have received
from experts in this area. We have been concerned to
hear and see reports of homeowners being targeted
by people intent on spreading unnecessary worry,
fear and alarm. We have a high degree of confidence
in the performamce of our products and would
vigorously defend any class action and seek full
recovery of any direct and indirect costs incurred.
We have initiated an $80.9 million capital raising
to strengthen the balance sheet and following
completion, we will be well positioned to execute
our business transformation initiatives and
achieve our longer term strategic objectives.
06
STEEL & TUBE ANNUAL REPORT 2018

FINANCIAL PERFORMANCE
For the FY18 year, Steel & Tube reported sales revenue
of $495.8 million, with lower year on year sales
reflecting the short term impact of implementation
issues with the new ERP system, alongside highly
competitive trading conditions in some businesses.
Operating earnings (EBIT) were a loss of $(36.2) million
including non-trading adjustments of $(53.8) million.
Excluding non-trading costs, impairments and a
timing benefit from reduced software amortisation
costs of $1.1 million, normalised operating
earnings¹ were $16.5 million. A net loss after tax of
$(32.1) million was reported for the FY18 year.
Proceeds from the $80.9 million capital raising will be
used to pay down debt. Following completion, gearing is
expected to be approximately 1.15x normalised EBITDA.
The capital structure policy has been reset to operate
with net debt of less than 2.0x normalised EBITDA.
While no final dividend will be paid for FY18,
the company expects to resume dividend
payments in FY19 consistent with its stated policy
of paying 60-80% of normalised NPAT.
PRODUCTS AND
SERVICES TO MEET
CUSTOMER NEEDS
LEVERAGE OUR
TECHNICAL EXPERTISE
DELIVERY ON
TIME AND ON SPEC
DEVELOP LEADERS
EVERYONE MATTERS
RECOGNISE PERSONAL
AND TEAM CONTRIBUTIONS
PROVIDE A REWARDING
WORKPLACE
SAFE AND HEALTHY
WORK ENVIRONMENT
QUALITY PROCESSES
QUALITY PRODUCTS
CONTINUAL
IMPROVEMENT
LEVERAGE OUR
PROCUREMENT AND
SUPPLY CHAIN SCALE
EXCELLENT INVENTORY
MANAGEMENT
EMPLOY DATA ANALYTICS
TO BETTER SERVICE OUR
CUSTOMERS
DRIVE EFFICIENCIES
STRIVING FOR EXCELLENCE
BUSINESS DIVISIONS
DISTRIBUTION
~58% OF FY18 REVENUE
Products are sourced from
preferred steel mills and
distributed through Steel & Tube’s
national network of branches
INFRASTRUCTURE
~42% OF FY18 REVENUE
Products are processed before
sale and typically on a contract
or project basis, including onsite
installation services
Steel products
Piping systems
Chain & Rigging
Rural Products
Fastenings
Stainless Steel
Roll-formingRoofing
Coil Processing
Purlins
Comflor
Reinforcing/
Construction
ReinforcingCFDL
OUR GOAL
TO BE THE LEADER IN BUYING, SELLING, PROCESSING AND PLACING STEEL PRODUCTS IN NEW ZEALAND
1
Further details about normalised operating earnings for FY18 are outlined on pages 14 and 15.
07

DISTRIBUTION
In FY18, the Distribution division generated $288.3
million revenue and normalised operating earnings
of $5.9 million. Including non-trading adjustments
of $(18.7) million, operating earnings were a loss of
$(12.8) million.
Performance was materially impacted by the ERP
system implementation issues which affected
deliveries and customer service. These issues
have now been resolved. The majority of the non-
trading adjustments for Distribution were related
to the impairment of inventory following extensive
stock takes across the group and a detailed review,
in addition to business rationalisation costs.
Many of Steel & Tube’s ‘Project Strive’ business
transformation initiatives - such as the introduction
of Sales and Operations Planning, streamlining
of duplicated sites, a focus on efficiencies and
improvements in inventory management - will
directly benefit the Distribution division in the
coming year and are already having a positive effect.
The core focus on customer service and delivery
performance is driving sales, a number of large
project wins in late FY18 are now coming online
and further efficiency initiatives are expected
to deliver additional savings in FY19.
INFRASTRUCTURE
The Infrastructure division generated $207.5 million in
revenue and normalised operating earnings of $15.2
million. Including non-trading adjustments of $21.3
million (mainly comprising the impairment on the
Plastics business as well as inventory impairments),
operating earnings for Infrastructure were $(6.1) million.
Despite the challenges faced, sales improved versus
the prior year. Significant improvements have been
made to the Reinforcing business, repositioning it as a
leader in quality products and service. The roll-forming
businesses also improved during the year as issues
with the new ERP implementation were overcome.
CFDL retained its strong performance levels and
delivered a good result, albeit with some softening in
the South Island market. While the Plastics business
performed well as existing contracts were completed,
the reliance on large projects became apparent with
losses incurred in the second half of the year. As
previously advised, a strategic decision has been made
to exit this business due to a downturn in the long
term outlook for the irrigation market, along with a
need for further capital investment in the business.
The focus for the coming year is on building the
customer base and delivering further manufacturing
and operating efficiencies. Positive wins are already
being seen on the majority of projects, along with
a significant lift in manufacturing efficiencies.
OPERATIONAL PERFORMANCE
DIVISION: REVENUEDIVISION: NORMALISED EBIT*
$207.5m
$15.2m
$ 5.9 m
$288.3m
* Normalised EBIT is reported EBIT adjusted for non-trading items in FY18 outlined on pages 14 and 15.
08
STEEL & TUBE ANNUAL REPORT 2018

OUR POSITION IN THE VALUE CHAIN
We offer access to the widest range of steel products
in the New Zealand market, from roofing to flooring,
large steel plates and sheets to the smallest nuts and
bolts. We are experts in the processing of steel into
the products that our customers need, and have
specialised manufacturing facilities, with high tech
equipment and skilled staff. And we have a nationwide
network of distribution centres, allowing our customers
easy access to a wide range of steel solutions.
Mining
Primary processing
- Primary processing of
steel in New Zealand
is by BlueScope
and PacificSteel
Secondary
processing of
New Zealand
primary processed
products
STEEL & TUBE CORE BUSINESS
Direct importation of some secondary
processed products to distribute
Imports from small number of pre-qualified
Asian suppliers
Secondary processing
of imported primary
processed products
Distribution
of primary
processed
products (Some
customers prefer
to process
themselves)
Distribution of secondary
products to end customer
Installation of secondary
products to end customer
OUTLOOK
The 2018 financial year was about resetting
the business. Legacy issues are now behind
us, restructuring has been completed and
Steel & Tube is in a much stronger position.
We are beginning the journey to significantly
improve financial and operating performance.
We have a detailed strategic plan in place and
significant progress is being made on Project Strive
business transformation initiatives which will have
a positive benefit in the 2019 financial year.
The company has a balanced exposure across the
rural, manufacturing and construction sectors, with
consistent demand and activity forecast in all sectors
over the next few years. Recent increases in volume
are encouraging and we expect sales to continue the
positive trajectory seen in the last four months.
In light of the improving performance we have
provided EBIT guidance for FY19 of $25.0 million.
I would like to personally thank all the people at
Steel & Tube for their hard work and support over the
last year, and our customers for their loyalty. We remain
focused on our goal of being the leading provider of
steel products and solutions in New Zealand and are
confident we have the right strategy, the right people
and the right organisational structure to achieve this goal.
Mark Malpass
Chief Executive Officer
Primary
Processing
Secondary ProcessingDistribution
09

The health and safety of our staff, customers and suppliers is paramount,
and essential for our success. Our zero harm goal is embedded in our
culture. We are committed to delivering safe work systems, quality facilities
and training, and workplace safety procedures are always top of mind. We
provide extensive education programmes and have initiatives and daily
compliance expectations all designed to keep our people safe at work.
Our ability to deliver quality products and solutions is what sets us
apart. Quality is in everything we do, from sourcing and production of
products through to customer service and delivery. We are committed
to the principle that all our customers and stakeholders should expect
consistent, outstanding service and quality products from the company.
All employees have a responsibility to deliver on this - there are no
exceptions. In all that we do, we continually seek to improve and do better.
IMPROVING TRACEABILITY: The ability to track and trace raw materials and products through all stages
of production and distribution is essential for good business and to meet recognised standards and regulations.
It also allows us to verify the source and placement of our products. One of Steel & Tube’s new traceability
initiatives is the current trial of a computerised tracking and scanning system. Barcode scanning technology
allows raw materials to be scanned on arrival and inventory systems are instantly updated. Reports identify the
quantity, location and value of on-hand material and related administrative processes such as invoicing have
also been simplified. This will allow products to be easily tracked from their source through to the customer.
Key initiatives currently
underway include:
• Safety leadership
Legends programme
• Company-wide update
to ISO 9001:2015
• Enhanced quality
assessments of steel mills
• Traceability enhancement
including barcode scanning
COMMITTED TO
SAFETY AND QUALITY
10
STEEL & TUBE ANNUAL REPORT 2018

Our customers are at the heart of our business and everything we do
is aimed at meeting and exceeding their expectations. Our aim is to
do the best we can for our customers today and into the future.
We are continually reviewing our offer to make sure we have products
and solutions to meet our customers’ needs. Delivering these on time
and on spec is essential.
Technology is a big enabler, allowing us to improve sales effectiveness
and lower our cost to service our customers.
We are optimising our national branch network and improving the
sales model, with customers able to access all products and solutions
from one point of call.
We are bringing outsourced services in-house, such as our team of
‘fixers’ (who install reinforcing) and warehousing. This provides us
with even more control over quality outcomes.
Key initiatives currently
underway include:
• Sales account alignment,
management and sales
excellence training programme
• Investment in new and
enhanced product offering
• Development of customer
loyalty programme
• Activation of new call centre
• Common customer
contact point
CUSTOMER SATISFACTION ON THE RISE: Steel & Tube works with more than 15,000 customers every year
and delivering great customer service is a top priority. Edwards & Hardy Roofing is New Zealand’s largest roofing
company and a key customer for Steel & Tube. Edwards & Hardy Group General Manager, Tony Thorn, commented:
“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”. Great customer
feedback such as this is a result of Steel & Tube’s renewed focus on wining the hearts and minds of our customers.
PUTTING THE CUSTOMER
AT THE HEART OF OUR BUSINESS
11

Our success is predicated on our ability to source, process, deliver
and place steel products. We have to get the right product to the
customer at the right time every time in the most efficient and
profitable manner possible.
Having an excellent operations and supply chain is essential to achieving
our goals.
This means suppliers providing us with high quality products at good
prices. It means working efficiently in our warehouses to get products
out to the customer on time and to minimise waste. Excellent inventory
management is necessary to make sure we have product available
where and when our customers need it. Continual improvement is
essential to make sure we are servicing our customers as best we can.
As part of our focus, we are continually seeking to minimise the
environmental effects of our activities. This translates to reusing
and recycling, operational policies and processes, and efficient
freight management.
ROOFING DELIVERING OPERATIONAL EXCELLENCE: Customer feedback tells us that relationship
and delivery sits ahead of price when it comes to value. Our aim is to be the preferred trading partner for
our customers by delivering in full, on time, to spec and in a cost effective manner by reducing waste. The
Roll- forming business has been making great strides by taking small steps, which are positioning the business
to reach its goal. These include ensuring the right structure and talent to support manufacturing operations.
Daily reports to measure accuracy. Accurate customer and supplier pricing in the ERP system. And investment
in equipment upgrades and new equipment to improve safety, accuracy and reduce inefficiency. The results
are already becoming clear, with strong uplifts in business performance and positive customer feedback.
Key initiatives currently
underway include:
• Implementation of a
new Sales and Operations
Planning model
• Leverage procurement scale
• Operational excellence
and efficiency
• Freight efficiencies
• Optimising our
facility footprints

OPERATIONAL AND
SUPPLY CHAIN EXCELLENCE
12
STEEL & TUBE ANNUAL REPORT 2018

To be a great organisation, we need great people. It’s their talents, passion,
determination and resourcefulness that are our greatest assets and what
drives our company forward.
It’s our job to provide an environment that inspires and rewards our
people. We invest in training and programmes to develop, nurture and
grow our team talent to unleash potential. We work hard to develop future
leadership talent and our Lead2Succeeed programme focuses on rising
and diverse future leaders.
While excellent financial and commercial performance is a given, we
believe it’s also important to add value in other ways. This is our fifth year
of partnering with the First Foundation, assisting academically talented
students to achieve their potential through tertiary education and to
prepare them to positively influence and benefit their communities.
Key initiatives currently
underway include:
• Succession planning
• Supervisor/Manger
development programme
• Lead2Succeed programme
INVESTING IN TRAINING AND DEVELOPMENT: Investing in our people remains a priority. Over
the past year we have delivered a range of training and development initiatives – ranging from our Health
& Safety culture ‘Legends’ programme, supervisory and Quality 5S continuous improvement programmes,
to continuation of our successful future leaders programme, Lead2Succeed. Induction programmes for
new workers and mentoring are also an important part of building the capability of our people.

SUPPORT A WINNING TEAM
13

FY18 FINANCIAL
MEASURES EXPLAINED
An overview of the financial results for the year ended
30 June 2018 can be read in the CEO’s commentary on
page 07 with more detailed disclosure included in the
Financial Statements and Note Disclosures on pages
23 to 60.
Non-trading adjustments/
Unusual transactions: The financial results for FY18
include a number of unusual transactions, considered
to be non-trading in either their nature or size. These
transactions are excluded from normalised earnings.
The following reconciliation is intended to assist readers
understand how the earnings reported in the Financial
Statements for the year ended 30 June 2018 reconcile
to normalised earnings. Non-trading adjustments of
$(53.8) million were included in the FY18 results.

Non-GAAP financial information:
Steel & Tube uses several non-GAAP measures when
discussing financial performance. These include
normalised EBIT and working capital. Management
believes that these measures provide useful information
on the underlying performance of Steel & Tube’s
business. They may be used internally to evaluate
performance, analyse trends and allocate resources.
Non-GAAP financial measures should not be viewed
in isolation nor considered as a substitute for
measures reported in accordance with NZ IFRS.
Steel & Tube’s unaudited reconciliation of non-
GAAP measures to GAAP measures for the financial
year ended 30 June 2018 are detailed below.
RECONCILIATION OF GAAP TO NON GAAP MEASURES
Year ended 30 June 2018
June
2018
$000
June
2017
$000
GAAP: (Loss)/Earnings before interest and Tax (EBIT)(36,187)31,629
Add back unusual transactions (non-trading adjustments):
Inventory write-downs and write-offs (Note B1)24,005 -
Exit from S&T Plastics (Note C4)10,849 -
Impairment of Intangible assets (Note C2)12,127 -
Business Rationalisation (Note E2)2,727 -
Organisational Restructuring (Note E2)3,317 -
Other unusual costs 762 -
One-off payment by subsidiary vendor-(442)
Normalised EBIT – non-GAAP17,600 31,187
Unexpected benefit from timing of ERP IT system amortisation(1,132) -
Normalised EBIT comparable to May 2018 Earnings Guidance – non-GAAP16,468 31,187
14
STEEL & TUBE ANNUAL REPORT 2018

Business rationalisation includes business change
costs incurred to rationalise Steel & Tube’s property
footprint including onerous leases, rationalisation
and re-organisation of manufacturing operations and
delivery logistics operations, and costs incurred in
reviewing and streamlining operations. These costs
are included in Note E2 to the Financial Statements.
Organisational restructuring includes the
costs incurred to improve capabilities, remove
duplication and inefficiencies and capture synergies
from acquisitions. These costs are included
in Note E2 to the Financial Statements.
Other unusual costs include significant doubtful
debt and contract disputes provisions, offset by a net
gain on sale of properties and settlement of acquisition
earn out payments. These items are included in Notes
B2, B3, E2 and Section C to the Financial Statements.
Note references included in the table on page 14 are
to specific notes in the audited Financial Statements.
Revenue: FY18 sales revenue of $495.8 million, was
slightly lower year on year sales reflecting the short term
impact of ERP implementation issues, alongside highly
competitive trading conditions in some businesses.
EBIT: This means (loss) / earnings before interest and
tax and is calculated as profit for the period before
net finance costs and tax. FY18 EBIT was impacted
by a number of non-trading adjustments totalling
$(53.8) million, as shown in the table above.
Normalised EBIT: This means EBIT after normalisation
adjustments. Steel & Tube reports its normalised EBIT
as $16.5m for FY2018. This is directly comparable to
the earnings guidance issued on 23 May 2018, which
forecast normalised EBIT of $16m. Subsequent to
this announcement, the amortisation start date for
the new ERP system was amended. This reduced
amortisation expenditure by $1.1m in comparison
to that included in the May 2018 forecast.
Working Capital: This means the net position after
current liabilities are deducted from current assets. The
major individual components of working capital for the
Group are Inventories, Trade and other receivables and
Trade and other payables. How the Group manages these
has an impact on operating cash flow and borrowings.
15

