Amended Steel & Tube FY22 Results Announcement
22 August 2022
STU / NZX ANNOUNCEMENT
7 Bruce Roderick Drive, East Tamaki, 2013, Auckland PO Box 30543, Botany, 2163, Auckland
P 04 570 5000 F 04 570 2453www.steelandtube.co.nz
STEEL & TUBE FY22 RESULTS FOR YEAR ENDED 30 JUNE 2022
RECORD RESULTS AND DOUBLING OF PROFIT FOR STEEL & TUBE
•
Record results with revenue of $599.1m, strong uplift in gross margin and net profit after tax almost
doubling to $30.2m.
•
Earnings momentum driven by a focus on customer service, trading disciplines, operational
excellence, supply chain management and positive market conditions.
•
Final, partially imputed, dividend of 7.5 cents per share (50% imputed), taking total dividends to 13.0
cents per share, equating to a gross yield of 11.4%
1
.
•
Strategic focus on strengthening the core and growing high value products, services and segments.
•
Well positioned to deliver through the economic cycle while continuing to invest in growth and
deliver sustainable double-digit ROFE.
$m FY22 FY21
2
Var%
Revenue 599.1 481.0 24.6%
Volume (Ktonnes) 167 158 5.7%
EBITDA 66.6 38.6 72.5%
Normalised EBITDA
3
66.9 37.6 77.9%
EBIT 47.6 20.7 130.0%
Normalised EBIT
3
47.9 19.7 143.1%
NPAT 30.2 15.4 96.4%
EPS 18.3cps 9.3cps 96.8%
Dividend 13.0cps 4.5cps 188.9%
Steel & Tube Holdings Limited (NZX: STU) has reported record results for the 12 months ended 30 June 2022
(FY22), with profit almost double that of the prior year, as the company moves its focus to growth.
Chief Executive Officer, Mark Malpass, said: “Our priority is to make it easy for our customers to transact with
us and I would like to acknowledge our people, who have done an outstanding job of doing just that. Despite
the volatile steel pricing environment, rising costs and continuing supply chain disruption, we have been able
to source, supply and deliver products to our customers in a timely manner.
“We are seeing the benefits of our focus on operational excellence and supply chain management which has
allowed us to control costs and deliver improved performance in a more challenging environment. A
continued investment in digital technology is delivering improved customer service and efficiency. We will
continue to build on our core strengths and are excited about the growth opportunities we are investing in”.
1
Based on share price of $1.27 as at 30 June 2022
2
FY21 results have been restated for the impact of a change in accounting policy in regards to the accounting for Software as a
Service arrangements (“SaaS”).
3
FY22 and FY21 Normalised EBITDA and Normalised EBIT have been adjusted to exclude non-trading adjustments. Further
details included in appendix of our Investor Presentation.
FY22 revenue was $599.1m, up 24.6% on prior year, with volumes increasing by 5.7% to 167 ktonnes.
Earnings increased significantly with EBITDA of $66.6m, up 72.5% year on year and normalised EBITDA up
77.9% to $66.9m. EBIT increased by 130.0% year on year to $47.6m, with normalised EBIT up 143.1% to
$47.9m. Net profit after tax (NPAT) was almost double that of the prior year, up 96.4% to $30.2m (FY21:
$15.4m).
The Board is pleased to have declared a final dividend of 7.5 cents per share. This takes full year dividends to
13.0 cents per share, representing 71% of Adjusted NPAT and equating to a gross yield of 11.4%. This is in line
with Steel & Tube’s policy to pay out 60% - 80% of Adjusted NPAT to shareholders.
The company has utilised its strong cash position to invest in critical inventory, providing a key competitive
advantage in an environment of supply chain difficulties.
Outlook
While global and local economies traverse an inflationary environment, there will still be strong demand for
steel. Pricing is expected to remain at current elevated levels for the balance of the calendar year. As shipping
and supply chain congestion eases, inventory cover levels are expected to reduce.
Mark Malpass said: "Steel & Tube’s journey has taken us from a relentless focus on cost and operational
discipline under Project Strive, to now having the foundation and ability to focus on growth and building a
more diversified, resilient business. Our two primary strategic pathways are continuing to strengthen our core
and investing in high value products, services and sectors to drive gross margin improvement.
“One such opportunity is in added value plate processing where we have invested into new equipment to
expand our plate processing capability and offer. Another example is our Fasteners NZ purchase in July 2021,
a niche operator that has performed extremely well in FY22. More recently, on 1 August we acquired Kiwi
Pipe and Fittings, in line with our strategy to invest in high value sectors, and which provides us with scale and
market share growth in the fire and water reticulation sector. This acquisition was immediately earnings
positive and expected to add over 0.5 cents to earnings per share in FY23.”
Chair, Susan Paterson, said: “Steel & Tube has been in business for almost seven decades and we have
successfully navigated numerous economic cycles. The company is well positioned to respond to the changing
environment and to take advantage of new market and product opportunities. Data and technology are truly
delivering for our customers. Steel, with its infinite recyclability, is a key enabler of decarbonisation, we are
proud to play our part in meeting this challenge for New Zealand. We have a great team of committed
employees and a strong pipeline of secured work in place.”
The company is hosting an analyst and investor call at NZST 10am today (22 August 2022). Call details can be
viewed here https://www.nzx.com/announcements/395195.
ENDS
For media or investor enquiries, please contact: Jackie Ellis Tel: +64 27 246 2505 or
email: jackie@ellisandco.co.nz
For further information please contact:
Mark Malpass
Steel & Tube CEO
Tel: +64 27 777 0327
Email: mark.malpass@steelandtube.co.nz
Richard Smyth
Steel & Tube CFO
Tel: +64 21 646 822
Email: richard.smyth@steelandtube.co.nz
---
Template
Results announcement
(for Equity Security issuer/Equity and Debt Security issuer)
Updated as at 17 October 2019
Results for announcement to the market
Name of issuer Steel & Tube Holdings Limited
Reporting Period 12 months to 30 June 2022
Previous Reporting Period 12 months to 30 June 2021
Currency NZD
Amount (000s) Percentage change
Revenue from continuing
operations
$599,148 24.6%
Total Revenue $599,148 24.6%
Net profit/(loss) from continuing
operations
$30,193 96.4%
Total net profit/(loss) $30,193 96.4%
Final Dividend
Amount per Quoted Equity
Security
0.07500000
Supplementary dividend per
Quoted Equity Security
0.00661765
Imputed amount per Quoted
Equity Security
0.01458333
Record Date 9 September 2022
Dividend Payment Date 23 September 2022
Current period Prior comparable period
(30 June 2021)
Net tangible assets per Quoted
Equity Security
$1.22 $1.11
A brief explanation of any of the
figures above necessary to
enable the figures to be
understood
Non-GAAP financial information
Steel & Tube uses several non-GAAP measures when
discussing financial performance. This includes normalised
EBIT. Management believes that these measures provide
useful information on the underlying performance of Steel &
Tube’s business. They may be used internally to evaluate
performance, analyse trends and allocate resources. Non-
GAAP financial measures should not be viewed in isolation
nor considered as a substitute for measures reported in
accordance with NZ IFRS. Reconciliations of non-GAAP
measures to GAAP measures are detailed within this
announcement.
Steel & Tube reports its normalised EBIT as $47.9m for FY22
(up from $19.7m in FY21). Further details on the unusual
transactions/non-trading adjustments are included in the
investor presentation for the year ended 30 June 2022.
Definitions:
• EBIT: This means earnings before interest and tax and is
calculated as profit for the period before net finance costs
and tax.
• Normalised EBIT: This means EBIT after normalisation
adjustments.
• Normalisation adjustments: These are transactions that
are unusual by size or nature in a particular accounting
period. Excluding these transactions can assist users in
forming a view of the underlying performance of the
Group. Unusual transactions can be as a result of specific
events or circumstances or major acquisitions, disposals
or divestments that are not expected to occur frequently.
Authority for this announcement
Name of person
authorised to
make this announcement
Mark Malpass
Contact person for this
announcement
Mark Malpass
Contact phone number +64 27 777 0327
Contact email address mark.malpass@steelandtube.co.nz
Date of release through MAP
22 August 2022
Audited financial statements accompany this announcement.
---
STEEL & TUBE HOLDINGS LIMITED
2022
ANNUAL
REPORT
2STEEL & TUBE ANNUAL REPORT 2022
The Board of Steel & Tube is pleased to
present the Annual Report for the year
ended 30 June 2022
Susan Paterson | Chair
Mark Malpass | Chief Executive
19 August 2022
CONTENTS
About Us04
Our Business05
Our Strategic Roadmap06
Chair and CEO's Review12
Our Businesses17
What Matters24
Leadership Team32
Our Board34
Financial Measures36
Five Year Financial Performance37
Financial Report38
Financial Statements40
Independent Auditor's Report74
Governance78
Remuneration85
Disclosures89
Directory94
SITE 9, WELLINGTON
The Site 9 project is a premium base-isolated office building
within the newly landscaped Kumutoto Wharf area in
Wellington. Developed by Willis Bond, the sustainably
designed building is due for completion in September 2022.
Steel & Tube has worked in partnership with Willis Bond over
a number of projects. For this latest development, Steel
& Tube has delivered approx. 400 tonnes comprising of
structural steel, pipe, hollows and fasteners, 204 tonnes of
Reo and 3,726 m
2
of Comflor product, as well as a significant
amount pipe and fittings for fire & reticulation purposes.
3STEEL & TUBE ANNUAL REPORT 2022
ABOUT US
1
Excludes vacancies and contractors.
2
eTRIFR: Employee Total Recordable Injury Frequency Rate per 1 million work hours
3
Includes Scope 1 and 2 plus business travel (Scope 3).
4
Calculated as total reported emissions/$1M revenue
OUR PURPOSE
IS TO MAKE
LIFE EASIER
FOR OUR
CUSTOMERS
NEEDING STEEL
SOLUTIONS
We will do this by:
-Providing a one-stop-
shop for the most
essential steel products,
from foundation to
roof and everywhere
in between
-Doing everything we
can to make it easy for
our customers to do
business with us
-Always looking for ways
to work smarter
-Using technology and
great thinking to pull it
all together and enable
a better business
-Building one great
team right across the
Steel & Tube business
THE NUMBERS
AS AT 30 JUNE 2022
829
1
Team members
26 SITES
Across New Zealand
46,500 +
Product SKUs
10,500 +
Active customers
1.13 Safety eTRIFR
2
. Well below industry average
7. 8/ 1 0
Employee engagement score
35
Employee NPS.
Above industry benchmark
Fuel consumed: 475kl
Energy use: 525.2 tCO
²
e
Greenhouse gas emissions
3
: 1,948 tCO
²
e
Emissions intensity
4
: reduced by 21%
40 Customer NPS. Significant uplift in score
Sustainability metrics
maintained at prior
year level despite
uplift in activity:
Steel & Tube offers New Zealand’s most
comprehensive range of steel products,
services and solutions, with expertise
across the construction industry.
We source, process and distribute steel
products – including fastenings, chain
and rigging, stainless and engineering
steel to customers across New Zealand.
We also make steel products to order
on a project basis, including roofing,
ComFlor decking and reinforcing.
We serve our customers through
our national network and our online
platform, helping them to build
stronger projects and create better
outcomes.
We are a proud New Zealand company
in our 70
th
year of trading, having started
in 1953. Our people are our greatest
strength – the steel backbone of our
company. We’re passionate, innovative,
capable and proud of what we do.
4STEEL & TUBE ANNUAL REPORT 2022
1DUNEDIN
1TIMARU
1
PALMERSTON NORTH
1NEW PLYMOUTH
2INVERCARGILL
1NELSON
3WELLINGTON
7AUCKLAND
2HAWKES BAY
2
2
TAURANGA
HAMILTON
2CHRISTCHURCH
1
WHANGAREI
OUR BUSINESS
We source, process and distribute steel
products to customers across New
Zealand through our nationwide network
of branches and distribution centres.
We have expertise across a diverse range
of sectors and reach across the country,
offering our customers a wide range of
products and solutions to meet their
steel needs.
Our competitive advantage is our
ability to cross sell our extensive
offer to customers, leveraging our
national footprint and breadth
of product offering.
