Prospectus

Vulcan Steel Limited
|
Prospectus
ProsPectus
Vulcan Steel limited
(NZBN 9429038466052,
ARBN 652 996 015).
Initial Public Offering of fully
paid ordinary shares at an
Offer Price per Share of A$7.10
Joint Lead Managers
For personal use only

OFFER
This Prospectus is issued by Vulcan Steel Limited (NZBN
9429038466052, ARBN 652 996 015) (“company” or “Vulcan”)
and Vulcan Sale Company Limited (NZBN 9429049523409,
ARBN 652 961 209) (“saleco”) for the purpose of Chapter 6D
of the Corporations Act 2001 (Cth) (“corporations Act”). The Offer
contained in this Prospectus is an initial public offering to acquire
fully paid ordinary shares in the Company (“shares”). See Section 7
for further information on the Offer, including details of the
securities that will be sold under this Prospectus.
LODGEMENT AND LISTING
This Prospectus is dated 15 October 2021 (“Prospectus Date”)
and was lodged with the Australian Securities and Investments
Commission (“AsIc”) on that date.
The Company will apply to the Australian Securities Exchange
(“AsX”) within seven days of the Prospectus Date, for its admission
to the Official List and quotation of Shares (under the code “VSL”).
The Company will also apply for listing with NZX Limited (“NZX”)
as a foreign exempt issuer and for quotation of the Shares on the
NZX Main Board (under the code “VSL”). None of ASIC, ASX, NZX
nor any of their respective officers takes any responsibility for
the contents of this Prospectus or the merits of the investment
to which this Prospectus relates.
E XPIRY DATE
This Prospectus expires on the date which is 13 months after
the Prospectus Date (“expiry Date”). No Shares will be sold
on the basis of this Prospectus after the Expiry Date.
NOTE TO APPLICANTS – NOT INVESTMENT ADVICE
The information contained in this Prospectus is not investment
or financial product advice and has been prepared as general
information only. It does not consider the investment objectives,
financial situation or particular needs of any prospective investor.
It is important that you read this Prospectus carefully and in full
before deciding whether to invest in the Company. If you have
any questions, you should consult your accountant, financial
advisor, stockbroker, lawyer or other professional advisor before
deciding whether to invest in Shares.
In particular, you should consider the basis of preparation
and best estimate assumptions underlying the Pro Forma
Historical Financial Information (see Section 4) and the risk
factors (see Section 5) that could affect the business, financial
condition and financial performance of the Company, including
macroeconomic and market condition risks arising from the
ongoing global COVID‑19 pandemic.
No person named in this Prospectus, nor any other person,
guarantees the performance of the Company, the repayment
of capital by the Company or the payment of a return on
the Shares.
THE COMPANY AND SALECO
ARE NEW ZEALAND COMPANIES
The Company and SaleCo are each a company incorporated
in New Zealand. As such, each is subject to New Zealand law
including the Companies Act.
Once admitted to the Official List, the Company will also be
subject to the requirements of the ASX Listing Rules. There are
certain differences between New Zealand law and Australian
law that prospective investors in Australia should be aware of.
Refer to Section 9.8.3 for further information.
EXPOSURE PERIOD
The Corporations Act prohibits the Company and SaleCo
from processing Applications in the seven‑day period after
the Prospectus Date (“exposure Period”). The Exposure Period
may be extended by ASIC by up to a further seven days.
The purpose of the Exposure Period is to enable this Prospectus
to be examined by market participants prior to the raising
of funds. The examination may result in the identification of
deficiencies in this Prospectus, in which case any Application
may need to be dealt with in accordance with Section 724 of
the Corporations Act. Applications received during the Exposure
Period will not be processed until after the expiry of that period.
No preference will be conferred on Applications received during
the Exposure Period.
NO COOLING-OFF RIGHTS
Cooling‑off rights do not apply to an investment in Shares sold
under this Prospectus. This means that, in most circumstances,
you cannot withdraw your Application once it has been accepted.
OBTAINING A COPY OF THIS PROSPECTUS
During the Exposure Period, an electronic version of this
Prospectus (without an Application Form) will be available
at https://events.miraqle.com/vulcan‑ipo for Australian and
New Zealand resident investors only. Application Forms will not
be made available until after the Exposure Period has expired.
During the Offer Period, this Prospectus is available to
Australian and New Zealand resident investors in electronic
form at https://events.miraqle.com/vulcan‑ipo. The Offer
constituted by this Prospectus in electronic form at
https://events.miraqle.com/vulcan‑ipo is available only to
persons within New Zealand and Australia. The Prospectus
is not available to persons in other jurisdictions (including the
United States) in which it may not be lawful to make an invitation
or offer. If you access the electronic version of this Prospectus,
you should ensure that you download and read the Prospectus
in its entirety.
You may obtain a paper copy of this Prospectus (free of charge),
before the Closing Date, by telephoning the Vulcan IPO Offer
Information Line on 1800 881 047 (within Australia) 8.30am
to 5.30pm (AEDT), Monday to Friday. If you are eligible to
participate in the Offer and are calling from outside Australia,
you should call +61 1800 881 047 from 8.30am to 5.30pm (AEDT),
Monday to Friday.
Applications for Shares may only be made during the Offer
Period by completing an Application Form attached to or
accompanying this Prospectus, in its paper form, or in its
electronic form, which must be downloaded in its entirety
from the Offer website (https://events.miraqle.com/vulcan‑ipo).
The Corporations Act prohibits any person from passing the
Application Form on to another person unless it is attached to
a paper copy of the Prospectus or the complete and unaltered
electronic version of this Prospectus.
Refer to Section 7 for further information.
STATEMENTS OF PAST PERFORMANCE
This Prospectus includes information regarding the past
performance of Vulcan. Investors should be aware that past
performance should not be relied upon as being indicative
of future performance.
FINANCIAL INFORMATION
Section 4 sets out in detail the Financial Information referred
to in this Prospectus and the basis of preparation of the
Financial Information.
All references to FY19, FY20, FY21, FY21F and FY22F appearing
in this Prospectus are to the financial years ended 30 June 2019,
30 June 2020 and 30 June 2021 and to the forecast financial
years ending on 30 June 2021 and 30 June 2022 respectively,
unless otherwise indicated. The Prospectus also includes
references to 1H22 and 2H22 which refer to the six months
ended 31 December 2021 and the six months ending on
30 June 2022 respectively.
Important notice
For personal use only

The Historical Financial Information is presented on both an
actual and pro forma basis and has been prepared in accordance
with the New Zealand equivalents to the International Financial
Reporting Standards (NZ IFRS) and in accordance with the
recognition and measurement principles of the New Zealand
Generally Accepted Accounting Practice (NZ GAAP), which are
consistent with the International Financial Reporting Standards
(IFRS) and Vulcan’s accounting practices. Vulcan’s significant
accounting policies are described in Appendix A.
The Prospectus also includes Forecast Financial Information
based on the best estimate general and specific assumptions
of the Board. The basis of preparation and presentation of
the Forecast Financial Information, to the extent applicable,
is consistent with the basis of preparation and presentation
of the Historical Financial Information. The Forecast Financial
Information presented in this Prospectus is presented on a pro
forma basis and is unaudited. The Financial Information has
been prepared on a going concern basis, which contemplates
the continuity of normal business activities and the realisation
of assets and settlement of liabilities in the ordinary course
of business.
Investors should note that certain financial data included in this
Prospectus is not recognised under NZ IFRS and is classified
as “non‑IFRS financial information” under Regulatory Guide 230
“Disclosing non‑IFRS financial information” published by ASIC.
The Company believes that this non‑IFRS financial information
provides useful information to users in measuring the financial
performance and condition of Vulcan. The non‑IFRS financial
measures do not have standardised meanings under NZ IFRS,
and therefore may not be comparable with similarly titled
measures presented by other entities, nor should these be
interpreted as an alternative to other financial measures
determined in accordance with IFRS. Investors are cautioned
not to place undue reliance on any non‑IFRS financial
information, ratios and metrics included in this Prospectus.
The Financial Information is presented in an abbreviated form.
It does not include all of the presentation and disclosures
required by NZ IFRS and other mandatory professional reporting
requirements applicable to general purpose financial reports
prepared in accordance with the Corporations Act or
New Zealand law.
The financial information in this Prospectus should be read
in conjunction with, and is qualified by reference to, the risk
factors as contained in Section 5, the assumptions outlined
in Section 4.8 and other information in this Prospectus.
All financial amounts contained in this Prospectus are expressed
in New Zealand dollars, unless otherwise stated. Any discrepancies
between totals and sums of components in tables, figures and
components contained in this Prospectus are due to rounding.
INVESTIGATING ACCOUNTANT’S REPORT ON FINANCIAL
INFORMATION AND FINANCIAL SERVICES GUIDE
The provider of the Investigating Accountant’s Report on
Financial Information is required to provide Australian retail clients
with a financial services guide in relation to the review under the
Corporations Act (“Financial services Guide”). The Investigating
Accountant’s Report and accompanying Financial Services Guide
are provided in Section 8.
FORWARD-LOOKING STATEMENTS
This Prospectus contains certain forward‑looking statements
and comments about future events, including in relation to the
Company’s businesses, plans and strategies, and expected trends
in the industry sector in which the Company currently operates.
Forward‑looking statements also include prospective financial
information for the Company. Forward‑looking statements can
generally be identified by the use of forward‑looking words
including “expect”, “anticipate”, “likely”, “intend”, “should”, “could”,
“may”, “predict”, “plan”, “propose”, “will”, “believe”, “forecast”,
“estimate”, “consider”, “target” and other similar words that involve
risks and uncertainties. Indications of, and guidance or outlook
on, future earnings or financial position or performance are also
forward‑looking statements.
These forward‑looking statements are based on an assessment
of present economic and operating conditions, and on a number
of assumptions regarding future events and actions that, at
the Prospectus Date, are expected to take place. Neither the
Company nor SaleCo undertakes to, and does not intend to,
update or revise any forward‑looking statements, or publish
prospective financial information in the future, regardless of
whether new information, future events or any other factors
affect the information contained in this Prospectus, except
where required by law.
Forward‑looking statements involve inherent risks and
uncertainties, both general and specific, and there is a risk that
the forward‑looking statements will not be achieved. A number
of important factors could cause the Company’s actual results
to differ materially from the plans, objectives, expectations,
estimates and intentions expressed in the forward‑looking
statements, and many of these factors are beyond the Company’s
and SaleCo’s control. Forward‑looking statements should be read
in conjunction with, and are qualified by reference to, the risk
factors as set out in Section 5, the best estimate general and
specific assumptions contained in the Financial Information as
set out in Sections 4.8.1 and 4.8.2, the sensitivity analysis as set
out in Section 4.10, and other information in this Prospectus.
Nothing in this Prospectus is a promise or representation as
to the future and past performance is not a guarantee of future
performance. Statements or assumptions in this Prospectus
as to future matters may prove to be incorrect. None of the
Directors, the directors of SaleCo or the Joint Lead Managers
make any representation or warranty as to the accuracy of any
forward‑looking statements or assumptions. Circumstances
may change and the contents of this Prospectus may become
outdated as a result. Investors are cautioned not to place undue
reliance on the forward‑looking statements in this Prospectus.
MARKET AND INDUSTRY INFORMATION
This Prospectus contains statistics, data and other information
relating to markets, market sizes, market shares, market positions
and other industry data pertaining to the Company’s business
and markets (“Industry Data”). Unless otherwise indicated, such
information is based on a market study (“Independent Market
report”) that the Company commissioned from the National
Institute of Economic and Industry Research Pty Ltd (“NIeIr”),
as well as the Company’s analysis of such information. In addition,
the Company understands from NIEIR that the Independent
Market Report includes, or is otherwise based on information
obtained from various data collection agencies, industry
associations and publicly available sources. The Independent
Market Report was prepared in June 2021, and the data
presented in the Independent Market Report for the financial
years ending 30 June 2021 and 30 June 2022 reflect forecasts
made at that time.
While the Independent Market Report provides that the views,
opinions, forecasts and information contained in it are based
on information reasonably believed by NIEIR in good faith to
be reliable, it has not independently verified or audited the
information or material obtained from third parties. In addition,
the Company, SaleCo or the Joint Lead Managers have not
independently verified, and cannot give any assurances as to
the accuracy and completeness of, the Industry Data contained
in this Prospectus that has been extracted or derived from the
Independent Market Report. Accordingly, the accuracy and
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Important notice Continued
completeness of such information is not guaranteed. In addition
to the Industry Data, this Prospectus uses third‑party data,
estimates and projections. There is no assurance that any of
the third‑party data, estimates or projections contained in this
Prospectus will be achieved. The Company has not independently
verified such information. Estimates involve risks and uncertainties
and are subject to change based on various factors, including
those described in the risk factors set out in Section 5.
Investors should note that market data and statistics are
inherently predictive and subject to uncertainty and not
necessarily reflective of actual market conditions.
SELLING RESTRICTIONS
This Prospectus does not constitute an offer or invitation in any
place in which, or to any person to whom, it would not be lawful
to make that offer or invitation. No action has been taken to
register or qualify the Shares or the Offer, or to otherwise permit
a public offering of Shares, in any jurisdiction outside Australia
and New Zealand. The distribution of this Prospectus outside
New Zealand and Australia (including electronically) may be
restricted by law and persons who come into possession of this
Prospectus outside Australia and New Zealand should observe
any relevant restrictions. Any failure to comply with these
restrictions may constitute a violation of applicable securities laws.
This Prospectus may not be released to US wire services or
distributed in the United States. This Prospectus does not
constitute an offer to sell, or a solicitation of an offer to buy,
securities in the United States. Any securities described in this
Prospectus have not been, and will not be, registered under
the US Securities Act and may not be offered or sold in the
United States except in transactions exempt from, or not subject
to, registration under the US Securities Act and applicable
US state securities laws.
See Section 9.12 for more detail on selling restrictions that apply
to the Offer in jurisdictions outside Australia and New Zealand.
IMPORTANT NOTICE TO NEW ZEALAND INVESTORS
This Offer to New Zealand investors is a regulated offer made
under Australian and New Zealand law. In Australia, this is
Chapter 8 of the Corporations Act 2001 (Cth) and regulations
made under that Act. In New Zealand, this is subpart 6 of
Part 9 of the Financial Markets Conduct Act 2013 and Part 9
of the Financial Markets Conduct Regulations 2014.
This Offer and the content of this Prospectus are principally
governed by Australian rather than New Zealand law. In the main,
the Corporations Act 2001 (Cth) and the regulations made under
that Act set out how the Offer must be made.
There are differences in how financial products are regulated
under Australian law. For example, the disclosure of fees
for managed investment schemes is different under the
Australian regime.
The rights, remedies, and compensation arrangements available
to New Zealand investors in Australian financial products
may differ from the rights, remedies, and compensation
arrangements for New Zealand financial products.
Both the Australian and New Zealand financial markets
regulators have enforcement responsibilities in relation to
this Offer. If you need to make a complaint about this Offer,
please contact the Financial Markets Authority, New Zealand
(http://www.fma.govt.nz). The Australian and New Zealand
regulators will work together to settle your complaint.
The taxation treatment of Australian financial products is not
the same as for New Zealand financial products.
If you are uncertain about whether this investment is appropriate
for you, you should seek the advice of an appropriately qualified
financial adviser.
The Offer may involve a currency exchange risk. The currency for
the financial products is not New Zealand dollars. The value of
the financial products will go up or down according to changes
in the exchange rate between that currency and New Zealand
dollars. These changes may be significant.
If you expect the financial products to pay any amounts in
a currency that is not New Zealand dollars, you may incur
significant fees in having the funds credited to a bank account
in New Zealand in New Zealand dollars.
If the financial products are able to be traded on a financial
product market and you wish to trade the financial products
through that market, you will have to make arrangements for
a participant in that market to sell the financial products on
your behalf. If the financial product market does not operate
in New Zealand, the way in which the market operates, the
regulation of participants in that market and the information
available to you about the financial products and trading may
differ from financial product markets that operate in New Zealand.
A copy of this Prospectus, other documents relating to the Offer
and a copy of the Constitution have been, or will be, lodged with
the New Zealand Companies Office and are, or will be, available
at www.business.govt.nz/disclose (offer number OFR13181).
DEFINED TERMS, ABBREVIATIONS AND TIME
Defined terms and abbreviations used in this Prospectus have
the meaning set out in the Glossary in Appendix B or are defined
in the context in which they appear.
Unless otherwise stated or implied, references to times in this
Prospectus are AEDT.
PRIVACY
By completing an Application Form to apply for Shares, you are
providing personal information (as defined under the Privacy Act)
to the Company and SaleCo through the Share Registry, which is
contracted by the Company and SaleCo to manage Applications.