FIVE YEAR FINANCIAL
PERFORMANCE
2018¹2017¹201620152014
$000$000$000$000$000
Financial Performance
Sales495,806 511, 4 0 0 515,9 47 501,795 4 41,433
EBITDA(28,127)39,310 43,160 38,267 32 ,9 0 0
Depreciation and amortisation(8,060)( 7, 6 8 1)(6,354)(4,9 45)(6 ,1 0 4)
EBIT(36,187)31,629 36,806 33,322 26,796
Net Interest expense(4,6 3 1)(3,577)(3,638)(3,496)(1,919)
Profit before tax(40,818)28,052 3 3 ,16 8 2 9,8 26 24,877
Tax expense – operating income8,768 (8,012)( 7, 3 4 2 )(8,379)(6,973)
Profit after tax(32,050)20,040 25,826 21,4 47 17,9 0 4
Funds Employed
Equity172,612 2 12 ,13 0 18 0,245 167, 0 0 9 16 0,381
Non-current liabilities113,826 14 0,9 8 8 100,296 75,0 07 2,345
286,438 3 5 3 ,118 28 0,541 242,016 162,726
Comprises:
Current assets228,887 243,290 221,539 204,895 205,327
Current liabilities(59,099)(59,609)(49,8 9 9)(45,785)(114,24 0)
Working capital169,788 183,6 81 171,6 4 0 159,110 91,087
Non-current assets116,650 169,437 10 8 ,9 01 82,906 71,639
286,438 3 5 3 ,118 28 0,541 242,016 162,726
Statistics
Dividends per share (cents)7. 0 16.0 22.5 19.0 16.0
Basic Earnings per share (cents)(35.8)22.4 28.9 24.5 20.4
Return on sales (6.5%)3.9 %5.0%4.3%4 .1%
Return on equity (18.6%)9.4 %14.3%12.8%11. 2 %
Working capital (times)3.9 4 .1 4.4 4.5 1.8
Net tangible assets per share$1.27 $1.6 0 $1.47 $1.59 $1.55
Equity to total assets50.0%51.4%54.5%58.0%5 7.9 %
Gearing (debt to debt plus equity)37.7%3 7. 4 %34.7%28.8%26.8%
Net interest cover (times)(7.8)8.8 1 0 .1 9. 5 14.0
Ordinary shareholders8,163 8,404 8,506 8,299 8,348
Employees1,015 972 918 781 773
– Female203 193 193 15 4 139
– Male812 779 725 627 634
Directors & Officers
– Female4 4 3 4 4
– Male8 10 10 9 9
EBITDA – Earnings before interest, tax, depreciation and amortisation.
EBIT – Earnings before interest and tax.
¹ Normalised financial results for the financial years are included on pages 14 and 15.
16
STEEL & TUBE ANNUAL REPORT 2018

17

STEVE KUBALA
LEADERSHIP TEAM
MARC HAINEN
GREG SMITH
MARK MALPASS
DAMIAN MILLER
MIKI COOKE
DAVE CLEGG
18
STEEL & TUBE ANNUAL REPORT 2018

Mark Malpass
CEO
Mark first joined Steel & Tube as an Independent
Director in March 2017, but stood down from the
Board after being appointed interim Chief Executive on
25 September 2017. Mark was permanently appointed
as Chief Executive on 22 February 2018. 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 Buildings
largest division, Infrastructure Products, which included
transforming their steel distribution businesses.
Greg Smith
CFO AND COMPANY SECRETARY
Greg joined the company on 30 October 2017.
A chartered accountant, Greg has financial and
senior level leadership experience across the
telecommunications, dairy, electricity and infrastructure
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 Limited and since 2011, as Chief Financial
Officer of Wellington Electricity Lines (WEL) /
International Infrastructure Services Company (IISC).
Steve Kubala
GENERAL MANAGER S&T ROLL-FORMING
Steve first joined the company with the purchase of
Cable Price Steel in 1989. In 1995 he left to join Mico
Wakefield, returning to S&T in 2007. Since that time he
has held a number of senior managerial roles across
the company. As Integration Manager, Steve led the
assimilation of the company now trading as S&T Stainless,
before becoming GM of that business. Now General
Manager Roll-forming, he leads the teams which
includes Roofing, Coil, Purlins and Comflor businesses.
Damian Miller
QUALITY MANAGER
Damian joined the company in 2016 and has 20 years’
international experience in Operations Management,
Quality, Health, Safety & Environment, QA/QC, Oil
& Gas and most recently the steel industry. He has
held various Operations & Executive Management
positions in the US, Asia, Africa, Latin America.
Marc Hainen
GENERAL MANAGER DISTRIBUTION
Marc, who joined the company on 1 November
2017, brings significant experience in the steel and
construction industry in New Zealand. He has a strong
background in sales and marketing management,
operations and manufacturing as well as logistics and
supply chain. Marc has held a variety of management
and leadership roles in New Zealand, Australia and
the UK, including multiple roles leading a variety
of divisions within Fletcher Building Limited.
Miki Cooke
NATIONAL MANAGER SUPPLY CHAIN
Miki joined the company in May 2017. She has worked
for more than 25 years in Supply Chain, specialising
in Procurement and for a number of multi-national
companies based in ANZ and within a number of
industries. She has also played an active role in
the supply chain industry, serving as President of
APICS NSW and a director of APICS Australia.
Dave Clegg
GENERAL MANAGER PEOPLE & CULTURE
Dave joined the company in June 2010. He has
more than 25 years’ experience in human resources
management, including consulting to Contact Energy
as GM Human Resources and as change manager
for a major enterprise transformation project.
19

BOARD
Chris Ellis
Independent Director
Appointed October 2017
Chris’ background spans the manufacturing, heavy
construction and engineering sectors. He has held
CEO roles with Brightwater Group and at Fletcher
Building Limited where he was Chief Executive of the
Building Products Division. Chris was the inaugural
Chairman of the NZ Business Leaders’ Health and
Safety Forum. He is currently Chairman of HiWay
Group and also serves on the Board of Directors of
WorkSafe New Zealand, Horizon Energy, Steelpipe
and the New Zealand Transport Agency.
Rosemary Warnock
Independent Director
Appointed September 2010
Rosemary has held senior leadership positions in the
BP Group including sales, marketing & distribution in
ANZ, global manufacturing and supply chain based
out of London and Chief Executive Castrol Asia Pacific
based out of Singapore. She was formerly Chair of
the Thinc Group, global project management &
consultants in major capital works. Rosemary is a
Founding Partner of the Adelante Group, a partnership
that provides executive leadership development
services, a Director of The Buttery and a member
of the Foundation Committee for The Buttery.
Susan Paterson
Chair
Appointed January 2017
Susan was appointed Chair on 16 February 2017. A
professional director since 1996, in 2015 Susan was
appointed an Officer of the Order of New Zealand
(ONZM) for her to services to corporate governance.
Having trained and practiced as a pharmacist, Susan
completed her MBA at London Business School, then
worked in strategy and IT consulting and management
roles in New Zealand, Europe and USA. She worked in
the Steel Sector at Fletcher Challenge and was General
Manager of Wiremakers. Susan holds a number of
directorships including Sky Network TV, Goodman
NZ, aged care provider Arvida, Les Mills NZ and is also
Chair of IT consultancy Theta Systems and External
Monetary Policy Advisor to RBNZ Governor.
Anne Urlwin
Independent Director
Appointed June 2013
Anne is a chartered accountant, business consultant and
professional director. She has considerable governance
experience and is currently deputy chair of Southern
Response Earthquake Services Ltd. She has directorships
with Chorus Ltd, Summerset Group Holdings, One Path
Life (NZ), City Rail Link and Tilt Renewables and is the
former Chair of the Naylor Love Group of Companies.
Steve Reindler
Independent Director
Appointed October 2017
Steve is an engineer who has a background in large-scale
infrastructure and heavy industry manufacturing. He
has gained extensive experience through his previous
executive roles at New Zealand Steel Limited and
Auckland International Airport Limited, and through
his industry position as inaugural Chairman of the
Chartered Professional Engineers Council and as a
board member and President of IPENZ. Steve holds a
number of directorships including Meridian Energy
Ltd, Broome International Airport Group, Z Energy,
WorkSafe New Zealand, Lincoln University/Ag Research
Joint Facility Board and Yachting New Zealand, and is
also Chair of Waste Disposal Services JV in Auckland.
20
STEEL & TUBE ANNUAL REPORT 2018

ANNE URLWIN
SUSAN PATERSON
ROSEMARY WARNOCK
STEVE REINDLER
CHRIS ELLIS
21

Financial Review
CONTENTS
23 Financial Statements 2018
25 Statement of Profit or Loss and
Other Comprehensive Income
26 Statement of Changes in Equity
27 Balance Sheet
28 Statement of Cash Flows
29 Notes to the Financial Statements
29
Section A – Performance
34 Section B – Working Capital
39 Section C – Fixed Capital
47 Section D – Funding
51 Section E – Other
61 Independent Auditor’s Report
68 General Information
68
Governance
74 Remuneration
78 Disclosures
84 Directory
22
STEEL & TUBE ANNUAL REPORT 2018

The accompanying notes form part of these financial statements.
23
FINANCIAL

STATEMENTS
Financial Statements 2018
The financial report for Steel & Tube includes these
sections:
Financial Statements
Performance
Working Capital
Fixed Capital
Funding
Other
Significant matters in the financial year:
The Group has been impacted by a number of items,
considered to be non-trading in nature, during the
financial year ended 30 June 2018.
Enterprise Resource Planning System
The implementation of a new Enterprise Resource Planning
(ERP) system went live on 2 October 2017. While the new
ERP system is now operational, issues with its
implementation across the Group hampered business
operations and resulted in lost business. The Group worked
closely with its IT suppliers to rectify issues and, while the
Board and Management are disappointed in the execution
of this project, they are confident that this new platform is
the right one to take the Group forward. Refer to note C2.
The roll-forming business within the Infrastructure
operating segment and the core Distribution businesses, in
particular, were impacted by the ERP implementation
issues. Refer to note A4.
S & T Plastics Closure
During the year, the Group carried out an extensive review
of the S & T Plastics business resulting in a decision to exit
the business. The Board considered that the narrow market
segment the business operates in, further capital
investment required in the business and a less favourable
outlook for the irrigation market to be key factors in the
decision to exit the business. The Board, having regard to
optimising value for shareholders, considered that the
Group would realise better value for shareholders by
exiting the plastics business. The business and/or its assets
are currently being marketed for sale. The assets related to
S & T Plastics have been presented as held for sale following
the decision to dispose of the business. The sale and close-
down of the business is expected to be completed by
December 2018. Costs associated with the impairment of
assets to fair value less costs to sell and the exit of the
plastics business totalled $10.8m in the 2018 financial year.
Refer to note C4.
Business Reorganisation
Management also commissioned an independent
consultant to undertake reviews of the operations of the
Distribution and Infrastructure businesses in 2018. This led
to decisions to restructure and re-organise certain parts of
these businesses. These changes resulted in the Group
incurring approximately $6m of expenditure. The Board
considers these costs to be non-trading as they relate to
business reorganisation activities and will not be repeated
in future years.
Intangible Asset Impairment
The Group undertook value-in-use calculations for each
Cash Generating Unit (CGU) that recognised Goodwill for
the year ended 30 June 2018. A decline in performance
over recent years in the Hurricane Wire and Distribution
CGU’s resulted in the value-in-use calculations showing a
lower value than the recoverable amount of assets within
those CGU’s. This led to an impairment of Goodwill of $10.1
million. Management has commenced a business
transformation project and consider that the financial
performance of both CGU’s can be improved.
The Group also reviewed capital spend associated with the
implementation of the ERP system and assessed that costs
totalling $2 million no longer provided economic benefit to
the Group and were therefore impaired. Refer to note C2.
Inventory Impairment
During the year ended 30 June 2018, Management
completed a detailed review of inventory holdings, aided
by the implementation of the new ERP system. The new
system assisted Management with improved visibility of
inventory and the Group also completed detailed stock
counts during May & June 2018. Following this detailed
review and stock counts, Management identified that the
carrying value of certain inventory items exceeded the net
realisable value. This was primarily for stock items greater
than twelve months old. Together with other aged stock
impairments and valuation write-downs, the Group
impaired approximately $15.3m of inventory value during
the year. Following completion of detailed stock counts,
the Group wrote-off approximately $8.7m of inventory
which was no longer on hand. Management believe that
the new IT system, together with improved stock count
controls will ensure there is no further material write-
downs of inventory. Refer to note B1.

The accompanying notes form part of these financial statements.
24
STEEL & TUBE ANNUAL REPORT 2018
Significant accounting policies which are
relevant to the understanding of the financial
statements are provided throughout the
report in boxes outlined in red.
KEY POLICY
Critical accounting estimates and judgements
Preparation of these financial statements requires the
exercise of judgements that affect the application of
accounting policies, the reported amounts of assets and
liabilities, and income and expenses.
Estimates and judgements are continually evaluated, based
on historical experience and other factors, including
expectations of future events that are believed to be
reasonable under the circumstances. The Group makes
estimates and assumptions about the future. Actual results
may differ from these estimates.
The estimates and assumptions that have
a significant risk of causing a material
adjustment to the carrying value of assets and
liabilities within the next financial year are
highlighted throughout the report in boxes
shaded in red.
KEY JUDGEMENT
General information
Steel & Tube Holdings Limited (the Company or Steel &
Tube) is registered under the Companies Act 1993 and is a
FMC Reporting Entity under the Financial Markets Conduct
Act 2013. The Company is a limited liability company
incorporated and domiciled in New Zealand. The Group
comprises Steel & Tube Holdings Limited and its
subsidiaries.
The Group’s principal activities relate to the distribution
and processing of steel, plastic and related products.
The registered office of the Company is Level 7, 25 Victoria
Street, Petone, Lower Hutt 5012, New Zealand.
These financial statements have been prepared:
– In accordance with New Zealand Generally Accepted
Accounting Practice (NZ GAAP), for which Steel & Tube is
a for-profit entity
– To comply with New Zealand Equivalents to International
Financial Reporting Standards (NZ IFRS) and with
International Financial Reporting Standards (IFRS)
– In accordance with the requirements of Part 7 of the
Financial Markets Conduct Act 2013 and the NZX Main
Board Listing Rules
– In New Zealand dollars (which is the Company’s and
subsidiaries’ functional currency and the Group’s
presentation currency) and rounded to the nearest
thousand dollars
– Under the historical cost convention, as modified by the
revaluation of certain assets as identified in specific
accounting policies.
– Following the implementation of a new ERP system
during the period, certain comparative information has
been reclassified to align with current year presentation.
The changes to the comparatives are shown below:
As
previously
statedAdjustments*
Revised
Financial
statements
$000s$000s$000s
Cost of sales(380,226)(4,674)(384,900)
Interest expense(3,091)(537)(3,628)
Operating expenses(101,758)5,211 (96,547)
*Adjustments
1 $4.67m adjustment from operating expenses to cost of
sales to restate the salaries & wages payments that are
directly associated with delivering revenue.
2 $0.54m in line fees for the Company’s term loans were
reclassified from operating expenses to interest
expenses to better reflect the nature of the expense.
3. Intangibles - Software has been combined with licenses
and comparatives changed in note C2.

The accompanying notes form part of these financial statements.
25
FINANCIAL

STATEMENTS
Group
2018 2017
Notes$000 $000
Sales revenue495,806 511, 4 0 0
Other operating income994 1,676
Cost of salesA3(398,399)(3 8 4,9 0 0)
Operating expensesA3(115,924)(96,547)
Operating (loss) / earnings before other gains and financing costs( 17, 5 2 3)31,629
Impairment of property, plant and equipment and intangiblesC1/C2( 2 0 ,10 0) -
Other gains1,436 -
(Loss) / Earnings before interest and tax(3 6 ,18 7 ) 31,629
Interest income53 51
Interest expense(4,68 4)(3,628)
(Loss) / Profit before tax(4 0,818)28,052
Tax credit / (expense)A58,768 (8,012)
(Loss) / Profit for the year attributable to owners of the Company(32,050)20,040
Items that may subsequently be reclassified to profit or loss
Other comprehensive income / (loss) - hedging reserve2 ,13 6 (762)
Items that may not subsequently be reclassified to profit or loss
Other comprehensive income - revaluation reserve960 35,713
Other comprehensive income / (loss) - deferred tax on revaluation reserve1,922 (2,908)
Total comprehensive (loss) / income(27,032)52,083
Basic (loss) / earnings per share (cents)A2(35.8)22.4
Diluted (loss) / earnings per share (cents)A2(35.8)22.3
Statement of Profit or Loss and Other Comprehensive Income
FOR THE YEAR ENDED 30 JUNE 2018

The accompanying notes form part of these financial statements.
26
STEEL & TUBE ANNUAL REPORT 2018
Statement of Changes in Equity
FOR THE YEAR ENDED 30 JUNE 2018
Share
capital
Retained
earnings
Hedging
reserve
Revaluation
reserve
Treasury
shares
Share-
based
payments
Total
equity
Notes$000 $000 $000 $000 $000 $000 $000
Group
Balance at 1 July 20167 7, 7 5 6 105,657 (431) - (3,50 0)763 18 0,245
Comprehensive income
Profit after tax - 20,040 - - - - 20,040
Other comprehensive (loss) / income
Hedging reserve (net of tax) - - (762) - - - (762)
Asset revaluation (gross) - - - 35,713 - - 35,713
Deferred tax on above
- - - (2,908) - - (2 ,9 0 8)
Total comprehensive income - 20,040 (762)32,805 - - 52,083
Transactions with owners
Dividends paidA2 - ( 2 0 ,1 4 5 ) - - - - ( 2 0 ,1 4 5 )
Proceeds from partly paid sharesD348 - - - - - 48
Options vested during the year - - - - - (170)(170)
Issue / (purchase) of own shares - net of
transaction costs
D3
- - - - 69 - 69
Balance at 30 June 2017
7 7, 8 0 4 105,552 ( 1,19 3)32,805 (3,431)593 2 12 ,13 0
Comprehensive income
(Loss) after tax - (32,050) - - - - (32,050)
Other comprehensive (loss) / income
Hedging reserve (net of tax) - - 2 ,13 6 - - - 2 ,13 6
Deferred tax on asset sale - - - 2,191 - - 2 ,19 1
Asset revaluation (gross) - - - 960 - - 960
Deferred tax on asset revaluation
- - - (269) - - (269)
Total comprehensive income - (32,050)2,136 2,882 - - (27,032)
Transfer on sale of property - 29,178 - (29,178) - - -
Transactions with owners
Dividends paidA2 - (12 ,6 62) - - - - (12 ,6 62)
Proceeds from partly paid sharesD341 - - - - - 41
Options vested during the year
- - - - - (400)(400)
Issue / (purchase) of own shares - net of
transaction costs
D3
- - - - 535 - 535
Balance at 30 June 2018
77,845 90,018 943 6,509 (2,896)193 172,612