OUR
BUSINESSES
OUR STABLE OF BEST-
IN-CLASS BUSINESSES
ARE SOME OF THIS
COUNTRY’S LEADING
STEEL SUPPLIERS
DISTRIBUTION
Products sourced from
preferred steel mills and
distributed through our
national network
INFRASTRUCTURE
Products processed before
sale, typically on a contract or
project basis, including onsite
installation services
5STEEL & TUBE ANNUAL REPORT 2022
OUR STRATEGIC ROADMAP
W
I
N
N
I
N
G
T
E
A
M
O
P
E
R
A
T
I
O
N
A
L
A
N
D
S
U
P
P
L
Y
C
H
A
I
N
E
X
C
E
L
L
E
N
C
E
C
U
S
T
O
M
E
R
F
I
R
S
T
C
O
M
M
I
T
M
E
N
T
T
O
Q
U
A
L
I
T
Y
,
H
E
A
L
T
H
,
S
A
F
E
T
Y
&
E
N
V
I
R
O
N
M
E
N
T
MAKING
IT EASY
Deliver the information,
expertise, purchasing
options and communication
channels that make it easy
for our customers
FULL SERVICE
PROVIDER
Leverage our breadth of
expertise, quality products
and strong brands to
deliver a ‘ground up’
solution for our customers
B E T TE R WAYS
OF WORKING
Continually improve to
ensure an efficient and
effective operational
platform, with strong
operational discipline and
excellent customer service
INNOVATION &
TECHNOLOGY
Embrace new technology and continually
innovate to deliver on our customer and
partner strategies – and drive greater
efficiency in our business
ONE TEAM
Engage our staff and our businesses behind
a common purpose, investing in staff
development, recognising and growing their
talents and contributions and empowering
them to add more customer value
6STEEL & TUBE ANNUAL REPORT 2022
STRATEGIC FOCUS
BUILDING ON CORE
STRENGTHS AND
GROWING HIGH
VALUE PRODUCTS
AND SERVICES
With structural changes to the business now well
embedded and delivering value, we are focused
on growth and building a more diversified,
resilient business.
Our strategic focus is on two areas:
CONTINUE TO
STRENGTHEN
THE CORE
Strengthening the core involves
building on the strong business
foundation now in place.
That means continuing to build best
in class customer experiences to
ensure we achieve our goal of being
New Zealand’s preferred supplier of
steel products and solutions.
It means leveraging our breadth and
scale to cross-sell a wider range of
products and services, continually
driving improvement in gross margin
dollar per tonne and delivering
operational efficiencies.
GROW
HIGH VALUE
PRODUCTS,
SERVICES
& SECTORS
Our focus is on investing in new
products, services and sectors that
will extend what we can offer to our
customers. This includes adjacent
materials and value-added services.
We will continue to invest in our digital
and IT offering, and accelerate our
shift to digital sales, making it easier
for our customers and delivering
efficiencies for our business.
Diversifying customer segments
and building scale and footprint in
high value areas is important. While
our primary focus is on organic
growth, we also continue to consider
opportunities in adjacent sectors.
7STEEL & TUBE ANNUAL REPORT 2022
FY22 OPERATING ENVIRONMENT
WELL POSITIONED
TO RESPOND TO
MARKET CONDITIONS
AND DELIVER FOR
CUSTOMERS
The 2022 financial year has seen a
continuation of the Covid-19 pandemic,
along with escalating supply chain,
steel mill and labour constraints and
increasing inflation.
Pleasingly, demand for steel has
rebounded since the early days of the
pandemic in 2020 and in many cases,
we have seen extraordinary demand
as projects and construction reignited
after lockdowns. Steel & Tube is well
positioned to respond to market
conditions and deliver for customers.
Average steel pricing increased by 27%
year on year due to a mix of reduced
output from China, which accounts for
over half of the world’s steel output, and
an increase in global demand for steel,
both for manufacturing consumer items
and Government stimulus programmes.
More recently, there has been the
added impact of the Russia/Ukraine
conflict. We expect the current supply
and demand trends to continue.
Residential building activity has
continued to intensify although we
expect that to moderate. We have
also seen a recovery in other sectors
such as commercial building which
has been soft for several years.
Manufacturing is expanding and
infrastructure construction is also
on the rise as Government spending
catches up on a long period of
under investment. We also have broad
exposures to activity that will benefit
from macro changes due to climate
change, Three Waters, and a focus on
circular economy products and services.
Steel & Tube has a number of
advantages in the current environment.
We are diversified across a range of
sectors. We have size, scale and strong
supplier relationships that mitigate a
lot of the risk from the supply chain
pressures. Our strong inventory
management and supply chain
disciplines have been of significant
value and our investment into
technology is also paying dividends
across all areas of our business.
8STEEL & TUBE ANNUAL REPORT 2022
RECORD RESULTS AND
PERFORMANCE AS
STEEL & TUBE MOVES
FOCUS TO GROWTH
CONTINUE TO
STRENGTHEN
THE CORE
• Record financial performance in
FY22, with profit almost double that
of the prior year
• Four consecutive half year periods
of revenue and earnings growth
• Year on year volume and sales uplift
and margin improvements
• Strong performance from the
Distribution business, and
continued improvement in the
Infrastructure business
• Priority focus on maintaining
availability of critical products and
high levels of service for customers
• Increased investment in high
demand, high margin inventory
items
• Earnings momentum supported by
structurally lower cost base, strong
market reputation and ability to
source and deliver product
• Continued investment in digital
technologies delivering business
efficiencies, high standards of
customer service and competitive
advantage
• Data driven pricing decisions,
strong governance and controls
providing resilience in a dynamic
environment
GROW
HIGH VALUE
PRODUCTS,
SERVICES
& SECTORS
• Accelerating shift to digital sales
with customers benefitting from
our omni-channel platform for
customers
• Acquired Fasteners NZ
• Launch of new product ranges,
including Zipclip and Rooffast
• Investment in new manufacturing
equipment to further grow market
share in existing sectors
• Invested in new plate processing
equipment – a high margin, high
value sector
• Expanding steel framed housing
– widen customer base and
investment
FY22 AT A GLANCE
Revenue
$599.1m, +24.6%
Volume
167,209 tonnes, +5.7%
EBITDA
$66.6m, +72.5%
EBIT
$47.6m, +130.0%
N PAT
$30. 2m, +96.4%
Normalised EBITDA
$ 6 6 .9m, +7 7.9 %
Normalised EBIT
$ 4 7.9 m , +1 4 3 .1 %
Investment in inventory
$ 19 2 . 5 m, + 69. 6%
Negotiated two new bank
facilities totalling $50m, in
addition to existing $50m
facilit y.
Final FY22 dividend of 7.5 cents
per share (cps), 50% imputed,
taking full year dividends to
13.0 cps.
Normalised EBITDA and Normalised EBIT
have been adjusted to exclude non-trading
adjustments and unusual transactions. See
reconciliation and more details on page 36.
9
STEEL & TUBE ANNUAL REPORT 2022
FIVE YEAR JOURNEY
OF IMPROVEMENT
DELIVERING VALUE
FY 2018
FY 2022
Revenue
Volume
599
496
167
150
$m
000 Tonnes
$m
$m
$m
$m
$m
%
EBITDANormalised EBITDA
66.6
(28.1)
66.9
21.2
EBITNormalised EBIT
(36.2)
47.6
47.9
13.1
NPAT
ROFE
(32.1)
30.2
14.6
4.2
Normalised EBITDA and Normalised EBIT
have been adjusted to exclude non-trading
adjustments and unusual transactions. See
reconciliation and more details on page 36.
10
STEEL & TUBE ANNUAL REPORT 2022
SUPPORTING OUR CUSTOMERS
Designed and handcrafted in Dunedin,
Escea is Australasia’s leading fireplace
manufacturer.
Escea doesn’t compromise when it comes
to quality, design, or efficiency, which is
why they only use the best materials to
craft their fires.
“Quality is at the centre of every product
we produce, and high-quality steel is
a requirement for maintaining both
productivity and for producing products
that will carry the Escea name for years
to come – and take pride of place in the
heart of our customers’ homes.”
Donna Sherriff | Escea Chief Operating Officer
STAYING WARM
WITH ESCEA
FIREPLACES
11STEEL & TUBE ANNUAL REPORT 2022
Tēnā koe.
On behalf of the Board and
Management, we are very pleased to
present this year’s annual report and
reflect on what has been a record year
for the company despite the ongoing
challenges of Covid-19 and increasing
economic headwinds.
Five years ago, we embarked on a
journey to reset our organisation for
a stronger future. The results of our
endeavours are now evident, with
Steel & Tube reporting record financial
results for the financial year ending
30 June 2022. We would like to thank
shareholders for their support on
this journey.
We are now well positioned to
deliver through the economic cycle.
We have a strong business foundation,
a focus on operational excellence and
disciplined supply chain and inventory
management. Our priority is to make
it easy for our customers to transact
with us and this is delivering market
share gains and driving revenue growth.
Technology is a key enabler for our
business, providing operational leverage
and supporting our customer value
proposition. We recognise that it is
Steel & Tube’s people who provide
excellent service, expertise and support
for our customers, day in and day out.
Our goal is to do business in a way
that is financially rewarding for our
shareholders and positive for our
people, our customers and our planet.
It is therefore important to us that we
integrate our strategy and sustainability
goals into one framework. We continue
to build initiatives under each of our
five pathways which are focused on
customers, our people, technology,
service and operational efficiency.
We are continually looking at ways we
can ‘do business better and smarter’
and have a number of innovative
programmes in place that enhance
our customer proposition, support
the development and wellbeing of our
people and help reduce environmental
impact. You can read about some of
these later in this report. Pleasingly, our
key metrics continue to improve with
year on year improvements in employee
safety, customer satisfaction, employee
engagement and emissions intensity
by revenue.
SHAREHOLDER RETURNS
The Board is pleased to have declared
a final dividend of 7.5 cents per share,
50% imputed. This takes full year
dividends to 13.0 cents per share and
represents 71% of our Adjusted NPAT.
This is in line with our policy to pay out
60% - 80% of Adjusted NPAT to our
shareholders.
The benefits of our turnaround
programme are now well embedded in
the business, we have a clear strategy
for growth and are a leading supplier in
a market with strong demand.
Steel & Tube has a high gross dividend
yield, with this year’s full year dividend
of 13.0 cents per share, representing a
yield of 11.4%. This gross yield compares
well to our peers. Earnings per share
are 18.3 cents per share (cps), with Net
Tangible Assets per share at $1.22.
CHAIR
AND CEO'S
REVIEW
12STEEL & TUBE ANNUAL REPORT 2022
FINANCIAL PERFORMANCE
Steel & Tube delivered record results for
the FY22 year, with profit after tax almost
doubling to $30.2m (FY21: $15.4m).
Gross margin continues to improve,
driving a significant increase in earnings
with EBITDA of $66.6m, up 72.5% year
on year and normalised EBITDA up 77.9%
to $66.9m.
EBIT increased by 130.0% year on year to
$47.6m, with normalised EBIT up 143.1%
to $47.9m.
These strong results have been driven
by delivery on strategic initiatives:
• Volumes and revenues rebuilt post
Covid-19; targeting growth and high
margin product categories
• Margin improvements driven by
product margins, labour and freight
efficiencies
• Improved customer service and
delivery, a key driver of performance
• Significant structural cost reductions
• Optimised working capital and
investment in inventory to support
customer growth
• Digital initiatives have been
embedded and are now providing
commercial benefits
• Growth focused on continuing to
strengthen the core and growing high
value products, services and sectors
OPERATIONAL
PERFORMANCE
Positive economic activity has been
driving demand for steel, however,
there remains continuing volatility in
global and local economies and we
expect this to continue in the near to
medium term.
Covid-19 continued to disrupt the
business during FY22, with regional
lockdowns and restrictions in the first
half of the year and increased employee
absenteeism due to illness in the second
half of the year. We’ve also seen labour
constraints, steel mill and supply chain
congestion which has impacted on
stock availability and increasing steel
prices alongside rising inflation and
interest rates.
We have a number of advantages in this
environment. We are diversified across
a range of sectors. We have size, scale
and very strong supplier relationships
that mitigate a lot of the risk from the
supply chain pressures. Our investment
into technology is also paying dividends
across all areas of our business, making
us more efficient and agile.
SUPPLY CHAIN
MANAGEMENT
Our focus has been on maintaining
availability and high levels of service
for customers. Our strong inventory
management and supply chain
disciplines, and margin and product
mix focus have been of significant
value in the current environment.
Importantly, we increased our holdings
of high demand products in FY22,
investing significant cash to ensure
availability of critical products for our
customers. As shipping and supply
chain issues ease, we expect our
inventory levels to reduce. Using data
analytics, our experienced team has
been able to hold inventory unit and
tonnes turns in line with previous
periods (excluding goods in transit).
Our strong supplier partnerships have
put us in good stead during this time
and our customer satisfaction rating
(Net Promoter Score) continues to rise.
Volumes have been strong, with activity
continuing to build in the infrastructure,
manufacturing and commercial sectors
in particular. In fact, we have recorded
some of our busiest days ever, with
January 2022 marking the highest level
of tonnes handled per day.
Over the next year we will be further
optimising our operations and
improving logistics to reduce our
costs and deliver better service and
outcomes.