The Company, SaleCo and the Share Registry on behalf of the
Company and SaleCo, may collect, hold and use that personal
information in order to process your Application, service your
needs as a Shareholder, provide facilities and services that you
request and carry out appropriate administration. Some of this
personal information is collected as required or authorised by
certain laws including the Income Tax Assessment Act 1997 (Cth)
and the Corporations Act.
If you do not provide the information requested in the Application
Form, the Company, SaleCo and the Share Registry may not be
able to process or accept your Application.
Your personal information may also be provided to the
Company’s and SaleCo’s Shareholders, agents and service
providers on the basis that they deal with that information for
the purposes for which the information was collected by the
Company, SaleCo or the Share Registry on behalf of the Company
and SaleCo and in accordance with the Privacy Policy and
applicable laws. The Shareholders, agents and service providers
of the Company and SaleCo may be located outside Australia
and New Zealand, where your personal information may not
receive the same level of protection as that afforded under
Australian and New Zealand law. The types of agents and service
providers that may be provided with your personal information
and the circumstances in which your personal information may
be shared are:
• the Share Registry for ongoing administration of the
Shareholder register, including incidental matters such
as communications in relation to the Offer;
• the Joint Lead Managers to assess your Application;
• printers and other companies for the purpose of preparation
and distribution of statements and for handling mail;
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• market research companies for the purpose of analysing
the Shareholder base and for product development and
planning; and
• legal and accounting firms, auditors, contractors, consultants
and other advisors for the purpose of administering, and
advising on, the Shares and for associated actions.
The circumstances in which your personal information may be
provided to the Company’s Shareholders includes providing
information to Company Shareholders in respect of the
Company’s Shareholder register. If an Applicant becomes
a Shareholder, the Corporations Act or Companies Act
(as applicable) requires the Company to include information
about the Shareholder (including name, address and details
of the Shares held) in its Shareholder register.
The information contained in the Shareholder register must
remain there even if that person ceases to be a Shareholder.
Information contained in the Shareholder register is also used
to facilitate dividend payments and corporate communications
(including the Company’s financial results, annual reports and
other information that the Company may wish to communicate
to its Shareholders) and compliance by the Company with legal
and regulatory requirements.
An Applicant has a right to gain access to the information that
the Company and the Share Registry hold about that person,
subject to certain exemptions under law. A fee may be charged
for access. Access requests must be made in writing or by
telephone call to the Company’s registered office or the Share
Registry’s office, details of which are disclosed in the Corporate
directory on the inside back cover of this Prospectus. Applicants
can obtain a copy of the Privacy Policy by visiting the Company’s
website https://vulcan.co/privacy‑policy/.
By submitting an Application, you agree that the Company,
SaleCo and the Share Registry may communicate with you in
electronic form or contact you by telephone in relation to the
Offer. The personal information collected by the Company
and SaleCo in connection with your Application may be used
in accordance with this disclosure and as set out in the Privacy
Policy. To the extent of any inconsistency, the more permissive
provisions apply.
You may request access to your personal information held by
or on behalf of the Company or SaleCo and you may correct
the personal information held by or on behalf of the Company
or SaleCo about you. You may be required to pay a reasonable
charge to the Share Registry in order to access your personal
information. You can request access to your personal information
by writing to or telephoning the Share Registry as follows:
Email: registrars@linkmarketservices.com.au
Telephone: +61 1300 554 474
PHOTOGRAPHS AND DIAGRAMS
Photographs and diagrams used in this Prospectus that do not
have descriptions are for illustration only and should not be
interpreted to mean that any person shown in them endorses
this Prospectus or its contents or that the assets shown in them
are owned by the Company or SaleCo. Diagrams and maps used
in this Prospectus are illustrative only and may not be drawn
to scale. Unless otherwise stated, all data contained in charts,
graphs and tables is based on information available at the
Prospectus Date.
INTELLECTUAL PROPERTY
This Prospectus may contain trademarks of third parties,
which are the property of their respective owners. Third‑party
trademarks used in this Prospectus belong to the relevant
owners and use is not intended to represent sponsorship,
approval or association by or with us.
COMPANY WEBSITE
Any references to documents included on the Company’s website
at https://vulcan.co/ are for convenience only, and none of the
documents or other information available on the Company’s
website is incorporated into this Prospectus by reference.
DISCLAIMER
No person is authorised to give any information or make any
representation in connection with the Offer which is not
contained in this Prospectus. Except as required by law, and only
to the extent so required, none of the Company, the Directors,
SaleCo or its directors or the Joint Lead Managers nor any other
person warrants or guarantees the future performance of the
Company, or any return on any investment made pursuant to
this Prospectus. You should rely only on information in this
Prospectus when deciding whether to invest in Shares.
As set out in Section 7.11.3, it is expected that the Shares will
be quoted on the ASX and NZX on a conditional and deferred
basis on or around 4 November 2021. To the maximum extent
permitted by law, (on behalf of itself and Vulcan, its group
companies and SaleCo), the Share Registry and the Joint
Lead Managers disclaim all liability, whether in negligence
or otherwise, to persons who trade Shares before receiving a
holding statement, even if that person received confirmation
of allocation from the Vulcan IPO Offer Information Line or
confirmed their firm allocation through a Broker.
UBS AG, Australia Branch and Credit Suisse (Australia) Limited
have acted as Joint Lead Managers to the Offer, Forsyth Barr
Group Limited and Ord Minnett Limited have acted as Co‑Lead
Managers to the Offer and Crestone Wealth Management
Limited and JBWere Limited have acted as Co‑Managers to
the Offer. The Joint Lead Managers, Co‑Lead Managers and
Co‑Managers have not authorised, permitted or caused the issue,
lodgement, submission, dispatch or provision of this Prospectus
and there is no statement in this Prospectus which is based
on any statement made by them or by any of their respective
affiliates, directors, officers, employees, agents or advisors. To the
maximum extent permitted by law, the Joint Lead Managers and
each of their respective affiliates, directors, officers, employees,
agents and advisors expressly disclaim all liabilities in respect of,
make no representations regarding, and take no responsibility
for, any part of this Prospectus other than references to their
respective names and addresses and make no representation
or warranty as to the currency, accuracy, reliability or
completeness of this Prospectus.
QUESTIONS
If you have any questions about how to apply for Shares, call your
Broker or the Vulcan IPO Offer Information Line on 1800 881 047
(within Australia) from 8.30am to 5.30pm (AEDT), Monday to
Friday. If you are eligible to participate in the Offer and are calling
from outside Australia, you should call +61 1800 881 047 from
8.30am to 5.30pm (AEDT), Monday to Friday. Instructions on how
to apply for Shares are set out in Section 7 of this Prospectus and
on the back of the Application Form.
If you have any questions about whether to invest in the
Company, you should seek professional advice from your
accountant, financial advisor, stockbroker, lawyer or other
professional advisor before deciding whether to invest in Shares.
UNDERWRITING
The Offer is managed and fully underwritten by the Joint
Lead Managers.
This document is important and should be read in its entirety.
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contents
Important notice ................................................................................IFC
Key Offer statistics and important dates ......................................6
Chairman’s letter ....................................................................................8
1 Investment overview ....................................................................10
2 Industry overview .........................................................................35
3 Company overview .......................................................................53
4 Financial information ..................................................................73
5 Key risks ..........................................................................................105
6 Key people, interests and benefits ........................................116
7 Details of the Offer .....................................................................134
8 Investigating Accountant’s Report ......................................148
9 Additional information ...............................................................156
Appendix A: Significant accounting policies ...........................179
Appendix B: Glossary ........................................................................186
Corporate directory ...........................................................................IBC
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Key offer statistics and important dates
KeY OFFeR StatiSticS
Offer Price
1
A$7.10 per share
Total proceeds from the transfer of Shares under the Offer
1
A$371.6 million
Total number of Shares available under the Offer52.3 million
Total number of Shares on issue at Completion of the Offer131.4 million
Total number of Shares held by the Existing Shareholders at Completion of the Offer79.1 million
Indicative market capitalisation
2
A$933.0/NZ$975.8 million
Pro forma net debt including lease liabilities (post NZ IFRS 16)NZ$314.5 million
Enterprise Value at Completion of the Offer
3
NZ$1,290.4 million
Enterprise Value/pro forma FY22F EBITDA
4
8.8x
Enterprise Value/pro forma FY22F EBIT
4
10.8x
Indicative market capitalisation/pro forma FY22F NPAT
4
13.2x
Annualised pro forma FY22F dividend yield
4,5
4.5% – 6.0%
Notes:
1. Total proceeds raised of A$371.6 million under the Offer is calculated as the total number of shares to be sold and transferred by SaleCo multiplied by
the Offer Price of A$7.10. All Applicants who are allocated Shares under the Offer may apply to settle their Shares on the NZX in New Zealand dollars
with the New Zealand branch of the Share Registry as outlined in Section 7.
2. Indicative market capitalisation calculated as total number of Shares on issue at Completion of the Offer multiplied by the Offer Price of A$7.10 and also
shown on a New Zealand currency equivalent basis applying a NZD:AUD exchange rate of 0.9561 as published on the RBNZ website as at 6 October 2021.
3. Enterprise value calculated as the sum of the indicative market capitalisation of NZ$975.8 million plus pro forma net debt including lease liabilities
(post NZ IFRS 16) of NZ$314.5 million.
4. Metrics calculated using the New Zealand currency equivalent indicative market capitalisation and Enterprise Value shown above, based on a NZD:AUD
exchange rate of 0.9561 as published on the RBNZ website as at 6 October 2021.
5. Assumes a 60‑80% payout ratio of pro forma FY22F NPAT, which is subject to the discretion of the Board in accordance with the dividend policy set
out in Section 4.11.
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imPORtant dateS
Prospectus Date Friday, 15 October 2021
Broker Firm Offer Opening DateMonday, 25 October 2021
Broker Firm Offer Closing DateTuesday, 2 November 2021
Expected commencement of ASX and NZX trading
on a conditional and deferred settlement basis
Thursday, 4 November 2021
Settlement of the Offer (ASX)Friday, 5 November 2021
Settlement of the Offer (NZX)Monday, 8 November 2021
Transfer of Securities and the last day of conditional
trading on the ASX and NZX (“completion”)
Monday, 8 November 2021
Expected dispatch of holding statementsTuesday, 9 November 2021
Trading on a normal settlement basis on ASX and NZXWednesday, 10 November 2021
Dates may change
This timetable is indicative only and may change without notice. Unless otherwise indicated, all times are stated
in Australian Eastern Daylight Savings Time. The Company, SaleCo and the Joint Lead Managers reserve the
right to vary any and all of the above dates and times without notice including, subject to the ASX Listing Rules
and the Corporations Act, to close the Offer early, to extend a closing date, or to accept late applications or bids,
either generally or in particular cases, or to cancel or withdraw the Offer before Settlement, in each case without
notifying any recipient of this Prospectus or Applicants. Offers may be made and may be open for acceptances,
under this Prospectus either generally or in particular cases, including until Completion or, subject to the
Corporations Act, thereafter, at the discretion of the Directors.
If the Offer is cancelled or withdrawn before the allocation of Shares, then all Application Monies will be
refunded in full (without interest) as soon as possible in accordance with the requirements of the Corporations
Act. Investors are encouraged to submit their Applications as soon as possible after the Offer opens.
How to invest
Applications for Shares can only be made by completing and lodging an Application Form. Instructions
on how to apply for Shares are set out in Section 7 and on the back of the Application Form. Use the phone
number below and operating hours (8.30am to 5.30pm AEDT) for all references to the Offer Information
Line in this Prospectus.
Questions
Call the Offer Information Line on 1800 881 047 (within Australia) and +61 1800 881 047 (outside Australia) from
8.30am until 5.30pm (AEDT), Monday to Friday (excluding public holidays). If you are unclear in relation to any
matter or are uncertain as to whether Shares are a suitable investment for you, you should seek professional
guidance from your stockbroker, accountant, lawyer, financial adviser or other independent professional adviser
before deciding whether to invest.
Vulcan Steel Limited | Prospectus
7
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chairman’s letter
Vulcan operates as
a key link in the steel
value chain between
steel producers
and bulk traders,
and end-users.
RuSSell c Henu
Chairman
8
For personal use only

Dear Investor,
On behalf of the Directors, I am pleased to offer you the opportunity to become a Shareholder in Vulcan Steel
Limited (“Vulcan” or the “company”).
Vulcan was founded by Peter Wells in 1995 in Auckland and has a proud history. Vulcan has evolved significantly
since inception, both organically and through acquisitions, to become the only Australasian‑wide, pure‑play
1
,
value‑added steel distributor and processor. Vulcan has grown to generate NZ$731.5m pro forma revenue and
NZ$129.7m pro forma EBITDA in FY21.
Vulcan operates as a key link in the steel value chain between steel producers and bulk traders, and end‑users.
The Company’s operations are underpinned by a network of 29 operating sites across Australia and New Zealand
which are strategically located to serve the local customer base. Vulcan continuously strives to achieve best‑in ‑
class operational excellence in inventory management, processing capabilities, management of overheads
and customer service. Vulcan has fostered a flat organisational structure and an egalitarian culture, which
empowers managers with autonomy and decision‑making responsiveness. The Company’s culture and
commitment to customer satisfaction are exemplified by its ~98% distribution delivery in full, on time (“DIFot”)
in FY21.
Vulcan’s operational excellence has translated into strong financial performance, including EBITDA margins of
17.7%, return on capital employed (“roce”) of 23.9%, and cash flow conversion of 94.9% in FY21. Subject to the
discretion of the Board, Vulcan’s strong cash flows will be used to fund its future growth initiatives as well as
support an intended future payout ratio of 60% to 80% of statutory net profit after tax (“NPAt”), adjusted for
significant items approved by the Board.
Vulcan’s CEO, Rhys Jones, has an extensive and successful history in the steel industry. Rhys leads Vulcan’s
experienced and committed senior management team who have a demonstrated track record of delivering
growth. The past and future success of Vulcan is underpinned by the collective performance of the entire
team, and I would like to acknowledge all of our 842 team members’ ongoing commitment to Vulcan
and our customers.
The majority of the existing shareholders of Vulcan (“existing shareholders”) have held shares for 15 years
or more, and the funds raised by this Offer will enable them to partially realise their investment in Vulcan.
Additionally, ASX and NZX listings will provide Vulcan with access to equity capital markets, give our employees
an opportunity to further participate in the ownership of the Company and provide a liquid market for its
Shares. At the Completion of the Offer, New Shareholders will represent approximately 39.8% of the Shares
outstanding and the Existing Shareholders will retain a majority shareholding of 60.2% of the Shares outstanding,
reflecting their strong support of the Company. The Existing Shareholders have entered into escrow agreements
in relation to their Shares held at Completion of the Offer until the release of the FY22 results.
2
This Prospectus contains detailed information about Vulcan, the Offer, the industry in which it operates, its
financial and operating performance as well as key risks associated with an investment in Vulcan. Some of the
key risks are further described in Section 5 and include, amongst other things, the level of demand for steel,
fluctuations in steel prices, COVID‑19 and associated Government restrictions and general investment risks.
I encourage you to read this Prospectus carefully, and in its entirety, before making your investment decision.
This Offer provides an opportunity for you to share in Vulcan’s exciting future. On behalf of the Directors,
I look forward to welcoming you as a Shareholder of Vulcan.
Yours sincerely,
Russell Chenu
Chairman and Independent Non‑Executive Director
Vulcan Steel Limited
1. A ‘pure‑play’ company is a company that specialises in and focuses on one line of business.
2. Certain other key shareholders and management will be subject to an extended escrow period until the release of the FY23F results
(see section 4 for further information).
Vulcan Steel Limited | Prospectus
9
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Investment
overview
1
10
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1 Investment overview
1.1. Introduction
TopicSummary
Further
information
What is Vulcan? • Vulcan is the only Australasian‑wide, pure‑play, value‑added steel
distributor and processor. Vulcan operates as a key link in the steel
value chain between steel producers and end‑users.
• Vulcan distributes steel products, including carbon steel, stainless
steel and engineering steel to a diversified customer base
including customers in engineering, manufacturing, fabricating,
transport, mining and a broad range of other market segments.
Vulcan also provides value‑added processing services for steel
coils, steel plate, stainless steel and engineering steel. Vulcan cuts,
drills, slits and shapes for fabrication, assembly or downstream
processing by customers.
• Vulcan was founded by Peter Wells in 1995 in Auckland, and has
grown significantly over the last 26 years, both organically and
through acquisitions.
• Vulcan has 29 operating sites across Australia and New Zealand,
which are strategically located to serve the local customer base.
Vulcan had 842 employees at 30 June 2021 and served an average
of 7,000 active trading accounts each month in FY21.
• Vulcan generated NZ$731.5m pro forma sales and NZ$129.7m
pro forma EBITDA in FY21.