The accompanying notes form part of these financial statements.
27
FINANCIAL

STATEMENTS
Balance Sheet
AS AT 30 JUNE 2018
Group
20182017
Notes$000 $000
Current assets
Cash and cash equivalentsE65,584 6,517
Trade and other receivablesB29 9,181 93,489
InventoriesB1116,047 143,064
Income tax refund5,165 218
Derivative financial instrumentsE61,271 2
Assets held for saleC4
1,639 -
228,887 243,290
Non-current assets
Deferred taxA56,488 -
Property, plant and equipmentC152,739 102,589
IntangiblesC2
5 7, 4 2 3 66,848
116,650 169,437
Total assets
345,537412,727
Current liabilities
Trade and other payablesB349,8 67 5 4 , 3 61
ProvisionsE29,215 3,534
Derivative financial instrumentsE6
17 1,714
59,099 59,609
Non-current liabilities
Trade and other payablesB32,108 2,212
BorrowingsD110 9,935 133,374
Deferred taxA5 - 4 ,15 7
ProvisionsE2
1,783 1,245
113,826140,988
Equity
Share capitalD3 7 7, 8 4 5 7 7, 8 0 4
Retained earnings9 0,018 105,552
Other reserves
4,749 28,774
17 2 ,612 2 12 ,13 0
Total equity and liabilities
345,537 412,727
These financial statements and the accompanying notes were authorised by the Board on 28 August 2018.
For the Board




Susan Paterson Anne Urlwin
Chair Director

The accompanying notes form part of these financial statements.
28
STEEL & TUBE ANNUAL REPORT 2018
Statement of Cash Flows
FOR THE YEAR ENDED 30 JUNE 2018
Group
2018 2017
Notes$000 $000
Cash flows from operating activities
Customer receipts4 89,6 8 6 512 ,9 7 9
Interest receipts53 51
Payments to suppliers and employees(478,601)(480,329)
Income tax payments(5,620)(8, 231)
Interest payments
(4 ,19 5)(3,628)
Net cash inflow from operating activities1,323 20,842
Cash flows from / (to) investing activities
Property, plant and equipment disposal proceeds52,768 221
Payment for new business purchase (net of cash acquired) - (13,761)
Property, plant and equipment and intangible asset purchases
(18,96 4)(18,518)
Net cash inflow / (outflow) from investing activities33,804 (32,058)
Cash flows (to) / from financing activities
Proceeds from partly paid sharesD3 41 48
Issue / (purchase) of Treasury shares - 69
Net proceeds from / (repayment of ) borrowingsD2(23,439)35,474
Dividends paidA2
(12 ,6 62)( 2 0 ,1 4 5 )
Net cash (outflow) / inflow from financing activities(36,060)15,4 4 6
Net (decrease) / increase in cash and cash equivalentsD2(933)4,230
Cash and cash equivalents at the beginning of the year
6,517 2,287
Cash and cash equivalents at the end of the year
5,584 6,517
Represented by:
Cash and cash equivalents
5,584 6,517
5,584 6,517
Reconciliation of (loss) / profit after tax to cash flows from operating activities
(Loss) / profit after tax(32,050)20,040
Non-cash adjustments:
Depreciation and amortisation8,060 7, 6 8 1
Deferred tax(9,572)905
Impairment of property, plant, equipment and intangibles2 0 ,10 0 -
Other(400) -
Gain on items classified as investing activities:
(Gain)/Loss on property, plant and equipment disposals
(1,436) -
(15, 298)28,626
Movements in working capital:
Income tax(4,947) (808)
Inventories27,017 ( 13 ,19 4)
Trade and other receivables(5,692)(111)
Trade and other payables
2436,329
Net cash inflow from operating activities
1,323 20,842

2929
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2018
Section A - Performance
This section focuses on the Group’s financial performance and returns provided to Shareholders.
A1: Business Performance
During 2018, Steel & Tube introduced a comprehensive change programme targeting improved business
performance and also carried out an extensive review of business operations. The review resulted in a decision to
exit S & T Plastics business, a write-down of inventory values, impairment of intangible assets, rationalisation of
Distribution and Reinforcing operations and completion of further organisational restructuring.
The non-trading costs associated with the review, offset by some upside from the sale of two properties were
$53.8m and these have directly impacted EBIT performance in 2018.
The Group was also impacted by issues related to the implementation of the new ERP system that went live on
2nd October. The implementation issues hampered business operations, mainly in the roll-forming and core
distribution businesses, and resulted in lost business. The Group worked closely with its IT suppliers to rectify the
issues and are confident that this new platform is the right one to take the Company forward.
A2: Dividends and Earnings per Share
On 7 August 2018 the Board announced a capital raising and declared that, as a result, a final, full year dividend
would not be declared (2017: 7.0 cents per share or $6.34m).
Final Dividend Paid: 2017: 7.0 cents per share (2016: 13.5 cents)
Interim Dividend Paid: 2018: 7.0 cents per share (2017: 9.0 cents)
25,000
20,000
15,000
10,000
5,000
0
201620172018
Dividends Paid ($000s)
Dividends Paid and Earnings per Share
Dividends paid are fully imputed. The Group is entitled to a tax credit for supplementary dividends paid to overseas
shareholders of $0.25m (2017: $0.34m).
Basic earnings per share is calculated by dividing the net profit attributable to shareholders by the weighted average
number of fully paid shares less treasury shares.
Diluted earnings per share includes partly paid shares (refer Note D3) and represents the Company’s earnings per
share if convertible shares were exercised. The weighted average number of shares is adjusted by the number of
outstanding rights to executive shares that are deemed to vest at their future vesting dates.
NOTES – SECTION A

PERFORMANCE

30
STEEL & TUBE ANNUAL REPORT 2018
30
STEEL & TUBE ANNUAL REPORT 2018
(Loss) / Earnings per share (EPS)
2018 2017
$000 $000
(Loss) / profit after tax(32,050)20,040
Weighted average number of shares for basic EPS 89,596 8 9,427
Weighted average number of shares for diluted EPS N/A 90,028
Basic (loss) / earnings per share (cents)(35.8)22.4
Diluted (loss) / earnings per share (cents)(35.8)22.3
The impact of unvested share options on the Group’s diluted EPS is anti-dilutive. As a result, basic and diluted EPS
are the same for 2018.
A3: Expenses
2018 2017
Included in operating activities:
$000 $000
Inventories expensed in cost of sales3 49,973 358,665
Inventory written down / impairment24,005 25
Bad and doubtful debts2,855 1, 0 61
Depreciation and amortisation8,060 7, 6 8 1
Directors' fees478 349
Donations8 29
Employee benefits76,646 67,067
Defined contribution plans 1,625 1,495
Information Technology Expenses6,058 3,542
Foreign exchange gains(2,105)(1,781)
Operating leases17,109 15,190
Onerous leases1,999 -
Other expenses
27,612 28,124
Total cost of sales and operating expenses
514,323 481,447
Inventory as sold is expensed as cost of sales. Adjustments between Inventory cost and net realisable value are
included in cost of sales. Adjustments to receivables are included in other operating expenses.
Depreciation related to equipment used to manufacture products is included in cost of sales. Other depreciation
is included in operating expenses.
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified
as operating leases. Payments made under operating leases are charged to profit or loss on a straight-line basis
over the term of the lease.

3131
NOTES – SECTION A

PERFORMANCE
A4: Operating Segments
Following a change to the operating structure of the Group during the reporting period, the reportable
operating segments have been revised to align with the new structure. Previously the Group had one reportable
segment. The Group has realigned its operating structure whereby there are now two clear Operating Divisions.
The Group’s internal financial reporting has changed to align with this new structure. The CEO, assessed to be the
Group’s Chief Operating Decision Maker (CODM), now receives separate financial reports for the two Operating
Divisions. As a result it has been determined that the Group has two reportable segments being the Distribution
and Infrastructure Divisions. The Group has made the decision that the seven operating segments that form part
of the reporting to the CEO can be aggregated into the two reporting segments. Reportable segments have
been determined by having regard to the nature of products, services and processes the various business units
undertake to service customers. The Group has a diverse range of customers from various industries, with no
single customer contributing more than 10% of the Group’s revenue. Within each segment there are the same
customers and similar sales channels.
The Group derives its revenue from the distribution and processing of steel, plastics and allied products. Within
the Distribution business the majority of product is traded and sales staff are tasked to know the full range
of products. Within the infrastructure business product is predominantly steel product which is bought and
processed/manufactured in warehouse facilities for project/contract customers.
The CEO uses EBIT as a measure to assess the performance of segments. The segment information provided to
the CODM for the year ended 30 June 2018 is as follows:

DistributionInfrastructure*
Other/
Elimination
Reconciled
to Group
$000 $000 $000 $000
2018
Revenue from external customers288,299 207,507 - 495,806
Amortisation and depreciation1,943 3,776 2,341 8,060
Impairment of property, plant, equipment and intangibles(4,391)(13,682)(2,027)(20,100)
Segment EBIT (12,752)(6,112)(17,323)(36,187)
Interest (net)(4,631)
Reconciled to Group Loss Before Tax
(40,818)
Total assets195,101 111,942 38,494 345,537
Total liabilities3 0 ,15 0 3 8 ,9 26 103,8 49 172 ,925

2017
Revenue from external customers305,675 205,725 - 511, 4 0 0
Amortisation and depreciation1,998 3,335 2,348 7,681
Segment EBIT17,041 18,767 (4,179)31,629
Interest (net)(3,577)
Reconciled to Group Profit Before Tax
28,052
Total assets190,969 125,274 96,484 412,727
Total liabilities22,702 33,340 144,555 200,597
* Included in Infrastructure division is S & T Plastics. Following the Board approved decision in May 2018 to exit
the Plastics business the sale process is underway. Management has undertaken an evaluation of the expected
realisable value and costs associated with closing down the business as disclosed in note C4.

32
STEEL & TUBE ANNUAL REPORT 2018
32
STEEL & TUBE ANNUAL REPORT 2018
Interest income and expense are not allocated to segments, as this type of activity is driven by the central
treasury function, which manages the cash position of the Group.
Sales between segments are eliminated on consolidation. The amounts provided to the CODM with respect to
segment revenue and segment assets are measured in a manner consistent with that of the financial statements.
Segment assets are allocated based on the operations of the segment and the physical location of the asset.
Following the change in operating structure it is the intent of Management to record certain supplier transactions
in applicable operating segments and in the information presented to the CEO. This change has been implemented
from 1 July 2018. The Group’s internal reporting provided to the CODM is aligned with this change.
A5: Income and Deferred Tax
Income tax comprises both current and deferred tax.
All entities in the Group are part of the same income tax group.
Current tax is the expected tax payable on the taxable income for the period, using current tax rates,
and any adjustment required to tax payable in respect of prior periods.
Deferred tax is recognised in respect of temporary differences arising between the tax base of assets
and liabilities and their carrying amounts in the financial statements. Deferred tax assets are only
recognised to the extent that it is probable future taxable profits will offset temporary differences. Tax
rates used are those that have been enacted or substantially enacted at balance date and which are
expected to apply when the deferred tax asset or liability crystalises.
Deferred tax is not provided if it arises from the following differences:
- goodwill not deductible for tax purposes
- initial recognition of assets and liabilities in a transaction other than a business combination that
affects neither accounting or taxable profit and
- investment in subsidiaries where the timing of the reversal of the temporary difference is controlled
by the Group to the extent that they will probably not reverse in the foreseeable future.
KEY POLICY
Income and deferred tax
2018 2017
$000 $000
(Loss) / profit before tax(4 0,818)28,052
Non-assessable income(2 ,076)(425)
Non-deductible expenditure
11, 581 988
(31,313)2 8 , 615
Tax (credit) / expense at 28% (8,768)8,012
Represented by:
Current tax804 7,107
Deferred tax
(9,572)905
(8,768)8,012
Tax Losses
Steel & Tube has recognised tax losses available to carry forward of $4.9m (2017: Nil). A deferred tax asset has
been recognised for these losses as they are expected to be realised within the foreseeable future.

3333
NOTES – SECTION A

PERFORMANCE
Deferred tax assets and liabilities
The table below shows the movement in the deferred tax balances that are recognised at the beginning and end
of the period.
Opening
balance
Acquired
in business
combination
Recognised
in income
Recognised
in equity
Closing
balance
$000 $000 $000 $000 $000
Group 2018
Property, plant and equipment(7,852) - 4,185 1,922 (1,745)
Employee benefits1,872 - (679) - 1,19 3
Provisions1,74 0 - 4,269 - 6,009
Cash flow hedging reserve499 - - (849)(350)
Customer relationship(113) - 113 - -
Customer contracts(225) - 225 - -
Licenses(78) - 78 - -
Net tax loss to carry forward
- -1,381 - 1,381
(4 ,157) -9,572 1,073 6,488
Group 2017
Property, plant and equipment(3,485) - (1,459)(2 ,9 0 8)( 7, 8 5 2 )
Employee benefits1,670 - 202 - 1,872
Provisions1,612 - 128 - 1,740
Cash flow hedging reserve183 - - 316 499
Customer relationship(14 0) - 27 - (113)
Customer contracts - (414)189 - (225)
Licenses
- (8 6)8 - (78)
(160)(500)(905)(2,592)(4,157)
20182017
$000 $000
The analysis of deferred tax assets and deferred tax liabilities is as follows:
Deferred tax liabilities(2,095)(9,339)
Deferred tax assets
8,583 5 ,18 2
Deferred tax asset / (liabilities) (net)
6,488 ( 4 ,15 7 )
Imputation credits available at year end were $2.6m (2017: $9.6m).

34
STEEL & TUBE ANNUAL REPORT 2018
34
STEEL & TUBE ANNUAL REPORT 2018
This section contains details of the short term operating assets and liabilities required to service the Group’s
Distribution branches and Processing sites.
B1: Inventories
Inventories are stated at the lower of cost and net realisable value, with cost determined on a
moving average cost basis or standard cost basis. Costs include expenditure incurred in acquiring
the inventories and bringing them to their existing location and condition. Net realisable value is
the estimated selling price in the ordinary course of business less the estimated costs of completion,
and selling expenses. The cost of manufactured/fabricated finished inventories includes a share of
overheads based on normal operating capacity.
KEY POLICY
Key judgement
Inventory impairment
The Group undertook an assessment of its inventory holdings to identify slow moving and aged
inventory. Inventory was considered aged if it had not had a sale for more than 12 months. Inventory
was considered slow moving if the Group held greater than 12 months’ worth of sales of the stock.
Upon identification of this inventory the Group conducted an assessment to determine whether the
net realisable value (NRV) of the inventory was greater than the inventory cost. NRV is mostly based
on scrap value and a reasonable change in NRV of impaired inventory wouldn’t have a material impact
on the provision. At 30 June 2018, for $8.8m (at cost value) of inventory, the Group determined that
NRV was lower than cost. An impairment provision of $8.4m was recognised in cost of sales to reduce
the carrying value of this inventory. This is in addition to the impairment expense of $6.9m recognised
earlier in the year. Judgement was required in the determination if the aged inventory can sell and
hence whether inventory should be impaired.
Inventory Existence
The Group implemented a new ERP system during the year. While the system is now operational, issues
with its implementation across the Group were greater than anticipated. Following implementation,
and to gain greater confidence in the financial position of the Group, Management decided that a
full wall-to-wall inventory count should be conducted for the parts of the Group impacted by the
ERP implementation. This was a departure from the Group’s inventory count policy which requires
inventory be counted on a cycle count basis. The counts were conducted prior to balance date. Due
to the number of locations and volume of inventory Stock Keeping Units (SKUs) to be counted, the
inventory counts were not all conducted at the same date. The count programme was conducted in
May and June 2018. While significant judgement was not involved in conducting the inventory counts
it did require significant levels of effort. The counts also identified that $8.7 million of inventory did not
exist. The Group recognised an inventory write off within costs of sales for this inventory.
KEY JUDGEMENT
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2018
Section B - Working Capital

3535
NOTES – SECTION B

WORKING CAPITAL
The Group holds inventories valued at $116.0 million (2017: $143.1 million).
Provision for write-down
Finished goods at realisable value
Inventories ($000s)
2018
$116,047
2017
$143,064
150,000
120,000
90,000
60,000
30,000
0
143,064
(648)
(8,388)
The Group is exposed to foreign exchange risk arising mainly from overseas purchases of inventory. In
accordance with its Treasury Policy, all confirmed overseas purchase orders are fully hedged using forward
foreign exchange contracts where payment is made in a foreign currency. The Group qualifies for hedge
accounting. The effective portion of the changes in fair value is recognised in other comprehensive income and
accumulated in reserves in equity as described in section E10.
As at balance date foreign exchange contracts recorded as assets were $1.27m (2017: $0.002m) and as liabilities
were $0.017m (2017: $1.7m). The notional value of foreign exchange contracts in place as at 30 June 2018 totalled
$37.7m (2017: $40.6m). The fair value of the foreign currency forward exchange contracts is as shown on the
Balance Sheet. Refer to section E6 for fair value hierarchy determination.
If the NZ dollar had weakened/strengthened by 5% against foreign currencies (primarily US dollar) at balance
date, there would be no impact on profit or loss, as the Group qualifies for hedge accounting and all hedges are
100% effective at balance date. The effect would be to equity + $1.9m if NZ dollar strengthened by 5% and - $2.1m
if the NZ dollar weakened by 5% (2017: + $1.8m /- $2.1m respectively).
116,047

36
STEEL & TUBE ANNUAL REPORT 2018
36
STEEL & TUBE ANNUAL REPORT 2018
B2: Trade and Other Receivables
Trade receivables at 30 June 2018 are $87.9m (2017: $88.4m) and are recognised initially at fair value and
subsequently at amortised cost less any provision for impairment. The carrying value of trade and other
receivables are equivalent to their fair value.
Trade receivables past due were revised to include aged debts greater than 60 days to align with the Group’s
payment terms. Comparative balances have been restated on the same basis.