DIGITISING OUR BUSINESS
Technology is a key enabler for our
business and has been an essential
element in our positive performance
during what has been a challenging
procurement environment for our
customers. Data analytics, supply
chain management and pricing tools
have ensured we have been able to
source, supply and deliver products to
our customers, while our ecommerce
platform has allowed them to order
products anywhere and at any time.
Technology is also delivering benefits by
reducing the cost to serve customers,
while providing excellent customer
service.
Cybersecurity continues to be a focus
and we have invested in resiliency of key
sites to further protect sensitive data.
Going forward, we will continue to
focus on the customer, using insights
to tailor offers to different segments
of the market; and will be integrating
operational technologies, such as
manufacturing equipment, more
comprehensively into our technology
environment. We will continue to
develop our pricing analytical tools in
FY23, providing the ability to better
model and manage pricing in an
ongoing volatile environment.
HEALTH, SAFETY AND
QUALITY
The health and safety of our people
remains our number one priority. We are
committed to ensuring our people go
home safe, every day. This reflects the
safety ethos across our company, with
health and safety being a fundamental
element in our workplace culture.
Ensuring high quality, durable and
trusted products is also essential to
what we do. We have continued to raise
the bar this year, enhancing our ability
to track and trace products, test for
compliance and ensuring our products
are sourced from independently audited
and verified steel mills.
Normalised EBITDA and Normalised EBIT have been adjusted to exclude non-trading adjustments and unusual transactions. See reconciliation and more details on page 36.
13
STEEL & TUBE ANNUAL REPORT 2022
OUR PEOPLE
Our team at Steel & Tube have adapted
admirably to the challenges of the last
year and continue to deliver excellent
service to our customers and support
our business. We would like to thank
and acknowledge our people for their
efforts during this time. We strive
to provide a rewarding and inclusive
workplace and regularly engage with
our people to seek out what we can
do better. Over the past 12 months, we
were pleased to see our employee NPS
lift even higher, up to 35 – a great score.
One of our biggest challenges has
been the constraints on labour over the
last year. Recruitment and even more
importantly, retention, of great people
has become more of a priority focus.
We have a number of programmes in
place to ensure we create a rewarding,
diverse and inclusive workplace that
positions Steel & Tube as an attractive
place to work. You can read more
about our initiatives on page 29.
SUSTAINABILITY
Our long term aim is to operate our
business in a way that is financially
rewarding for our shareholders and
positive for our people, our customers
and our planet.
We are continuing our sustainability
journey and are constantly focused
on what we can do better to achieve
our aims, as well as meet regulatory
requirements.
There are several stand out areas that
we see as critical for the long term
success of our business – maximising
steel’s contribution to a sustainable and
low emission society, supporting our
people and customers, and delivering
value to our shareholders. You can read
more about our actions in these areas
on pages 25 to 29.
LOOKING FORWARD
Steel & Tube’s journey has taken us
from a focus on cost and operational
discipline under Project Strive, to now
have the foundation and ability to
focus on growth and building a more
diversified, resilient business.
In particular, we are concentrating our
efforts into two key areas – continuing
to strengthen our core foundation
and investing in higher value products,
services and sectors to drive gross
margin improvement.
Continuing to strengthen the core
This involves building on the strong
business foundation now in place.
That means continuing to build best
in class customer experiences to
ensure we achieve our goal of being
New Zealand’s preferred supplier of
steel products and solutions, leveraging
our breadth and scale to cross sell a
wider range of products and services,
continually driving improvement in
gross margin dollar per tonne, and
delivering operational efficiencies.
We will also continue to invest in our
digital and IT offering, and accelerate
our shift to digital sales, making
it easier for our customers and
delivering efficiencies for our business.
Enhanced use of data and analytics
and a continued focus on pricing
and procurement will help to ensure
all opportunities are maximised.
Data also enables us to continuously
review product lines to ensure our focus
is on highest returning products and
optimising our inventory investment.
We have an ongoing relentless focus
on costs and operational improvements
and automation will assist in our
endeavours. Going forward, we
expect to maintain our current level
of normalised operating expenses,
with increases in line with inflation
and expansion of the business.
Capital expenditure in FY23 is targeted
towards our growth pathways:
• Continued investment in digital
technology
• Investment in new plate processing
equipment and other growth
investments
• Increased cashflow will support
capital investment programme
Grow high value products, services
and sectors
Our growth is targeted towards high
value products, services and sectors
that will extend what we can offer to
our customers. While our primary focus
is on organic growth, we also continue
to consider opportunities in adjacent
sectors.
One such opportunity is in added
value plate processing where we have
invested into new equipment to expand
our plate processing capability and
offer. This is a category with strong
demand, that provides attractive
margins. Our expanded capability
will allow us to benefit from growing
demand for value-added processed
steel plate, while continuing to supply
our existing processing customers.
Another identified opportunity is
with steel framed housing. While steel
framed houses currently make up only
c.10% of the market, we expect this to
grow given long term timber constraints
and the environmental advantages
of steel framing, which is infinitely
recyclable. Steel & Tube is already a
major supplier of slit coil to customers in
this fast-growing sector of the market.
These are both exciting opportunities
in added value sectors that offer higher
margins and growth potential.
14STEEL & TUBE ANNUAL REPORT 2022
FY23 OUTLOOK
Steel & Tube has been in business for
almost seven decades and we have
successfully traversed numerous
economic cycles. We believe that by
taking the actions above, we will be
well positioned for the future.
Continuing volatility in global and
local economies is expected. The steel
demand is anticipated to remain strong
across a range of sectors. Steel pricing is
expected to remain elevated.
Our focus remains on our customers,
product and sales growth, gross
margin dollar/tonne improvement,
strengthening our core and investing
in higher value products, services and
sectors.
Steel & Tube is well positioned to
respond to the changing environment
and to take advantage of new market
and product opportunities. We have
a strong pipeline of secured work in
place and expect continued earnings
momentum.
Susan Paterson | Chair
Mark Malpass | Chief Executive
Strategic Initiative
Early
stage
Hitting
its stride
Full
benefit
Continue to strengthen the core
Continue to build best-in-class customer experience
Leverage opportunities to cross sell a wide range of products
and services
Drive gross margin $/tonne through dynamic pricing and
product procurement
Ongoing focus on operating model – warehouse operations,
digitizing supply chains and customer facing channels
Grow high value products,
services and sectors
Continue to diversify customer segments and build scale in high
value sectors
Expand plate processing offer and capability
Build niche market share through Kiwi Pipe and Fittings
Build high value product range via acquisition of Fasteners NZ
Accelerate shift to digital sales
15STEEL & TUBE ANNUAL REPORT 2022
SUPPORTING OUR CUSTOMERS
Steel & Tube is delighted to be a
supplier to innovative New Zealand
companies, such as Stoked Stainless,
helping them deliver quality products
to New Zealanders and worldwide.
Stoked Stainless makes handcrafted,
stainless steel and cedar hot tubs
available in New Zealand and Australia.
Each tub is handmade, using the
highest quality materials – including
stainless steel provided by Steel &
Tube. With a stainless steel interior
and internal components, exterior
bands and wood fire heater, Stoked
Stainless tubs require almost no
maintenance and minimal cleaning.
PUTTING
THE STEEL
IN STOKED
STA I N LE S S
HOT TUBS
16STEEL & TUBE ANNUAL REPORT 2022
OUR BUSINESSES
DISTRIBUTION
Carbon steel, stainless steel,
fasteners
Products sourced from preferred
steel mills and distributed through
our national network
Revenue
$383.4m, +33.7%
Normalised EBITDA
$50.0m, +110.6%
INFRASTRUCTURE
Rollforming, ComFlor/CFDL,
Reinforcing & Wire
Products processed before sale,
typically on a contract or project
basis, including onsite installation
services
Revenue
$215.7m, +11.1%
Normalised EBITDA
$ 1 3 . 8 m +7.1 %
EBIT
$40.1m, +164.1%
Normalised EBIT
$40.1m, +190.3%
EBIT
$7.5m, +14.3%
Normalised EBIT
$7.0m, +9.6%
$69,627$63,892
20222021
Revenue
Infrastructure
Distribution
EBIT
Normalised EBITDA and Normalised EBIT have been adjusted to exclude non-trading adjustments and unusual transactions. See reconciliation and more details on page 36.
17
STEEL & TUBE ANNUAL REPORT 2022
Distribution’s performance was strong
in FY22, with revenues up over 33.7%
and tonnes up 7.5% on the prior year.
Fortunately, we saw little negative sales
effect from Covid-19 with consistently
high demand for our products.
This excellent result is despite the
continuing rise of international steel
prices alongside shipping disruption
and increasing costs. Our disciplined
pricing approach has allowed us to keep
ahead of increases and our long term
relationships with steel supply mills
and position as one of New Zealand’s
largest importers on a tonnage basis has
helped us secure product and container
allocations, ensuring supply continuity
for our customers.
DIFOT (delivered in full on time) is
our core service measure and all
Distribution centres, despite some
supply challenges, have steadily
improved. Our Customer Excellence
Centre is now well established, focussed
on delivering consistent, best practice
service.
Digital adaption has been positive and
is a key part of improving service and
lowering our cost to serve for smaller
customers. For a number of larger
customers, our investment in EDI is
already providing synergies.
We have also invested in higher value
products and customer segments
and this mix improvement has been
a significant contributor to our
margin growth. We will continue to
ensure we match customer value with
appropriate cost to serve.
During FY22, we acquired Fasteners
NZ for $0.4m which is a good example
of a high margin, unique segment of the
fasteners market. In August 2022, we
acquired Kiwi Pipe and Fittings for $8.9m
which again is symbolic of our strategy
of selective investment in high value
products and customer segments.
We have also invested in leading
edge plate processing equipment
which expands our offer and capability
in this high margin sector.
Customer demand is expected to
remain strong in the near to medium
term. Interest rate and cost escalations,
particularly steel, freight, fuel and
labour, are expected to continue into
FY23 alongside a softening New Zealand
dollar. Aided by technology, our ability
to effectively manage our margins is
becoming increasingly sophisticated
and we are confident in our offer
and ability to continue our strong
performance through the cycle.
DISTRIBUTION
Distribution performance has been robust, with strong margin
growth and earnings more than doubled. This excellent result
has been driven by a supportive market environment, the
benefits of prior year cost initiatives and an enhanced
customer service proposition.
Marc Hainen | GM Distribution
18STEEL & TUBE ANNUAL REPORT 2022
HIGH VALUE PRODUCTS AND SERVICES
ADDING MORE VALUE
WITH PLATE PROCESSING
Steel & Tube is increasing its plate processing offer and capability
with the top-of-the-line K5000xmc. This is a heavy-duty combination
plasma cutting, oxy-fuel cutting, and milling machine that maximises
productivity and profitability. This market leading, high capacity
machinery has been operational at Steel & Tube since June 2022 and
we have already secured a good forward workload. Not only does
it deliver substantial operational benefits, but it also reduces waste
through optimising the use of remnants.
19STEEL & TUBE ANNUAL REPORT 2022
FASTENERS NZ
JOINS THE GROUP
As a leading provider of fasteners
(primarily screws, nuts, rivets, nails,
anchors and bolts), Steel & Tube added
Fasteners NZ to its brand portfolio on
1 July 2021. This is a specialist business
with strength in frame and truss fastener
products. It also sells power and hand
tools to make any job easier. Alongside
the Fortress brand, Steel & Tube continues
to offer an extensive range of quality
fastening products.
The acquisition of Kiwi Pipe and Fittings on 1 August 2022 is
symbolic of our strategy to selectively invest in high value
products, services and sectors. Kiwi is a specialist, well
established and successful provider of fire and reticulation
products, primarily to large commercial customers in the
upper North Island. While Steel & Tube already offers a range
of fire protection products to its customers, bringing Kiwi into
the fold makes it one of the larger suppliers in this market.
LEADING THE WAY IN FIRE
SAFETY PRODUCTS
20STEEL & TUBE ANNUAL REPORT 2022
INFRASTRUCTURE
Peter Ensor | GM Wire/Reinforcing
and CFDL
Steel & Tube’s reinforcing business felt
the most impact from the Covid-19
restrictions, with many infrastructure
and large commercial projects
deferred or delayed. However, this
has opened up capacity to take on a
number of other projects, particularly
in the infrastructure and commercial
construction space.
While traditionally a less attractive
sector with low barriers to entry, it is
now providing consistent and improving
returns as the business model evolves
and, in turn, delivers more value for
customers.
Digital modelling is enabling Steel &
Tube to participate in projects early and
optimise outcomes, with 3D software
integrating with both the client’s model
and our internal manufacturing systems.
For our customers, this enables cost
savings and opportunities to reduce
project lead times.
We have focussed on our manufacturing
capability and capacity, becoming
a trusted, supply-only partner. This
provides better value for the customer
and optimises the management of risk.
Fixed price contracts have also been
unwound as the market adjusts to
escalation clauses to better manage
rising costs.