Section 3.1
What are
Vulcan’s business
segments?
Vulcan operates through two business segments – Steel and Metals.
• The Steel segment consists of:
– steel distribution: distribution of steel hollows, merchant
products and sheets/plates;
– plate processing: processing of steel plate to customer
specifications; and
– coil processing: processing of steel coil to customer
specifications.
• The Metals segment consists of:
– stainless steel: distribution and processing of stainless steel
hollows, bars, fittings and sheets/plate; and
– engineering steel: distribution and processing of high‑
performance engineering steel and metal products.
Section 3.1.3
Why is the offer
being conducted?
The Offer is being conducted to:
• allow Existing Shareholders to realise a portion of their
investment in Vulcan;
• provide a liquid market for the Shares and an opportunity for
other investors (beyond the Existing Shareholders) to invest
in Vulcan; and
• provide Vulcan with access to capital markets to enable additional
financial flexibility to pursue growth opportunities.
Sec tion 7.1 . 2
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1 Investment overview Continued
1.2. Key industry features
TopicSummary
Further
information
What industries
does Vulcan
operate in?
• Vulcan operates in the Australasian steel distribution industry.
Steel distributors play an important role in the steel supply chain,
acting as intermediaries between steel producers and end‑users.
As an aggregator of downstream demand, steel distributors are
able to accommodate a wide range of order sizes and supply
products with short lead times.
• Steel distributors add value to customers by:
– reliably maintaining sufficient stock availability across a broad
range of products;
– utilising specialised equipment to process products to meet
customers’ specific requirements;
– minimising significant material loss for customers when
processing steel; and
– providing ‘just in time’ delivery of products.
• In Australia, total steel consumption is expected to grow at a CAGR
of 1.9% between FY20 and FY22F, underpinned by a strong
pipeline of civil infrastructure projects and growing output from
the manufacturing and mining sectors
3
.
• In New Zealand, total steel consumption is expected to grow at
a CAGR of 3.1% between FY20 and FY22F, driven predominantly
by anticipated increased demand from all areas of construction
4
.
Section 2.1
What are the key
end-markets of
the industry?
• The key end‑markets of steel in Australia are the construction,
manufacturing and mining sectors, which are respectively
expected to account for 67%, 18% and 9% of total volumes
in FY22F
5
.
• The key end‑markets of the steel distribution industry in
New Zealand are the construction and manufacturing sectors,
which are respectively expected to account for 60% and 28% of
total volumes in FY22F
6
.
Section 2.1.2
Who are the market
participants?
• Vulcan primarily competes with steel distributors with a national
footprint in Australia and New Zealand.
• In Australia, the steel distributors with a national footprint include
Vulcan, InfraBuild, BlueScope, Southern Steel and United Group.
In stainless steel, Australia’s distributors with a national footprint
include Vulcan, Atlas Steels, Midway Metals and Stirlings
Performance Steels. In engineering steel, Australia’s distributors
with a national footprint include Vulcan and Voestalpine.
• In New Zealand, the steel distributors with a national footprint
are Vulcan, Steel & Tube, Fletcher Steel, United Industries and
Asmuss. New Zealand’s distributors of stainless steel with a
national footprint include Vulcan, Steel & Tube and Wakefield
Metals, while New Zealand’s distributors of engineering steel
with a national footprint include Vulcan, Steel & Tube, Fletcher
Steel and Wakefield Metals.
Section 2.1.3
3. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
4. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
5. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
6. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
12
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TopicSummary
Further
information
What are the key
drivers of the
industries in which
Vulcan operates?
• Demand for steel in Australasia is expected to be driven primarily
by construction and manufacturing activity in Australia and
New Zealand, as well as mining activity in Australia.
Construction activity in Australia and New Zealand
• The Australian and New Zealand construction industry is divided
into three segments:
– engineering/infrastructure construction: civil infrastructure
construction and industrial projects;
– non-residential construction: construction of offices, industrial
premises, shops, hotels, hospitals and entertainment facilities;
and
– residential construction: construction of houses, flats, units,
townhouses and apartments (including multi‑storey).
• Australia’s construction industry is expected to deliver A$241 billion
of work done
7
in 2022F
8
. Total work done is expected to grow at
a CAGR of 1.0% from 2020–2022F, largely driven by strong growth
in engineering/infrastructure construction activity
9
.
• New Zealand’s construction industry is expected to reach
NZ$33.2 billion of construction investment in FY22F
10
. Total
construction investment is expected to grow at a CAGR of 6.5%
from FY20–FY22F, driven by growth in all construction segments,
including robust growth in residential construction
11
.
Manufacturing activity in Australia and New Zealand
• Australia’s manufacturing industry output is expected to reach
A$117 billion in 2022F, representing a CAGR of 4.0% from
2020–2022F
12
.
• New Zealand’s manufacturing industry output is expected to
reach NZ$35.7 billion in 2022F, representing a CAGR of 5.5% from
2020–2022F
13
.
Mining output in Australia
• Australia’s mining industry output is expected to reach
A$133 billion in 2022F, representing a CAGR of 8.6% from
2020–2022F
14
.
Section 2.2
7. ‘Work done’ is a project management and reporting technique measuring the full value of the costs incurred, regardless of payment or receipt.
8. ACIF, Australian Construction Market Report (May 2021).
9. ACIF, Australian Construction Market Report (May 2021).
10. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
11. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
12. Oxford Economics, Nominal GVA, Manufacturing, Australia and New Zealand (July 2021). The data presented was prepared prior to the imposition
of mid‑2021 COVID‑19 related lockdowns.
13. Oxford Economics, Nominal GVA, Manufacturing, Australia and New Zealand (July 2021). The data presented was prepared prior to the imposition
of mid‑2021 COVID‑19 related lockdowns.
14. Oxford Economics, Nominal GVA, Mining, Australia (June 2021). The data presented was prepared prior to the imposition of mid‑2021 COVID‑19
related lockdowns.
Vulcan Steel Limited | Prospectus
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1 Investment overview Continued
1.3. Key features of Vulcan’s business
TopicSummary
Further
information
How does Vulcan
generate its income?
• Steel: The Steel segment generates revenue from the distribution
of steel hollows, merchant products, plate and coil, and by
processing plate and coil to customer specifications. Vulcan’s
Steel segment generated NZ$450.2m revenue in FY21.
• Metals: The Metals segment generates revenue from the
distribution and processing of stainless steel and engineering
steel. Vulcan’s Metals segment generated NZ$281.3m revenue in
FY21.
Sections 3.1.3,
4.4.2
What is Vulcan’s
corporate strategy?
• Vulcan aims to be the most customer service focused and efficient
steel distributor in the Australasian market.
• Vulcan continuously strives to achieve operational excellence in
inventory management, processing capabilities, management of
overheads and customer service. This is driven in part by Vulcan’s
economies of scale, flat organisational structure, an egalitarian
culture and internally developed, fit‑for‑purpose IT systems.
• Vulcan’s strategy is to further increase economies of scale as it
grows organically through greenfield and brownfield expansion.
This strategy is intended to be supported by opportunistic
acquisitions to enhance the breadth and depth of Vulcan’s
product range, service offering and geographic reach across
the Australasian steel market.
Sections 3.1.4,
3.2
How is Vulcan
differentiated?
• Inventory management expertise: Vulcan prides itself on
expertise in inventory management. This enables the Company
to provide a broad range of capabilities in the sector across
Australasia. With its supply chain capability, fit‑for‑purpose IT
system, centralised procurement function, and extensive steel
industry experience, Vulcan is able to maintain an extensive
product range comprising c.12,000 stock keeping units (“sKus”)
in Australia and c.7,500 SKUs in New Zealand at 30 June 2021.
• Value-added processing capability: Vulcan proactively invests
in its machinery to offer an extensive range of value‑added
processing services including plate cutting, drilling and tapping,
and coil slitting and sheeting, across its Steel and Metals segments.
Value‑added processing divisions accounted for c.47% of FY21
Group revenue. These processing capabilities enhance customer
satisfaction, provide cross‑selling opportunities and solidify Vulcan’s
position as a preferred supplier of steel for many of its customers.
Section 3.1.4
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TopicSummary
Further
information
How is Vulcan
differentiated?
continued
• Fit-for-purpose IT system: Vulcan leverages software systems that
are fit‑for‑purpose in certain core functions specifically for the steel
distribution industry. Vulcan’s systems are intended to support
high service levels at low cost. The systems aim to achieve this
by improving inventory management and forecasting, enabling
real‑time access to granular financial and operating data,
decentralising decision‑making and improving responsiveness.
Vulcan’s IT systems also enhance the efficiency of customer
pricing strategies and increases the effectiveness of Vulcan’s
salesforce.
At 30 June 2021, Vulcan’s IT systems were supported by 16 in‑house
staff, including 11 members in software development.
• Dedicated in-house trucking fleet and delivery team: Vulcan
owns and operates an in‑house trucking fleet which allows the
Company to provide an end‑to ‑end solution to customers from
ordering through to processing and delivery. Vulcan’s focus
on hiring truck drivers with strong customer service skills is
a cost‑effective sales strategy. The Company has 92 owned
trucks, 33 owned trailers and 12 third‑party cartage trucks
as at 30 June 2021 that operate across Australasia.
• Organisational structure and culture: Vulcan believes that its
organisational structure and culture are major contributors to its
success. Vulcan is characterised by a flat organisational structure,
egalitarian culture and high accountability. Managers are
empowered with autonomy and responsibility, and Vulcan
operates a number of incentive initiatives that align staff interests
with those of the Company. Vulcan’s organisational structure and
incentive programs also drive focus on its Principles (key pillars)
and Ethos (underlying values).
Section 3.1.4
Who are Vulcan’s
key customers?
• Vulcan’s customer base is large and diversified. In FY21, Vulcan
served an average of c.7,000 active trading accounts each month,
who operated across a range of end‑markets.
• Vulcan’s largest customer accounted for 2% of FY21 revenue
and its top 20 customers accounted for 13% of FY21 revenue.
Section 3.1.6
Who are Vulcan’s
key suppliers?
• Vulcan has access to a wide cohort of suppliers (both in‑region
and overseas) for steel, stainless steel and engineering steel.
• Vulcan has a long trading history and track record with key
suppliers which provides for sound commercial standing
with its suppliers.
• Vulcan’s largest suppliers are InfraBuild and BlueScope,
both of whom have supplied to Vulcan for over 20 years.
• Vulcan also imports additional requirements (including stainless
steel and engineering steel) by leveraging its established trading
history and commercial standing with major suppliers.
Section 3.1.7
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1 Investment overview Continued
1.4. Key financial information
TopicSummary
Further
information
What is Vulcan’s
pro forma historical
and forecast
financial
performance?
Pro Forma and Statutory Income Statements
Pro formaStatutory
$mNoteFY19FY20FY21FY22FFY22F
Operating
revenue1685.2640.5731.5809.3809.3
Cost of sales2(448.2)(418.2)(461.2)(517.8)(517.8)
Gross profit237.0222.3270.4291.4291.4
Total
operating
expenses(146.2)(137.1)(140.7)(144.0)(142.8)
EBITDA90.887.7129.7147.4130.7
NPAT31.831.961.173.757.1
Notes:
1. Operating revenue: revenue earned from contracts with customers for the processing
and distribution of steel and metal products.
2. Cost of sales: purchase costs (steel and metal products), net of rebates received.
Section 4.3.1
How does Vulcan
expect to fund
its operations?
• Following Completion, Vulcan’s principal sources of funding are
expected to be cash flow generated from operations, available
cash on balance sheet and undrawn debt capacity in the New
Debt Facilities.
• Vulcan expects that it will have sufficient funds available from
its ongoing operations and available borrowings, to meet its
operational requirements and will have sufficient working capital
to carry on its stated objectives and planned capital investment
for the next 12 months.
Sec tion 4 .7.4
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TopicSummary
Further
information
What is Vulcan’s
dividend payout
policy?
• The payment of dividends by Vulcan is subject to the discretion of
the Directors and will be a function of the Directors’ consideration
of a number of factors including the general business environment
and Vulcan’s operating results, cash flows, financial condition,
future funding requirements, capital expenditure, capital
management initiatives, taxation considerations (including the
level of New Zealand imputation credits and Australian franking
credits), any contractual, legal or regulatory restrictions on the
payment of dividends and any other factors the Directors may
consider relevant.
• The Directors intend to target a payout ratio of 60% to 80% of
statutory NPAT adjusted for significant items approved by
the Board. However, the exact payout ratio is expected to vary
between periods depending on the factors above and is subject
to the Board’s discretion.
• Subject to the factors outlined above, the Directors expect to
declare and pay interim dividends in respect of half years ending
31 December and final dividends in respect of the half years
ending 30 June each year. It is expected that interim dividends
will be paid in March or April and final dividend in September
or October following the relevant financial period.
• The Directors intend to pay out between 40‑50% of the expected
annual dividend as an interim dividend with the balance of 50‑60%
to be paid as a final dividend, reflecting underlying seasonality.
• As a corporate taxpayer on earnings in Australia and New Zealand,
Vulcan expects to pay income tax in both Australia and
New Zealand and hence generate Australian franking credits
and New Zealand imputation credits available for distribution to
shareholders. Subject to Australian Taxation Office confirmation,
Vulcan anticipates that it will become a New Zealand franking
company for the purposes of being able to frank dividends into
the future. Vulcan will not generate sufficient imputation credits
and franking credits to fully impute and fully frank all annual
dividends. Accordingly, Vulcan intends to alternately impute
or frank successive dividends to the maximum extent possible.
Section 4.11
What will be the
FY22F dividends
and when will
they be paid?
• The Directors anticipate that Vulcan’s first dividend as a listed
company will be declared in relation to the half year ending
31 December 2021 and will be paid in March 2022. Vulcan’s
expectation is that this first interim dividend will be fully imputed
with New Zealand imputation credits.
Section 4.11

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1 Investment overview Continued
1.5. Key strengths and investment highlights
TopicSummary
Further
information
trans-tasman
positions with a
national footprint
and significant
scale drive
operating leverage
and supply chain
capability
• Vulcan has a national footprint in steel distribution and processing
across Australia and New Zealand, including:
– a network of 29 strategically located operating sites, including
16 in Australia and 13 in New Zealand, serving an average of
c.7,000 active trading accounts each month in FY21;
– a national footprint in New Zealand across steel distribution,
plate processing, coil processing, stainless steel and
engineering steel; and
– a national footprint in Australia across stainless steel
and engineering steel.
• Vulcan’s large scale provides the Company with operational
leverage as volumes and revenue continue to grow, and enhances
supply chain capability, with Vulcan able to procure product on
attractive terms from a diverse range of local and international
steel producers and bulk traders.
Sections 3.1,
3.1.2
Premium
distribution offering
with a primary
focus on customer
service
• As the value‑added link between steel producers and users,
Vulcan offers a premium distribution proposition, including:
– availability and breadth of product range;
– customised products and services including value‑added
processing capabilities (e.g. cutting and drilling);
– order size flexibility; and
– an in‑house trucking fleet, which enables end‑to ‑end control
of the process with the ability to provide customised delivery
across Vulcan’s entire range of solutions, including next‑day
delivery for distribution products.
• Importantly, traceability through availability of test certificates for
Vulcan’s products provides customers with confidence in product
quality. The Vulcan fit‑for‑purpose IT system is able to produce
these efficiently.
• A key focus for Vulcan is the breadth and consistent availability of
its product range. Across Australia and New Zealand, the Company
carried c.12,000 and c.7,500 individual SKUs, respectively at
30 June 2021.
• Vulcan’s commitment to customer satisfaction are exemplified
by its ~98% distribution DIFOT metrics in FY21.
Sections
3.1.4.1, 3.1.4.4
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TopicSummary
Further
information
Fit-for-purpose It
software facilitates
inventory
management to
drive superior
customer
satisfaction
• Vulcan leverages software systems that are fit‑for‑purpose
in certain core functions specifically for the steel distribution
industry. Vulcan’s systems are intended to support high service
levels at low cost.
• Vulcan’s IT system provides employees with real‑time access
to accurate and granular financial and operational data which:
– ensures efficient customer pricing strategies;
– decentralises decision‑making, thereby improving
responsiveness to customers;
– improves inventory management and forecasting; and
– increases the effectiveness of Vulcan’s salesforce.
• Vulcan’s IT team includes 16 in‑house staff, including 11 members
in software development.
Section 3.1.4.3
Business
diversification
and low customer
concentration
• Vulcan’s business is diversified across geographies and
market segments.
– 62% of FY21 revenue was generated in Australia (QLD, VIC,
SA, NSW and WA), with 38% generated in New Zealand
(North Island and South Island).
– Revenues are also diversified across a broad range of market
segments.