No one customer accounts for more than 2% of trade receivables at 30 June 2018 and 30 June 2017.
At 30 June 2018 trade receivables of $11.3m (2017: $6.1m) were over 60 days due. These relate to a number of
independent customers for whom there is no recent history of default.
The aging profile of these customers is shown below.
Prepayments and sundry receivables
Provision for impairment
Past due
Current due
14,213
5,572
(2,980)
(438)
11,336
6,093
76,612
82,262
2018
$99,181
2017
$93,489
Trade and Other Receivables ($000s)
2018
2017
5,000
4,000
3,000
2,000
1,000
0
Within
1 month
2,654
1,613
4,089
Within
1 to 3 months
Beyond
3 months
Past due but not impaired ($000s)
731
273
4,651

3737
NOTES – SECTION B

WORKING CAPITAL
Provision for impairment
At 30 June 2018 an impairment provision of $3.0m (2017: $0.4m) was held. The impairment provision comprised
assessment of recovery across a number of customers. The provision is based on objective evidence that indicates
that the customers will not be able to pay their debts when due, these include significant financial difficulties of
customers and the probability of entering receivership or bankruptcy.
The Group is exposed to the risk of customers being unable to pay their debts as they fall due. The maximum
exposure is the total value of these balances. Customers who trade on credit terms are subject to credit
verification procedures and credit limits are set for each customer. The Group’s credit policy is monitored
regularly. In some circumstances security over assets may be obtained from trade debtors to mitigate the risk
of default. There are no significant concentrations of credit risk in the current or prior years. Due to their short
maturities the carrying value of trade and other receivables is considered to approximate their fair values.
The Group also has credit risk in respect of financial institutions that hold the Group’s cash. These institutions
have credit rating of AA-.
1,061
(2,038)
438
2,980
30-Jun-16
30-Jun-18
30-Jun-17
RecognisedRecognised
Written off as
uncollectable
Written off as
uncollectable
Provision for impairment ($000s)
1,415
3,500
3,000
2,500
2,000
1,500
1,000
500
0
(313)2,855

38
STEEL & TUBE ANNUAL REPORT 2018
38
STEEL & TUBE ANNUAL REPORT 2018
B3: Trade and Other Payables
Trade and other payables comprise $49.9m (2017: $54.4m) payable within a year and $2.1m (2017: $2.2m) payable
beyond 12 months.

The carrying amounts of the above items are equivalent to their fair values. Trade payables denominated in a
foreign currency are not material in the current or comparative year.
Included in the prior year’s balance was a contingent consideration liability recognised on acquisition of CFDL .
The contingent consideration was payable if financial milestones were met in the 2018 and 2019 financial years. A
full and final settlement agreement was reached with the previous owners of CFDL in 2018, resulting in $0.7m of
the remaining provision being released to the profit or loss.
Trade and other payables ($000s)
34,148
9, 7 0 0
6,019
2,108
2018
Lease incentives (Non-Current)
Employee benefits
Accrued expenses
Trade payables
35,958
12,777
5,626
2,212
2017
Current: $49,867
Non current: $2,108
Current: $54,361
Non current: $2,212

3939
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2018
Section C - Fixed Capital
This section includes details of the Group’s long term assets including tangible and intangible assets and related capital
commitments.
During the year the Group sold its properties at Stonedon Drive, Auckland and Blenheim Road, Christchurch. The
properties were sold for $32.6m and $21.1m respectively. The Group recognised a gain on sale of $1.5m within Other
Income in the Statement of Profit or Loss and Other Comprehensive Income. The gain on sale is after the recognition
of a make good aggregate provision of $1.5m and associated costs to sell. $29.2m was transferred from the Asset
Revaluation Reserve to Retained Earnings associated with the sold buildings.
C1: Property, Plant and Equipment
Plant and equipment are stated at cost less accumulated depreciation with the exception of land and
buildings and capital work in progress. Land and buildings are stated at fair value, and capital work
in progress is stated at cost less impairment. Assets are tested annually for indicators of impairment
and adjusted if required.
Depreciation is charged on a straight-line basis over the estimated useful lives of the assets, with the
exception of land and capital work in progress, which are not depreciated. This allocates the cost
or fair value amount of an asset, less any residual value, over its estimated remaining useful life. The
residual values and useful lives are reviewed annually.
The estimated useful lives are as follows:
Buildings 50 years
Plant and machinery and motor vehicles 3 - 20 years
Furniture, fittings and equipment 2 - 10 years
Land and buildings are recognised at fair value based on valuations by external independent valuers,
less subsequent depreciation for buildings. Valuations are undertaken when there is evidence
that the carrying value of the property is materially different to fair value. A revaluation surplus is
credited to other reserves in shareholder’s equity.
Gains and losses on disposals are determined by comparing proceeds with carrying amount and
are included in profit or loss. When revalued assets are sold, it is the Group’s policy to transfer any
amounts included in other reserves in respect of those assets to retained earnings.
KEY POLICY

NOTES – SECTION C

FIXED CAPITAL

40
STEEL & TUBE ANNUAL REPORT 2018
40
STEEL & TUBE ANNUAL REPORT 2018
Land &
buildings
at fair value
Plant,
machinery
& vehicles
at cost
Furniture,
fittings &
equipment
at costTotal
$000 $000 $000 $000
2018
Opening cost5 7, 5 19 102,853 24,440 18 4,812
Opening accumulated depreciation - (61,7 76)(20,4 47)(82 ,223)
Opening net book value5 7, 5 19 41,077 3,9 93 102,589
Additions 7,17 0 6 , 3 61 1,731 15, 262
Land and building revaluations:
Increase to revaluation reserve 960 - - 960
Disposals(49,915)(471)(22)(50,4 08)
Impairments* - ( 7, 8 0 2)(171)( 7,9 7 3)
Transfer to assets held for sale * - (1,30 0)(339)(1,639)
Depreciation(359)(3,818)(1,875)(6,052)
Closing net book value15,375 34,047 3,317 52,739
Comprised of:
Cost or fair value15,375 85,885 18,301 119, 5 61
Accumulated depreciation - (51,838)(14,98 4)(6 6,822)
Property, plant and equipment15,375 34,047 3,317 52,739
2017
Opening cost28,897 94,554 23,427 146,878
Opening accumulated depreciation(8,454)(5 8 , 3 61)(18,50 6)(85,321)
Opening net book value20,4 43 3 6 ,19 3 4,9 21 61, 55 7
Net additions through business combinations - 6 61 47 708
Additions 1,762 7,807 1,025 10,594
Disposals - (169)(59)(228)
Land and building revaluations:
Increase to revaluation reserve35,713 - - 35,713
Decrease to income statement - - - -
Depreciation(399)(3,415)(1,9 41)(5,755)
Closing net book value5 7, 5 19 41,077 3,9 9 3 102,589
Comprised of:
Cost or fair value 57,519 102,853 24,440 184,812
Accumulated depreciation - (61,776)(20,447)(82,223)
57,519 41,077 3,993 102,589
Included within the plant, property and equipment categories is capital work in progress totalling $5.2m (2017:
$3.3m). Capital work in progress was tested for indicators of impairment. No impairment indicators were
identified.
At 30 June 2018 had land and buildings been carried at historical cost less accumulated depreciation their
carrying amount would have been approximately $8.7m (2017: $21.8m).
*Refer note C4

4141
NOTES – SECTION C

FIXED CAPITAL
Valuation of land and buildings:
The Group undertook a fair value assessment of land and buildings owned by the Group at 30 June 2018. The
fair value of these land and buildings was determined based on the market comparable approach that reflects
transaction prices for similar properties adjusted for identifiable differences including land use, economic
conditions, zoning and location, quality and condition. They are categorised as Level 3 of the fair value hierarchy
as unobservable inputs (as described in NZ IFRS 13). The valuations were prepared by independent and qualified
registered valuers and are based on:
– Land and buildings - relevant general and economic factors such as recent sales, leasing transactions of
comparable properties, and seismic strengthening costs.
The significant unobservable inputs are described in section E8.
The previous independent valuation of these land and buildings was performed in June 2017.
C2: Intangibles
Goodwill
Software &
LicencesOtherTotal
$000 $000 $000 $000
2018
Opening cost4 7,17 1 24,464 2,522 74 ,15 7
Opening accumulated amortisation - (6,4 0 6)(9 03)( 7, 3 0 9)
Opening net book value4 7,17 1 18,058 1, 619 66,848
Additions - 4,710 - 4,710
Amortisation charge - (1,19 8)(810)(2,008)
Impairment(10,10 0)(2,027) - (12 ,127)
Closing net book value3 7, 0 7 1 19,543 809 5 7, 4 2 3
Comprised of:
Cost4 7,17 1 24,832 2,522 74,525
Accumulated amortisation - (3,262)(1,713)(4,975)
Impairment(10,10 0)(2,027) - (12 ,127)
Closing net book value
3 7, 0 7 1 19,543 809 5 7, 4 2 3
2017
Opening cost35,458 16,533 736 52,727
Opening accumulated amortisation - (5, 251)(132)(5,383)
Opening net book value35,458 11, 2 8 2 604 4 7, 3 4 4
Net additions through business combinations11,7 13 - 1,786 13,49 9
Additions - 7,9 3 1 - 7,9 3 1
Amortisation charge - (1,155)(7 71)(1,9 26)
Closing net book value4 7,17 1 18,058 1, 619 66,848
Comprised of:
Cost4 7,17 1 24,464 2,522 74 ,15 7
Accumulated amortisation - (6,406)(903)(7,309)
47,171 18,058 1,619 66,848

42
STEEL & TUBE ANNUAL REPORT 2018
42
STEEL & TUBE ANNUAL REPORT 2018
Included within the intangibles categories is work in progress totalling $2.7m (2017: $15.1m). Other intangibles
comprises customer relationships and customer contracts arising from business combinations.
Included within the software and licence category is the Group’s ERP system, Microsoft Dynamics AX. This
asset accounts for $18.3m (2017: $11.8m) of the intangible asset balance and includes internally generated costs
of $4.4m. Following initial go-live on 2 October 2017, the Group experienced significant issues that severely
impacted on business performance. Substantial additional work was required to deliver a functional system that
was fit for purpose and met business needs. The Group considered these additional costs, together with the
delays in project delivery and associated budget overspend, and concluded that the carrying value required
impairment. The Group reviewed all capitalised project spend and assessed that costs totalling $2.0m no longer
provided ongoing economic benefit to the Group and should be impaired. An impairment expense of $2.0m was
recognised in the Statement of Profit or Loss and Other Comprehensive Income within impairment of fixed and
intangible assets.
Due to the issues that had to be rectified, the commencement date for amortisation of the ERP intangible was
delayed to 1 June 2018. The software will be amortised over the next 10 years to 2028.


Goodwill is recognised on a business combination and represents the excess of the acquisition cost over
the fair value of the acquired net assets. Goodwill is allocated to cash-generating units, tested annually
for impairment, or more frequently if events or circumstances indicate it may be impaired, and is carried
at cost less accumulated impairment losses.
Computer software and licences are capitalised on the basis of costs incurred to acquire and use the
specific licences and are amortised on a straight-line basis over their estimated useful lives of 3 to 10
years. Computer software and licence amortisation charges are included in other operating expenses.
Customer relationships and customer contracts are capitalised at fair value on acquisition date and
are amortised on a straight-line basis over their estimated useful lives of 10 and 2 years respectively.
Amortisation charges are included in other operating expenses.
Costs associated with maintaining software programmes are recognised as an expense as incurred.
Development costs that are directly attributable to the design and testing of identifiable and unique
software products controlled by the Company are recognised as intangible assets when the following
criteria are met:
- it is technically feasible to complete the software so that it will be available for use
- management intends to complete the software and use or sell it
- there is an ability to use or sell the software
- it can be demonstrated how the software will generate probable future economic benefits
- adequate technical, financial and other resources to complete the development and to use or sell
the software are available, and
- the expenditure attributable to the software during its development can be reliably measured.
Directly attributable costs that are capitalised as part of the software include employee costs and an
appropriate portion of relevant overheads.
Capitalised development costs are recorded as intangible assets and amortised from the point at which
the asset is ready for use.
KEY POLICY

4343
NOTES – SECTION C

FIXED CAPITAL
KEY JUDGEMENT
Key judgement - Impairment test on CGUs:
The Group has undertaken value-in-use calculations for each cash generating unit (CGU) that
recognises goodwill. A value-in-use (VIU) calculation is a valuation based on forecast cash flows. These
cash flows are discounted back to present value to estimate a value for the CGU. If the VIU exceeds the
carrying value of the assets within the CGU no impairment is recognised.
A number of judgements have been made in respect to the assumptions used in the valuations. The key
assumptions are summarised below:
ASSUMPTION20182017
Discount Rate (post tax)8.5% - 10.4%7.1% - 10.3%
The Group engaged an independent expert to
assess the Group’s post-tax weighted average
cost of capital. A premium was applied to
smaller CGU’s. These post-tax discount
rates were applied to post-tax cash flows.
Through back solving the pre-tax WACC was
calculated.
Discount Rate (pre tax)11.3% - 13.9%9.9% - 14.3%
Terminal Growth Rate1.50%1.50%
Forecast Period5 Years5 YearsBoard approved budget used for 2019
Forecast Period Cash Flow
Growth Rate
3.4% - 4.0%2.50%
In addition to the above growth rate the Group included cash flows expected from performance
improvement projects. Cash flows expected from these projects have been included as part of
the Board approved FY19 budget, upon which the VIU calculations were based. However, for the
Distribution and Wire CGU’s, expected performance improvement has also been estimated for the
remaining forecast period. The Group is committed to these performance projects and has already
commenced implementation as supported by the recognition of restructuring initiatives. See note E2.
A summary of the impairment recognised is included below:
CGU
IMPAIRMENT
RECOGNISED
RECOVERABLE
AMOUNTRELATED SEGMENT
Hurricane Wire Products$5.7m$13.1mInfrastructure
Distribution$4.4m$102.4mDistribution
The table below illustrates the sensitivity of the impairment assessment to adverse changes in key
assumptions:
ASSUMPTIONCHANGE
ADDITIONAL GOODWILL IMPAIRMENT
HURRICANE
WIRE
PRODUCTS
DISTRIBUTION
(1)MSLCFDLROOFING
Discount Rate1%$1.4mNilNilNilNil
Terminal Growth Rate(1%)$1.0mNilNilNilNil
Decrease in forecast cash flows(10%)$0.7mNilNilNilNil
(1) The Group is of the opinion should adverse changes in key assumptions occur, the Distribution CGU
carrying value would be supported by its fair value less cost to dispose.
Any impairment of Goodwill allocated to a Cash Generating Unit (CGU) is determined based on the
present value of future CGU cash flows.
The Board exercises judgement in confirming the carrying value of Goodwill, considering a wide range
of inputs including the state of the steel sector and market movements.