With solid demand projected in FY23,
the business is well positioned to build
profitable returns.
WE HAVE SEEN STRONG
GROWTH AND DEMAND
ACROSS ALL PRODUCT
SECTORS.
REINFORCING
21STEEL & TUBE ANNUAL REPORT 2022
A buoyant residential market and an
increase in commercial work has driven
an uplift in roofing and significant
growth in purlins over the year.
Steel & Tube’s Kāinga Ora contract for
repairs, maintenance and refitting of
roofs is progressing well for all parties.
With the announced construction of
18,000 new public and transitional
homes to be completed by 2024,
we expect our workload to increase
significantly. We are undertaking a reset
of our main roofing hub in Auckland
to support the increase in Kāinga Ora
activity and from other customer
orders, ensuring we meet our high
customer service expectations.
The purlins business has experienced
strong growth, with volumes up
69% and revenue increasing 78%.
Early identification of supply chain
constraints meant smarter procurement
planning, thus ensuring stock availability
ahead of our competitors and providing
customers with certainty of supply.
This has paid off well through increased
market share and share of wallet.
Onboarding new large customers has
meant our secured works pipeline is
very healthy for FY23. We have also
grown our presence in the South Island.
To meet expected demand, we are
investing in new machinery which will
add c.30% more production capacity
and we expect this to be commissioned
for the start of the FY24 year.
Sheeting and coil processing has seen
significant growth due to increased
demand for steel framing in both the
residential and commercial sectors.
Our Red Bud slitting machine is one
of the largest in the country and we
are implementing additional software
to increase capacity to meet growing
demand. Steel & Tube is a major
supplier of slit coil to the steel framed
housing market.
Comflor remains a frequently specified
metal decking system by engineers.
The expert technical and project
management team at our CFDL
installation business work closely
with main contractors throughout
the process, with 3D detailing and
modelling often resulting in time and
cost savings. Comflor is mainly used in
high rise vertical construction projects
and we have a good pipeline of secured
work ahead of us.
Labour constraints remain a
challenge at all levels of the business,
as organisations, including large
Government funded infrastructure
projects, compete for skilled workers.
Our focus remains strongly on
customer service. Digital sales through
the webshop have been growing
steadily and the Customer Excellence
Centre continues to deliver high levels
of service.
Mohammed Afroz | GM Rollforming
ROLLFORMING
SHEETING
AND COIL
PROCESSING
HAS SEEN
SIGNIFICANT
GROWTH DUE
TO INCREASED
DEMAND FOR
STEEL FRAMING
IN BOTH
RESIDENTIAL &
COMMERCIAL
SECTORS.
22STEEL & TUBE ANNUAL REPORT 2022
SUPPORTING OUR CUSTOMERS
A STRONGER
S TAT E
HIGHWAY
More than 1,036 tonnes of
steel will be used in the State
Highway 1 upgrade between
Papakura and Drury to widen the
motorway, widen, replace and
raise motorway bridges and install
walking and cycling paths. Steel &
Tube is supplying the reinforcing
steel for this project to contractor,
Fulton Hogan.
23STEEL & TUBE ANNUAL REPORT 2022
24STEEL & TUBE ANNUAL REPORT 2022
W H AT M AT TE R S
Our focus is on delivering what our customers want, in a
profitable manner that has a positive impact on our people,
communities and the planet, while continuing to grow our
business and deliver value to shareholders.
Our long term aim is to operate our
business in a way that is financially
rewarding for our shareholders and
positive for our people, our customers
and our planet.
We continue our sustainability journey
and are constantly focused on what we
can do better to achieve our aims, as
well as meet regulatory requirements
such as the upcoming introduction of
mandatory climate related reporting.
We believe it is essential that we
integrate our strategy and sustainability
goals into one framework that future
proofs our business. In line with this, in
FY23 we will be undertaking a review of
our strategic framework to ensure it is
fit for the future of our company.
There are several stand out areas that
we see as critical for the long term
success of our business – maximising
steel’s contribution to a sustainable and
low emission society, supporting our
people and customers, and delivering
value to our shareholders.
We have further identified focus areas
that will help us to meet our goal of
doing business in a way that is financially
rewarding for our shareholders and
positive for our people, our customers
and our planet. In the next few months,
we will be surveying key stakeholders
to take into account their views. We will
share the outcome of this work with our
shareholders in our next annual report.
BUILDING A SUSTAINABLE BUSINESS
Maximising steel’s
contribution to a
sustainable and low
emission society
Supporting our
people and
customers
Delivering value to our
shareholders
25STEEL & TUBE ANNUAL REPORT 2022
Maximising steel’s contribution to a
sustainable and low emission society
Steel is one of the world’s most essential
and sustainable building products –
permanent, forever reusable and the
most recycled substance on the planet.
On a cradle to cradle basis, steel’s
environmental performance compares
favourably to other materials such as
concrete and timber.
In New Zealand, it is estimated that 85%
of steel from demolition sites is returned
to steel mills for recycling. Extending
the life of a structure enables more value
to be extracted from the resources
invested to build, operate and maintain
it. Steel’s thermal mass properties keep
buildings cooler in summer and warmer
in winter, reducing the reliance on air
conditioning and heating. For many
construction applications, steel is the
only choice.
However, we are mindful of the
greenhouse gas emitted during steel’s
production. We are closely monitoring
new technologies to decarbonise steel
but are conscious these are still in the
very early stages. In the meantime, we
are focusing on initiatives to control
our operational emissions, optimise
energy consumption and minimise
waste. Our investment in technology is
an important enabler of our progress
towards reducing our carbon footprint.
We are also actively looking for
sustainability progress with our key
vendors.
One new initiative we are very excited
to support in FY23 is a 'carbon credit'
offer for infrastructure customers.
Now, customers can opt to offset the
embodied carbon in the steel they
order, which Steel & Tube will facilitate
through our partners. These credits
will be passed directly through to the
customer, with the cost being used to
fund the planting and protection of
native trees across New Zealand and the
Pacific Islands. Steel & Tube does not
make any money from this programme.
Supporting our team and our
customers
Our team and our customers are central
to our strategic framework. We are
continually looking at ways we can
provide meaningful value to both these
important groups of people.
We are conscious that it has been
another challenging year for our
people and we have worked hard to
support them during this time. We have
a number of innovative programmes
in place around wellbeing, diversity,
recruitment, career development and
training. Pleasingly, in a competitive
labour environment, we have seen
a significant uplift in employee
satisfaction.
Health and safety remains a priority
for every person in our organisation
and our safety score (total recordable
injury frequency rate) has significantly
improved over the last six years and in
FY22, was the lowest in our company’s
history.
There has been a significant emphasis
on critical risks and risk reduction
measures across our sites, to ensure our
operations are executed at the highest
level of safety. The Bowtie methodology
has been used to assess our six critical
risks involving senior executive, location
management and operational staff to
ensure the appropriate controls are in
place, are effective and mitigate risks to
as low as reasonably practicable.
Our Safety Conversations program and
worker engagement is ongoing, with
the objective to get an insight into each
person’s job and how to keep them safe
at all times. The conversations allow
us to benefit from their expertise and
to understand how they deal with the
demands of everyday work and what
happens in times of stress or variability.
We are looking for differences between
how the tasks are proceduralised and
how they are performed – and the
drivers for that variability. This allows us
to ensure that the company has, and is
using appropriate resources, processes
to eliminate or minimize those risks and
hazards.
Building great customer relationships
through delivering quality products and
providing excellent service is essential
for the long term growth and success of
our company.
Once again, our customer satisfaction
score has increased, up to 40 from 34
in the previous year. Significant effort
has gone into ensuring supply of high
demand items to our customers in a
timely manner, particularly during a
time of shipping disruption and supply
chain uncertainty.
You can read about some of our
initiatives on the following pages.
Delivering value to our shareholders
We are continually looking for ways
we can ‘do business better and
smarter’. Our record results this year
demonstrate the strong progress we
have made in the last five years, as we
firstly reset and rebuilt our company
and more recently, as we have focused
on growth opportunities.
We are mindful of the investment
shareholders make in our company and
do not believe in growth for growth’s
sake. Instead, we have a disciplined
approach to investment in new
opportunities, to ensure they will deliver
financial and strategic value.
Best practice governance and robust
financial oversight are fundamental
to our business. You can read our
Governance Report on pages 78 to 84.
Our financial statements are set out on
pages 40 to 73.
26STEEL & TUBE ANNUAL REPORT 2022
OUR SUSTAINABILITY JOURNEY TO 2024
FY22
COMPLETED
FY23FY24
• Invested in dedicated
resource to act on
Steel & Tube’s climate
goals
• Completed design
phase of ESG system:
Accelerate2Zero
• Initiatives undertaken to
support Steel & Tube’s
sustainability goals
• Board director appointed
to champion sustainability
• Verify material topics with
external stakeholders
• Integrate sustainability
and strategy into one
framework
• Deployment of
Accelerate2Zero underway
• Identify climate related
risks and opportunities
for Steel & Tube
• Validate approach to
Climate-related Disclosures
and reporting framework
• Continue with initiatives
undertaken to support
Steel & Tube’s sustainability
goals
• Set ambitious carbon-
reduction targets in line
with Science-based target
setting
• Integrate management of
climate related risk and
opportunities into risk
framework
• Implement external
assurance process in
respect of GHG emissions
• Commence Climate-
related Disclosures
reporting
• Continue with initiatives
undertaken to support
Steel & Tube’s sustainability
goals
• Show progress against
carbon-reduction targets
on an annual basis
27STEEL & TUBE ANNUAL REPORT 2022
COMMITMENT
TO QUALITY,
H E A LT H &
SAFETY
• Occupational
health and safety
• High quality products
and service
• Historically low employee
TRIFR, well below industry
average
• Continued training in best
practice forklift, crane,
offloading and unloading
operations
• 8.7 out of 10 employee
rating on Steel & Tube’s
commitment to providing a
safe work environment
• Commenced programme to
implement Steel & Tube’s first
IANZ accredited reinforcing
testing laboratory, with first
audit successfully completed
• Achieved ISO 9001:
2015 Quality Standard
recertification for all sites
• Programme in place for
adoption of ISO 14001: 2015
Environmental and ISO
45001: 2018 Occupational
Health and Safety (OH&S)
Certifications in FY23
• Independent third-party
supplier mill assessments
conducted across China,
Taiwan and Austria
• Updated dashboards and
digital processes to further
improve traceability and
match test certificates to
products
• Successfully implemented
Phase 1 of the Intelex
Quality, Health, Safety and
Environmental management
software via a mobile
platform, with Phase 2 now
underway
CUSTOMER
FIRST
• Customer satisfaction
• Product life cycle
performance
• Net promoter score of 40
(FY21: 34)
• Increased use of data
analytics to better
understand the needs
of different customer
segments
• Increased use of EDI
for large, high quantity
customers
• Continued to enhance the
webshop – escalation in
customers’ usage
FY22 HIGHLIGHTS IN OUR FOCUS AREAS
1
Steel & Tube is now reporting Scope 1, Scope 2 and Business Travel (Scope 3) emissions. FY21 has been restated for comparison purposes.
ELECTRICITY
CONSUMED
525.2 tCO
²
e
FY21: 526.2 tCO
²
e
RECYCLED
WASTE
98.3 TONNES
FY21: 77.4 TONNES
GREENHOUSE
GAS EMISSIONS
1
1,948 tCO
²
e
FY21: 1,972 tCO
²
e
28STEEL & TUBE ANNUAL REPORT 2022
OPERATIONAL
& SUPPLY
CHAIN
EXCELLENCE
• Resource efficiency and
waste reduction
• Financial performance
and corporate
governance
• Fortress IT operating platform
integrated into the group
• Enhanced supply chain,
inventory management and
pricing disciplines
• Initiated battery recycling
programme
• Commenced programme to
replace lights with LED bulbs
at all operating sites for an
expected 20% reduction of
Scope 2 emissions
• Utilising telemetry in vehicles
to improve driving behaviour
and optimise routes, thereby
reducing fuel consumption
and GHG emissions
• Achieved Gold certification
from Sustainable Steel
Council
• Continued to develop
expertise in low carbon
infrastructure e.g. windfarms,
solar energy farms
• Carbon offset ability for
customers on reinforcing
steel
• Recycled 98.3 tonnes of
material destined for landfill
and 2,630 tonnes of scrap
steel
• Renewed Environmental
Choice New Zealand
certification through NZ
Steel for a number of Roofing
products
ONE WINNING
TEAM
• Talent attraction and
retention
• Culture and wellbeing
• Diversity and inclusion
• Member of Diversity Works NZ
• Proportion of females in the
workforce 27%
• Over 4,400 online training
modules completed by our
team in FY22
• 30 different ethnicities across
our workforce
• Introduction of Steel & Tube
Career Coaching programme
• Wellbeing Education
programme
• Māori cadetship with Te Puni
Kokiri
• Partnership with the
Red Cross to offer work
opportunities to refugees
FY22 HIGHLIGHTS IN OUR FOCUS AREAS
CUSTOMER
NPS
2
40
FY21: 34
Pre-painted and Resin
Coated Steel Products
Licence No. 5717145
No. 822
2
Employee NPS industry average is 18 and Customer NPS industry average is 32.