• Vulcan has low customer concentration, with the Company’s
largest customer accounting for 2% of FY21 revenue and its
top 20 customers accounting for 13% of FY21 revenue.
Sections 3.1.6,
4.4.1
Attractive financial
profile with high
cash conversion
and demonstrated
growth
• Vulcan’s average gross profit per tonne (NZ$1,041/t in FY21) is
driven by the Company’s value‑added processing capability and
premium distribution offering.
• Vulcan’s average gross profit per tonne, operating leverage and
business improvement initiatives have generated strong EBITDA
margins (17.7% in FY21).
• Vulcan’s strong EBITDA margins and capital‑light business model
have enabled high cash conversion (94.9% in FY21) and ROCE
(23.9% in FY21).
• Vulcan is forecast to generate NZ$809.3m pro forma operating
revenue and NZ$147.4m pro forma EBITDA in FY22F.
Sections
3.2.5, 4.3, 4.5
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1 Investment overview Continued
TopicSummary
Further
information
Numerous
opportunities for
further growth with
a proven execution
track record
• Vulcan has a proven track record of driving revenue and earnings
growth, both organically and through acquisitions.
• There are a number of growth opportunities and initiatives
available to Vulcan across its businesses, including:
– brownfield expansion in current geographies to meet growing
demand from both new and existing customers;
– entry into new regions, particularly within Australia, which
provides an opportunity to better service existing customers
as well as target new customers;
– expansion of the Company’s product and service offering
(e.g. reinforcing steel, wire, mesh, roofing, fasteners, pipe fittings
and aluminium products);
– opportunistic acquisitions given the fragmented nature of the
steel distribution and processing industry in Australasia (outside
of the major players shown in Figure 6 and Figure 7); and
– business improvement initiatives, including incremental
operational efficiencies, to further reduce costs to serve
customers and improve EBITDA margins.
Section 3.2
experienced
leadership team
and Board with
deep sector
knowledge
• Vulcan is led by a long‑standing and capable leadership team and
Board with extensive experience across the building products and
steel distribution industries.
– CEO Rhys Jones has 15 years of experience at Vulcan, with the
executive team having an average tenure of c.9 years.
– Vulcan’s Board members have an average tenure of c.11 years,
have extensive relevant industry or other experience, and hold,
or have held, a number of ASX and NZX‑listed company
directorships.
• Vulcan’s leadership team has a demonstrated track record
of delivering strong and consistent financial performance.
Sections 6.1,
6.2
1.6. Key growth initiatives
TopicSummary
Further
information
Brownfield
expansion
in current
geographies
• Vulcan has a history of successfully implementing brownfield
expansions in areas where it already operates. Vulcan aims
to win new customers in the regions where the Company
currently operates, which provides opportunities for continued
brownfield expansion.
• Vulcan has identified a number of potential sites for expansion in
the medium‑term to meet the anticipated increase in customer
demand. These site expansion opportunities will allow Vulcan to
increase its capacity and product range.
Section 3.2.1
20
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TopicSummary
Further
information
entry into new
geographies
• Vulcan has successfully expanded into 10 regional markets
15

through greenfield initiatives across Australasia since inception
in 1995.
• While Vulcan has a broad distribution and processing network
spanning Australia and New Zealand, Vulcan has identified
several opportunities to further expand its geographic footprint
across Australasia.
• In particular, these opportunities include certain regions in
Australia where Vulcan does not currently offer certain products,
representing an opportunity to better service existing customers
as well as target new customers.
Section 3.2.2
expansion of
product and/or
service offering
• Vulcan has also successfully introduced new products and services
through expansion and acquisitions.
• Currently, Vulcan does not offer certain products, including
reinforcing steel, wire, mesh, roofing, fasteners, pipe fittings
and aluminium products, which may represent potential
growth opportunities.
• An expansion into these or similar markets may introduce cross‑
selling opportunities and allow Vulcan to leverage its existing sites
and capabilities.
Section 3.2.3
opportunistic M&A• Vulcan has acquired 10 businesses since 1995 which it has
successfully integrated into the broader Vulcan group. The
Company has a proven history of driving lasting organisational
and cultural change to realise synergies and improve operational
and financial performance in the businesses it has acquired.
• Whilst the Forecast Financial Information included in Section 4
assumes no acquisitions in FY22F, given the fragmented nature
of the steel distribution industry in Australasia (outside of the
major players shown in Figure 6 and Figure 7), Vulcan expects
it will continue to pursue strategic opportunities.
Section 3.2.4
Business
improvement
initiatives
• Vulcan has been disciplined in optimising its cost base through
a number of business improvement initiatives.
• These initiatives have translated into higher operating leverage
and are reflected in the Company’s improved EBITDA margin,
which increased from 13.2% in FY19 to 17.7% in FY21.
• Vulcan has identified a number of additional business
improvement initiatives that it may implement over the next
12–24 months. Management estimates that these initiatives have
the potential to increase Vulcan’s annual run‑rate revenue by up
to c.NZ$60m over the next 36 months, assuming no changes to
current market demand, cost and pricing conditions.
Section 3.2.5
15. Outside of Brisbane, Sydney, Melbourne, Adelaide, Perth, Auckland, Wellington and Christchurch.
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1.7. Key risks
TopicSummary
Further
information
economic activity
and demand
for steel
• Steel demand is linked to the strength of economic activity,
on a global and regional (Australia and New Zealand) basis.
If macroeconomic conditions were to deteriorate in Australia
and New Zealand, the outlook for steel demand in Australia and
New Zealand may be negatively impacted. No prediction can be
made regarding the nature, timing, extent, and duration of any
future downturn in the Australian and New Zealand economies,
as well as any potential impact of COVID‑19 related uncertainties
on the demand for steel products. There is a risk that slower
economic growth, a downturn in the economy as a whole, or a
downturn in industries that are consumers of steel (such as the
construction, manufacturing or mining industry), may have
a material adverse effect on the demand for steel products.
This may have an adverse effect on Vulcan’s business and
financial performance.
Section 5.1.1
Fluctuations
in steel prices
• Steel prices are primarily influenced by regional and global steel
demand and production capacity, as well as fluctuations in steel
imports and exports, rebates, tariffs and the costs of raw inputs
(such as iron ore, ferrous scrap, nickel). As a globally traded
product, steel or steel products are generally quoted in USD
or in currencies that are substantially correlated with the USD.
Accordingly, movement in NZD and AUD relative to USD can
impact on the average landed cost of steel in both the Australian
and New Zealand markets. These prices, which can fluctuate
significantly over time, are cyclical, difficult to forecast
and outside of Vulcan’s control.
Section 5.1.2
customers operate
in industries which
are cyclical
• Vulcan’s customer demand profile and therefore its revenue
and earnings are sensitive to the level of activity in a number
of industries in Australia and New Zealand, but particularly the
construction, manufacturing and mining industries given the
nature of Vulcan’s products. These industries are typically cyclical
and sensitive to a number of factors outside of Vulcan’s control,
including general economic conditions. Any significant or
extended downturn in the construction, manufacturing and/or
mining industries will negatively affect Vulcan’s business and
financial performance. Vulcan is not able to predict the timing,
extent, and duration of the economic cycles in the markets in
which it operates.
Section 5.1.3
coVID-19 and
government
restrictions
• Events related to COVID‑19 have resulted in significant market
volatility. Given the continued evolving nature of COVID‑19,
the nature and extent of its effect and the related impact on
commodity prices, the Company’s performance, and the global,
New Zealand and Australian economies remain unknown. There is
also continued uncertainty as to the ongoing and future response
of governments and authorities in Australia and New Zealand.
The impact of COVID‑19 could potentially have a material adverse
effect on Vulcan’s business, operations and financial performance,
as well as the Company’s suppliers and customers. Further, any
government or industry measures may have a material adverse
effect on Vulcan’s operations and are likely beyond Vulcan’s control.
Section 5.1.4
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TopicSummary
Further
information
competition• As one of the distributors and processors of steel products
in Australia and New Zealand, Vulcan’s business is subject to
competition from other participants in the industry. Competition
is based on price competitiveness, product and service standards,
product availability, the range and variety of product offerings
and ability to demonstrate broad distribution and processing
capabilities. There is no guarantee that Vulcan can maintain its
current competitive pricing and service offering, position in the
market or profitability and earnings due to increased competition
from existing participants or new entrants in the market.
Section 5.1.5
Disintermediation • As a primary distributor and processor of steel products in
Australia and New Zealand, Vulcan operates as a link in the steel
value chain between steel producers and bulk traders, and
end‑users. While the Company believes there are a number
of factors or measures relevant to disintermediation (such as
economies of scale, customer relationships, inventory management
and the ability to fill orders and deliver products to customers in
a timely fashion) for the industry, there can be no assurance that
Vulcan’s suppliers do not adopt a strategy of supplying products
directly to end‑users (thereby disintermediating Vulcan).
Section 5.1.6
Product
substitution
• In many applications, steel competes with other materials that
may be used as steel substitutes, such as aluminium, concrete,
composites, plastic and wood. Improvements in the technology,
production, pricing or acceptance of these competitive materials
relative to steel or other changes in the industries for these
competitive materials could reduce the volume of steel that
Vulcan distributes and processes, and hence reduce Vulcan’s
cash flow and profitability.
Section 5.1.7
customer
relationships
• Vulcan does not have long‑term agreements or arrangements
with its key customers, giving rise to a lack of contractual certainty
regarding future revenue. There is therefore a risk that Vulcan’s
existing customers may decide not to continue their business
with Vulcan in the future or at the same level as in prior periods.
As a result, Vulcan’s operating performance may vary from period
to period and may fluctuate in the future.
• Any financial difficulty or insolvency encountered by a key
customer could have a material adverse effect on Vulcan’s
business, financial performance and prospects, including where
it results in an inability to recover moneys owed, or delay or deferral
of major projects to which Vulcan is supplying, or intends to supply,
steel products.
Section 5.1.8
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TopicSummary
Further
information
supply of steel
products
• Vulcan relies on a number of key supplier relationships in Australia,
New Zealand and overseas, which are engaged on a purchase
order basis on the relevant supplier’s standard terms, giving rise
to a lack of contractual certainty regarding future supply.
In addition, the local supply of steel in Australia and New Zealand
is concentrated among a few suppliers. There is a risk that if any
of Vulcan’s local suppliers reduce their operations or cease
operations completely, this could have a material adverse effect
on Vulcan’s ability to source products viably or on appropriate
commercial terms, and therefore impact its operations and
financial performance.
• Third party suppliers may also have a “stock out” with insufficient
quantities of products available in a timely manner, or encounter
financial or material difficulties, labour shortages or unilaterally
amend their terms of agreement with competitors. While Vulcan
takes steps to ensure the quality of its products, there is a risk
that products are returned by customers due to poor quality or
manufacturing defects and that Vulcan may be forced to replace
these defective products supplied to customers at additional
costs or be subject to time delay.
Section 5.1.9
operations • The distribution and processing of steel products involves
a number of inherent risks. Specifically, steel processing is
dependent on critical processing equipment including cutting
machinery (such as laser, plasma and gas cutting machines),
folding equipment, uncoiling, slitting and sheeting equipment,
electrical equipment, generators and compressors. Such
equipment may incur downtime as a result of unanticipated
failures or events such as fires or loss of external power supply.
Section 5.1.10
transport and
distribution
• As a distributor and processor of steel, Vulcan’s supply chain
depends on roadway, railways, ports and ocean vessels to receive
materials from its suppliers, and roadway to deliver its products to
its customers. Any unavailability, or increased cost of transportation,
including those caused by weather‑related problems, natural
disasters, infrastructure damage, strikes, lock‑outs, fuel shortages
or other events, could impair Vulcan’s ability to supply its products
to its customers. Furthermore, any disruption in the supply chain
logistics of steel products could impact the flow of goods, including
the supply of stock to Vulcan which could have a material adverse
effect on Vulcan’s business and financial performance.
Section 5.1.11
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TopicSummary
Further
information
Information
technology
and risk of data
security breaches
• Vulcan has invested significantly in information technology
systems which support its operations as outlined in 3.1.4.3. There
is a risk that these systems may fail to perform as expected or be
adversely impacted by a number of factors, some of which may
be outside of Vulcan’s control. This includes data losses, computer
system faults, internet and telecommunications or data network
failures, fire, natural disasters, computer viruses and external
malicious interventions such as unauthorised access, malware,
ransomware or denial‑of ‑service attacks. Any one or combination
of these events may have a material adverse effect on Vulcan’s
business, operations and financial performance as well as
its reputation.
• There is a risk that if one or more of Vulcan’s critical operating
systems do not function properly, there could be system
disruptions, corruption of databases or other electronic information,
delays in transaction processing, delays in receiving or processing
orders through the warehouse, website slowdown or unavailability,
loss of data or the inability to accept and fulfil customer orders.
Furthermore, Vulcan may not be able to continue to adapt its
systems to meet its future IT needs. Such disruption, if sustained
or regular, could materially adversely affect Vulcan’s business
and financial performance.
Section 5.1.12
Growth strategy• Vulcan’s growth strategy includes identifying and executing
a number of potential projects that require capital investment,
and these projects are inherently subject to completion and
financing risks. Vulcan cannot guarantee that it will be able to
execute on its projects, and to the extent that Vulcan proceeds,
that it will be able to complete them on schedule, within budget,
or achieve an adequate return on its investment.
• Further, completed acquisitions may not perform as anticipated.
Failure of due diligence to identify pre‑existing issues, or issues that
arise from the integration of operations, may hinder acquisition
success, which may have a material adverse effect on Vulcan’s
financial performance, its growth opportunities and its ability
to pursue further acquisitions.
Section 5.1.13
reliance on
key personnel
• Vulcan‘s management team has significant experience in,
and knowledge of, the New Zealand and Australian steel industry.
The vast majority of the management team have been with
Vulcan for an extended period, and the loss of key senior
executives and key employees is a risk to Vulcan’s business,
operations and financial performance.
Section 5.1.14
exchange rates• As set out in section 5.1.2, steel products are generally quoted in
USD or in currencies that are substantially correlated to the USD.
Vulcan principally transacts in AUD and NZD with its customers,
in AUD, NZD and USD with its suppliers, and reports its financial
results in NZD. Accordingly, Vulcan’s primary exposures are to
movements in AUD/NZD, AUD/USD and NZD/USD exchange rates.
Vulcan’s earnings and equity are exposed to risks associated with
foreign exchange rate movements.
Section 5.1.15
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TopicSummary
Further
information
Interest rates• Vulcan’s financial performance is exposed to fluctuations in
interest rates. An increase in interest rates may lead to an increase
in borrowing costs for Vulcan and the assessment of Vulcan’s
credit risk. Therefore, an increase in interest rates may have a
material adverse effect on Vulcan’s business and financial
performance.
Section 5.1.16
Debt financing• Vulcan has entered into facility agreements for the provision of
debt financing. Funding provided under the banking facility is
used to fund Vulcan’s activities. The banking facility is subject to
certain covenants which if breached may have a material adverse
effect on Vulcan and the continuity of the banking facilities. The
Lenders under the banking facility have a general security over
the assets of Vulcan which, if enforced, may have a material
adverse effect on Vulcan’s business and financial performance.
Section 5.1.17
Insurance• Although Vulcan maintains insurance policies including business
interruption, property damage, loss or damage to goods in transit,
credit insurance for debtors and public and product liability, not all
risks are insured or insurable (and may have significant deductibles
on policies). Accordingly, Vulcan’s insurance policies do not provide
coverage for all losses related to Vulcan’s business, and the
occurrence of losses, liabilities or damage not covered by such
insurance policies may have a material adverse effect on Vulcan’s
business, operations and financial performance.
Section 5.1.18
Industrial relations• Some of Vulcan’s employees in Australia and New Zealand are
members of trade unions. These employees are generally covered
by collective bargaining agreements, which are periodically
renegotiated and renewed.
• Disputes and ordinary course collective bargaining processes with
trade unions could lead to strikes or other forms of industrial action
that could disrupt Vulcan’s operations, increase costs and reduce
Vulcan’s revenue and earnings.
Section 5.1.19
Work health
and safety
• Work health and safety laws impose a broad range of safety duties
on Vulcan and maximum penalties under applicable legislation
are significant. If Vulcan fails to maintain adequate work health
and safety systems and practices, this may impact Vulcan’s
reputation, ability to operate for a specific time period and its
ability to maintain its current insurance status on the same or
similar terms, which may have a material adverse effect on
Vulcan’s business, operations and financial performance.
Section 5.1.20
Litigation, claims
and disputes
• Vulcan is exposed to potential legal and other claims or disputes
in the course of its business, including; contractual disputes,
defective products, property damage and personal liability
claims with respect to its operations and claims by regulators
with jurisdiction to investigate aspects of the conduct of Vulcan’s
business or the industry in which it operates (such as the
New Zealand Commerce Commission, in particular in relation to
its anticipated market study into building supplies in New Zealand,
and the Australian Competition and Consumer Commission).