44
STEEL & TUBE ANNUAL REPORT 2018
44
STEEL & TUBE ANNUAL REPORT 2018
Intangible assets with indefinite useful lives and intangibles not yet available for use are not subject
to amortisation. This applies to both goodwill and software under development.
The Group tests annually for impairment of these intangibles, or when events or circumstances
indicate the carrying value may not be recoverable.
An impairment loss is recognised for the excess of the carrying value of an asset or cash-generating
unit over its recoverable amount and is charged to profit or loss.
The recoverable amount is the higher of an asset’s fair value less costs to sell and value-in-use. For
the purpose of assessing impairment, assets are grouped at the lowest levels for which there are
separately identifiable cash flows.
KEY POLICY
Based on the calculations completed, the impacts of impairment as at 30 June 2018 are as follows:
Following recent under-performance in certain parts of the Group, the Board has determined that the carrying
value of goodwill associated with the Distribution and Wire CGU’s is impaired.
Hurricane Wire Products
The Hurricane Wire brand is a long standing brand in the New Zealand wire market. The financial performance of
this CGU has however declined in recent years. Management considers this to be attributable to a lack of focus on
brand management and marketing. Management has commenced a business transformation project and consider
that the financial performance of this CGU can be improved and that the Hurricane wire brand can continue to
be a leading market provider of wire products. In assessing the value in use of this CGU, Management has taken a
prudent assessment of expected future financial performance. Applying a pre-tax discount rate of 13.9%, the value in
use is lower than the carrying value of the CGU’s assets, including goodwill by $5.7 million. Accordingly Management
has written down the carrying value of goodwill for this CGU by $5.7 million.
Distribution
The financial performance of the Distribution CGU has declined in recent years and in 2018 was impacted by the
poor implementation of the Company’s new ERP system, which has contributed to the financial loss this year. During
the 2018 financial year Management has implemented a business transformation programme, which is expected
to result in improved financial performance. However, as a number of these initiatives are in their early stages of
implementation the Group has not yet realised the full financial improvement benefits from them. As a result,
Management has taken a prudent approach to forecast cash flows for this CGU. Applying a pre tax discount rate of
13.0%, the value in use is lower than the carrying amount of assets in this CGU (including goodwill) by approximately
$4.4m. Management has therefore written down the carrying value of the CGU assets by impairing the goodwill of
$4.4m associated with this CGU.
15,602
11,713
4,046
5,710
2018
$ 3 7, 0 7 1
15,602
11,713
4,046
4,391
11,419
2017
$ 4 7,1 7 1
Carrying Value of Goodwill ($000s)
Hurricane Wire Products
Distribution
Roofing Products
Manufacturing Suppliers Limited
Composite Floor Decks Limited
2017
$ 4 7,1 7 1

4545
NOTES – SECTION C

FIXED CAPITAL
The goodwill in Distribution previously reported as $4.9m is made up of acquisition of various businesses over
time including DJ Agencies ($0.5m) which has now been reclassified to Roofing products to align with the new
reporting segment structure.
Roofing Products, Manufacturing Suppliers Limited, and Composite Floor Decks Limited
Based on the calculation and pre-tax discount rate sensitivity analysis, there is no indication of impairment for the
CGUs as at 30 June 2018.
Assessment of CGUs without goodwill
In assessing the CGUs without goodwill indicators of impairment such as the CGU’s current and future
performance, asset make up of the CGU and market condiditons were taken into consideration. Through the
assessment, it was determined there is no impairment of the CGUs without Goodwill as at 30 June 2018.
C3: Commitments
The Group occupies a number of warehouse and office premises under operating leases. The leases have varying
terms and renewal rights.
The Group has an operating lease agreement for the majority of its vehicle fleet. The lease agreement has varying
terms and renewal rights for each vehicle.
Capital commitments
The Group has contractual commitments of $2.6m (2017: $7.4m) for property fitout and purchase of plant and
equipment.
C4: Assets Held for Sale
During the year, the Group carried out an extensive review of S & T Plastics business resulting in a decision by the
Board to exit the business. The business and/or its assets are currently being marketed for sale. Management
consider the likely outcome to be a sale of individual assets, therefore has been classified as assets held for sale
and not a discontinued operation. The property, plant and equipment related to S & T Plastics have been impaired
to their fair value less costs to sell (FVLCTS) and presented as held for sale.
2018
2017
80,000
60,000
40,000
20,000
0
Lease commitments on non-cancellable leases ($000s)
Within
1 year
17,489
13,663
48,682
31,079
68,737
31,515
Within
1 to 5 years
Beyond
5 years

46
STEEL & TUBE ANNUAL REPORT 2018
46
STEEL & TUBE ANNUAL REPORT 2018
Carrying
value at ImpairmentFVLCTS
30 June 2018 30 June 201830 June 2018
$000 $000 $000
Property, plant and equipment held for sale
9, 612 ( 7,973) 1,639
Total
9, 612 ( 7,9 7 3)1,639
In addition to the impairment of assets, the Group has recognised the following provisions within the
Infrastructure operating segment to exit S & T Plastics.
30 June 2018
Provision for Business Rationalisation$000
Onerous Lease 814
Closedown and Site Remediation
2,062
Total
2,876
Current
2,248
Non-Current 628
Non-current assets are classified as assets held for sale and carried at the lower of carrying amount
and fair value less costs to sell if their carrying amount is recovered principally through a sale
transaction rather than through continuing use. The assets are not depreciated or amortised while
they are classified as held for sale. Any impairment loss on initial classification and subsequent
measurement is recognised as an expense. Any subsequent increase in fair value less costs to sell
(not exceeding the accumulated impairment loss that has been previously recognised) is recognised
in profit or loss.
KEY POLICY
Key judgements:
In accordance with IFRS 5: Non-current Assets Held for Sale and Discontinued Operations, the
assets and liabilities held for sale were written down to their fair value less costs to sell.
The FVLCTS is based on Management’s judgement of expected realisable values from disposing
and/or selling the assets. Considering the circumstances associated with the sale process
management has assumed a forced sale scenario in determining the FVLCTS. This judgement is
supported by an assessment from an independent plant and machinery valuer who undertook
a site visit and review of the assets. He concluded that the assets could be sold for between
$1.5m and $1.7m, consistent with Management’s estimate. Management has also taken into
consideration offers to purchase certain assets received post balance date. Judgements in
determining the FVLCTS have been made based on unobservable inputs (as described by IFRS 13)
and are therefore classified as level 3 in the fair value hierarchy.
The Provision for Onerous Leases for the remaining lease term on the main factory site and the
laboratory was partially offset by Management’s assessment that a future sub-lease may be
possible. The provision was discounted back to net present value.
The Closedown and Remediation provision includes Management’s assessment of the cost of
disposing of inventory, removing equipment and general close-down activities. It also includes
an estimate of the cost for site remediation of the main factory site which is based on an
independent estimate of the likely cost to return the site to paddock conditions.
KEY JUDGEMENT

4747
This section includes details of the Group’s cash, borrowings and capital reserves which provide funds for current and
future activities.
D1: Borrowings
20182017
$000 $000
Term loans - non current 10 9,935133,374
Credit facilities arranged with the banks can be drawn at any time, subject to meeting the Group’s General
Security Arrangement conditions over the assets of the Group.
The Group is exposed to interest rate risk through its term loans which are drawn down under the Group’s bank
debt facilities at variable interest rates.
At balance date, if bank interest rates had been 100 basis points higher/lower with all other variables held
constant, it would change post-tax profit/equity for the year by $0.8m lower/higher (2017: $0.9m).
The Group has committed bank borrowing facilities at balance date of $147m (2017: $157m). The total available
facilities were reduced by $10m following the settlement from the sale of the Group’s Blenheim Road property for
$21.1m in June 2018. These credit facilities were refinanced in June 2018 and all facilities have an expiry date of 31
October 2019 (30 June 2017: $78.5m, 31 October 2019 and $78.5m, 31 October 2021). The refinanced agreements
were treated as a modification of the liability.
Borrowings are recognised initially at fair value and net of transaction costs incurred. Borrowings
are subsequently stated at amortised cost and any difference between the net proceeds and
redemption value is recognised in profit or loss over the period of the borrowings using the effective
interest method. The movement in borrowings shown in the Statement of Cash Flows is the net
of repayments and drawdowns of borrowings. Borrowings are classified as current liabilities if
settlement is within 12 months.
Waiver for Expected Breach of Bank Facility Covenant
The Group is required to comply with a number of covenants and undertakings under the General
Security Arrangement for the credit facilities. The Group expected it would breach one of these
requirements, being the earnings before interest and tax (“EBIT”) to interest cover ratio as at 30 June
2018. The Group is required to maintain EBIT of at least 2.25x its interest costs on an annual basis,
measured as at 31 December and 30 June. Due to the non-trading costs impacting on the reported
financial results for 2018, the Group expected it would not be in compliance with this covenant at 30
June 2018. The Group obtained a waiver from the facility providers for this expected breach as at 30
June 2018 through to 30 June 2019. Other than the expected breach of the EBIT to interest cover ratio
as at 30 June 2018, for which a waiver was provided, the Group has fully complied with credit facility
covenants and undertakings during the year (2017: fully complied).
The Group is required to comply with certain financial covenants that relate to asset cover, gearing,
earnings before interest and tax and tangible net worth. Management has completed a detailed
assessment of compliance with these covenants and expects to comply fully. In addition and
subsequent to Balance Date, the Group has recently announced a capital raise, which will result in
significantly lower gearing and substantial additional covenant headroom.
KEY POLICY
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2018
Section D – Funding
NOTES – SECTION D
FUNDING

48
STEEL & TUBE ANNUAL REPORT 2018
48
STEEL & TUBE ANNUAL REPORT 2018
The Group manages its liquidity risk by maintaining availability of sufficient cash and funding via an adequate
amount of committed credit facilities. Owing to the nature of the underlying business, the Group aims to
maintain funding flexibility through committed credit lines. The Group monitors actual and forecast cash flows on
a regular basis and rearranges credit facilities where appropriate.
The table below analyses the Group’s financial liabilities and derivative financial instruments into maturity
groupings based on the remaining period from balance date to the contractual maturity date. The amounts
disclosed are the contractual undiscounted cash flows.

Average6 months 6 to 121 to 3Carrying
Interestor lessmonthsyearsTotalValue
rate$000$000$000$000$000
Group 2018
Borrowings3.77% 2 ,114 2,031 110,9 9 2 115 ,13 7 109,935
Trade payables & accruals 48,922 - -
48,922 48,922
Cash flow hedging of derivatives:
Outflow 36,027 1,676 - 3 7, 7 0 3
Inflow(3 7, 2 6 2)(1,695) - (38,957)
Group 2017
Borrowings2.86% 2,001 1,9 23 133, 26 4 13 7,18 8 133,374
Trade payables & accruals50,616 - - 50,616 50,616
Cash flow hedging of derivatives:
Outflow40,608 29 - 40,637
Inflow(38,898)(27) - (3 8 ,9 2 5)
D2: Net debt reconciliation
Cash and cash
equivalents
Borrowings
repayable
after one yearTotal
$000 $000 $000
Net debt as at 1 July 20176,517 (133,374)(126,857)
Cash flows
(933)23,439 22,506
Net debt as at 30 June 2018
5,584 (109,935)(10 4,351)
Net debt as at 1 July 20162,287 ( 9 7,9 0 0 )(95, 613)
Cash flows
4,230 (35,474)(31,24 4)
Net debt as at 30 June 2017
6,517 (133,374)(126,857)
The Group’s current bank loans are based on variable rates.

4949
NOTES – SECTION D
FUNDING
D3: Share Capital
The Group’s capital includes share capital, treasury shares, debt, reserves and retained earnings. The objectives
for managing capital are to safeguard the Group’s ability to continue as a going concern, to provide returns and
benefits for Shareholders and other stakeholders and to maintain a strong capital base for investor, creditor and
market confidence. The Group may adjust the dividends paid to Shareholders, return capital to Shareholders,
issue new shares or sell assets to maintain or adjust its capital structure.
Capital Structure Policy Targets
During the year ended 30 June 2018, the Group adopted formal capital structure targets as follows:
1. Net Debt:EBITDA less than 2.75x
The Group is targeting net debt to be less than 2.75x EBITDA. The Group has set this target to be achieved but
as at 30 June 2018 has not met the target. Net Debt:EBITDA excluding non-trading items as at 30 June 2018 is
4.3x. This ratio is higher than target as the Group has increased borrowings to fund acquisitive growth since 2014.
However EBITDA has not grown, resulting in a higher than target ratio. The Board considers the current ratio to
be higher than it should be. Post balance date the Group announced a fully underwritten placement and pro-rata
rights offer to raise $80.9 million. Following the successful execution of this capital raise the Board will revise that
target Net Debt : EBITDA ratio down to 2.0x and expects full compliance with the revised ratio.
2. Gearing ratio less than 30 – 35%
The target ratio is to be at or less than 30% and never more than 35%. The Group’s gearing ratio is calculated
as net debt divided by the sum of total equity and net debt, where net debt is total borrowings less cash and
cash equivalent assets. The policies in respect of capital management and allocation are reviewed regularly by
the Board. The gearing ratio for this year is 38% (2017: 43%) and is below the benchmark of 55% in the Group’s
General Security Agreement. Whilst the Group is operating well within the General Security Arrangement
requirements, the Board consider this level of gearing to be higher than it should be. The Group expects to be
in line with the target ratio following completion of the post balance date capital raise.
3. Dividend pay-out of between 60% - 80% of Net Earnings (NPAT) adjusted for any significant

non-trading items
There has been no material change in the management of capital during the year.
2018 2017 2018 2017
$000 $000 SharesShares
Fully paid:
Balance at the beginning of the year77,803 7 7, 7 5 5 90,588,026 90,578,026
Proceeds from partly paid shares
41 48 20,000 10,000
Balance at the end of the year
7 7, 8 4 4 7 7, 8 0 3 90,608,026 90,588,026
Partly paid:
Balance at the beginning of the year1 1 45,000 55,000
Transfer to fully paid shares
- - (20,000)(10,000)
Balance at the end of the year1 1 25,000 45,000
Total balance at the end of the year
77,845 77,804 90,633,026 90,633,026

50
STEEL & TUBE ANNUAL REPORT 2018
50
STEEL & TUBE ANNUAL REPORT 2018
The holders of ordinary shares are entitled to receive dividends declared from time to time and to one vote
per share at meetings of the Company. Ordinary shares issued and partly paid to one cent shares in the Senior
Executives’ Share Scheme 1993 do not have dividend or voting entitlements until the shares are paid in full but
qualify for bonus and cash issues.
Ordinary shares are classified as equity. Where any controlled entities purchase Company shares that have not
been allocated, the consideration paid and directly attributable costs are deducted from equity and classified as
treasury shares.
Treasury shares
2018 2017 2018 2017
$000 $000 SharesShares
Balance at the beginning of the year3,431 3,500 1,150,787 1,1 0 9, 7 2 1
Purchases - 592 - 270,000
Used in share schemes
(535)(6 61)( 17 7,9 3 8)(228,934)
Balance at the end of the year
2,896 3,431 972,849 1,150,787
Treasury shares are unallocated Company shares held by the Trustees of share-based schemes and are
recognised as a reduction in shareholders’ funds of the Group. There were no Treasury shares purchased during
the year (2017: Weighted Average price of shares purchased $2.19).

5151
Notes to the Financial Statements
FOR THE YEAR ENDED 30 JUNE 2018
Section E – Other
This section contains additional notes and disclosures which do not form part of the primary sections but which are
required to comply with financial reporting standards.
• Financial risk management
• Provisions
• Contingent liabilities
• Auditor remuneration
• Related party and share based plans
• Financial instruments
• Financial assets
• Land and buildings
• Subsequent events
• Other accounting policies
E1: Financial Risk Management
The Group is exposed to financial risk: market risk, credit risk and liquidity risk.
The Group’s Treasury Policy is approved by the Board and is reviewed annually. The Treasury Policy establishes
principles and risk tolerance levels to guide management in carrying out risk management activities to minimise
potential adverse effects on the financial performance of the Group. Compliance with policy is monitored and
reviewed on a monthly basis.
Detail relevant to the following risks are covered in relevant sections:
Foreign exchange risk (a market risk) Inventories B1
Interest rate risk (a market risk) Borrowings D1
Credit risk Trade & other receivables B2
Liquidity risk Borrowings D1
E2: Provisions
Restructure
provision
Onerous Contract
and Contract
Dispute Provision
Onerous Lease
and Make Good
Provision
Commerce
Commission
ProvisionTotal
$000 $000 $000 $000 $000
Opening balance - 2,634 1,245 900 4,779
Additions4,740 844 3,371 300 9, 2 55
Used
- (2,344)(692) - (3,036)
Closing balance
4,74 0 1,13 4 3,924 1,20 0 10,9 98
Current4,112 1,134 2,769 1,200 9, 215
Non Current628 - 1,15 5 - 1,783
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result
of a past event. This occurs when it is probable that a cost will be incurred to settle the obligation
and a reliable estimate can be made of that obligation. Where material, provisions are determined by
discounting the expected cash flows at a pre-tax rate that reflects current market assessments of the
time value of money. Where discounting is used, the increase in the provision due to the passage of
time is recognised as an expense.
KEY POLICY
NOTES – SECTION E

OTHER

52
STEEL & TUBE ANNUAL REPORT 2018
52
STEEL & TUBE ANNUAL REPORT 2018

– Make-good obligations on existing tenanted properties, including Stonedon Drive remediation work agreed
as part of the sale and purchase agreement, estimated at $1.5m. Actual payment dates and costs will be known
once each lease reaches its expiry date.
– Onerous Contract and Contract Dispute Provision is an estimate of the costs of customer claims for faulty or
defective products supplied and an assessment of the shortfall between costs and future revenue on certain
projects where the Group is committed to providing a service within the next 12 months for which the costs
will exceed the revenue.
– Restructure and Rationalisation Provision. The Group has undertaken a review of the business and commenced
a restructure in a number of areas. A provision has been recognised where staff have been notified of
redundancy or where a valid expectation of redundancy has been created. Included within this provision
are costs associated with the closure of S & T Plastics including onerous lease provision. Refer note C4 for
details.
– Provision for Commerce Commission Fine
In December 2016 the Commence Commission announced that it had completed its investigation in relation
to several companies, and that it intended to prosecute three companies under the Fair Trading Act, including
Steel & Tube. The Commission’s prosecution of Steel & Tube relates to the inadvertent use of a testing
laboratory’s logo on test certificates, and application of testing methodologies. Following a Group wide
review, quality resources have been strengthened and quality management processes have been and continue
to be enhanced.
In August 2017 Steel & Tube pleaded guilty to those charges. On 25th May 2018, the sentencing hearing
occurred in the Auckland District Court. The judge has reserved his decision and therefore a sentence was not
given.
A provision for estimated fines, penalties and costs in relation to this prosecution and their expected recovery
under the Group’s insurance policies has been provided for in the Group’s financial statements. It is expected
that the sentencing will occur within the next 12 months.
E3: Contingent Liabilities
Indemnities given to the Company’s trading banks in respect of performance bonds were $2.7m (2017: $2.5m) at
balance date and were transacted in the ordinary course of business.
Key judgements:
– The Provision for Onerous Leases is for the remaining lease term on the properties that have
been vacated as part of the Group’s change programme. The provision is partially offset by
Management’s assessment that a future sub-lease may be possible on some of the properties
with longer than 12 month lease terms remaining. If the Group’s assumptions on time required
to sub-let the properties increased by three months and the expected sub-lease rentals were
10% less, the provisions would increase by $0.1m.
KEY JUDGEMENT

5353
NOTES – SECTION E

OTHER
E4: Auditor Remuneration
20182017
$000 $000
Fees paid to PwC
– annual audit & half year review 337 304
– direct expenses associated with performance of the audit

(eg. reimbursement of travel and accommodation costs)
18 5
– tax compliance: annual tax return 25 24
– other assurance services related to the Company's ERP system 10 106
– other 3 2
– tax advisory services in relation to the Company's Executive Share Scheme 41 -
– facilitation of an IFRS 15 workshop
7 -
441 441
E5: Related Party and Share Based Plans
The Group has related party relationships with its controlled entities and with key management personnel.
The subsidiaries in the Group are:
20182017
SubsidiariesPrincipal ActivityHoldingHolding
Steel & Tube New Zealand LimitedNon-trading100%100%
Composite Floor Decks Holdings LimitedNon-trading100%100%
Studwelders LimitedNon-trading100%100%
S&T Stainless LimitedStainless Distributor100%100%
Manufacturing Suppliers LimitedFastenings Distributor100%100%
S & T Plastics LimitedPipe Manufacturer100%100%
Composite Floor Decks LimitedFloor Decking Installer100%100%
Transactions with Key Management Personnel
2018
2018 for
Comparison2017
$000 $000 $000
Short-term benefits 2,591 3,544 3,717
Termination Benefits 972 1,087 -
Share-based benefits
270 312 688
3,833 4,943 4,405
Following a change to the operating structure of the Group during the reporting period, there are now two clear
Operating Divisions. As a result the executive leadership structure has also changed. The 2018 Key Management
Personnel numbers have been prepared based on the new executive structure with a comparison provided based
on the previous executive structure.
The Key Management Personnel are the Non Executive Directors and Executive Management. Included in short-
term benefits are Directors’ fees of $477,500 (2017: $349,125).