EMPLOYEE
NPS
2
35
FY21: 19
29STEEL & TUBE ANNUAL REPORT 2022
SUPPORTING OUR CUSTOMERS
Meridian Energy’s Harapaki wind farm
will be New Zealand’s second largest
wind farm when completed, with 41
turbines generating around 176 MW of
renewable energy, enough to power
70,000 average households.
Steel & Tube has been contracted to
supply and install the reinforcing for all
of the 41 wind turbine bases, including
492 pile cages and the 41 foundation
base cages. Around 3,000 tonnes of
reinforcing will be used over 13 months
by Steel & Tube to complete this stage
of the project. The 1,235 hectare site
is very challenging. To assist with the
project, Steel & Tube has located a
reinforcing project manager on-site
to support project execution, build
methodology, logistical planning as
well as resolving any technical matters
that may arise.
This is an example of how Steel & Tube is
well positioned to deliver products and
expertise in a low carbon environment.
MERIDIAN ENERGY’S
HARAPAKI WINDFARM
AROUND 3,000
TONNES OF
REINFORCING
WILL BE USED
OVER 13 MONTHS
BY STEEL & TUBE
30STEEL & TUBE ANNUAL REPORT 2022
FIVE MINUTES WITH
ANNA MORRIS
General Manager People & Culture
HOW HAS STEEL & TUBE
BEEN SUPPORTING ITS
PEOPLE DURING COVID?
As well as all the safety measures in
place to protect the health of our
people during the pandemic, we have
dialed up support around Wellbeing.
Every six weeks, we have been running
webinars on a range of topics that affect
our people both in the workplace and at
home. These range from mental health,
parenting, managing stress, financial
advice, nutrition and mindfulness.
We have had excellent feedback from
participants. Our parenting webinar
was our most popular so far, with a
specialist providing advice on ways to
build stronger relationships through
communication.
HOW DO YOU HELP YOUR
PEOPLE ACHIEVE THEIR
WORK GOALS? TELL US
ABOUT THE NEW CAREER
PATHWAYS PROGRAMME.
We believe that if we upskill our people
and help them realise their potential and
career goals, then it will benefit not just
our business, but also their families and
communities.
Our new Career Pathways Coaching
programme is something we are
very proud of. Fourteen people in
all different levels and parts of the
business have participated in a four
month programme to become trained
Career Coaches. They have also worked
together as a team to identify different
ways people in one role can transfer
their skills to another area or role in the
company. Any one of our employees
can now book in with one of these
career coaches to talk about areas of
interest or opportunities. The coach
will then help them map out a pathway,
identifying what skills are transferrable
and guide them to gain new skills they
may need.
THE LABOUR MARKET IS
RUNNING HOT. WHAT ARE
YOU DOING TO ATTRACT
AND RETAIN STAFF?
We are very conscious that there are
a lot of opportunities in the market
at the moment. Our focus remains
on recruiting new talent, and just as
importantly, retaining the great people
already in our business.
We support a number of programmes
providing work opportunities for school
leavers, offer referral incentives for our
staff, and this year we have partnered
with the Red Cross to offer jobs to
refugees. As part of this initiative, the
Red Cross also provides mentoring and
support to the worker, in what may be
a very different environment from their
home country. We are also offering
internships to University graduates,
with our first two digital internships
now working full time for Steel & Tube.
Creating a great, inclusive and rewarding
workplace is also essential. Our culture
and diversity committee leads the way
on celebrating cultural events, and all
our people are paid at least the living
wage effective from 31 December 2022.
OUR PEOPLE
Anna Morris
GM People & Culture
31STEEL & TUBE ANNUAL REPORT 2022
32STEEL & TUBE ANNUAL REPORT 2022
Peter Ensor
GM Reinforcing
BE CIVIL (HONS)
Peter joined Steel & Tube in 2021.
He brings extensive construction
experience with over 20 years’ in
the industry. Peter brings to Steel
& Tube a successful track record
of leading and building teams
with a focus of health & safety,
quality, financial management
and customer engagement.
Peter is the current chair of Civil
Contractors NZ, Auckland branch.
Damian Miller
GM Quality, Health, Safety
and Environment
BN
Damian has over 20 years’
international experience in
Operations Management, Quality,
Health, Safety & Environment,
QA/QC, Oil & Gas and most
recently the steel industry. He
has held various Operations &
Executive Management positions
in the US, Asia, Africa, Latin
America.
Richard Smyth
Chief Financial Officer
BCOM, FCA
Richard joined the Company
in 2021. A Fellow Chartered
Accountant, Richard has
financial and senior level
leadership experience across
the entertainment and energy
sectors. He commenced his
career within PwC’s audit team,
working both in New Zealand and
overseas. His most recent role
was Deputy Chief Financial Officer
at SkyCity. Richard is a board
member of the New Zealand
Accounting Standards Board.
Mark Baker
GM Supply Chain & Distribution
Centres
BSC(HONS), MBA, HMM
Mark joined Steel & Tube in 2020
and brings executive experience
in areas such as operations
management, manufacturing,
technology, supply chain, logistics
and customer engagement. He
has worked in the information
technology, manufacturing,
logistics and retail sectors, having
held senior roles in leading NZ
companies, such as Foodstuffs
Auckland, PlaceMakers, NZ Post
and Kiwi Dairies.
Marc Hainen
GM Distribution
BBUS, PGDIPBUS
Marc joined the company in 2017.
He brings significant experience
in the steel and construction
industry in New Zealand. Marc
has a strong background in sales
and marketing management,
operations and manufacturing
as well as logistics and supply
chain. Marc has held a variety
of management and leadership
roles in New Zealand, Australia
and the UK, including multiple
roles leading a variety of divisions
within Fletcher Building Limited.
From L to R
LEADERSHIP TEAM
32STEEL & TUBE ANNUAL REPORT 2022
33STEEL & TUBE ANNUAL REPORT 2022
Mark Malpass
Chief Executive Officer
MBA, BE (Hons), NZCE
Mark has had significant executive
and governance experience
both in NZ and overseas. He
worked with ExxonMobil
Corporation for over 19 years,
previously Managing Director
of Mobil Oil NZ, and was Chief
Executive of Fletcher Building’s
largest division, Infrastructure
Products. Mark was appointed
Chief Executive in February 2018,
after initially being appointed an
Independent Director in March
2017 and then stepping down to
take on the interim CEO role in
September 2017.
Mohammed Afroz
GM Rollforming
NAT DIP QS
Mohammed has extensive
experience with large scale
infrastructure projects throughout
New Zealand. He was national
manager for Composite Floor
Decks Ltd before moving to Steel
& Tube when the business was
acquired in 2016.
Mike Hendry
Chief Digital Officer
BA, MBA, CISM, MINSTD
Mike was appointed to the new
role of Chief Digital Officer
in 2019. He is an international
business and software leader
with a focus on implementing
digital change. Mike has
extensive experience leading
the IT, cybersecurity and
digital transformation for large
companies, including Auckland
Airport, Yellow NZ and IBM.
Anna Morris
GM People and Culture
LLB, BA
Anna joined Steel & Tube in 2019.
She is an experienced executive
with a background in human
resources, law and corporate
services. Anna has worked
extensively in the construction
and building industry, with her
previous role being Head of
People & Performance at Fletcher
Construction Company Ltd.
33STEEL & TUBE ANNUAL REPORT 2022
The Steel & Tube Board currently
comprises six independent directors,
who have significant relevant industry
and market experience, skills and
expertise that are of value to the
company.
As advised last year, the Board
had been seeking an additional
director with experience in digital
transformation. In line with this, we
were pleased to have appointed
Andrew Flavell during the year.
Andrew is an accomplished senior
technology executive with significant
global success in developing and
executing strategies to promote
business and organisational growth,
and driving optimal use of cutting edge
technologies, tools and processes.
He has held senior executive roles
and driven digital transformations at
companies such as Nike and Microsoft
and most recently as Chief Technology
Officer at Plexure, the NZX-listed
global mobile engagement company.
Andrew’s extensive experience is of
significant value to Steel & Tube and
meets a need identified in the Board
Skills Matrix. This Matrix identifies
the skill set which the Board believes
adds value to Steel & Tube. Directors’
capabilities are considered as a
collective against this skills matrix
and the Board believes that the
current Directors offer valuable and
complementary skill sets. Importantly,
the majority of Steel & Tube’s Directors
have either worked in, or are involved
in directorships, in the sector. The
Matrix can be viewed on page 79 of
this Report.
OUR BOARD
Susan was appointed Chair on 16 February 2017. A professional
Director since 1996, in 2015 Susan was appointed an Officer
of the Order of New Zealand (ONZM) for her services to
corporate governance. Having trained and practiced as a
pharmacist, Susan completed her MBA at London Business
School, then worked in strategy and IT consulting and
management roles in New Zealand, Europe and USA. She
worked in the steel sector at Fletcher Challenge and was
General Manager of Wiremakers. Susan’s directorships also
include Arvida Group, Theta Systems (Chair), Les Mills NZ,
the Reserve Bank, ERoad and Lodestone Energy. Susan is a
mentor on the Institute of Director’s Mentoring for Diversity
programme.
SUSAN PATERSON
ONZM, CFINSTD, MBA (LDN), BPHARM
Appointed: 16 January 2017
Roles: Chair and Independent
Director
Chris’ background spans the manufacturing, heavy
construction and engineering sectors. He qualified with a
civil engineering degree from the University of Canterbury, a
Master of Science in civil engineering from Stanford University
and more recently a senior executive program at Wharton
Business School. He is an experienced, strategy-focused
director with an extensive career in the Australasian building
industry. He has held CEO roles with Brightwater Group and
at Fletcher Building where he was Chief Executive of the
Building Products Division. Chris’s directorships include Hiway
Group, Horizon Energy Group, and Steelpipe NZ, and he is
Independent Chair at Oxcon Ltd.
CHRIS ELLIS
BE, MS, CMINSTD
Appointed: 29 September 2017
Role: Independent Director
34STEEL & TUBE ANNUAL REPORT 2022
Steve is an engineer with a background in large-scale
infrastructure and heavy industry manufacturing. He was GM
Engineering at Auckland International Airport for 11 years,
and his previous employment included 22 years with NZ Steel
and BHP Steel where he held a number of roles including GM
Engineering and Environment. Steve was inaugural chairman
of the Chartered Professional Engineers Council and President
of the New Zealand Institution of Professional Engineers.
Steve’s current directorships include Broome International
Airport Group, Christchurch Multi Use Arena Project, he is
chair of Waste Disposal Services JV, D&H Steel Construction
Ltd, Clearwater Construction Ltd, Lincoln University Science
North Building Programme, and is a Trustee of the Whitford
Community Charitable Trust.
STEVE REINDLER
BE MECH (Hons), AMP, FIPENZ, CFINSTD
Appointed: 28 August 2017
Role: Independent Director
John has held a range of senior executive roles across a
variety of sectors including building and industrial materials
manufacturing, distribution, finance and consumer goods.
John was most recently the Chief Executive for the building
trade materials supplier, Placemakers, and previously held
leadership roles at Godfrey Hirst, Lion Nathan and Barclays
Bank PLC. He currently sits on the boards of Horizon Energy
Group, NZ Scaffolding Group (Chair) and Door+Window
Systems Auckland. He has an economics degree from Otago
University, Post Graduate Marketing Diploma from Auckland
University and has completed the Senior Executive program
at Columbia University, New York.
JOHN BEVERIDGE
BA, Post Grad Business Diploma,
CMINSTD
Appointed 14 August 2019
Role: Independent Director
Karen is a director experienced across private, public and
not-for-profit sectors. She is a Chartered Fellow of the IOD
NZ and a Fellow of CIMA. Karen has over 20 years corporate
experience in FTSE listed energy companies in the UK energy
infrastructure sector. She is currently a director on the Board
of City Rail Link Ltd, an Independent Member of the NZDF Risk
& Assurance Committee and of the NZ Inland Revenue Risk &
Assurance Committee.
KAREN JORDAN
BSOCSC, FCMA, CFINSTD
Appointed 10 December 2020
Role: Independent Director
Dr. Flavell was appointed in October 2021. He has extensive
international experience in the Information Technology
space, having previously held leadership roles at both
Microsoft and Nike in the USA. He has led large teams driving
digital transformations and delivering compelling consumer
experiences and has experience in distributed computing,
Personalization and Loyalty, Privacy and Security, and AI and
machine learning. In the roles he has held over the past 30
years he has also contributed significantly to risk management
and governance in the application of digital technologies.