Section 5.1.21
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TopicSummary
Further
information
International
trade restrictions
• Vulcan has exposure to the effects of trade actions and barriers.
Vulcan cannot predict the timing and nature of trade actions.
As Vulcan sources some of its products from overseas suppliers,
it may be impacted by any trade actions or restrictions introduced
by any country in which Vulcan buys or procures its products. Any
such trade actions and barriers may have a material adverse effect
on Vulcan’s business by reducing or eliminating Vulcan’s access
to steel supply markets.
Section 5.1.22
Forecast financial
performance
• The Forecast Financial Information, including any Forecast
Financial Information regarding the mix of revenue and earnings
across its operating segments, is a forward‑looking statement that
is based on an assessment of present economic and operating
conditions and on a number of best estimate assumptions
regarding future events and actions that, at the Prospectus Date,
are expected to take place. Vulcan may not achieve its forecast
and or may achieve a different mix of earnings by segment as
a result of both known and unknown factors which may or may
not be under their control.
Section 5.1.23
environmental laws
and regulations
• Vulcan’s business is subject to environmental laws and regulations
that require specific operating licences and impose various
requirements and standards, including noise and dust contaminant.
These laws and regulations provide for penalties and other liabilities
for the violation of such laws and regulations and establish, in certain
circumstances, obligations to remediate current and former leased
properties, facilities and locations where operations are or were
conducted. Vulcan may be required to undertake such remediation
or other operational changes at its own cost.
• Vulcan may also be liable to remedy locations affected by
environmental issues even in circumstances where it is not
responsible for causing the environmental liability. The cost of
such remediation could be substantial. It could also restrict the
ability of Vulcan to conduct its business economically or restrict
some activities altogether.
• Vulcan may also be impacted by the emergence of new or
expanded regulations relating to transitioning to a lower‑carbon
economy and market changes related to climate change mitigation.
These regulations could also restrict the ability of Vulcan to conduct
its business economically or restrict some activities altogether,
or otherwise subject Vulcan to specific tariffs or penalties for
carbon emissions or environmental damage.
Section 5.1.24
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TopicSummary
Further
information
concentration
of shareholding
• On completion of the Offer, Existing Shareholders will hold 60.2%
of the total issued Shares, all of which will be subject to escrow.
27.7% of the total issued Shares, as held by Executive Escrowed
Shareholders, will be subject to escrow from the period from the
Company’s admission to the Official List until the release of the
Company’s financial results for the year ending 30 June 2023,
and 32.4% of the total issued Shares, as held by the Other
Escrowed Shareholders will be subject to escrow from the
period from the Company’s admission to the Official List until
the release of the Company’s financial results for the year ending
30 June 2022.
• Both the size of the shareholdings retained by Existing Shareholders
and the applicable escrow periods are likely to cause or contribute
to limited liquidity in the market for Shares, which could affect the
market price at which other Shareholders are able to sell their Shares.
Section 5.1.25
reputation• Vulcan believes that the reputation of its products and brands is
key to its success. Erosion of Vulcan’s reputation as a result of one
or a combination of the factors discussed in Section 5 may reduce
demand for Vulcan’s products, diminish the value of Vulcan’s
brand, or adversely impact relationships with key customers,
suppliers or employees, which in turn may adversely impact
Vulcan’s business, operations and financial performance.
Section 5.1.26
other key risks• The above risks should not be taken as an exhaustive list of all the
key risks faced by the Company. The above factors, and others not
specifically referred to above, may materially affect the financial
performance of Vulcan and the value of the Shares under the
Offer. A number of other key risks are included in Section 5.2,
and investors should review all of these carefully before making
an investment decision.
Section 5.2
1.8. Directors and leadership team
TopicSummary
Further
information
Who are the
Directors of Vulcan?
• Russell Chenu – Chairman, Independent Non‑Executive Director
• Rhys Jones – Chief Executive Officer, Managing Director
• Peter Wells – Non‑Executive Director
• Wayne Boyd – Non‑Executive Director
• Pip Greenwood – Independent Non‑Executive Director
• Bart de Haan – Independent Non‑Executive Director
• Carolyn Steele – Independent Non‑Executive Director
Section 6.1
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TopicSummary
Further
information
Who are the
leadership team
of Vulcan?
• Rhys Jones – Chief Executive Officer, Managing Director
• Kar Yue Yeo – Chief Financial Officer
• Adrian Casey – Chief Operating Officer
• James Wells – Chief Information Officer
• Helene Deschamps – Leadership Development
• Brendon Chandulal – Australia Leader
• Matthew Lee – Australia Leader
Section 6.2
1.9. significant interests of key people and related party transactions
TopicSummary
Further
information
Who are
the existing
shareholders and
what will their
interest be at
completion
of the offer?
Shareholder
Shares held prior
to Completion
Shares held
on Completion
Millions %Millions%
Takutai Limited
1
30.723.4% 18.414.0%
Partitio Trustee Limited
2
12.29.3% 7.35.6%
Adrian Casey, Henderika
Casey and B.W.S Trustee
Company 2012 Limited
3
9.87.4% 5.94.5%
PJ & HC Moore Trustee
Limited, Helen Moore
and Patrick Moore9.06.8% 5.44.1%
Rhys Jones and
Lorraine Susan Taylor
4
7.96.0% 4.73.6%
Wide View Enterprises
Limited7.75.8% 4.63.5%
Other Existing
Shareholders54.241.3% 32.824.9%
New ShareholdersNilNil52.339.8%
Total131.4100.0%131.4100.0%
1. Shareholding entity associated with Peter Wells.
2. Shareholding entity associated with Wayne Boyd.
3. Shareholding entity associated with Adrian Casey.
4. Shareholding entity associated with Rhys Jones.
The Selling Shareholders will each sell a portion of their Shares into
the Offer through their arrangements with SaleCo (see Section 9.3).
Sec tion 7.1 .4
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TopicSummary
Further
information
What significant
benefits are
payable to Directors
and other persons
connected with
Vulcan or the
offer and what
significant interests
do they hold?
The Shares expected to be held by Directors on Completion
are as follows:
Interests held at
the Prospectus Date
Interests held
at Completion
DirectorShares
1,2
Performance
RightsShares
1,2
Performance
rights
Russell ChenuNilNiln/a
3
Nil
Rhys Jones7,863,333Nil4,718,000261,303
Peter Wells30,693,398Nil18,416,039Nil
Wayne Boyd12,172,814Nil7,303,688Nil
Bart de Haan300,000Nil180,000Nil
Pip Greenwood150,000Nil90,000Nil
Carolyn SteeleNilNiln/a
3
Nil
Notes:
1. Directors may hold their interests in Shares directly, or through entities associated with
them (e.g. through holdings by companies or trusts).
2. Refer also to Section 7.1.4 for further information on Vulcan’s shareholding structure.
3. Both Russell Chenu and Carolyn Steele are intending to take up shares as part of the
Priority Offer.
Directors and senior management are entitled to remuneration
and fees on commercial terms as described in Section 6.4.
Advisers and other service providers will receive fees for services
on the terms set out in Section 6.3.
Section 6.4
Will any shares
be subject to
restrictions on
disposal following
completion of
the offer?
• Each of the Executive Escrowed Shareholders and the Other
Escrowed Shareholders (together, the “escrowed shareholders”)
have entered into escrow arrangements with the Company under
which they will be prevented from selling or otherwise dealing in
their respective Executive Escrowed Shares and Other Escrowed
Shares (together, the “escrowed shares”) during the applicable
Escrow Period subject to certain permitted exceptions as set out
in their escrow arrangements. The Escrowed Shares will comprise
approximately 60.2% of the total Shares outstanding at Completion
of the Offer.
• The Company’s free float at the time of Listing will not be less than
20% for the purposes of ASX Listing Rule 1.1 Condition 7.
• The Executive Escrowed Shareholders will have their Executive
Escrowed Shares subject to escrow restrictions commencing on
the date of Official Quotation and ending at 4.15pm Australian
Eastern Standard Time on the date that the Company’s full year
results for FY23 are released to the ASX and NZX, as described
in Section 9.6.2.
• The Other Escrowed Shareholders will have their Other Escrowed
Shares subject to escrow restrictions commencing on the date
of Official Quotation and ending at 4.15pm Australian Eastern
Standard Time on the date that the Company’s full year results for
FY22 are released to ASX and NZX, as described in Section 9.6.2.
Section 9.6.2
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TopicSummary
Further
information
What are the key
related party
agreements?
• As described in Section 6.7, the Company has entered into
the Related Party Leases with Peter Wells, Wayne Boyd and
Adrian Casey.
Section 6.7
1.10. overview of the offer
TopicSummary
Further
information
Who is the issuer
of the Prospectus?
• Vulcan Steel Limited (NZBN 9429038466052,
ARBN 652 996 015); and
• Vulcan Sale Company Limited (NZBN 9429049523409,
ARBN 652 961 209).
Important
notice
Who is saleco?• SaleCo is a special purpose vehicle, established to enable Existing
Shareholders to sell part of their investment in Vulcan via the Offer.
Section 9.3
What is the offer?• The Offer is an IPO of approximately 52.3 million Shares in Vulcan
at an Offer Price of A$7.10 per Share. The Offer is expected to
raise approximately A$371.6 million. All Shares will be sold by
and transferred from SaleCo.
• The Shares being offered will represent 39.8% of the Shares
on issue at Completion. The total number of Shares on issue at
Completion will be 131.4 million and all Shares on issue will rank
equally with each other.
Sec tion 7.1
What is the
proposed use
of the funds raised
under the offer?
• The proceeds of the Offer will be applied to distribute payments to
SaleCo, and ultimately to the Existing Shareholders, for the Shares
sold and transferred under the Offer.
Sec tion 7.1 . 3
How is the offer
structured and
who is eligible
to participate?
• The Offer comprises:
– the Institutional Offer, which consists of an invitation to bid to
Institutional Investors in Australia and New Zealand and certain
other eligible jurisdictions made under this Prospectus;
– the Broker Firm Offer, which is open mainly to Australian and
New Zealand resident retail clients of Brokers who have received
a firm allocation of Shares from their Broker; and
– the Priority Offer, which is open to selected investors in Australia
and New Zealand who have received an invitation under the
Priority Offer.
No general public offer of Shares will be made under the Offer.
Section 7.1.1
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TopicSummary
Further
information
Will the shares be
quoted on the AsX?
• Vulcan will apply to ASX within seven days of the Prospectus Date,
for its admission to the Official List and quotation of Shares (under
the code “VSL”). It is anticipated that quotation will initially be on
a conditional and deferred settlement basis.
• The transfer of Shares under the Offer is conditional on ASX
approving this application. If approval is not given within three
months after such application is made (or any longer period
permitted by law), the Offer will be withdrawn and all Application
Monies received will be refunded (without interest), as soon
as practicable in accordance with the requirements of the
Corporations Act.
Section 7.11
Will the shares be
quoted on the NZX?
• Vulcan will apply for listing with NZX as a foreign exempt issuer
and for quotation of the Shares on the NZX Main Board.
• The transfer of Shares under the Offer is conditional on NZX
approving this application.
Section 7.12
When are the
shares expected to
commence trading?
• It is expected that trading of the Shares on ASX and NZX will
commence on or about Thursday, 4 November 2021 on a
conditional and deferred settlement basis.
• Conditional trading will continue until Vulcan has advised the
ASX and NZX that:
– Settlement has occurred;
– the Shares to be sold by the Existing Shareholders have been
transferred to SaleCo; and
– SaleCo has transferred the Shares to successful Applicants
under the Offer, which is expected to be on or about Monday,
8 November 2021.
• The dispatch of holding statements will occur on or about
Tuesday, 9 November 2021 and the Shares will commence
trading on a normal settlement basis on or about Wednesday,
10 November 2021.
• It is the responsibility of each Applicant to confirm their holding
before trading in shares. Applicants who sell shares before they
receive an initial holding statement do so at their own risk.
• Vulcan, SaleCo, the Share Registry and the Joint Lead Managers
disclaim all liability, whether in negligence or otherwise, to persons
who sell Shares before receiving a holding statement, even if that
person received confirmation of their allocation from the Vulcan
IPO Offer Information Line or confirmed their firm allocation
through a Broker.
Sections 7.11,
7.12
Is there any
brokerage,
commission or
stamp duty payable
by Applicants?
• No brokerage, commission or stamp duty is payable by Applicants
on an acquisition of Shares under the Offer.
Section 7.2
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Further
information
What are the tax
implications of
investing in
the shares?
• Shareholders may be subject to Australian and/or New Zealand
income tax or withholding tax on any future dividends paid.
The tax consequences of any investment in the Shares will depend
upon an investor’s particular circumstances. Applicants should
obtain their own tax advice prior to deciding whether to invest.
Section 9.9
Is the offer
underwritten?
• Yes. The Offer is fully underwritten by the Joint Lead Managers. Sections 7.8,
9.6.1
Who are the Joint
Lead Managers
for the offer?
• The Joint Lead Managers are Credit Suisse and UBS.Sec tion 7. 2
What is the
allocation policy?
• The allocation of Shares between the Institutional Offer, Broker
Firm Offer and Priority Offer will be determined between the
Joint Lead Managers, Vulcan, and SaleCo having regard to the
allocation policies outlined in Sections 7.3.4, 7.4.4, 7.6.1 and 7.6.2.
Sections
7.3.4, 7.4.4,
7.6 .1 , 7.6 . 2
What is the
minimum
Application size
under the offer?
• Broker Firm Offer: The minimum Application under the Broker
Firm Offer is as determined by the Applicant’s Broker. There is
no maximum Application under the Broker Firm Offer.
• Priority Offer: Applications under the Priority Offer must be
for a minimum of 300 Shares. There is no maximum Application
under the Priority Offer. The Priority Offer will be capped at an
aggregate amount of 700,000 Shares.
• Vulcan, SaleCo and the Joint Lead Managers reserve the right to
reject any Application or to allocate a lesser number of Shares than
that applied for, in their absolute discretion.
Sec tion 7. 2
How can I apply? • Broker Firm Offer Applicants may apply for Shares by completing
a valid Broker Firm Offer Application Form attached to or
accompanying this Prospectus and lodging it with the Broker
who invited them to participate in the Broker Firm Offer.
• Applicants under the Priority Offer may only apply for Shares
online at https://events.miraqle.com/vulcan‑ipo using the online
Application Form.
• The Joint Lead Managers separately advised Institutional Investors
of the Application procedure under the Institutional Offer.
• To the maximum extent permitted by law, an application under
the Offer is irrevocable.
Sec tion 7. 2
When will I receive
confirmation that
my Application has
been successful?
• It is expected that initial holding statements will be dispatched
to successful Applicants by standard post on or about Tue s day,
9 November 2021.
• Refunds (without interest) to Applicants who make an Application
and receive an allocation of Shares, the value of which is smaller
than the amount of the Application Monies, will be made as soon
as practicable after Completion of the Offer.
Sec tion 7. 2
Vulcan Steel Limited | Prospectus
33
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1 Investment overview Continued
TopicSummary
Further
information
can the offer be
withdrawn?
• Vulcan reserves the right to not proceed with the Offer at any time
before the transfer of Shares to successful Applicants.
• If the Offer does not proceed, Application Monies will be refunded.
• No interest will be paid on any Application Monies refunded as
a result of the withdrawal of the Offer.
Sec tions 7.13
Where can I find
out more
information about
this Prospectus or
the offer?
• If you are an Australian or New Zealand resident, call the Offer
Information Line on 1800 881 047 (within Australia) or
+61 1800 881 047 (outside Australia) from 8.30am until 5.30pm
(AEDT), Monday to Friday (excluding public holidays). If you are
unclear in relation to any matter or are in any doubt as to whether
to invest in Vulcan, you should seek professional advice from
your stockbroker, accountant, lawyer, financial adviser or other
independent professional adviser before deciding whether
to invest in Vulcan.
Important
notice
34
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2
Industry
overview
35
For personal use only

2 Industry overview
2.1. overview of the Australasian steel distribution industry
Vulcan operates in the Australasian steel distribution industry. In the 12 months to 30 June 2022F, approximately
6.3Mt and 0.9Mt of steel are expected to be consumed in Australia and New Zealand respectively
16
.
Steel distributors play an important role in the steel supply chain, acting as intermediaries between steel
producers and end‑users. Sourcing products directly from upstream producers is often not viable for certain
customers given mills generally require large minimum order quantities (“MoQs”) and long lead times. As an
aggregator of downstream demand, steel distributors are able to accommodate a wider range of order sizes
and supply products with shorter lead times.
Distributors are generally able to manage steel price fluctuations through effective inventory management,
thereby supporting the maintenance of gross margin per tonne through the cycle.