54
STEEL & TUBE ANNUAL REPORT 2018
54
STEEL & TUBE ANNUAL REPORT 2018
Executive Share Plan 2003
The Executive Share Plan offered key personnel an opportunity to subscribe for rights to Company shares, as
directed by the Board. Vesting of the rights occurs upon achieving Board-approved targets, based on total
shareholder returns, after a minimum of three years to a maximum of five years from grant date and vest as
equity. The rights to shares are equity settled.
Whilst no further Rights will be issued relative to the Executive Share Plan 2003, it will continue to operate until
such time as the prior years’ Rights that have been granted are either vested and exercised, forfeited or lapse, in
accordance with that plans rules.
Executive Share Plan 2017
In February 2018 a new Executive share plan was approved by the Board. The performance period for the new
scheme runs for 3 years and comprises two performance conditions (50% each) as follows:
a) The Benchmark Comparator (BC) ranks the Company’s Total Shareholder Return (TSR) relative to the TSR of
the NZX 50 Index securities.
– Where the Company TSR equals the 50th percentile TSR of the Index Companies over the Performance
Period, 50% of (BC) Performance Rights will vest.
– Where the Company TSR equals or exceeds the 75th percentile TSR of the Index Companies over the
Performance Period, 100% of (BC) Performance Rights will vest.
– Where the Company’s TSR over the Performance Period exceeds the 50th percentile TSR of the Index
Companies but does not reach the 75th percentile, then between 50% and 100% of the (BC) Performance
Rights, will vest as determined on a linear pro rata basis.
b) The Absolute Comparator (AC) ranks the Company’s TSR relative to the Company’s Cost of Equity (CoE) plus a
premium of 2% annualised and compounding.
– Where the Company TSR is less than or equal CoE no (AC) Performance Rights will be vested
– Where the Company TSR is greater than CoE but less than (CoE) + 2%, 50% of (AC) Performance Rights will vest
– Where the Company TSR is equal to or greater than CoE + 2%, 100% of (AC) Performance Rights will vest
Performance Rights are only able to be exercised after completion of the three year performance period,
providing and only to the extent that the performance conditions have been satisfied. Any Benchmark and
Absolute Comparator Performance Rights that do not vest at the Measurement Date will lapse.

5555
NOTES – SECTION E

OTHER
At July 2017 1,102,558 rights to shares were outstanding. Rights outstanding, granted or forfeited carry no exercise
price. During the year the following movements of rights to shares occurred in accordance with the rules of the
share plan:
No. of Rights
Available
2018
No. of Rights
Available
2017
Opening Balance1,102,558 1,074,218
New Shares Granted371,366 483,624
Rights Forfeited(728,765)(226,347)
Rights Exercised
( 17 7,9 3 8)(228,937)
Total
567,221 1,102,558
Rights Performance Conditions
Start Dates
Expiry date
Issue date
fair value
Total Rights
Issued
Rights
available
30 June 2018
Rights
available
30 June 2017
1 July 2013 - Tranche 1130/06/2018 $ 3 .1 0 303,740 5,355 118 ,9 4 6
1 July 2014 - Tranche 1230/06/2019 $2.85 288,711 10,623 23 6 ,9 26
1 July 2015 - Tranche 1330/06/2020 $2.66 343,441 40,200 2 8 7, 3 0 3
1 July 2016 - Tranche 1430/06/2021 $2.21 475,596 139,677 459,3 8 3
1 September 2017 - Tranche 11/09/2020 $2.09
371,366 371,366 -
Total
1,782,854 567,221 1,102,558
The fair value of rights is determined using a Monte Carlo share price simulation model. The significant inputs
into the model for shares granted during the period were the market share price at grant date, an exercise price
of zero (as shares are issued to the employees at nil consideration on vesting), volatility of 26.3%, expected
option life of between 1 and 3 years and an annual risk free interest rate of 1.95%. Volatility has been calculated
based on the annualised volatility for the three years prior to the rights issue.
The Board appoints a Trustee to administer the 2003 plan. Any rights not vested after the expiry of
five years are cancelled. The cost associated with this plan is measured at fair value at grant date and
is recognised as an expense in profit or loss over the vesting period, with a corresponding entry to
the reserve in equity. Shares purchased in this plan are recognised as treasury shares until they are
distributed.
KEY POLICY

56
STEEL & TUBE ANNUAL REPORT 2018
56
STEEL & TUBE ANNUAL REPORT 2018
E6: Financial Instruments
Loans and
receivables
Derivatives
for hedging
Liabilities at
amortised cost
Group 2018
Cash and cash equivalents 5,584 - -
Trade and other receivables excluding prepayments 88,235 - -
Derivative financial instruments (1)
- 1,271 -
Total financial assets
93,819 1,271 -
Borrowings - - 10 9,935
Trade and other payables - - 4 4 , 615
Derivative financial instruments (1)
- 17 -
Total financial liabilities
- 17 15 4,550
Group 2017
Cash and cash equivalents 6,517 - -
Trade and other receivables excluding prepayments 8 7,9 17 - -
Derivative financial instruments (1)
- 2 -
Total financial assets
94,434 2 -
Borrowings - - 133,374
Trade and other payables - - 52,580
Derivative financial instruments (1)
- 1,714 -
Total financial liabilities
- 1,714 18 5,95 4
(1) Derivative financial instruments are measured at fair value calculated using forward exchange rates that are
quoted in an active market (Level 2 of the fair value hierarchy).
E7: Financial Assets
The Group classifies its financial assets as loans and receivables and at fair value through profit or loss
(derivatives). Adjustments to fair value are recognised through profit or loss, which includes derivatives held
for hedging. The classification within profit or loss depends on the purpose for which the assets were acquired.
Management determines the classification of the assets at the initial recognition and re-evaluates the designation
at each reporting date.
Purchases and sales of financial assets are recognised on the date the Group has committed to the transaction.
De-recognition of financial assets occurs when the rights to receive cash flows have expired or the Group has
transferred substantially all the risks and rewards of ownership
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. They are included in current assets, except for those with maturities greater than 12
months after the end of the reporting period, these are classified as non-current assets. The Group’s loans and
receivables comprise trade and other receivables and cash and cash equivalents. They are recognised initially at
fair value and subsequently at amortised cost less any impairment.

5757
NOTES – SECTION E

OTHER
E8: Land and Buildings
This note provides information on the key inputs used in determining the fair value of land & buildings. The
Group has measured its land & buildings at fair value. These are Level 3 on the fair value hierarchy.
The Group’s policy is to recognise transfers into and out of fair value hierarchy levels as at the end of the
reporting period. There were no transfers between any levels during the year.
The movements in level 3 items during the period are shown in the table in section C1.
The following table summarises the quantitative information about the significant unobservable inputs used in
recurring level 3 fair value measurements. The relationship of all these unobservable inputs to fair value is that the
higher they are, the lower the fair value.
DescriptionUnobservable inputs
Range of inputs
[from valuation reports]
2018
Range of inputs
[from valuation reports]
2017
Owned land & buildingsDiscount rate7.25% – 9.84%7.13% - 9.69%
Terminal yield7.50% – 9.0%6.25% - 9.25%
Capitalisation rate7.0% – 8.50%6.0% - 8.75%
E9: Subsequent events
On 7 August 2018 the Board announced a fully underwritten capital raise of $80.9m by way of an upfront
placement of $20.8m to eligible institutional investors and a pro-rata Rights Offer to eligible shareholders for
$60.1m. This will allow the Group to execute its business transformation initiatives and achieve its longer term
strategic objectives. On 10 August 2018, the upfront placement was successfully transacted.
E10: Other Accounting Policies
Basis of consolidation
The Group applies the acquisition method to account for business combinations. The Group financial statements
comprise the financial statements of Steel & Tube Holdings Limited and its controlled entities (subsidiaries)
(ref Note E5). The financial statements of subsidiaries are prepared for the same reporting period as the parent
company, using consistent accounting policies.
The Group controls an entity when the Group is exposed to, or has rights to variable returns from its involvement
with the entity and has the ability to affect those returns through its power to direct the activities of the entity.
Subsidiaries are consolidated from the date on which control is transferred to the Group and deconsolidated
from the date control ceases.
Consideration transferred is the fair value of assets transferred, liabilities incurred to the former owners of the
acquiree and equity interests issued by the Group. Consideration transferred also includes the fair value of any
asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities
(including contingent liabilities) assumed in a business combination are measured initially at their fair values at
acquisition date.
All inter-company transactions and balances between Group companies are eliminated.
Foreign currency
Transactions in foreign currencies are translated at the foreign exchange rate at the date of the transaction.
Gains and losses resulting from the settlement of such transactions and from translation of monetary assets and
liabilities at balance date are recognised in profit or loss except when deferred in equity as qualifying cash flow
hedges.

58
STEEL & TUBE ANNUAL REPORT 2018
58
STEEL & TUBE ANNUAL REPORT 2018
Revenue recognition
Revenue comprises the fair value of sales of goods net of Goods and Services Tax, and discounts and after
elimination of sales within the Group. Revenue is recognised when the significant risks and rewards of ownership
have been transferred to the customer or when the services have been performed.
Accounts payable policy
Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using
the effective interest method.
Derivatives - Cash flow hedge
The Group uses derivative financial instruments to hedge its exposure to foreign exchange risks and interest
risk arising from operational, financing and investing activities. In accordance with its Treasury Policy, the Group
does not hold or issue derivative financial instruments for trading purposes. Derivative financial instruments are
recognised initially at fair value on the date a derivative contract is entered into. Subsequent to initial recognition,
derivatives are re-measured at fair value.
The Group designates certain derivatives as hedges of a highly probable forecast transaction (cash flow hedge).
The effective portion of changes in the fair value of derivatives designated as cash flow hedges is recognised in
equity. The gain or loss on the ineffective portion is recognised in profit or loss in other gains/(losses).
When the hedged item is a non-financial asset (for example, inventory or property, plant and equipment) the
amount recognised in equity is transferred to the carrying amount of the asset when it is recognised. In other
cases the amount recognised in equity is transferred to profit or loss in the same period the hedged item is
recognised in the Statement of Profit or Loss and Other Comprehensive Income. If the hedging instrument no
longer meets the criteria for hedge accounting, expires, is sold, terminated or is exercised, any cumulative gain
or loss previously recognised in equity remains in equity until the forecast transaction is ultimately recognised in
profit or loss. When a forecast transaction is no longer expected to occur, the cumulative gain or loss reported in
equity is immediately transferred to profit or loss within other gains/(losses).
Derivative financial instruments are classified as current assets if expected to be settled within 12 months;
otherwise, they are classified as non-current.
Impairment of non-financial assets:
Assets that have indefinite useful lives that are not subject to amortisation and intangible assets not yet available
for use are tested annually for impairment. Assets (including intangibles and property, plant and equipment)
subject to amortisation and depreciation are reviewed for impairment whenever events or changes in
circumstances indicate the carrying amount may not be recoverable. An impairment loss is recognised for the
amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the
higher of an asset’s fair value, less costs to sell and value in use. For the purposes of assessing impairment, assets
are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units).
Adoption status of relevant new financial reporting standards and interpretations
There are no new standards or amendments to standards applicable to the Group for the year ended 30 June
2018 other than the adoption of the amendments to IAS 7, see note D2.
Certain new accounting standards, amendments and interpretations of existing standards have been published
that are not mandatory for the year ended 30 June 2018 and have not been early adopted by the Group. These
will be applied by the Group in the mandatory periods listed below. The key items applicable to the Group are:

5959
NOTES – SECTION E

OTHER
NZ IFRS 9: Financial Instruments (Effective date: periods beginning on or after 1 January 2018)
NZ IFRS 9: Financial Instruments addresses the classification, measurement and derecognition of financial assets
and financial liabilities, introduces new rules for hedge accounting and a new impairment model for financial
assets.
This standard takes effect from 1 July 2018 and the expected impact relates largely to financial assets and the
expected credit loss associated with those assets. The main impact for Steel and Tube will be on the impairment
calculation for trade receivables. The Group is currently using a provision matrix where trade receivables are
grouped based on past-due basis.
The new impairment model per the standard requires the recognition of impairment provisions based on
expected credit losses (ECL) rather than only incurred credit losses as is the case under NZ IAS 39. This requires
receivables to be grouped based on different customer attributes and different historical loss patterns.

The model is then updated with current and forward looking estimates. The Group is still in the process of
analysing historical credit loss information and forward-looking information in order to assess the impact,

if any, on the impairment provisions in the year of adoption.
There will be no impact on the Group’s accounting for financial liabilities, as the new requirements only affect
the accounting for financial liabilities that are designated at fair value through profit or loss and the Group does
not have such liabilities. The derecognition rules have been transferred from NZ IAS 39 Financial Instruments:
Recognition and Measurement and have not been changed.
The new hedging accounting rules will align the accounting for hedging instruments more closely with the
Group’s practices. The Group’s hedging is restricted to cash flow hedges for purchases of inventory. The Group’s
current practice is to recognise the accumulated gains or losses on the hedged transaction against the carrying
value of the inventory which is the prescribed practice under NZ IFRS 9.
NZ IFRS 15: Revenue from Contracts with Customers (Effective date: periods beginning on or after 1 January 2018)
This standard addresses recognition of revenue. It replaces the current revenue recognition guidance in NZ
IAS 18 Revenue and NZ IAS 11 Construction Contracts. The new standard is based on the principal that revenue
is recognised when control of a good and service transfers to a customer. The standards permits either a full
retrospective or a modified retrospective approach for the adoption.
During the current financial period, the Group began the assessment of the potential impact of NZ IFRS 15. Work
focused on segregating the different revenue streams that exist within the business. The majority of revenue
is made up of product sales with some contract revenue (approximately 16% of total revenue) through the
Reinforcing and CFDL divisions.
The following matters are relevant to the Group under NZ IFRS 15:
• Treatment of contract modifications for CFDL and Reinforcing division in determining whether to combine the
contract.
• For contracts which involve the supply and installation of materials in the CFDL and Reinforcing divisions,
whether the supply is a separate performance obligation as it may impact the timing, measurement and
classification of revenue recognised.
• A customers’ right of return in determining revenue to be recognised and how this should be accounted for.
• The treatment of volume rebates provided to customers.
Further work is required to assess the impact of contract modifications on revenue recognition.
The Group will take the modified retrospective approach for the transition.

60
STEEL & TUBE ANNUAL REPORT 2018
60
STEEL & TUBE ANNUAL REPORT 2018
NZ IFRS 16: Leases (Effective date: periods beginning on or after 1 January 2019)
NZ IFRS 16: Leases replaces the current guidance in NZ IAS 17. Under NZ IFRS 16, a contract is, or contains, a lease
if the contract conveys the right to control the use of an identified asset for a period of time in exchange for
consideration. Under NZ IAS 17, a lessee was required to make a distinction between a finance lease (on balance
sheet) and an operating lease (off balance sheet). NZ IFRS 16 now requires a lessee to recognise a lease liability
reflecting future lease payments and a ‘right-of-use asset’ for virtually all lease contracts. The income statement
will also be impacted by the recognition of an interest expense and a depreciation expense and the removal of
the current rental expense.
This standard will affect primarily the accounting for the Group’s operating leases. As at the reporting date, the
Group has non-cancellable operating lease commitments of $134.9m (refer to note C3). On adoption, NZ IFRS 16
will have a significant impact on the Group’s balance sheet and on specific line items on the income statement.
Management’s process to date highlights that the potential impact based on current lease arrangements is
expected to be material, with impacts on the following line items:
Balance sheet:
• Recognition of a right to use asset;
• Recognition of a lease liability; and
• Adjustment in opening retained earnings.
Income statement:
• Decrease in operating leases expense;
• Increase in depreciation and amortisation expense; and
• Increase in finance costs (interest expense).
The impact on each of these line items is expected to be significant. The accounting standard change will not
impact the cash flow of the Group.
The Group is currently undertaking a restructure of the business, including the rationalisation of the Group’s lease
portfolio. Until the outcome of this rationalisation is clear, it is not possible to provide a reliable indicative impact
of the new standard on the Group’s financial statements.
The standard is effective for the Group for the year ending 30 June 2020. Early adoption is permitted however
the Group intends to adopt NZ IFRS 16 on its effective date. The Group intends to adopt the simplified transition
approach under NZ IFRS 16 in the year ending 30 June 2020 and will not restate comparative amounts for the
period prior to first adoption.