ANDREW FLAVELL
NZCE, BE (HONS), ME, Dr. Eng.
Appointed: 1 October 2021
Role: Independent Director
35STEEL & TUBE ANNUAL REPORT 2022
NON-GAAP FINANCIAL INFORMATION
Steel & Tube uses several non-GAAP measures when discussing financial performance. These include Normalised EBITDA,
Normalised EBIT and Working Capital. Management believes that these measures provide useful information on the underlying
performance of Steel & Tube’s business. They are used internally to evaluate performance, analyse trends and allocate resources.
Non-GAAP financial measures should not be viewed as a substitute for measures reported in accordance with NZ IFRS.
NON-TRADING ADJUSTMENTS/UNUSUAL TRANSACTIONS
The financial results for FY22 include transactions considered to be non-trading in either their nature or size. Unusual transactions
can be as a result of specific events or circumstances or major acquisitions, disposals or divestments that are not expected to
occur frequently. Excluding these transactions form normalised earnings and can assist users in forming a view of the underlying
performance of the Group.
EBITDA/EBIT
EBITDA is Earnings/(Loss) before the deduction of interest, tax, depreciation and amortisation. EBIT is Earnings/(Loss) before the
deduction of interest and tax. These are both non-GAAP financial measures. FY22 EBITDA and EBIT were impacted by non-trading
adjustments totalling $0.3 million.
Earnings before interest, tax, other gains and losses and impairment represents operating profit for the year before other gains
and losses, impairment and deduction of interest and tax. Earnings before interest, tax and impairment represents operating
profit for the year including other gains and losses before impairment and deduction of interest and tax. Management believes
that these additional measures provide useful information on the underlying performance of the Group’s business.
NORMALISED EBITDA/EBIT
This means EBITDA/EBIT excluding non-trading adjustments and unusual transactions. Management believe that normalised
measures provide a more appropriate measure of Steel & Tube’s performance and more useful information on the normalised
earnings of the company.
WORKING CAPITAL
This means the net position after Current liabilities are deducted from Current assets. The major individual components of
Working capital for the Group are Inventories, Trade and other receivables and Trade and other payables. How the Group
manages these has an impact on operating cash flow and borrowings.
EBITDAEBIT
Reconciliation of Reported to Normalised Earnings
FY22
Restated
1
FY21FY22
Restated
1
FY21
Year Ended 30 June$000$000$000$000
Reported 66,598 38,614 4 7, 6 3 620,707
Holiday Pay provision release(85 4) -(85 4) -
NZ IFRS 16 reversal of impairment(527) (1, 5 4 6) (527) (1, 5 4 6)
Gain on sale of properties-(1,215) -(1,215)
Software as a Service (SaaS) expenditure1,6451,7601,6451,760
Normalised66,8623 7, 6 1 34 7,9 0 019,706
1
Comparatives have been restated for the impact of a change in accounting policy in regards to the accounting for Software as a Service arrangements. Refer to Note C2 in the
Financial Statements for further details.
FINANCIAL MEASURES
36STEEL & TUBE ANNUAL REPORT 2022
2022
Restated
1
2021202020192018
$000$000$000$000$000
Financial Performance
Sales59 9,148 481,043 4 1 7,9 2 3 498,110 495,806
EBITDA66,598 38,614 ( 3 7, 2 3 6) 24,085 (28,127)
Depreciation and amortisation(18,962) ( 1 7,9 0 7 ) (20,458) (7,290) (8,060)
EBIT4 7, 6 3 6 20,707 (5 7, 6 9 4) 16,795 (36,187)
Net interest expense(5,701) (5,754) (6,6 61) (2,828) (4,6 3 1)
Profit / (loss) before tax41,93 5 14,95 3 (6 4, 3 5 5) 13 ,967 (4 0,818)
Tax (expense) / benefit(11,742) 418 4,342 (3,552) 8,768
Profit / (loss) after tax30,193 15,371 (60,013) 10,415 (32,050)
Operating cash (outflow) / inflow(34,117)2 9, 3 3 23 9,6 0 621,3041,323
Funds Employed
Equity210,101 193,753 181,290 253,901 172,612
Non-current liabilities 83,788 92,023 106,084 26,699 113,826
293,889 285,7 76 2 8 7, 3 74 280,600 286,438
Comprises
Current assets303,790 222,510 193,761 213,827 228,887
Current liabilities(1 39,9 71) (80,024) (58,87 1) (45 , 5 6 3) (59,0 9 9)
Working Capital163,819 142,486 134,890 168,264 169,788
Non-current assets 130,070 143,290 152,484 112,336 116,650
293,889 285,7 76 2 8 7, 3 74 280,600 286,438
Statistics
Dividends per share (cents)
2
13.04.5-5.07. 0
Basic earnings per share (cents) 18.3 9. 3 (36.4) 6.8 (20.9)
Return on Sales5.0%3.2%(14.4%)2.1%(6. 5%)
Return on Equity14.4%7.9 %(33.1%)4.1%(18.6%)
Working Capital (times)2.2 2.8 3.3 4.7 3 .9
Net tangible assets per share$1.22$1.11$1.03$1.19$1.27
Equity to total assets48.4%53.0%52.4%7 7. 8 %50.0%
Gearing (debt to debt plus equity)19. 5%-5.2%5.6%3 7. 7 %
Net Interest cover (times)8.4 3.6 (4.9) 5.9 ( 7. 8)
Ordinary shareholders7, 3 8 5 7, 5 2 8 8,036 8,310 8,163
Employees 829 799 884 1,003 1,015
- Female224 201 192 214 203
- Male 605 598 692 789 812
Directors & Officers
- Female 3 3 4 6 4
- Male12 11 10 9 8
1
Comparatives have been restated for the impact of a change in accounting policy in regards to the accounting for Software as a Service arrangements. Refer to Note C2 for further details.
2
Dividends per share are calculated based on dividends issued in respect of the financial year.
FIVE YEAR FINANCIAL
PERFORMANCE
37STEEL & TUBE ANNUAL REPORT 2022
STEEL & TUBE ANNUAL REPORT 20213838STEEL & TUBE ANNUAL REPORT 2022
39
FINANCIAL
REPORT
Financial Statements 202240
Statement of Profit or Loss and
Other Comprehensive Income
42
Statement of Changes in Equity43
Balance Sheet44
Statement of Cash Flows 45
Notes to the Financial Statements
Section A – Performance46
Section B – Working Capital52
Section C – Fixed Capital57
Section D – Funding63
Section E – Other65
Independent Auditor's Report74
General Information
Governance78
Remuneration85
Disclosures89
Directory94
39STEEL & TUBE ANNUAL REPORT 2022
THE FINANCIAL REPORT FOR STEEL & TUBE INCLUDES THESE SECTIONS:
· Financial Statements
· Performance
· Working Capital
· Fixed Capital
· Funding
· Other
KEY POLICY
Significant accounting policies which are relevant to the understanding of the financial statements are highlighted
throughout the report.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Preparation of these financial statements requires the exercise of judgements that affect the application of accounting policies,
the reported amounts of assets and liabilities, and income and expenses.
Estimates and judgements are continually evaluated, based on historical experience and other factors, including expectations of
future events that are believed to be reasonable under the circumstances. The Group makes estimates and assumptions about
the future. Actual results may differ from these estimates.
KEY JUDGEMENT
The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying value of assets
and liabilities within the next financial year are highlighted throughout the report.
GENERAL INFORMATION
Steel & Tube Holdings Limited (the Company or Steel & Tube) is registered under the Companies Act 1993 and is a FMC Reporting
Entity under the Financial Markets Conduct Act 2013. The Company is a limited liability company incorporated and domiciled in
New Zealand. The Group comprises Steel & Tube Holdings Limited and its subsidiaries.
The Group’s principal activities relate to the distribution and processing of steel products, fastenings and metal floor decking.
The registered office of the Company is 7 Bruce Roderick Drive, East Tamaki, Auckland, 2013, New Zealand.
These financial statements have been prepared:
• In accordance with New Zealand Generally Accepted Accounting Practice (NZ GAAP), for which Steel & Tube is a for-profit
entity
• To comply with New Zealand Equivalents to International Financial Reporting Standards (NZ IFRS) and with International
Financial Reporting Standards (IFRS)
• In accordance with the requirements of Part 7 of the Financial Markets Conduct Act 2013 and the NZX Main Board Listing Rules
(issued 17 June 2022)
• In New Zealand dollars (which is the Company’s and subsidiaries’ functional currency and the Group’s presentation currency)
and rounded to the nearest thousand dollars
• Under the historical cost convention, as modified by the revaluation of certain assets as identified in specific accounting
policies.
FINANCIAL STATEMENTS 2022
40STEEL & TUBE ANNUAL REPORT 2022
NON-GAAP FINANCIAL INFORMATION
The Group’s standard profit measure prepared under New Zealand Generally Accepted Accounting Practice (GAAP) is profit for
the period, or net profit after tax. The Group also uses non-GAAP financial information which is not prepared in accordance with
New Zealand International Financial Reporting Standards (NZ IFRS) when discussing financial performance. The Directors and
Management believe that this non-GAAP financial information provides useful information to readers of the financial statements
to assist in the understanding of the Group’s financial performance.
Definitions of non-GAAP financial information used in these financial statements are:
• Earnings before interest, tax, other gains and losses and impairment;
• Earnings before interest, tax and impairment; and
• Earnings before interest and tax.
COVID-19 PANDEMIC
The World Health Organisation declared a global pandemic on 11 March 2020 due to the outbreak and spread of Covid-19.
An outbreak of the Delta variant was detected in New Zealand during August 2021 which subsequently led to Alert Level 4
and 3 lockdowns imposed by the New Zealand Government. Whilst this has impacted the Group’s results, there has been a
strong recovery in revenues following Auckland and other regions returning to Covid-19 Alert Level 3 and below.
The Group was eligible for and received $1.1m in relation to the New Zealand Government’s wage subsidy, which has been
recognised in other operating income in the Statement of Profit or Loss and Other Comprehensive Income (30 June 2021: nil).
41STEEL & TUBE ANNUAL REPORT 2022
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the year ended 30 June 2022
Restated
1
20222021
Notes$000$000
Sales revenueA3 59 9,148 481,043
Other operating incomeA6 1,463 273
Cost of salesA2 (4 6 5 , 5 14) (3 8 2,949)
Operating expensesA2 (86,305) ( 7 9,18 8)
Software as a Service (SaaS) upfront expenditureC2 (1,645) (1,760)
Earnings before interest, tax, other gains and losses and impairment 47,147 1 7, 4 1 9
Other (losses) / gains (38) 1,410
Earnings before interest, tax and impairment 4 7,1 0 9 18,829
Reversal of impairment of Right-of-use assetsC4 527 1,878
Earnings before interest and tax 47,636 20,707
Interest income 106 98
Interest expense (5,807) (5,852)
Profit before tax 41,93 5 14,95 3
Tax (expense) / creditA5 (11,742) 418
Profit for the period attributable to owners of the Company 30,193 15,371
Items that may subsequently be reclassified to profit or loss
Other comprehensive income – hedging reserve 157 488
Items that may not subsequently be reclassified to profit or loss
Other comprehensive income – deferred tax on revaluation reserve - 245
Total comprehensive income 30,350 16,104
Basic earnings per share (cents)A1 18.3 9. 3
Diluted earnings per share (cents)A1 18.1 9. 3
1
Comparatives have been restated for the impact of a change in accounting policy in regards to the accounting for Software as a Service arrangements. Refer to Note C2 for further details.
42STEEL & TUBE ANNUAL REPORT 2022
STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2022
Share
capital
Retained
earnings
Hedging
reserve
Revaluation
reserve
Treasury
shares
Share-based
payments
Total
equity
Notes$000 $000 $000 $000 $000 $000 $000
Restated balance at 1 July 2021156,6693 8,914403 - (2 , 896)663193,753
Comprehensive income
Profit after tax - 30,193 - - - - 30,193
Other comprehensive income
Hedging reserve (net of tax) - - 157 - - - 157
Total comprehensive income - 30,193157 - - - 30,350
Transactions with owners
Dividends paidA1 - (14, 5 89) - - - - (14, 5 89)
Employee share schemes - 252 - - - 335587
Balance at 30 June 2022156,66954,770560 - (2 , 896)998210,101
Balance at 1 July 2020156,66922,541(85)4,552(2 , 896)509181,290
Committee decision for Software as a
Service in opening retained earnings in
relation to 2020¹C2(2,055)(2,055)
Restated balance as at 1 July 2020156,66920,486(85)4,552(2 , 896)509179,235
Comprehensive income
Profit after tax (restated)
1
- 15,371 - - - - 15,371
Other comprehensive income
Hedging reserve (net of tax) - - 488 - - - 488
Release of revaluation to retained
earnings (net of tax) - 4,797 - (4, 5 5 2) - - 245
Total comprehensive income - 20,168488(4, 5 5 2) - - 16,104
Transactions with owners
Dividends paidA1 - (2,008) - - - - (2,008)
Employee share schemes - 268 - - - 154422
Restated balance at 30 June 2021156,6693 8 ,9 14403 - (2,896)663193,753
1
Comparatives have been restated for the impact of a change in accounting policy in regards to the accounting for Software as a Service arrangements. Refer to Note C2 for further details.