In Australia, domestically produced steel is predominantly sourced from two major manufacturers – BlueScope
and InfraBuild. In New Zealand, domestically produced steel is predominately sourced from New Zealand Steel,
a subsidiary of BlueScope. In Australia and New Zealand, stainless steel is entirely imported
17
and engineering
steel is primarily imported.
Steel distributors add value to customers by:
• reliably maintaining sufficient stock availability across a broad range of products;
• utilising specialised equipment to process products to meet customers’ specific requirements;
• minimising significant material loss for customers when processing steel; and
• providing ‘just in time’ delivery of products.
An overview of the key products and services offered by steel distributors is set out in Figure 1 below.
Figure 1: Key products and services offered by steel distributors
18

Distribution• Distribution of steel, including structural steel,
merchant bars, hollows, plate and coil.
Plate processing• Processing of steel plate, including cutting, drilling,
tapping, countersinking, folding and bevel cutting.
• Cutting processes include laser, plasma and oxy‑fuel.
coil processing• Processing of steel coils, including cut‑to ‑length and
slitting.
16. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
17. Australian Steel Institute, Capabilities of the Australian Steel Industry (October 2020), available at: https://www.steel.org.au/getattachment/About‑Us/
Our‑industry/Steel‑Industry‑Capability‑document‑131020.pdf/?lang=en‑AU.
18. Images: Shuttershock.com.
36
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stainless steel• Distribution of stainless steel products, including
tube, pipe and bar products, as well as fittings and
flanges and processing of stainless plate product.
engineering steel• Distribution and cutting of engineering steel,
including: high tensile steel, case hardening steel,
stainless steel, carbon steel, cast iron, bronze, brass,
bright steel and aluminium.
reinforcing steel• Distribution, cutting and bending of reinforcing
steel bar and mesh.
Wire• Steel wire products such as chain mesh, fencing
and barbed wire nails. Used for various applications,
including manufacturing and rural products.
roofing• Roll‑forming and distribution of roofing and exterior
cladding products.
Fasteners• Distribution of steel fasteners.
Vulcan Steel Limited | Prospectus
37
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2 Industry overview Continued
2.1.1. Steel demand
Australia
In Australia, steel consumption contracted by approximately 2.2% to 6.1Mt in the 12 months to June 2020,
primarily due to a fall in consumption by the residential construction market
19
. Steel demand is expected to
recover post FY20, with volumes forecast to grow at a CAGR of 1.9% from FY20–FY22F, underpinned by a strong
pipeline of civil infrastructure projects and growing output from the manufacturing and mining sectors
20
.
In Australia, long and flat products are expected to represent approximately 46% and 45% of total steel demand
in FY22F respectively, while tubular and stainless steel products are expected to represent a significantly smaller
proportion of total volumes at 7% and 2% respectively
21
.
Figure 2: steel consumption by product category – Australia
22
(000’ tonnes, June year‑end)
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
FY22FFY21FFY20FY19FY18FY17FY16FY15
Long steelFlat steelTubular steelStainless steel
2,8902,8262,7582,8152,7862,6352,5612,545
2,8682,826
2,7842,8512,878
2,820
2,7792,925
467
464
464
477464
697
787
845
6,328
6,213
6,100
6,2346,2146,2376,212
6,403
103
97
94
91868585
89
New Zealand
Demand for steel in New Zealand has been relatively stable between FY15 and FY20
23
. In FY20, total steel
consumption in New Zealand was approximately 0.8Mt
24
. Total steel consumption is expected to grow at
a CAGR of 3.1% between FY20 and FY22F, driven predominantly by an anticipated increased demand from
all areas of construction
25
.
Similar to the Australian steel market, flat and long products are the major contributors to steel volumes in
New Zealand
26
. Flat products are expected to represent a larger proportion of FY22F total steel demand at
approximately 53% of total volumes, while long products are expected to contribute 33%
27
. Tubular products
are expected to represent 11% of total volumes, while stainless steel products represent 3%
28
.
19. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
20. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
21. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
22. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
23. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
24. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
25. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
26. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
2 7. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
28. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
38
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Figure 3: steel consumption by product category – New Zealand
29
(000’ tonnes, June year‑end)
0
200
400
600
800
1,000
FY22FFY21FFY20FY19FY18FY17FY16FY15
Long steelFlat steelTubular steelStainless steel
292
278270272273
250236209
467
451
444451441
489
509
530
95
91
89
89
85
838382
879
844
826
836
822
846
852
844
25
24
23
24
24
23
24
24
2.1.2 end-maRKetS
Australia
In Australia, the major consumers of steel are the construction, manufacturing and mining sectors
30
.
In FY22F, approximately 67% of total steel volumes are expected to be used in the construction industry,
while approximately 18% of volumes are expected to be used in manufacturing and 9% in mining
31
.
Figure 4: steel volume mix by end-market – Australia
32
(%, June year‑end)
0%
20%
40%
60%
80%
100%
FY22FFY21FFY20FY19FY18FY17FY16FY15
EngineeringNon-residential buildingResidential buildingManufacturing
18%17%16%16%16%16%17%18%
22%22%23%
22%21%21%
22%
22%
18%18%
17%
17%
17%
17%17%
19%
9%
9%
9%9%
8%8%8%8%
3%3%3%3%3%3%3%3%
MiningAgricultureOther
27%29%
29%31%32%
32%
30%27%
3%3%3%3%3%3%3%4%
New Zealand
Similar to Australia, the construction sector is the largest consumer of steel volumes in New Zealand
33
.
In FY22F, approximately 60% of steel volumes are expected to be used in the construction industry,
while approximately 28% of steel volumes are expected to be used in manufacturing
34
.
29. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
30. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
31. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
32. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
33. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
34. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
Vulcan Steel Limited | Prospectus
39
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2 Industry overview Continued
Figure 5: steel volume mix by end-market – New Zealand
35
(%, June year‑end)
0%
20%
40%
60%
80%
100%
FY22FFY21FFY20FY19FY18FY17FY16FY15
EngineeringNon-residential buildingResidential buildingManufacturing
12%12%12%12%12%11%11%12%
28%28%29%29%29%29%29%28%
28%27%27%27%27%28%28%29%
0%
0%
0%0%
0%0%0%0%
7%7%7%8%8%8%8%8%
MiningAgricultureOther
20%20%20%19%19%
19%19%
18%
4%4%4%4%4%4%4%4%
2.1.3. cOmPetitiVe landScaPe
Australia’s steel distributors with a national footprint include Vulcan, InfraBuild, BlueScope, Southern Steel
and United Group. The two major integrated steel manufacturers are BlueScope and InfraBuild. BlueScope
distributes products through BlueScope Distribution as well as through other subsidiaries such as Orrcon Steel,
while InfraBuild distributes products to fabricators through InfraBuild Steel Centre
36
. Australia’s distributors of
stainless steel with a national footprint include Vulcan, Atlas Steels, Midway Metals and Stirlings Performance
Steel. Australia’s distributors of engineering steel with a national footprint include Vulcan and Voestalpine.
In New Zealand, the steel distributors with a national footprint are Vulcan, Steel & Tube, Fletcher Steel, United
Industries and Asmuss. New Zealand’s distributors of stainless steel with a national footprint include Vulcan,
Steel & Tube and Wakefield Metals, while New Zealand’s distributors of engineering steel with a national
footprint include Vulcan, Steel & Tube, Fletcher Steel and Wakefield Metals.
Figure 6 provides an overview of the key market participants in Australia and Figure 7 provides an overview
of the key market participants in New Zealand.
35. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
36. Australian Steel Institute, Capabilities of the Australian Steel Industry (October 2020), available at: https://www.steel.org.au/getattachment/About‑Us/
Our‑industry/Steel‑Industry‑Capability‑document‑131020.pdf/?lang=en‑AU.
40
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Figure 6: Primary product and service offering by key market participants – Australia
Steel distribution
1
Plate processingCoil processingStainless steelEngineering steelReinforcing steel
2
Wire
Vulcan
——
InfraBuild
———
3
BlueScope
———
Southern Steel
———
United Group
———
Mesh & Bar
—————
Atlas Steels
——————
Midway Metals
——————
Stirlings Performance Steel
——————
Voestalpine
——————
Source: Management.
Notes:
1. Includes structural, merchant bars, hollows, plate and coil.
2. Includes mesh.
3. Wire manufacturer.
Vulcan Steel Limited | Prospectus
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2 Industry overview Continued
Figure 7: Primary product and service offering by key market participants – New Zealand
Steel distribution
1
Plate processingCoil processingStainless steelEngineering steelReinforcing steel
2
WireRoofingFasteners
Vulcan
————
Steel & Tube
Fletcher Steel
——
United Industries
—————
Asmuss
—————
Summit Steel & Wire
——————
Wakefield Metals
———————
BlueScope
————————
Source: Management.
Notes:
1. Includes structural, merchant bars, hollows, plate and coil.
2. Includes mesh.
2.2. Key demand drivers for steel
Demand for steel in Australasia is related to activity in the construction, manufacturing and mining industries.
Consumption of steel across some of these sectors can be interrelated. For example, growth in construction
activity requires more manufactured steel products, which in turn, requires more raw materials from the
mining sector
37
.
2.2.1. cOnStRuctiOn actiVit Y
Construction activity is a key driver of demand for steel, and the construction end‑market can be divided into
three sub‑segments:
• engineering/infrastructure construction: civil infrastructure construction and industrial projects;
• non-residential construction: construction of offices, industrial premises, shops, hotels, hospitals
and entertainment facilities; and
• residential construction: construction of houses, flats, units, townhouses and apartments
(including multi‑storey).
3 7. Anti-Dumping Commission, Analysis of Australia’s Steel Manufacturing and Fabricating Markets Report to the Commissioner of the Anti‑Dumping
Commission (November 2017), available at: https://www.industry.gov.au/sites/default/files/2019‑05/adc_steel_fabrication_report_november_2017.pdf.
42
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2.2.1.1. Australia’s construction industry
Over the past five years, construction activity in Australia peaked in 2017 with A$266 billion
38
of work done
39
,
before declining from 2018 to 2020 due to a reduction in work done in residential and engineering/infrastructure
construction
40
. The COVID‑19 pandemic and associated lockdowns caused disruption to supply chains and
construction activity, and work done fell c.A$5 billion in 2020
41
. Growth in Australia’s construction industry is
expected to recover, driven by a strong outlook for engineering/infrastructure construction activity
42
. Total
construction work done is expected to grow by 2.7% to A$243 billion in 2021F, before declining by 0.7% to
A$241 billion in 2022F
43
. This represents a CAGR of 1.0% from 2020–2022F
44
.
Figure 8: Value of construction work done – Australia
45
(A$ billion, 2018–2019 prices
46
, December year‑end)
0
50
100
150
200
250
300
2022F2021F202020192018201720162015
Engineering/InfrastructureNon-residentialResidential
96
91
8988
100
114
93115
44
46
48
48
45
43
39
40
102106100106
114
109
112
111
241243
237
242
259
266
243
265
2.2.1.2. Engineering/infrastructure construction in Australia
The Australian engineering/infrastructure construction sector completed approximately A$89 billion of work in
2020, an increase of 0.3% compared to the prior year
47
. Infrastructure spending is expected to be supported by
infrastructure programs being implemented by the Federal and State Governments
48
. Private‑sector funding
is expected to play an increased role in financing infrastructure expenditure and several of the largest transport
infrastructure projects currently underway are largely funded by public‑private partnerships (“PPPs”)
49
. The
current pipeline of PPPs in Australia includes projects such as the Inland Rail, North East Link Melbourne,
Sydney Metro and WestConnex.
Work done in heavy industry, including mining, is expected to grow by more than 5% per annum in 2021F and
2022F
50
. Diversification into areas such as the development of hydrogen and new lithium‑ion battery capacity
has supported growth in engineering/infrastructure construction, which Vulcan expects to drive demand for
steel
51
. Between 2020 and 2022F, work done in the engineering/infrastructure construction sector is expected
to increase at a CAGR of 3.9%
52
.
38. ACIF, Australian Construction Market Report (May 2021).
39. ‘Work done’ is a project management and reporting technique measuring the full value of the costs incurred, regardless of payment or receipt.
40. ACIF, Australian Construction Market Report (May 2021).
41. ACIF, Australian Construction Market Report (May 2021).
42. ACIF, Australian Construction Market Report (May 2021).
43. ACIF, Australian Construction Market Report (May 2021).
44. ACIF, Australian Construction Market Report (May 2021).
45. ACIF, Australian Construction Market Report (May 2021).
46. The value of work done in ACIF’s Australian Construction Market Report (May 2021) is reported in Chain Volume Measurements (“cVM”). CVM refers to
value that is calculated in real value terms (constant prices) instead of nominal values (current price). This seeks to adjust for the impacts of inflation on
the value of work done. The reference year for CVM used by ACIF in the market report is 2018‑19: ACIF, Australian Construction Market Report (May 2021).
47. ACIF, Australian Construction Market Report (May 2021).
48. ACIF, Australian Construction Market Report (May 2021).
49. IBISWorld, Road and Bridge Construction in Australia (June 2020).
50. ACIF, Australian Construction Market Report (May 2021).
51. ACIF, Australian Construction Market Report (May 2021).
52. ACIF, Australian Construction Market Report (May 2021).
Vulcan Steel Limited | Prospectus
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2 Industry overview Continued
Growth in the engineering/infrastructure construction sector is expected to result in increased demand for
steel, with total steel volume expected to increase 10.4% to approximately 1.06Mt in FY21F
53
. By FY22F, demand
for steel from the Australian engineering/infrastructure construction sector is expected to reach over 1.1Mt,
representing a CAGR of 7.9% between FY20 and FY22F
54
.
Figure 9: steel consumption – Australian engineering/infrastructure construction
55
(000’ tonnes, June year‑end)
0
200
400
600
800
1,000
1,200
FY22FFY21FFY20FY19FY18FY17FY16FY15
Long steelFlat steelTubular steelStainless steel
656
620
560567580
533547
592
347
329
299304
319
301
314
351
99
95
87
90
92
130
158
186
1,118
1,059
960
974
1,002
975
1,031
1,141
16
15
14
12
12
11
12
13
Non-residential construction in Australia
The Australian non‑residential construction sector completed approximately A$48 billion of work in 2020,
representing an increase of 0.7% from the prior year
56
. Government spending on social infrastructure and other
essential services, such as health and aged care increased in 2020, which is expected to drive non‑residential
construction
57
. However, a sharp reduction in construction activity in certain segments, such as offices, shops,
hotels, entertainment, and recreational facilities is expected
58
. As a result, the total value of non‑residential
construction work done is forecast to decline at a CAGR of 4.2% between 2020 and 2022F
59
. Similarly,
demand for steel from the non‑residential construction sector is expected to decline at a CAGR of 1.6%
between FY20 and FY22F
60
.
Figure 10: steel consumption in Australian non-residential construction
61
(000’ tonnes, June year‑end)
0
300
600
900
1,200
1,500
FY22FFY21FFY20FY19FY18FY17FY16FY15
Long steelFlat steelTubular steelStainless steel
526526
539528
498
460455457
717724
739734
711
680682710
105107
112
111
104
162182
199
1,3681,378
1,412
1,394
1,333
1,322
1,339
1,386
21
21
22
21
20
20
20
20
53. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
54. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
55. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
56. ACIF, Australian Construction Market Report (May 2021).
5 7. ACIF, Australian Construction Market Report (May 2021).
58. ACIF, Australian Construction Market Report (May 2021).
59. ACIF, Australian Construction Market Report (May 2021).
60. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
61. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
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Residential construction in Australia
The Australian residential construction sector completed approximately A$100 billion of work in 2020,
representing a 5.4% decline compared to the prior year
62
. However, the annual value of construction work done
in Australia is expected to grow by 5.5% in 2021 to A$106 billion, driven by record‑low interest rates, strong
employment growth and temporary stimulus measures such as the Federal Government’s HomeBuilder
program
63
, before declining 3.8% in 2022F to A$102 billion
64
. Further, the increasing desire of homeowners
to improve their living spaces has supported the alterations and additions market, which reached A$39 billion
in 2020, but is expected to contract at a CAGR of 1.5% from 2020 to 2022F
65
. In total, the value of work done
in residential construction is expected to grow at a CAGR of 0.7% from FY20 to FY22F
66
.
This recovery is expected to be driven by growth in work done in housing, whereas work done in apartments
and other multi‑storey residential buildings are expected to fall from 2020 to 2022F
67
. Due to the lower use of
steel in housing construction
68
, total steel demand for residential construction is expected to fall at a CAGR
of 1.3% from FY20 to FY22F
69
.