6161
PricewaterhouseCoopers, PwC Centre, 10 Waterloo Quay, PO Box 243, Wellington 6140, New Zealand
T: +64 4 462 7000, F: , pwc.co.nz
Independent Auditors’ Report
to the shareholders of Steel & Tube Holdings Limited
The financial statements comprise:
the balance sheet as at 30 June 2018;
the statement of profit or loss and other comprehensive income for the year then ended;
the statement of changes in equity for the year then ended;
the statement of cash flows for the year then ended; and
the notes to the financial statements, which include significant accounting policies.
Our opinion
In our opinion, the financial statements of Steel & Tube Holdings Limited (the Company), including its
subsidiaries (the Group), present fairly, in all material respects, the financial position of the Group as
at 30 June 2018, its financial performance and its cash flows for the year then ended in accordance
with New Zealand Equivalents to International Financial Reporting Standards (NZ IFRS) and
International Financial Reporting Standards (IFRS).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs
NZ) and International Standards on Auditing (ISAs). Our responsibilities under those standards are
further described in theAuditor’s responsibilities for the audit of the financial statementssection of
our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
We are independent of the Group in accordance with Professional and Ethical Standard 1 (Revised)
Code of Ethics for Assurance Practitioners(PES 1) issued by the New Zealand Auditing and Assurance
Standards Board and the International Ethics Standards Board for Accountants’Code of Ethics for
Professional Accountants(IESBA Code), and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
Our firm carries out other services for the Group in the areas of tax compliance services, other
assurance services related to the Company’s ERP replacement project, tax advisory services in relation
to the Company’s Executive Share Scheme and the facilitation of an IFRS 15 workshop. The provision
of these other services has not impaired our independence as auditor of the Group.
INDEPENDENT
AUDITORS REPORT

62
STEEL & TUBE ANNUAL REPORT 2018
62
STEEL & TUBE ANNUAL REPORT 2018
Our audit approach
Overview
An audit is designed to obtain reasonable assurance whether the financial
statements are free from material misstatement.
Overall Group materiality: $1.1 million, which represents 5% of average profit
before tax in the current year and previous two years (adjusted for non-ordinary
items including, asset impairments, gain on asset sales and restructuring costs).
We chose average profit before tax (adjusted for non-ordinary items) as the
benchmark because, in our view, it is a more representative benchmark of the
performance of the Group for the period.
The following have been determined as key audit matters:
Impairment testing of the Group’s assets
Closure of S&T Plastics
Existence of inventory at business units affected by the new Enterprise
Resource Planning (ERP) system implementation
Assessment of the net realisable value (NRV) of inventory
Forecast compliance with banking covenants.
Materiality
The scope of our audit was influenced by our application of materiality.
Based on our professional judgement, we determined certain quantitative thresholds for materiality,
including the overall Group materiality for the financial statements as a whole as set out above. These,
together with qualitative considerations, helped us to determine the scope of our audit, the nature,
timing and extent of our audit procedures and to evaluate the effect of misstatements, both
individually and in aggregate on the financial statements as a whole.
Audit scope
We designed our audit by assessing the risks of material misstatement in the financial statements and
our application of materiality. As in all of our audits, we also addressed the risk of management
override of internal controls including among other matters, consideration of whether there was
evidence of bias that represented a risk of material misstatement due to fraud.
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an
opinion on the financial statements as a whole, taking into account the structure of the Group, the
accounting processes and controls, and the industry in which the Group operates.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial statements of the current year. These matters were addressed in the context
of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.

6363
INDEPENDENT
AUDITORS REPORT
Key audit matterHow our audit addressed the key audit matter
Impairment testing of the Group’s assets
The risk that the Group’s assets may be materially
impaired is considered a Key Audit Matter, due to:
the existence of indicators of impairment
the high level of management judgment
required to:
-determine the Cash Generating Units
(CGUs) to test for impairment, and
-estimate the future results of the business
and the discount rate used to determine
the value-in-use (VIU) of the CGUs.
To assess whether an impairment of the Group’s
assets exists, the Group has:
determined the lowest grouping of assets that
generate independent cash flows, known as a
CGU
allocated the Group’s assets to the CGUs, and
considered for each CGU whether indicators of
impairment exist.
Where an indicator of impairment exists, or where
the CGU contained goodwill, the Group has
prepared discounted cash flow valuations on a VIU
basis. A Group wide VIU impairment test was also
performed.
The Group included forecast cash flow
improvements from implemented performance
improvement projects in both the S&T
Distribution and S&T Wire CGU VIU calculations.
The Group concluded that:
goodwill associated with the S&T Distribution
and Wire CGUs was impaired by $10.1 million
in total, and
the calculations performed supported the
carrying value of all other assets.
Disclosure of the Group’s impairment assessment
is contained in note C2.
Determination of CGUs and allocation of assets to CGUs
We performed procedures to evaluate and challenge the
Group’s determination of CGUs. This included:
reviewing internal management reporting to assess the
level at which the Group monitors performance
comparing CGUs to our knowledge and understanding
of the Group’s operations
ensuring that CGUs were no larger than operating
segments, and
reconciling assets allocated to CGUs to those totals
within the general ledger.
Assessment of indicators of impairment
For CGUs not containing goodwill, we considered and
challenged the Group’s assessment of whether indicators of
impairment existed. This included assessing internal and
external information, including factors such as the
performance of the CGU against budget and prior year.
Calculating the recoverable amount
For each CGU that contained goodwill, or had an indicator
of impairment we assessed the appropriateness of the VIU
calculation. We:
tested the mathematical accuracy of the valuation model
assessed forecast cash flows by comparing them to
historical information, available industry information,
and agreeing cash flows to Board approved budgets
considered the reasonableness of the Group’s discount
rate by comparison to a discount rate developed by our
internal valuation expert, and
assessed the Group’s forecasting accuracy by comparing
historical forecasts to actual results.
For two CGUs, the Group included cash flows attributable to
performance improvement initiatives. We confirmed that
management were committed to the implementation of
these plans through:
obtaining external consultants’ reports identifying
improvement opportunities
reviewing project management and reporting tools to
track the status and benefits realised from the
initiatives, and
testing transactions associated with the improvement
initiatives, including restructuring provisions.
Because of the subjectivity involved in valuing CGUs, there
is a range of values, which can be considered reasonable
whenevaluatingthecarryingvalueofaCGU.Basedonthe
above procedures there were no matters to report.

64
STEEL & TUBE ANNUAL REPORT 2018
64
STEEL & TUBE ANNUAL REPORT 2018
Key audit matterHow our audit addressed the key audit matter
Closure of S&T Plastics
Significant management judgment was involved in
the estimation of the fair value less cost to sell
(FVLCTS or net realisable value) of S&T Plastics’
assets. For this reason, and considering the
significance of the impairment, we determined the
valuation of S&T Plastics’ assets to be a Key Audit
Matter.
The Group decided to close the S&T Plastics CGU.
The Group recognised an impairment expense of
$8.0 million to bring the assets of the CGU to their
net realisable value. In determining the extent of
impairment, the Group has made judgments in
respect of:
the likely method of asset disposal, for
instance through a managed sales process or
scrapping, and
estimating the net realisable value of the
assets.
The Group has engaged a broker to pursue a sale of
S&T Plastics’ assets.
The Group used its knowledge of the plastics
market, and offers received to purchase certain
assets, to assess the estimated net realisable value
of the assets.
In addition, the Group obtained an independent
appraisal of the valuation of S&T Plastics’ assets to
compare with their assessment.
Refer to note C4 for further disclosure.
To assess the appropriateness of the Group’s judgment as to
the method of disposal we have:
inquired of management, inside and outside of the
finance function, to understand and corroborate
management’s assumptions, and
reviewed management’s assessment of the likely sale
method.
In considering the reasonableness of management’s estimate
of net realisable value we have:
obtained the independent appraiser’s report and
compared it to management’s estimated net realisable
value
compared asset values to purchase offers received post
balance date, and
discussed indicative offers received for S&T Plastics’
assets with the Group appointed sales broker.
Because of the subjectivity involved in determining the likely
method of disposal and estimating the net realisable value,
there is a range of values that can be considered reasonable.
Based on the above procedures there were no matters to
report.
Existence of inventory at business units affected
by the new Enterprise Resource Planning (ERP)
system implementation
As explained in note B1, in October 2017 the Group
implemented an ERP solution across the core
Distribution and Roll-forming business units (the
‘Business Units’) and encountered a number of
implementation issues. These issues have affected
business operations.
In response, the Group sought increased
confidence over the existence of its inventory
holdings by conducting wall-to-wall inventory
counts at the Business Units. The counts occurred
at all sites at different times in May and June 2018.
This represented a change from the Group’s policy
of conducting cycle counts across the year.
We performed a number of procedures to address the
heightened risk that inventory did not exist. These
procedures included attending inventory counts at an
increased number of locations to assess the appropriateness
of the Group’s count procedures, the accuracy of counting,
and the accuracy of recording of adjustments.
We determined which count locations to attend based on
our assessment of risk, including:
the volume and value of inventory held at locations, and
the extent of past compliance with the Group’s cycle
count programme.
We also tested the reconciliation of the inventory counted to
the quantity recorded in the inventory sub-ledger.

6565
INDEPENDENT
AUDITORS REPORT
Key audit matterHow our audit addressed the key audit matter
Existence of inventory at business units affected
by the new Enterprise Resource Planning (ERP)
system implementation (continued)
We assessed there is an increased risk over
existence of inventory and identified this as a Key
Audit Matter. The factors which lead us to this
assessment included:
the implementation of a new ERP system
across the Business Units
the high volume and value of inventory held by
the Business Units, and
the large number of inventory locations.
To assess whether materially all inventory had been counted
during the year, we compared reports detailing inventory
counted to the inventory listing at 30 June 2018.
We tested a sample of inventory movements between the
inventory counts dates in May and June 2018 and the 30
June 2018 balance date to supporting documentation.
Based on the above procedures there were no matters to
report.
Assessment of the net realisable value (NRV) of
inventory
The Group has inventory of $116 million as at 30
June 2018, with $8.8 million held at NRV.
The Group is required to hold inventory at the
lower of cost and NRV. This is a Key Audit Matter
as significant management judgment is required to
determine the NRV of aged and slow moving
inventory, given its limited sales history.
The Group identified the following inventory
categories for which an adjustment to the carrying
value was required, comprising inventory:
with no or limited sales transactions within the
previous 12 months (slow moving)
where current holdings exceed 12 months sales
(excessive), and
for which there is no longer demand due to
changes in customer requirements (obsolete).
The Group’s estimate of NRV considered:
the most recent achieved sales price for each
Stock Keeping Unit (SKU)
current scrap metal recovery rates. These were
based on quotes obtained from scrap
merchants which indicated the scrap value was
not material, and
internal sales manager’s judgment of the
current realisable value for each SKU.
As described in section B1 of the financial
statements, the Group’s consideration of inventory
valuation resulted in an $8.4 million inventory
impairment provision.
We assessed the completeness and accuracy of the inventory
categories that management had identified for impairment
consideration. This included undertaking procedures to
assess the accuracy of reports used by management,
including recalculating the aging of inventory on a sample
basis.
We assessed the reasonableness of the Group’s estimate of
NRV by performing the following procedures:
inspected the scrap value quotations obtained by
management
inquired of supply chain personnel to understand and
corroborate the assumptions applied in estimating
inventory provisions, and
assessed the accuracy of previous NRV estimates by
comparing the Group’s estimate of NRV to the actual
realised sales price.
Where the Group assessed that a provision was not required
for the inventory included in the slow moving, obsolete and
excessive categories, we obtained, on a sample basis,
evidence to support or challenge this assessment. Evidence
obtained included:
invoices detailing recent sales transaction prices, and /
or
inquiry of supply chain and sales personnel to
understand the demand for the inventory SKU.
Based on the above procedures there were no matters to
report.

66
STEEL & TUBE ANNUAL REPORT 2018
66
STEEL & TUBE ANNUAL REPORT 2018
Key audit matterHow our audit addressed the key audit matter
Forecast compliance with banking covenants
As detailed in note D1, the Group expected to
breach one of its financial banking covenants in
the year. The Group received a waiver from the
banks and the parties also agreed to amend their
banking arrangements. We have therefore deemed
forecast compliance with amended banking
covenants to be a key audit matter.
The Group has assessed forecast compliance with
these covenants by:
preparing a phased budget for Fy19. This
budget has been approved by the Board
using the budget to calculate covenant
compliance at each forecast compliance date,
and
assessing forecasting risk by considering the
headroom available for each covenant at each
compliance date.
The Group has determined that it expects to
comply with all covenants. In addition, the Group
has recently announced a capital raise, which will
result in significantly lower gearing and
substantial additional covenant headroom
available.
We obtained an understanding of the relevant covenants
and any conditions included in the amended banking
facility agreements.
We obtained the Group’s forecast compliance assessment
and:
agreed the FY19 phased budget to that approved by the
Board
recalculated compliance with financial covenants at each
compliance date, and
performed sensitivity analysis to assess the level of
forecasting risk.
Separately, we considered the status of the capital raise and
its positive impact on available headroom.
We have no matters to report.

6767
Information other than the financial statements and auditor’s report
The Directors are responsible for the annual report. Our opinion on the financial statements does not cover the
other information included in the annual report and we do not, express any form of assurance conclusion on the
other information.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial statements or our
knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have
performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that
there is a material misstatement of this other information, we are required to report that fact. We have nothing to
report in this regard
.
Responsibilities of the Directors for the financial statements
The Directors are responsible, on behalf of the Company, for the preparation and fair presentation of the financial
statements in accordance with NZ IFRS and IFRS, and for such internal control as the Directors determine is
necessary to enable the preparation of financial statements that are free from material misstatement, whether due
to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s ability to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the Directors either intend to liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements, as a whole, are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs NZ and ISAs will always detect a material misstatement when it exists. Misstatements can
arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located at the External
Reporting Board’s website at:
https://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-1/
This description forms part of our auditor’s report.
Who we report to
This report is made solely to the Company’s shareholders, as a body. Our audit work has been undertaken so that
we might state those matters which we are required to state to them in an auditor’s report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than
the Company and the Company’s shareholders, as a body, for our audit work, for this report or for the opinions we
have formed.
The engagement partner on the audit resulting in this independent auditor’s report is Kevin Brown.
For and on behalf of:
Chartered AccountantsWellington
28 August 2018
INDEPENDENT
AUDITORS REPORT

68
STEEL & TUBE ANNUAL REPORT 2018
Governance
Corporate governance at Steel &
Tube is predicated on high standards
of ethics and performance, and is
achieved through robust governance
policies, practices and processes
to ensure compliance with the NZX
Main Board Listing Rules.
The Board regularly reviews Steel &
Tube’s governance structures and
processes to identify opportunities
for enhancement, ensure they are
consistent with best practice and
reflect Steel & Tube’s operations.
The Board believes that the company’s
corporate governance framework
materially complies with the NZX
Corporate Governance Code 2017.
Further work is being undertaken in
some areas to ensure full compliance
with the Code and our progress is
explained below. A summary of Steel
& Tube’s governance actions and
performance against each of the
Principles in the Code is detailed on
the following pages.
Governance Policies and Charters
can be viewed on the Steel & Tube
website at https://steelandtube.
co.nz/corporate/governance.
CODE OF ETHICAL BEHAVIOUR
Steel & Tube expects its Directors
and staff to act with integrity and
professionalism, and undertake their
duties in the best interests of the
company. The Board has adopted
a Code of Ethics, which is available
on the company website and staff
intranet.
The company Policy Manual also
includes an Employee Code of
Conduct. This forms part of the new
employee induction programme.
Steel & Tube encourages employees
to speak out if they have concerns.
The avenues for doing so are detailed
in the company’s Whistle Blowing
policy which is on the company
website.
Steel & Tube has an Insider Trading
Policy which, along with the Financial
Markets Conduct Act 2013, imposes
limitations and requirements
on Directors and employees in
dealing in the company’s shares.
These limitations prohibit dealing
in shares while in possession of
inside information and impose
requirements for seeking consent to
trade.
BOARD COMPOSITION AND
PERFORMANCE
The Steel & Tube Board comprises
five independent Directors, who
have significant relevant industry
and market experience, skills and
expertise that are of value to the
company. Profiles of Directors are
available on the company website
and included in the Annual Report.
Directors’ interests are disclosed on
page 78 of the Annual Report.
Steve Reindler and Chris Ellis were
appointed to the Board in October
2017 and elected by shareholders at
the Annual Meeting in November
2017. Susan Paterson was also elected
by shareholders at the Annual
Meeting and Rosemary Warnock was
re-elected to the Board. Long serving
Director, Dean Pritchard, retired from
the Board at the Annual Meeting.
The roles and responsibilities of
the Board are detailed in the Board
Charter, which is reviewed at least
every two years and is available on
the company website. The Board’s
primary objective is to enhance
shareholder value and protect the
interests of other stakeholders by
improving corporate performance
and accountability.
The Board has delegated authority
for day to day leadership and
management of the business to the
CEO, who in turn has sub-delegated
authority to other company
management with specified financial
and non-financial limits. A formal
Delegations of Authority Policy
documents delegated authorities and
is reviewed annually by the Board.
The number of elected Directors
and the procedure for their
retirement and re-election at
the Annual Meetings is set out
in the company Constitution.
The Nomination Committee has
delegated responsibility from the
Board to make recommendations on
Board composition and nominations,
subject to the company Constitution.
The Committee has developed a
skills matrix and takes into account
a number of factors including
qualifications, experience and skills.
Shareholders may also nominate
candidates for election to the Board.
Steel & Tube’s Chair is required to be
an independent Director. The Board
supports the separation of the roles of
Chair and CEO and the appointment
of an Independent Chair.
Directors are encouraged to
undertake appropriate training and
education to ensure they remain
current on how to best perform their
duties. In addition, management
provide regular updates on relevant
industry and company issues,
including briefings from senior
executives.