43STEEL & TUBE ANNUAL REPORT 2022
BALANCE SHEET
As at 30 June 2022
Restated
1
20222021
Notes$000$000
Current assets
Cash and cash equivalentsE6 8,046 25,033
Trade and other receivablesB2 90,971 75,003
Contract assetsA4 10,822 8,398
InventoriesB1 192,460 113,469
Derivative assetsE6 1,491 607
303,790 222,510
Non-current assets
Deferred taxA5 7, 5 8 2 12,865
Income tax receivable - 1,361
Property, plant and equipmentC1 35,925 34,393
IntangiblesC2 7, 8 7 5 9,13 4
Right-of-use assetsC4 78,688 85,537
130,070 143,290
Total assets 433,860 365,800
Current liabilities
Trade and other payablesB3 69,627 63,892
BorrowingsD1 51,000 -
Income tax payable 5,014 -
ProvisionsE2 767 3,006
Derivative liabilitiesE6 8 47
Short term lease liabilitiesC4 13,555 13,079
1 39,9 71 80,024
Non-current liabilities
ProvisionsE2 1,271 1,281
Long term lease liabilitiesC4 82,517 90,742
83,788 92,023
Equity
Share capitalD3 156,669 156,669
Retained earnings 54,770 3 8 ,9 14
Other reserves (1, 3 38) (1,830)
210,101 193,753
Total equity and liabilities 433,860 365,800
1
Comparatives have been restated for the impact of a change in accounting policy in regards to the accounting for Software as a Service arrangements. Refer to Note C2 for further details.
These financial statements and the accompanying notes were authorised by the Board on 19 August 2022.
For the Board
Susan Paterson | Chair Karen Jordan | Director
44STEEL & TUBE ANNUAL REPORT 2022
STATEMENT OF CASH FLOWS
For the year ended 30 June 2022
Restated
1
20222021
$000$000
Cash flows from operating activities
Customer receipts 580,911 468,634
Interest receipts 106 77
Payments to suppliers and employees (61 0,4 3 0) (43 3 ,6 8 3)
Payments for interest on leases (4, 6 3 4) (4,9 98)
Interest payments (1,176) (698)
Wage subsidy received 1,106 -
Proceeds for litigation settlement - (1,563)
Insurance proceeds received - 1,563
Net cash (outflow) / inflow from operating activities (34,117) 2 9, 3 3 2
Cash flows from investing activities
Property, plant and equipment disposal proceeds 74 8,650
Property, plant and equipment and intangible asset purchases (6,179) (5, 538)
Net cash (outflow) / inflow from investing activities (6,1 0 5) 3,112
Cash flows from financing activities
Proceeds from / (repayment of ) bank borrowings 51,000 (10,000)
Dividends paid (14, 5 89) (2,008)
Payment for leases (1 3 ,176) (12,821)
Net cash inflow / (outflow) from investing activities 23,235 (24,8 29)
Net (decrease) / increase in cash and cash equivalents (16,987) 7, 61 5
Cash and cash equivalents at the beginning of the year 25,033 1 7, 4 1 8
Cash and cash equivalents at the end of the year 8,046 25,033
Represented by:
Cash and cash equivalents 8,046 25,033
8,046 25,033
Reconciliation of profit after tax to cash flows from operating activities
Profit after tax30,193 15,371
Non-cash adjustments:
Depreciation and amortisation18,962 17,907
Tax expense 11,742 (49 3)
Reversal of impairment of right-of-use assets(527)(1,878)
Other gains on lease reassessments - (582)
Share scheme expense443 425
Other (3 6 6)268
Gain on items classified as investing activities:
Loss / (gain) on property, plant and equipment disposals38 (828)
60,485 30,190
Movements in working capital:
Inventories(78,991)(12,408)
Trade and other receivables(18,393)(9,6 0 4)
Trade and other payables and provisions2,782 21,154
Net cash inflow from operating activities(34,117)2 9, 3 3 2
1
Comparatives have been restated for the impact of a change in accounting policy in regards to the accounting for Software as a Service arrangements. Refer to Note C2 for further details.
45STEEL & TUBE ANNUAL REPORT 2022
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2022
This section focuses on the Group’s financial performance and returns provided to Shareholders.
A1: DIVIDENDS AND EARNINGS PER SHARE
On 22 February 2022, the Board declared an unimputed interim dividend of 5.53 cents per share ($9.1m). The dividends were paid
to shareholders on 25 March 2022. On 19 August 2022, the Board declared a final dividend (partially imputed) of 7.50 cents per
share (2021: 3.29).
20222021
$000 $000
Dividends paid 14,589 2,008
FY22FY21
Dividends were paid / payable in respect of the following years:$000 $000
Interim Dividend Paid 9,1 2 8 2,008
Final Dividend Payable / Paid 12,448 5,461
To t a l 21,576 7, 4 6 9
Cents per share
FY22FY21
Interim Dividend (unimputed)5.50 1.21
Final Dividend 7. 5 0 3.29
Final dividend declared for FY22 will be partially imputed (FY21: unimputed).
Basic earnings per share is calculated by dividing the net profit attributable to shareholders by the weighted average number of
fully paid shares less treasury shares.
Diluted earnings per share includes partly paid shares (see Note D3) and represents the Group’s earnings per share if unvested
share rights were exercised. The weighted average number of shares is adjusted by the number of outstanding rights to executive
shares that are deemed to vest at their future vesting dates.
2022
Restated
1
2021
Earnings per share (EPS)$000 $000
Profit after tax30,193 15,371
Weighted average number of shares for basic EPS 165,000 165,000
Weighted average number of shares for diluted EPS167,653 166,026
Basic earnings per share (cents)18.3 9. 3
Diluted earnings per share (cents)18.1 9. 3
1
Comparatives have been restated for the impact of a change in accounting policy in regards to the accounting for Software as a Service arrangements. Refer to Note C2 for further details.
PERFORMANCE
SECTION A
46STEEL & TUBE ANNUAL REPORT 2022
A2: EXPENSES
2022
Restated
1
2021
Cost of sales and operating expenses:Notes$000 $000
Inventories expensed in cost of sales431,0963 49, 8 8 3
Impairment of trade and other receivables293(79)
Depreciation and amortisationC 1/C 2/C418,9621 7,9 0 7
Directors’ fees526449
Donations - 1
Employee benefits73,74469, 26 3
Defined contribution plans 1,7001,519
Information technology expenses7, 0 0 86,811
Foreign exchange gains(123)(860)
Short term and low value lease costs313232
Other expenses18,3001 7, 0 1 1
Total cost of sales and operating expenses551,819462,137
1
Comparatives have been restated for the impact of a change in accounting policy in regards to the accounting for Software as a Service arrangements. Refer to Note C2 for further details.
Inventory sold during the period is expensed as cost of sales. Inventory write-downs of $0.6m (2021: $1.3m) was incurred in the
ordinary course of business which are included within Inventories expensed in cost of sales.
Depreciation of $1.6 million (2021: $1.5 million) related to equipment used to manufacture products is included in cost of sales.
Depreciation of right-of-use assets and other depreciation is included in operating expenses.
47STEEL & TUBE ANNUAL REPORT 2022
A3: OPERATING SEGMENTS
The Group has identified two reporting segments as at 30 June 2022 having regard for the criteria outlined in NZ IFRS 8 Operating
Segments (NZ IFRS 8). The Group’s Chief Operating Decision Maker (being the CEO) receives financial reports which aggregate
the activities of the Group’s various operating segments into two distinct divisions, being Distribution and Infrastructure.
These reportable segments have been determined by having regard to the nature of products, services and processes the
various Business Units undertake to service customers. The Group has a diverse range of customers from various industries,
with no single customer contributing more than 10% of the Group’s revenue.
The Group derives its revenue from the distribution and processing of steel and associated products. Within the Distribution
business, the primary focus is on the distribution of steel products and fasteners, servicing similar customer groups, sharing
similar business models and trading skills, and using similar sales channels. The majority of product is traded and sales staff are
tasked to know the full range of products. Within the Infrastructure business, product is predominately steel product which is
bought and processed/ manufactured in warehouse facilities for project/contract customers.
The CEO uses EBIT as a measure to assess the performance of segments. The segment information provided to the CEO for the
period ended 30 June 2022 is as follows:
DistributionInfrastructureOther
Reconciled
to Group
2022$000 $000 $000 $000
Timing of revenue recognition
At a point in time383,449 126,370 14 509,8 3 3
Over time - 89, 3 15 - 89, 31 5
Revenue from external customers383,449 215,685 14 59 9,148
Depreciation and amortisation(9, 8 8 6)(6,78 3)(2,293)(18,962)
Expenses(333,418)(201,411)2,279 (53 2 , 550)
Segment EBIT 40,145 7, 4 9 1 - 47,636
Interest on leases (2,722)(1,899)(13)(4, 6 3 4)
Interest – others (net)(1,067)
Reconciled to Group Profit Before Tax41,93 5
DistributionInfrastructureOther
Reconciled
to Group
1
2021 Restated$000 $000 $000 $000
Timing of revenue recognition
At a point in time286,906 98,166 17 385,089
Over time - 95,954 - 95,954
Revenue from external customers286,906 194,120 17 481,043
Depreciation and amortisation(9,9 20)(6,490)(1,497)(17,907)
Expenses(261,786)(181,078)435 (442,429)
Segment EBIT 15,200 6,552 (1,045)20,707
Interest on leases (2,913)(2,057)(28)(4,9 9 8)
Interest – others (net)(75 6)
Reconciled to Group Profit Before Tax14,95 3
1
Comparatives have been restated for the impact of a change in accounting policy in regards to the accounting for Software as a Service arrangements. Refer to Note C2 for further details.
Depreciation and amortisation recognised as at 30 June 2022 is inclusive of depreciation recognised under NZ IFRS 16 Leases,
which is in line with the financial reports received by the CEO.
Interest recognised under NZ IFRS 16 Leases is shown separately in the financial reports provided to the CEO. Other interest
income and expense are not allocated to segments as these are driven by the central treasury function, which manages the cash
position of the Group.
Assets and liabilities are reported to the CEO on a Group basis, and are not separately reported with respect to the individual
operating segments.
Sales between segments are eliminated on consolidation. The amounts provided to the CEO with respect to segment revenue
are measured in a manner consistent with that of the financial statements. Comparative figures have been amended to align with
current year presentation.
48STEEL & TUBE ANNUAL REPORT 2022
A4: REVENUE RECOGNISED ON CONSTRUCTION CONTRACTS
KEY POLICY
Refer to Note E9 to the Group’s accounting policy on revenue recognised on construction contracts (refer to “Supply and
Installation Sales” and “Supply Only Sales”). A contract asset is recognised when the Group has completed its performance
obligation in advance of the cash consideration (or the Group’s entitlement to invoice the customer). A contract liability is
recognised when the Group receives cash consideration (or it is due) in advance of the obligation being performed.
KEY JUDGEMENT – CONSTRUCTION CONTRACTS
Estimates and judgements are made by the Group when assessing construction contracts. These vary between each project
based on specific contractual terms. The estimates and judgements inherent in accounting for the Group’s construction
contracts relate to the assessment of the forecast costs to complete the project and the quantum and likelihood of any
revenue variations that the Group is contractually entitled to. If forecast costs are expected to exceed forecast revenues,
a provision for onerous contract loss is recognised.
2022 2021
$000 $000
Contract assets10,822 8,398
The contract assets relate to the Group’s rights to consideration for work completed but not billed at the reporting date.
The Group’s contract liabilities are not material either in the current or comparative year. In prior year, contract assets were
included within trade and other receivables balance and comparative figures have been amended to align with current year
presentation.
The aggregate amount of the transaction price allocated to long-term construction contracts that are partially or fully unsatisfied
as at 30 June 2022 is $24.9m (30 June 2021: $23.9m). The Group expects this revenue to be recognised over the next two years.
49STEEL & TUBE ANNUAL REPORT 2022
A5: INCOME AND DEFERRED TAX
Income tax comprises both current and deferred tax.
All entities in the Group are part of the same income tax group.
KEY POLICY
Current tax is the expected payable on the taxable income for the period, using current tax rates, and any adjustment to tax
payable in respect of prior periods.