Figure 11: steel consumption – Australian residential construction
70
(000’ tonnes, June year‑end)
0
550
1,100
1,650
2,200
FY22FFY21FFY20FY19FY18FY17FY16FY15
Long steelFlat steelTubular steelStainless steel
849
867866
925952901
827751
759778
779
837
893
875
815
771
108
113
115
125
127
198
212
198
1,731
1,774
1,777
1,903
1,9881,990
1,869
1,733
16
1616
16
1615
15
14
2.2.1.3. New Zealand’s construction industry
The total value of investment in the New Zealand construction sector increased at a CAGR of 4.3% between FY15
and FY19
71
. The construction market in New Zealand was significantly impacted by the disruption caused by the
COVID‑19 pandemic
72
, and the total value of construction investment declined by approximately NZ$1.6 billion
to NZ$29.2 billion between FY19 and FY20, largely driven by weakness in residential and non‑residential
construction.
73
Construction activity in New Zealand is expected to rebound by 11.6% in FY21F, underpinned
by robust growth in residential construction
74
. Total construction investment is expected to continue to grow
a further 1.7% in FY22F to NZ$33.2 billion, driven by growth in all construction sub‑segments
75
. This growth
represents a CAGR of 6.5% from FY20 to FY22F
76
.
62. ACIF, Australian Construction Market Report (May 2021).
63. ACIF, Australian Construction Market Report (May 2021).
64. ACIF, Australian Construction Market Report (May 2021).
65. ACIF, Australian Construction Market Report (May 2021).
66. ACIF, Australian Construction Market Report (May 2021).
6 7. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
68. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
69. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
70. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
71. NIEIR, ANZ Steel Volume Data (2021).
72. Deloitte, A better way forward: Construction Sector COVID‑19 Recovery Study (January 2021), available at: https://www2.deloitte.com/nz/en/pages/
economics/articles/construction‑sector‑covid‑19 ‑recovery‑study.html.
73. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
74 . NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
75. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
76. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
Vulcan Steel Limited | Prospectus
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2 Industry overview Continued
Figure 12: Value of construction investment – New Zealand
77
(NZ$ billion, 2009–2010 prices, June year‑end)
0
5
10
15
20
25
30
35
FY22FFY21FFY20FY19FY18FY17FY16FY15
EngineeringNon-residentialResidential
7.8
7.67.3
7.47.5
5.65.86.2
7.2
6.9
6.87.2
6.6
6.66.3
5.9
18.2
18.1
15.2
16.2
15.6
15.6
15.1
13.7
33.2
32.6
29.2
30.8
29.8
27.9
27.2
25.8
2.2.1.4. Engineering/infrastructure construction in New Zealand
Engineering/infrastructure construction in New Zealand has grown significantly over the past few years, with
investment in the sector growing to NZ$7.4 billion in FY19, representing a CAGR of 4.7% between FY15 and
FY19
78
. Investment in the sector contracted slightly in FY20 due to project delays caused by the COVID‑19
pandemic
79
, however investment is expected to grow at a CAGR of 4.0% between FY20 and FY22F
80
. Growth
in engineering/infrastructure construction activity will primarily be supported by New Zealand Government
expenditure over the next five years, as outlined in the NZ$12 billion ‘New Zealand Upgrade Programme’,
which is heavily focused on road and rail projects
81
. The 2020 Budget also committed an additional NZ$3 billion
of funding for infrastructure projects to support the economy’s recovery from the COVID‑19 pandemic
82
.
Further support is expected to be provided by funding from the private‑sector, with an increasing number
of PPPs in New Zealand
83
.
The strong outlook for engineering construction is expected to drive steel demand growth, with steel volumes
forecast to reach approximately 109kt in FY22F, representing a CAGR of 4.2% between FY20 and FY22F
84
.
Figure 13: steel consumption – New Zealand engineering/infrastructure construction
85
(000’ tonnes, June year‑end)
0
20
40
60
80
100
120
FY22FFY21FFY20FY19FY18FY17FY16FY15
Long steelFlat steelTubular steelStainless steel
50
47
464746
404038
40
3838
39
38
3942
50
16
15
14
14
14
13
13
14
109
103
101
103
100
95
97
105
3
3
3
3
2
2
2
3
7 7. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
78. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
79. IBISWorld, Road and Bridge Construction in New Zealand (June 2020).
80. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
81. IBISWorld, Road and Bridge Construction in New Zealand (June 2020).
82. IBISWorld, Road and Bridge Construction in New Zealand (June 2020).
83. IBISWorld, Road and Bridge Construction in New Zealand (June 2020).
84. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
85. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
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2.2.1.5. Non-residential construction in New Zealand
The total value of investment in non‑residential construction in New Zealand increased at a CAGR of 4.9%
between FY15 and FY19
86
, supported by favourable investment conditions such as the low interest rate
environment, a growing labour force and household consumption expenditure
87
. Further, significant stimulus
for rebuilds due to earthquakes in the Canterbury region and Christchurch contributed to growth in non‑
residential construction
88
. In FY20, investment in non‑residential construction declined sharply due to the
disruption caused by the COVID‑19 pandemic and the alert level four in March 2020, which prompted a
shutdown of all non‑essential construction activity
89
.
As the economy recovers, growth in non‑residential construction activity is expected to rebound quickly,
with investment forecast to reach NZ$7.2 billion in FY22F
90
. As activity in New Zealand’s non‑residential
construction sector recovers, total demand for steel is expected to grow to 246kt in FY22F, representing
a CAGR of 1.3% between FY20 and FY22F
91
.
Figure 14: steel consumption – New Zealand non-residential construction
92
(000’ tonnes, June year‑end)
0
54
108
162
216
270
FY22FFY21FFY20FY19FY18FY17FY16FY15
Long steelFlat steelTubular steelStainless steel
69
666667
66
6158
47
143
140141145
139154
158
159
28
27
27
27
26
25
25
23
246
240240
246
238
247248
236
7
7
7
7
7
77
6
2.2.1.6. Residential construction in New Zealand
New Zealand’s residential construction industry grew significantly from FY15 to FY19 at a CAGR of 4.3%
93
, driven
by a low interest rate environment and robust population growth due to elevated migrant intake
94
. However,
residential construction has been partly constrained by a shift in housing preferences towards higher‑density
apartments and townhouses
95
. The New Zealand residential construction sector suffered as a result of the
disruption to construction activity caused by the COVID‑19 pandemic
96
. In FY20, investment in the industry
contracted by 6.1%
97
. Residential construction investment is expected to recover significantly in FY21F, growing
by 19.0% to approximately NZ$18.1 billion and growing slightly in FY22F to approximately NZ$18.2 billion
98
.
Continued growth in residential construction in New Zealand has supported demand for steel, with steel
consumption from the sector reaching approximately 163kt in FY20
99
. Demand for steel in the residential
construction market is expected to grow to approximately 177kt in FY22F, representing a CAGR of 4.1%
between FY20 and FY22F
100
.
86. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
8 7. IBISWorld, Commercial and Industrial Building Construction in New Zealand (July 2020).
88. IBISWorld, Commercial and Industrial Building Construction in New Zealand (July 2020).
89. IBISWorld, Commercial and Industrial Building Construction in New Zealand (July 2020).
90. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
91. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
92. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
93. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
94. IBISWorld, House Construction in New Zealand (June 2021).
95. IBISWorld, House Construction in New Zealand (June 2021).
96. IBISWorld, House Construction in New Zealand (June 2021).
9 7. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
98. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
99. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
100. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
Vulcan Steel Limited | Prospectus
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2 Industry overview Continued
Figure 15: steel consumption – New Zealand residential construction
101
(000’ tonnes, June year‑end)
0
50
100
150
200
FY22FFY21FFY20FY19FY18FY17FY16FY15
Long steelFlat steelTubular steelStainless steel
67
64
60
5960
5450
42
90
88
84
8483
92
94
94
17
17
16
15
15
15
14
13
177
172
163
162
160
164
161
152
3
3
3
3
2
2
2
2
2.2.2. manuFactuRinG
As steel is a key input used in manufacturing steel goods, vehicles, machinery and equipment, the level of
manufacturing directly impacts demand for steel
102
.
2.2.2.1. Australia’s manufacturing sector
Total value‑added manufacturing output in Australia declined to A$99 billion in 2016
103
as manufacturers moved
production offshore and imports gained market share
104
. However, Australia’s manufacturing industry returned
to growth in 2017, with output increasing to A$109 billion in 2020
105
. Manufacturing output is expected to
continue to grow at a CAGR of 4.0% between 2020 and 2022F to reach A$117 billion
106
.
Figure 16: total value-added manufacturing output – Australia
107
(A$ billion, December year‑end)
60
70
80
90
100
110
120
2022F2021F202020192018201720162015
117117
109109
108
104
99
102
101. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
102. World Steel Association, The Uses of Steel (accessed on 10 August 2021), available at: https://www.worldsteel.org/about‑steel/steel‑facts.html.
103. Oxford Economics, Nominal GVA, Manufacturing, Australia and New Zealand (July 2021). The data presented was prepared prior to the imposition
of mid‑2021 COVID‑19 related lockdowns.
104. Australia Institute, Manufacturing (Still) Matters (June 2016).
105. Oxford Economics, Nominal GVA, Manufacturing, Australia and New Zealand (July 2021). The data presented was prepared prior to the imposition
of mid‑2021 COVID‑19 related lockdowns.
106. Oxford Economics, Nominal GVA, Manufacturing, Australia and New Zealand (July 2021). The data presented was prepared prior to the imposition
of mid‑2021 COVID‑19 related lockdowns.
1 0 7. Oxford Economics, Nominal GVA, Manufacturing, Australia and New Zealand (July 2021). The data presented was prepared prior to the imposition
of mid‑2021 COVID‑19 related lockdowns.
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Total demand for steel from the manufacturing sector contracted at a CAGR of 2.9% between FY15 and FY20
108
,
largely due to the withdrawal of steel‑intensive manufacturing activities from Australia, such as the manufacturing
of automobiles
109
. However, expected growth in manufacturing output is expected to drive robust growth in
demand for steel. The total volume of steel for use in manufacturing is expected to be approximately 1.16Mt
in FY22F, representing a CAGR of 5.0% between FY20 and FY22F
110
.
Figure 17: steel consumption – Australian manufacturing sector
111
(000’ tonnes, June year‑end)
0
300
600
900
1,200
1,500
FY22FFY21FFY20FY19FY18FY17FY16FY15
Long steelFlat steelTubular steelStainless steel
461440420419404400402415
614
587
556
556
553
563569
676
65
62
59
59
57
88
95
113
1,164
1,113
1,0571,056
1,033
1,701
1,085
1,227
24
24
2222
20
20
20
23
2.2.2.2. New Zealand’s manufacturing sector
Total manufacturing output has been steadily increasing in New Zealand since 2015 and this trend is
expected to continue to 2023
112
. Manufacturing output grew at a CAGR of 2.8% between 2015 and 2020,
reaching NZ$32.1 billion in 2020
113
. Growth in New Zealand’s manufacturing sector is expected to accelerate, with
total manufacturing output forecast to increase at a CAGR of 5.5% between 2020 and 2022F to reach
NZ$35.7 billion
114
.
Figure 18: total value-added manufacturing output – New Zealand
115
(NZ$ billion, December year‑end)
0
5
10
15
20
25
30
35
40
2022F2021F202020192018201720162015
35.7
34.3
32.132.3
31.5
30.3
28.7
27.9
108. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
109. NIEIR, ANZ Steel Volume Data (2021) and Australia Institute, ‘Manufacturing (Still) Matters’ (2016).
110. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
111. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
112. Oxford Economics, Nominal GVA, Manufacturing, Australia and New Zealand (July 2021). The data presented was prepared prior to the imposition
of mid‑2021 COVID‑19 related lockdowns.
113. Oxford Economics, Nominal GVA, Manufacturing, Australia and New Zealand (July 2021). The data presented was prepared prior to the imposition
of mid‑2021 COVID‑19 related lockdowns.
114. Oxford Economics, Nominal GVA, Manufacturing, Australia and New Zealand (July 2021). The data presented was prepared prior to the imposition
of mid‑2021 COVID‑19 related lockdowns.
115. Oxford Economics, Nominal GVA, Manufacturing, Australia and New Zealand (July 2021). The data presented was prepared prior to the imposition
of mid‑2021 COVID‑19 related lockdowns.
Vulcan Steel Limited | Prospectus
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2 Industry overview Continued
Total demand for steel from the manufacturing sector contracted at a CAGR of 1.7% between FY15 and FY20
116

which, similar to Australia, can be largely explained by the withdrawal of steel‑intensive manufacturing activities
as they are replaced with imports, particularly from China
117
. However, with manufacturing output expected
to grow, demand for steel is forecast to grow to approximately 243kt in FY22F, representing a CAGR of 4.2%
between FY20 and FY22F
118
.
Figure 19: steel consumption – New Zealand manufacturing sector
119
(000’ tonnes, June year‑end)
0
54
108
162
216
270
FY22FFY21FFY20FY19FY18FY17FY16FY15
Long steelFlat steelTubular steelStainless steel
7067656566625953
145
138
134135134
150
156
166
19
18
18
1817
17
17
17
243
231
224
226
225
237
240
245
8
8
8
89
8
9
9
2.2.3. mininG in auStRalia
In Vulcan’s experience, the level of output in the mining industry drives demand for steel, as steel is used for
a variety of purposes in the mining industry, from basic equipment such as workbenches and staircases to
specialised equipment such as rails, plates and grinding balls. The value of mining output grew at a CAGR of
2.2% from 2015 to approximately A$113 billion in 2020
120
. Continued growth at a CAGR of 8.6% is expected from
2020 to 2022F, with total output expected to reach A$133 billion in 2022F
121
.
Figure 20: Mining value-added output in Australia
122
(A$ billion, December year‑end)
0
30
60
90
120
150
2022F2021F202020192018201720162015
133
129
113
126
124
110
99
101
116. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
117. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
118. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
119. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
120. Oxford Economics, Nominal GVA, Mining, Australia (July 2021). The data presented was prepared prior to the imposition of mid‑2021 COVID‑19
related lockdowns.
121. Oxford Economics, Nominal GVA, Mining, Australia (July 2021). The data presented was prepared prior to the imposition of mid‑2021 COVID‑19
related lockdowns.
122. Oxford Economics, Nominal GVA, Mining, Australia (July 2021). The data presented was prepared prior to the imposition of mid‑2021 COVID‑19
related lockdowns.
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Total demand for steel in the Australian mining sector was flat from FY15 to FY18, then increased to 550kt in
FY19
123
. The favourable outlook for mining activity in Australia is expected to drive steel consumption to
approximately 567kt in FY22F, representing a CAGR of 1.3% between FY20 and FY22F
124
.
Figure 21: steel consumption – Australian mining sector
125
(000’ tonnes, June year‑end)
0
100
200
300
400
500
600
FY22FFY21FFY20FY19FY18FY17FY16FY15
Long steelFlat steelTubular steelStainless steel
238
226
229227
200
193187183
268
255261
263
240
236
232
235
50
48
5152
4560
6869
567
539
552550
494497497495
10
10
109
8
9
98
2.3. Industry dynamics
The Australian and New Zealand steel distribution industry has a number of key dynamics which are favourable
to Vulcan and are outlined below.
• Economies of scale: the industry is well‑established, with relatively few players who process and distribute
a high volume of steel. Economies of scale drives operating leverage and enables industry participants to
grow margins while keeping prices competitive. Some industry players have established nationwide
networks across Australia and New Zealand.
• A broad product and service offering: distributors with a national footprint are able to offer a broad range
of products and processing services. This provides customers with a comprehensive solution and enables
customer base diversity. The product range and service capabilities of a new entrant are likely to be narrower,
limiting their ability to fulfil customer requirements across a broad range of products and end‑markets.
• Customer relationships: by consistently providing reliable and high‑quality distribution and processing
services over a long period of time, some industry players have been able to establish significant loyalty
with customers.
• Supplier relationships: some industry players have established strong relationships with numerous suppliers,
both domestically and offshore. These relationships with suppliers provide access to products when supply
is constrained.
• Inventory management: as a distributor, product availability is critical. Inventory management expertise is
necessary to ensure consistently high customer satisfaction. Fit‑for‑purpose IT software systems provide ease
of access to information and therefore improve decision making responsiveness, contributing to effective
inventory management.
• Warehousing and trucking requirements: a key component in delivering a high level of service to customers
is the ability to fill orders and deliver product to customers in a timely fashion. Maintaining sufficient stock
across a wide range of SKUs requires significant warehousing space and delivery requires either an in‑house
trucking fleet, or timely access to a third‑party operated fleet.
123. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
124. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
125. NIEIR, ANZ Steel Volume Data (2021). Note the data presented for FY21F and FY22F reflects forecasts prepared by NIEIR in June 2021.