69
All Directors have access to
executives to discuss issues or obtain
information on specific areas in
relation to matters to be discussed
at Board meetings, or other areas as
they consider appropriate.
The Board Committees and
Directors, subject to the approval
of the Board Chair, have the right
to seek independent professional
advice at the company’s expense,
to enable them to carry out their
responsibilities.
The Board monitors its own
performance and from time to time
receives external reviews to assess the
performance of individual Directors
and the Board’s effectiveness.
Following a detailed review and the
subsequent refresh completed in
November 2017, the Board undertook
a self-review during 2018.
The company has written agreements
with each Director, outlining the
terms of their appointment.
The Board is satisfied that each
Director has the necessary time
available to devote to the position,
broadens the Board’s expertise and
has a personality that is compatible
with the other Directors.
GENERAL
INFORMATION
70
60
50
40
30
20
10
0
Lead Team/
Snr Execs
Board of
Directors
Tier 3Customer
Services
Tiers 4,
5 & 6
Warehousing
/Operations
Sales & Bus
Dev roles
Overall
Workforce
2018
2017
Gender Diversity at Steel & Tube (% of females)
60
1414
29
34
2020
17
19
53
47
6
11
20
21
50
DIVERSITY
Equality and diversity are
cornerstones of our organisational
culture. We believe that diversity at
Steel & Tube is integral to creating
a collaborative workplace culture,
competitive advantage and,
ultimately, sustainable business
success.
Diversity provides us with a broad
range of perspectives and experience
that enhance the quality and depth
of our decision-making, and helps
create a united team approach across
all levels of our organisation.
Our approach to diversity is outlined
in the Diversity Policy, which is
available on the company website.
Key areas of focus are:
• Recruitment and retention of a
diverse workforce
• Fair and consistent reward and
recognition
• Flexible working arrangements
• Employee engagement
• Agreed standards of conduct and
behaviour
A number of initiatives are in place
to support diversity and the Board
believes progress has been made in
FY18.
The Board of Directors comprises three females and there is one female on the leadership team.

70
STEEL & TUBE ANNUAL REPORT 2018
BOARD COMMITTEES
The Board has established several
standing committees, each of
which has a Board approved
charter summarising the role,
responsibilities, delegations and
membership requirements. The
Board regularly reviews the charters
of each Board committee, the
committees’ performance against
those charters and membership of
each committee. The Board believes
that committee charters comply
with recommendations in the NZX
Corporate Governance Code.
Board committees assist the Board by
focussing on specific responsibilities
in greater detail than is possible in
Board meetings. However, the Board
retains ultimate responsibility for
the functions of its committees and
determines their responsibilities. The
Board appoints the members and
chair of each committee, with the
committee chair reporting committee
recommendations to the Board.
Management attendance at
committee meetings is by invite only.
In the case of a takeover offer, Steel
& Tube would follow its takeover
protocols including forming an
Independent Takeover Committee
to oversee disclosure and response
and engage expert legal and financial
advisors to provide advice on
procedure.
Reporting and Disclosure
Steel & Tube’s Directors are
committed to keeping investors and
the market informed of all material
information about the company
and its performance, in a timely
manner. In addition to all information
required by law, Steel & Tube also
seeks to provide sufficient meaningful
information to ensure stakeholders
and investors are well informed.
For the financial year ended 30 June
2018, the Directors believe that
proper accounting records have been
kept which enable, with reasonable
accuracy, the determination of the
financial position of the company
and facilitate compliance of the
financial statements with the Financial
Markets Conduct Act 2013. The Chief
Executive and Chief Financial Officer
have confirmed in writing that Steel
& Tube’s external financial reports
present a true and fair view in all
material aspects
Steel & Tube is committed to
providing accurate, timely, consistent
and reliable disclosure of information
to ensure market participants have
fair access to information that may
impact on its share price.
The company’s Continuous
Disclosure Policy sets out the
principles and requirements of this
commitment to timely disclosures.
While Steel & Tube already has
policies that support environmental,
social and governance concerns,
a more detailed framework is in
development and will be progressed
for the FY19 annual report.
Remuneration
Remuneration of Directors and senior
executives is the key responsibility of
the Governance and Remuneration
Committee. The framework for
the determination and payment of
Directors’ and senior executives’
remuneration is set out in the
Remuneration Policy. External advice
is sought on a regular basis to ensure
remuneration is benchmarked to
the market for senior management
positions, Directors and Board
Committee positions.
Details of Director and Executive
Remuneration in FY18 are provided
on pages 74 to 77.

71
GENERAL
INFORMATION
The Board committees as at 30 June 2018 were:
CommitteeRoleMembers
Quality, Health, Safety
and Environment
Assist the Board to meet its responsibilities in relation to the
company’s Quality, Health and Safety (H&S) and Environment
policies and procedures, and legislative compliance
Rosemary Warnock (Chair)
Susan Paterson
Chris Ellis
Audit and RiskAssist the Board in its oversight of the integrity of financial
reporting, financial management and controls, external
audit quality and independence, and the risk management
framework
Anne Urlwin (Chair)
Susan Paterson
Steve Reindler
Governance and
Remuneration
Assist the Board to establish and maintain a strong
governance framework overseeing the management of the
company’s people, remuneration and diversity policies
Steve Reindler (Chair)
Susan Paterson
Anne Urlwin
NominationsAssist the Board in ensuring appropriate Board performance
and composition and in appointing directors
Susan Paterson (Chair)
Anne Urlwin
Rosemary Warnock
Steve Reindler
Chris Ellis
Meeting attendance
Board
Quality, Health,
Safety &
Environment
Committee
Audit & Risk
Committee
Governance &
Remuneration
Committee
Nominations
Committee
(6)
Total number of Meetings144531
Susan Paterson144531
Anne Urlwin134531
Chris Ellis
(1)
1131--
Dave Taylor
(2)
312--
Dean Pritchard
(3)
41311
Mark Malpass
(4)
31211
Rosemary Warnock104421
Steve Reindler
(5)
9-32-

1. Appointed 1 October 2017
2. Resigned from the Board and as CEO on 22 September 2017
3. Retired from the Board 16 November 2017
4. Stepped down from the Board to take up Interim CEO role 25 September 2017
5. Appointed 1 October 2017
6. Met as part of full Board meeting

72
STEEL & TUBE ANNUAL REPORT 2018
Risk Management
Steel & Tube’s ability to deliver
appropriate returns to its
shareholders requires successful
execution of the company’s business
strategy and plans.
The company is exposed to risks
from a number of sources, including
operational, strategic, economic and
financial risks. Steel & Tube’s Risk
Management Policy provides for a
risk management framework that
incorporates policies, procedures
and appropriate internal controls to
identify, assess and manage areas of
significant business and financial risks.
Quality, Health, Safety and
Environment
The Board is committed to ensuring
a high quality, safe and healthy
environment for all Steel & Tube
people and anyone in the company’s
workplaces.
The Board’s Quality, Health, Safety
and Environment Committee
regularly visits the company’s sites
to review health and safety in the
workplace and engage directly with
staff on health and safety matters.
The committee receives regular
reports on quality processes and
compliance with standards. Quality,
Health, Safety and Environment are
discussed at all Board meetings.
Quarterly comprehensive reports
from management are reviewed
by the Quality, Health, Safety and
Environment Committee. The reports
cover risk management, lead and
lag indicator performance, reviews
of Lost Time Incidents (LTIs), and
Medical Treatment Incidents (MTIs).
High potential risk incidents are also
recorded and reported to identify root
causes and to eliminate potential risks.
Employee involvement is a key
component of the company’s
Health and Safety management
system. Cascading down from
the Board Quality, Health, Safety
and Environment Committee, the
company’s Quality, Health, Safety and
Environment Committee, chaired by
the CEO, recommends policy and
oversees resource allocation and
progress against yearly action plans.
Reporting to the company’s Quality,
Health, Safety and Environment
Committee is an Operational Quality,
Health, Safety and Environment
Committee, comprised of the
company’s Quality Manager
and operational managers from
throughout the organisation.
This committee is responsible for
validating new policies, initiatives and
actions from a workplace perspective.
Additionally, this committee interacts
with the businesses and raises
operational issues that have the
potential to impact health and safety
to the company Quality, Health,
Safety and Environment Committee.
Each of the company’s operational
facilities has its own Quality,
Health, Safety and Environment
Committee with representatives
from all work groups, including
elected representatives. These
committees have responsibility
for ensuring compliance with the
company’s Quality, Health, Safety
and Environment Policies and are
responsible for day-to-day health and
safety at their facility.
A national health and safety statistics
report is published monthly and
it is analysed to identify lead and
lag indicators trending at group,
divisional and area levels. This
information enables quality decision
making when interventions are
required and it signals the high
priority placed on the importance of
strong safety culture.
The table below shows strong lag
indicator improvement due to two
strategic intervention strategies
resulting in a 43% reduction in
medical treatment incidents and an
82% reduction in lost time incidents.
The strategies implemented were:
(1) a WorkSafe based programme on
the power of speaking up; and
(2) a robust return to work
programme after the Christmas
holiday break.
LTIFR
MTIFR
10
8
6
4
2
0
S&T Employee Lag Indicator

12 Month Moving Average Frequency Rates
JulAugSeptOctNovDecJanFebMarAprMayJun

73
GENERAL
INFORMATION
AUDITORS
External audit
For the year ended 30 June 2018,
PWC was the external auditor for
Steel & Tube. PWC was re-appointed
under the Companies Act 1993 at the
2017 Annual Meeting. The last audit
partner rotation was in FY14. On
completion of the FY18 audit, PWC
has advised that a partner rotation
will occur for the FY19 audit.
The Audit and Risk Committee
monitors the ongoing independence,
quality and performance of
the external auditors PWC, and
monitors audit partner rotation. The
committee pre-approves any non-
audit work undertaken by PWC. The
non-audit services in the year ended
30 June 2018 are set out in the Annual
Report. Those services were provided
in accordance with the company’s
External Auditor Independence Policy
and were assessed by the Audit and
Risk Committee as not affecting
PWC’s independence. The fees paid
for audit and non-audit services in
FY18 is identified on page 53 of the
Annual Report. The external auditors
attend the Annual Shareholders
Meeting each year.
Internal Audit
Steel & Tube operates an out-sourced
internal audit function, which reports
to and is monitored by the Audit
and Risk Committee. KPMG were
appointed internal auditors during
the FY17 year and have continued
to provide this service in FY18. The
Committee approves the annual
internal audit plan, receives internal
audit review reports on the adequacy
and effectiveness of Steel & Tube’s
internal controls and monitors
the implementation of KPMG’s
recommendations arising from its
review findings.
SHAREHOLDER RIGHTS AND
RELATIONS
The Board is committed to open and
regular dialogue and engagement
with shareholders and the New
Zealand Shareholders Association.
Steel & Tube’s investor relations
programme includes semi-annual
post-results briefings with investors,
analysts and investor meetings,
and earnings announcements. The
programme is designed to provide
shareholders and other market
participants the opportunity to
obtain information, express views and
ask questions.
The company endeavours to make it
easy for shareholders to participate
in annual meetings, which are held in
main centres. Shareholders are able
to ask questions of and express their
views to the Board, Management
and the external auditors at annual
meetings. The Board adopts the one
share, one vote principle, conducting
voting at shareholder meetings by
poll. Shareholders are also able to
vote by proxy ahead of meetings
without having to physically attend
those meetings.
Shareholders are encouraged to
communicate with the company and
its share registry electronically.
The Board considers that
shareholders should be entitled to
vote on decisions that would change
the essential nature of Steel & Tube’s
business.
In addition to shareholders, Steel &
Tube has a wide range of stakeholders
and maintains open channels of
communication for all audiences,
including brokers, the investing
community and the New Zealand
Shareholders’ Association, as well as
its staff, suppliers and customers.

74
STEEL & TUBE ANNUAL REPORT 2018
DIRECTOR REMUNERATION
Total remuneration available to
non-executive directors in the year
ended 30 June 2018 was $575,000
as approved by shareholders. This
annual fee pool limit was increased
following resolutions approved at the
2017 Annual Shareholders Meeting.
The Remuneration and Governance
Committee reviews the remuneration
of directors annually.
As at 30 June 2018 the standard
annual directors’ fees per annum
were $145,000 for the chair and
$75,000 for each non-executive
director. Board committee chairs
also receive additional fees of
between $5,000 - $10,000 for
their committee responsibilities.
Directors’ fees exclude GST, where
applicable. Directors are entitled
to be reimbursed for costs directly
associated with carrying out their
duties, including travel costs.
The total amount of remuneration
and other benefits received by
the independent directors during
the year ended 30 June 2018 was
$477,500 as shown in the table below:
Remuneration
Director
Directors
Fees
Committee
Chair FeesOtherFY18 TotalResponsibility
Susan Paterson $145,000--$145,000Board Chair
Anne Urlwin$75,000$10,000-$85,000Audit and Risk Committee Chair
Rosemary Warnock$75,000$10,000-$85,000HS&E Committee Chair
Steve Reindler
1
$56,250$4,375-$60,625Governance & Remuneration
Committee Chair
Chris Ellis
1
$56,250--$56,250
Dean Pritchard
2
$ 2 8,1 2 5--$28,125
Mark Malpass
3
$17,500--$17,500
Dave Taylor
4
--$1,722,025$1,722,025Former CEO and Managing Director
1. Steve Reindler and Chris Ellis were appointed as Directors in October 2017
2. Dean Pritchard retired as a Director in November 2017
3. Mark Malpass stepped down as a Director in September 2017 to take the role as Interim CEO
4. Dave Taylor received fixed remuneration and other benefits as CEO up to the date of his resignation on 22 September 2017. Included in the
amounts paid to Mr Taylor was $494,282 for short term incentive and long term incentive entitlements, including dividends due (relating to
previous financial periods). Also included was his fixed annual remuneration up to the date of resignation and amounts paid in accordance with
his contractual entitlements upon cessation of employment.

75
GENERAL
INFORMATION
EXECUTIVE REMUNERATION
Steel & Tube’s remuneration policy
and practices are designed to attract,
retain and motivate high calibre
people at all levels of Steel & Tube.
The CEO and executives have the
potential to earn a Short Term
Incentive (STI) each year. Steel &
Tube’s STI is based on performance
targets and is designed to
differentiate performance and reward
delivery. STI values for the CEO and
executives are set as a percentage
of Fixed Annual Remuneration (FAR)
based on the scale, complexity and
performance expectations of each
individual STI participant’s role.
The CEO and executives, together
with a limited number of non-
executive senior managers, also have
the potential to earn a Long Term
Incentive (LTI). Steel & Tube’s LTI is
designed to incentivise and retain
key personnel, align the interests
of executives and shareholders and
encourage long-term decision-
making. LTI values for the CEO and
executives are set as a percentage of
FAR .
STI performance targets during the
year ended 30 June 2018 reflected
a mixture of financial, safety and
personal objectives appropriate for
the position held by the individual STI
participant.
The STI plan also includes a company
based performance hurdle, where
no STI is payable to any participant
if the YE results are 80% or less
of the company’s financial target.
Additionally, in the event of a fatality
or serious injury, where the company
is considered culpable by the Board,
no STI payment is payable to the
Chief Executive, Executives and their
direct reports and no payment is
payable for the Health, Safety and
Environment component to all other
STI participants.
For the 30 June 2019 financial
year the STI performance targets
are being adjusted to include
financial, quality & safety, employee
engagement, customer services and
strategy delivery related objectives
appropriate for the position held by
the individual STI participant.
A new LTI (referred to as the
Performance Rights Plan (PRP))
was developed and approved by
the Board in February 2018. The
PRP performance period runs for
three years and comprises of two
performance conditions (50% each)
as follows:
a) The Benchmark Comparator
(BC) ranks the company’s Total
Shareholder Return (TSR) relative
to the TSR of the NZX 50 Index
securities.
i. Where the company TSR equals
the 50th percentile TSR of the
Index Companies over the
Performance Period, 50% of
(BC) Performance Rights will
vest.
ii. Where the company TSR equals
or exceeds the 75th percentile
TSR of the Index Companies
over the Performance Period,
100% of (BC) Performance
Rights will vest.
iii. Where the company’s TSR over
the Performance Period exceeds
the 50th percentile TSR of the
Index Companies but does not
reach the 75th percentile, then
between 50% and 100% of the
(BC) Performance Rights, will
vest as determined on a linear
pro rata basis.
b) The Absolute Comparator (AC)
ranks the company’s TSR relative
to the company’s Cost of Equity
(CoE) plus a premium of 2%
annualised and compounding.
i. Where the company TSR is
less than or equal CoE no (AC)
Performance Rights will be
vested
ii. Where the company TSR is
greater than CoE but less
than (CoE) + 2%, 50% of (AC)
Performance Rights will vest
iii. Where the company TSR is
equal to or greater than CoE +
2%, 100% of (AC) Performance
Rights will vest
Performance Rights are only able
to be exercised after completion of
the three year performance period,
provided and only to the extent that
the performance conditions have
been satisfied. Any Benchmark and
Absolute Comparator Performance
Rights that do not vest at the
measurement date will lapse.
The company’s previous LTI scheme,
in place since 2003, will continue to
operate until such time as the prior
years’ Rights that have been granted
are either vested and exercised or
forfeited, in accordance with that
plans rules.
The STI and LTI are both variable
elements of remuneration, with
selected employees invited to
participate each year as approved
by the Board. They are only paid if
individual, company and shareholder
TSR performance conditions and
targets are met.