Vulcan Steel Limited | Prospectus
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2 Industry overview Continued
2.4. regulatory environment
Regulations and technical bodies for building works in Australia and New Zealand set out the required
standards and grades of steel products for the intended construction applications, which in turn influence
the procurement sources among steel product distributors, including Vulcan.
For Australia and New Zealand, the technical standards (AS/NZS standards) for construction design and
materials, including steel products, are set by Standards Australia and Standards New Zealand, which are
independent standards‑setting bodies in each country. These technical standards are referenced in Building
Code regulations
126
in Australia and New Zealand, and are typically cited for performance requirements in
construction contracts to provide the reference point for materials and product grades to be used for the
intended application.
Because the grades of reinforcing and structural steel products required to meet the AS/NZS standards are
specific to Australia and New Zealand, and because of the size of the Australasian steel market relative to the
global sector, these grades of products have less commercial appeal to overseas steel manufacturers that
operate on large minimum production runs and order quantities.
In the steel industry, reinforcing and structural steel products used in construction are graded and tested for
various properties and accompanied with test certificates for traceability. There has been increased regulatory
scrutiny
127
of performance reliability, certification and traceability of some structural steel products in the
New Zealand construction market which has led Steel Construction New Zealand (a fabrication industry body
in New Zealand) to mandate the use of standards‑compliant products by its members for structural fabrication.
Effectively, this has led to product specifiers in New Zealand requiring structural steel supplied to be from
third‑party accredited steel mills (by approved New Zealand and Australia accrediting organisations such
as Australasian Certification Authority for Reinforcing and Structural Steels, ACRS).
126. All building work in Australia and New Zealand are governed by the requirement of the Building Code regulations in the respective country. The
Building Code of Australia (“BcA”) is contained within the National Construction Code (“Ncc”) which is established by the Australian Building Code
Board. The Building Code in New Zealand is contained in the regulations of Building Act 2004 (NZ).
12 7. Canterbury Earthquake Royal Commission (November 2012), available at: https://canterbury.royalcommission.govt.nz/; NZ Commerce Commission
Steel Mesh Investigation (April 2016), available at: https://comcom.govt.nz/news‑and‑media/media‑releases/2016/update‑on‑steel‑mesh‑investigation.
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3
company
overview
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3 company overview
3.1. overview of Vulcan
Vulcan is the only Australasian‑wide, pure‑play, value‑added steel distributor and processor, with approximately
260kt of products sold in FY21
128
. Vulcan distributes steel products, including carbon steel, stainless steel and
engineering steel to a diversified customer base including customers in engineering, manufacturing, fabricating,
transport, mining and a broad range of other market segments. Vulcan also provides value‑added processing
services for steel coils, steel plate, stainless steel and engineering steel. Vulcan cuts, drills, slits and shapes
for fabrication, assembly or downstream processing by customers. Vulcan generated pro forma revenue
and EBITDA in FY21 of NZ$731.5m and NZ$129.7m respectively, and had 842 employees as at 30 June 2021.
The Company was founded in Auckland in 1995 by Peter Wells and has since grown to 29 operating locations
across Australia and New Zealand, serving an average of c.7,000 active trading accounts each month in FY21.
Vulcan’s core business is focused on the distribution of steel, stainless steel and other steel across Australia
and New Zealand. The Company also offers processing of steel plate, steel coil, stainless steel plate and
engineering steel.
Vulcan is able to service a broad range of customers by operating as an intermediary between steel producers
and end‑users. Vulcan’s scale and longstanding relationships with its suppliers enable the Company to offer
a broad product range, comprising c.12,000 individual SKUs in Australia and c.7,500 SKUs in New Zealand
at 30 June 2021.
Vulcan generates the majority of its revenue from its Australian operations (62% of revenue in FY21) and has
access to a diverse range of end‑markets across both Australia and New Zealand. Vulcan has a diversified
customer base, with its largest customer accounting for 2% of FY21 revenue and its top 20 customers accounting
for 13% of FY21 revenue. Vulcan operated at ~98% distribution DIFOT in FY21, an indicator of its strong operational
performance and commitment to outstanding customer service.
Vulcan is characterised by a flat organisational structure where managers in each region are empowered to
autonomously manage inventory levels to meet customer demand. Vulcan has developed a fit‑for‑purpose
IT system that is designed to enable staff to seamlessly access key financial and operational metrics in real‑time.
This assists staff to make better decisions, and improves responsiveness and inventory management. Further,
Vulcan operates an in‑house trucking fleet, with 92 owned trucks and 12 third‑party cartage trucks as at
30 June 2021 across Australasia. This is uncommon in the industry and enables end‑to ‑end control of the
process, with an ability to provide customised delivery across Vulcan’s entire range of solutions, including
next‑day delivery for distribution products.
Vulcan has a proven track record of growing earnings both organically and through acquisitions. Vulcan has
numerous opportunities for growth including ongoing business improvement initiatives, entry into new
geographies, expansion of product and/or service offerings and opportunistic acquisitions.
An overview of Vulcan’s operations by segment is shown in Figure 22 below.
128. Includes 10.5kt of Indent volumes, consisting of products that are provided directly from the manufacturer to the customer.
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Figure 22: Business overview
Operating
segment
SteelMetals
Products
and service
offering
steel distributionPlate processingcoil processingstainless steelengineering steel
Distributes steel
hollows,
merchant
products (bars,
beams, angles,
channels) and
sheets/plate
Processes steel
plate to
customer
specifications
(including
cutting, drilling
and folding)
Processes steel
coil to customer
specifications
(including
cutting and
drilling)
Distributes
stainless steel
hollows, bars,
fittings and
sheets/plate and
processes
stainless steel
plate to
customer
specifications
(including
cutting and
drilling)
Distributes
high‑performance
engineering steel
and metal
products, and
processes
engineering
steel and metal
products to
customer
specifications
(including
cutting)
FY21
revenue
NZ$450.2mNZ$281.3m
FY21
EBITDA
2
NZ$94.5mNZ$59.9m
FY21
EBITDA
margin
2
21.0%21.3%
Positions
NZ
National
footprint
National
footprint
National
footprint
National
footprint
Emerging
national footprint
Aust
Competes
selectively
3
Competes
selectively
3
Competes
selectively
3
National
footprint
National
footprint
FY21
revenue mix
SA
VIC
QLD
North Island
South Island
WA
NSW
Geography
23%
17%
15%
5%
Australia
62%
New Zealand
38%
3%
27%
10%
Transport
Fabricating
Engineering
Mining
Food & AgricultureRollformers
Other
1
Sheetmetal
Manufacturing
Market segments
23%
18%
15%
7%
4%
5%
3%
3%
22%
Other Customers
Customers #2-#20
Customer #1
Customer
11%
2%
87%
Notes:
1. Includes project engineering, housing, resellers, door manufacturing, marine and aviation, fencing, materials handling,
and additional segments.
2. Pro forma, before unallocated corporate costs of NZ$24.7m.
3. Competes selectively means that Vulcan service certain locations only.
Vulcan Steel Limited | Prospectus
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3 company overview Continued
3.1.1. HiStORY OF Vulcan
Vulcan was founded by Peter Wells in 1995 in Auckland as a steel distribution business. The Company has grown
significantly over the last 26 years, both organically (including the addition of 10 new greenfield locations) and
through M&A with the acquisition of 10 established businesses. The acquisition of 50% of Horan Steel in 2002
marked Vulcan’s entry into the Australian market, while subsequent acquisitions enabled the Company to
expand its product range to include steel coil, steel plate, stainless steel and engineering steel. Vulcan’s most
significant acquisition was the Australasian stainless steel distribution business of Sandvik in late 2014, which
further strengthened its presence in Australia and added stainless steel to its product portfolio.
Figure 23: Vulcan’s history and development timeline
1995
Founded in Auckland
1997
Palmerston North distribution entry, Nelson
distribution entry, acquisition of Profile Cutting
2001
Christchurch expansion into Coil/Dunedin distribution entry
2004
Whangarei distribution entry
2006
Sale of Capital Racking New Zealand
2010: Entry into Australian plate market
Acquisition of PCD Steel Brisbane
2015
Mackay plate closure
1996
Christchurch distribution entry
2000
Auckland expansion in Coil & Plate
2002: Entry into Australian market
Invercargill distribution entry,
Initial 50% acquisition of Horan,
Acquisition of Capital Racking New Zealand
2005
Acquisition of NZP Profiles Tauranga
2007: Entry into Australian coil market
Brisbane distribution entry and Brisbane coil entry
through acquisition of Precision Trading Brisbane
2014: Entry into Australian and
New Zealand stainless steel market
Acquisition of Sandvik Australia and New Zealand
2017
Acquisition of Forte (Hamilton),
consolidation of Christchurch and Brisbane sites
2017: Entry into Australian
engineering steel market
Initial acquisition of 50% of Global Metals Australia
2019: Consolidated Horan
Acquisition of remaining 50% of Horan,
Albury stainless steel expansion
2020
Acquisition of remaining 25% interest
in Global Metals Australia
2018: Consolidated Australian
engineering steel interests
Acquisition of Interlloy by Global Metals Australia and
increased interest in Global Metals Australia to 75%
2020
Mackay and Napier expansion into stainless steel
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3.1.2. netWORK OVeRVie W
Vulcan’s operations are underpinned by a network of 29 operating sites across Australia and New Zealand,
strategically located to serve the local customer base. In Australia, Vulcan has 16 operating sites across 5 states
(NSW, VIC, QLD, SA and WA). In New Zealand, Vulcan has 13 operating sites, with 8 in the North Island and 5 in
the South Island. 16 of Vulcan’s 29 operating locations are considered hybrid sites where two or more products
or services are offered to customers from a single site.
Figure 24: operating footprint
SteelStainless steelEngineering steelHybrid
Vulcan Steel Limited | Prospectus
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3 company overview Continued
Figure 25: Product and service offering by site
SteelMetals
LocationsHeadcount
Hybrid
sites
Steel
distribution
Plate
processing
Coil
processing
Stainless
steel
Engineering
steel
sydney (NsW)31261—
Newcastle (NsW)2241——
Albury
129
(NsW)18—————
Melbourne (VIc)2791——
Brisbane (QLD)41391
townsville (QLD)171———
Mackay (QLD)1101———
Adelaide (sA)1211———
Perth (WA)1391———
others (Admin/It)7
total australia16460842189
nORtH iSland
Auckland3140——
Whangarei181——
tauranga1521——
Hamilton1161——
Palmerston North 1281——
Napier12—————
SOutH iSland
christchurch2771
Nelson181——
Dunedin181———
Invercargill151———
others (Admin/It)38
total new Zealand133828932105
Total Group298421613531814
129. Vulcan expanded its offering in Albury to include Stainless in 2019. Vulcan management do not consider this a hybrid site due to the scale of the
Stainless operation.
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3.1.3. PROduct and SeRVice OFFeRinG
Vulcan’s Steel segment distributes steel, and processes steel plate and coil. Vulcan’s Metals segment distributes
stainless steel and engineering steel, and processes stainless steel plate and engineering steel.
3.1.3.1. Steel segment
Steel distribution
Vulcan’s distribution offering includes flat products (coil,
sheets and plates) and long products (structural beams,
columns and angles, hollows and merchant bars).
Vulcan’s distribution business has been developed around
providing a premium service offering to its customers and
Vulcan has consciously developed a demand‑based strategic
operating footprint in its key market segments. Vulcan’s sites
and in‑house trucking fleet support the efficient handling
of products and prompt delivery to its customers. Due to the
weight and dimensions of products, proximity of operating
locations to end‑users is critical to ensuring freight efficiency.
Plate processing
Plate processing involves the downstream processing of flat
products, typically in excess of 3mm thick.
The equipment required for plate processing is capital and
cost prohibitive for many end‑users, especially for those that
have irregular demand requirements. For these reasons,
many of Vulcan’s customers require steel plate that is already
cut to size and accordingly, Vulcan has invested in and
developed this service offering. A key part of downstream
steel plate processing and the maximisation of margin to
the distributor is minimising wastage per plate. In most
cases, Vulcan uses Computer Aided Design (“cAD”)
technicians and software to embed each customers’
design specifications within standard plate dimensions.
Vulcan manages steel plate processing from receiving
orders through to drawing, cutting and delivery direct to
customers. Steel plate processing operations are located
in Auckland, Tauranga and Christchurch (New Zealand)
and Brisbane, Sydney and Perth (Australia).
Coil processing
Coil processing involves the downstream processing of
coiled steel less than 3mm thick.
Vulcan is able to slit the steel coil, or flatten and cut sheets
to a range of standard sizes for its customers (typically large
manufacturers). Vulcan has 3 coil processing operations,
located in Auckland and Christchurch (New Zealand), and
Brisbane (Australia).
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3 company overview Continued
3.1.3.2. Metals segment
Stainless steel
In October 2014, Vulcan acquired the Australian and
New Zealand stainless steel distribution businesses of
Swedish conglomerate, Sandvik (renamed Vulcan Stainless).
Vulcan Stainless carries an extensive stainless steel product
range and prides itself on its strong sales force, alloy
knowledge and sourcing expertise. Vulcan Stainless has
specialty product expertise in wear plate, hygienic tubing
and fittings, and welding products. Vulcan Stainless also
provides processing services including laser cutting, plasma
cutting and sheet polishing. At sites where a stainless steel
product range has been introduced, stainless steel
operations are physically separated from other operations
to avoid cross‑contamination and corrosion to stainless steel
products resulting from carbon steel dust particles.
Engineering steel
Engineering steel is typically used in higher‑value, special
purpose products, such as plant and equipment used in
the industrial and resources sectors.
Vulcan has a national footprint as an engineering steel
distributor in Australia, which grew after acquiring a stake in
Global Metals in 2017 and Global Metals taking over Interlloy
in 2018. Vulcan has also expanded into the New Zealand
engineering steel market in the last 18 months and expects
to grow its presence in this market over the medium‑term.
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3.1.4. BuSineSS mOdel diFFeRentiatORS
Vulcan operates as a key link in the steel value chain between steel producers and end‑users. These end‑users
typically require smaller order quantities and customised or specialty products and services that many mills do
not provide. Therefore, a number of end‑users prefer to deal with Vulcan because they value the Company’s
extensive product range, processing capability, order size flexibility and high standard of customer service
from order to delivery.
Figure 26: Vulcan’s position in the steel supply chain
Metals supply chain
Producers & bulk tradersDistributorsCustomersEnd-use markets
Participants
• Steel mills
• Stainless steel mills
• Engineering
steel mills
• Steel traders
•
• Others
• Fabricators
• General engineering
• Equipment
manufacturers
• Component
manufacturers
• Others
• Building and
construction
• Mining
• Agriculture
and food
• Manufacturers
• Transport
• Consumer products
• Others
characteristics
• Sells in large
minimum order
quantities (“MoQs”)
• Processing capability
• Buys in large MOQs
• Sells in small MOQs to
multiple customers
• Buys “just‑in‑time”,
in small quantities
across a large number
of SKUs
• Proxy for industrial
activity and the
economy
• International exposure
through exports
Vulcan aims to be the most customer service focused and efficient steel distributor in the Australasian market
and strives to achieve operational excellence in inventory management, processing capabilities, management
of overheads, customer service, and superior product knowledge and technical expertise. The key advantages
that make Vulcan a pure‑play, value‑added steel distributor with a national footprint, are outlined below.
3.1.4.1. Inventory management expertise
Vulcan prides itself on expertise in inventory management. This enables the Company to provide a broad
range of capabilities across Australasia. With its supply chain capability, fit‑for‑purpose IT system, centralised
procurement function, and considerable steel industry experience, Vulcan maintains an extensive product
range comprising c.12,000 SKUs in Australia and c.7,500 SKUs in New Zealand at 30 June 2021.
Having a broad and deep product range allows Vulcan to provide customers with consistent product availability,
while Vulcan’s specialty product expertise further enhances the service offering. In the distribution industry
superior product knowledge and technical expertise provides an advantage
130
. Stock levels are measured in
real‑time by sales staff, and SKUs are categorised to improve monitoring of commonly sold units. This optimises
sales and ensures all fast‑moving items have appropriate buffer stock. Availability of key stock in the stainless
steel division was above 90% across Australasia throughout FY21, despite industry stock shortages.
Vulcan also provides traceability
131
of its products, enabled by the Company’s fit‑for‑purpose IT inventory
management system, and goods receipting and dispatch procedures. This ensures customers can be provided
with timely and accurate product test certificates which can be a requirement to comply with strict Australasian
building codes.
Vulcan’s inventory management expertise is a key contributor to Vulcan’s ~98% distribution DIFOT across both
New Zealand and Australia in FY21.
130. McKinsey & Company, “The coming shakeout in industrial distribution”, April 2019.
131. Vulcan is able to link items sold to its customers back to specific supplier test certificates relating to those items.
Vulcan Steel Limited | Prospectus
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