Deferred tax is recognised in respect of temporary differences arising between the tax base of assets and liabilities and their
carrying amounts in the financial statements. Deferred tax assets are only recognised to the extent that it is probable future
taxable profits will offset temporary differences. Tax rates used are those that have been enacted or substantially enacted at
balance date and which are expected to apply when the deferred tax asset or liability crystallises.
Deferred tax is not provided if it arises from the following differences:
• Goodwill not deductible for tax purposes
• Initial recognition of assets and liabilities in a transaction other than a business combination that affects neither
accounting or taxable profit and
• Investment in subsidiaries where the timing of the reversal of the temporary difference is controlled by the Group to the
extent that they will probably not reverse in the foreseeable future
Income and deferred tax
Income tax expense
2022
Restated
1
2021
The income tax expense is determined as follows:$000$000
Profit or loss
Current income tax
Current year income tax expense 6,378 -
Deferred income tax
Depreciation, provisions, accruals, tax losses and other5,437(210)
Adjustment on application of IFRS Interpretation Committee decision - (293)
Adjustments in respect of prior periods(73)85
Income tax expense/(credit) recognised in profit or loss11,742(418)
2022
Restated
1
2021
Reconciliation of income tax expense / (credit)$000$000
Profit before tax41,93 514,95 3
Non-assessable income - (1,503)
Non-deductible expenditure256297
42,19113,747
Tax at current rate of 28%11,8153,849
Prior period adjustment(73)85
Tax losses recognised - (4, 3 5 2)
Total income tax expense/(credit)11,742(418)
Represented by:
Current tax6,378 -
Deferred tax5,364(418)
11,742(418)
1
Comparatives have been restated for the impact of a change in accounting policy in regards to the accounting for Software as a Service arrangements. Refer to Note C2 for further details.
50STEEL & TUBE ANNUAL REPORT 2022
KEY JUDGEMENT – RECOGNITION OF TAX LOSSES
In the prior year, the Group had recognised a deferred tax asset of $4.4m for tax losses previously carried forward. During
the financial year, the Group has fully utilised these tax losses against the Group’s taxable profit.
Deferred tax assets and liabilities
The table below shows the movement in the deferred tax balances that are recognised at the beginning and end of the period.
Restated
Opening balance
$000
Prior period
adjustments
$000
Recognised
in income
$000
Recognised
in equity
$000
Closing
balance
$000
Group 2022
Property, plant and equipment
& Intangibles(1, 3 76)(112)(4 2 4) - (1,912)
Net lease liability4,656(168)(140) - 4,348
Employee benefits2,248 - 8281423,218
Provisions2,161154(168) - 2,147
Cash flow hedging reserve(158) - - (61)(219)
Net taxable loss 5,334199(5, 533) - -
12,86573(5,437)817, 5 8 2
Opening
balance
$000
Adjustment
on application
of IFRS
Interpretation
Committee
decision
1
$000
Prior period
adjustments
$000
Recognised
in income
$000
Recognised
in equity
$000
Tax losses
recognised
/ (not
recognised)
$000
Restated
Closing
balance
$000
Group 2021
Property, plant and equipment
& Intangibles(2,112)1,09237(6 3 8)245 - (1, 3 76)
Net lease liability5,260 - - (604) - - 4,656
Employee benefits1,420 - - 828 - - 2,248
Provisions2,493 - - (332) - - 2,161
Cash flow hedging reserve34 - - - (192) - (158)
Net taxable loss 4,500 - (122)(3,396) - 4,3525,334
11,5951,092(85)(4,142)534,35212,865
2022
Restated
1
2021
$000$000
The analysis of deferred tax assets and deferred tax liabilities is as follows:
Deferred tax liabilities(2 ,131)(1, 53 4)
Deferred tax assets9,71 314,399
7, 5 8 212,865
Imputation credits available at 30 June 2022 were $0.011m (2021 $0.025m).
1
Comparatives have been restated for the impact of a change in accounting policy in regards to the accounting for Software as a Service arrangements. Refer to Note C2 for further details.
A6: OTHER OPERATING INCOME
Other operating income for the financial year ended 30 June 2022 included wage subsidy of $1.1m which the Group applied for and
received from the New Zealand Government during the Covid-19 pandemic. The funds received have been accounted for in line
with NZ IAS 20 Government Grants and Disclosure of Government Assistance. The Group elected to recognise the funds received
under the wage subsidy scheme as other operating income in the Statement of Profit or Loss and Other Comprehensive Income.
51STEEL & TUBE ANNUAL REPORT 2022
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2022
This section contains details of the short term operating assets and liabilities required to service the Group’s distribution
branches and processing sites.
B1: INVENTORIES
KEY POLICY
Inventories are stated at the lower of cost and net realisable value, with cost determined on a moving average cost basis
or standard cost basis. Costs include expenditure incurred in acquiring the inventories and bringing them to their existing
location and condition. Net realisable value is the estimated selling price in the ordinary course of business less the
estimated costs of completion, and selling expenses.
KEY JUDGEMENT – INVENTORY VALUATION
The majority of the Group’s inventory comprises steel products and fastenings, which have long lives and generally are
not at risk of obsolescence. The Group undertook an assessment of its inventory holdings at 30 June 2022 to determine
whether the net realisable value (NRV) of inventory was greater than or equal to the current carrying value of inventory.
The Group has undertaken a full review of all aged inventory to identify any inventory at higher risk, particularly slow
moving inventory. Following this review, an impairment provision of $3.6m (2021: $2.2m) continues to be recognised as at
30 June 2022 to record the carrying value of inventory at its NRV where that is considered to be lower than its cost.
Judgement was required in determining if the slow moving inventory can be sold and its expected sales price, and therefore
whether inventory should be impaired. This includes consideration of forecast market conditions and prices.
To further support the valuation of inventory the Group operates a regular inventory count programme which requires
inventory to be counted on a cycle count basis, and through a full wall-to-wall count where required to ensure the accuracy
of the Group’s Inventory records.
The Group holds inventories valued at $192.5 million (2021: $113.5 million).
Goods in transit
Provision for
write-down
Finished goods
at cost price
171,818
24,214
(3,572)
94,416
21,279
(2,226)
Inventories ($000s)
$192,460
2022
2021
$113,469
WORKING CAPITAL
SECTION B
52STEEL & TUBE ANNUAL REPORT 2022
The Group is exposed to foreign exchange risk arising mainly from overseas purchases of inventory. In accordance with its
Treasury Policy, all committed overseas purchase orders are hedged using forward foreign exchange contracts where payment
is made in a foreign currency. The Group qualifies for hedge accounting. The effective portion of the changes in fair value is
recognised in other comprehensive income and accumulated in the Hedging reserve in equity as described in section E9.
As at balance date foreign exchange contracts recorded as assets were $1.49m (2021: $0.61m) and as liabilities were $0.01m (2021:
$0.05m). The notional value of foreign exchange contracts in place as at 30 June 2022 totalled $37.30m (2021: $36.81m). The fair
value of the foreign currency forward exchange contracts is as shown on the Balance Sheet. Refer to section E6 for the fair value
hierarchy determination.
If the NZ dollar had weakened/strengthened by 5% against foreign currencies (primarily US dollar) at balance date, there would
be no impact on profit or loss, as the Group qualifies for hedge accounting and all hedges are 100% effective at balance date.
The effect would be to equity +$2.06m if the NZ dollar strengthened by 5% and -$1.83m if the NZ dollar weakened by 5% (2021: +
$1.70m /- $2.05m respectively).
B2: TRADE AND OTHER RECEIVABLES
KEY JUDGEMENT – PROVISION FOR IMPAIRMENT
The Group has applied the simplified approach to providing for expected credit losses, which requires the recognition of a
lifetime expected loss provision for Trade and other receivables.
The expected credit loss (ECL) allowances for financial assets are based on assumptions about the risk of default and
expected credit loss rates. The Group uses its judgement in making these assumptions and selecting the inputs to the
impairment calculation, which is based on the Group’s historical experience, the aging profile of the financial assets,
existing market conditions as well as external economic forecasts at each reporting date. Details of key considerations and
judgements are set out below.
The Group considers the lifetime expected credit losses associated with its receivables upon initial recognition, and on an
ongoing basis at the end of each reporting period. To assess whether there is a specific increase in credit risk, the Group
compares the risk of default occurring on these receivables at the reporting date with the risk of default at the date of
initial recognition. The Group considers its trade receivables to be in default when:
– The debtor is unlikely to pay its credit obligations to the Group in full; or
– The receivable is more than 60 days past due (i.e. overdue).
Available forward looking information is considered, including actual or expected significant adverse changes in business,
financial or economic conditions that are expected to cause a significant change to the customer or counterparty’s ability
to meet their obligations. This also incorporates any objective evidence that indicates that the customers will not be able
to pay their debts when due, these include significant financial difficulties of customers and the probability of entering
receivership or bankruptcy.
The Group has analysed its trade receivables balances using three different characteristics and calculated the ECL
allowance by considering the impact of each:
Consideration/Judgements
Baseline/AgingThe Group’s baseline expectation for credit loss is informed by past experience and the aging profile
of the balances, applying an increasing expected credit loss estimate as the balance ages incorporating
forward looking information, such as forecasted economic conditions. This expectation incorporates
any available objective evidence that the customers will not be able to pay their debts when due,
including significant financial difficulties of customers and the probability of entering receivership,
administration or liquidation.
SectorThe Group has considered the credit risk related to the market sector that the customers operate
in and has made an adjustment to the ECL allowance base on assessment of the respective financial
strength of each industry sector.
RegionThe Group has considered the credit risk of its trade receivables portfolio based on the respective
financial strength of each geographic region, and has made an adjustment to the baseline ECL
allowance to reflect this.
53STEEL & TUBE ANNUAL REPORT 2022
Trade receivables at 30 June 2022 are $87.4m (2021: $71.2m) and are recognised initially at fair value and subsequently at amortised
cost less any provision for impairment. The carrying value of Trade and other receivables are equivalent to their fair value.
Current due
Prepayments and
sundry receivables
Provision for
impairment
Past due
Trade and Other Receivables ($000s)
87,02768,932
6,090
(2,240)
2021
$75,003
2,221
5,1 41
(1,553)
356
2022
$90,971
No one customer accounts for more than 6% of Trade receivables at 30 June 2022 (30 June 2021: 5%).
At 30 June 2022, trade receivables of $0.3m (2021: $1.9m) were greater than 60 days overdue. These relate to a number of
independent customers for whom there is no recent history of default. The Group’s credit terms are in line with industry
peers. The Group does not have any customers with payment terms exceeding one year. As a result the Group does not adjust
transaction prices for the time value of money.
The aging profile of the Group’s customer balances is shown below.
Within 1 to
3 months
Within
1 month
1,061
1,536
101
476
050010001500
2000
Beyond
3 months
255
1,745
Trade receivables excluding current at 30 June 2022 ($000s)
20222021
54STEEL & TUBE ANNUAL REPORT 2022
Provision for impairment
At 30 June 2022 an impairment provision of $1.6m (2021: $2.2m) was held.
The expected credit loss allowance provision has been determined as follows:
Current
Within
1 Month1 - 2 Months2 - 3 Months
Beyond
3 MonthsTotal
As at 30 June 2022 $000 $000 $000 $000 $000 $000
Gross carrying amount 85,966 1,061 90 11 255 8 7, 3 8 3
Baseline/Aging 930 305 54 10 240 1,539
Region 4 - - - 1 5
Sector 6 - 1 - 2 9
Expected credit loss allowance 940 305 55 10 243 1,553
Current
Within
1 Month1 - 2 Months2 - 3 Months
Beyond
3 MonthsTotal
As at 30 June 2021 $000 $000 $000 $000 $000 $000
Gross carrying amount 6 7, 3 9 6 1,536 274 202 1,745 71,153
Baseline/Aging 428 28 46 18 1,706 2,226
Region 4 - - - 2 6
Sector 5 1 - - 2 8
Expected credit loss allowance 437 29 46 18 1,710 2,240
Movements in the provision for impairment for the year ended 30 June 2022, are as follows:
20222021
Provision for impairment $000 $000
Provision as at 1 July2,2402,428
Recognised 1,527 1,285
Utilisation of provision/bad debts recovered(2 , 2 14)(1,473)
Provision as at 30 June1,5532,240
The Group is exposed to the risk of customers being unable to pay their debts as they fall due. The maximum exposure is the
total value of these balances. Customers who trade on credit terms are subject to credit verification procedures and credit limits
are set for each customer. The Group’s credit policy is monitored regularly. In some circumstances security over assets may
be obtained from Trade receivables to mitigate the risk of default. There are no significant concentrations of credit risk in the
current or prior years.
The Group also has credit risk in respect of financial institutions that hold the Group’s cash. These institutions have credit ratings
of AA-.
55STEEL & TUBE ANNUAL REPORT 2022
B3: TRADE AND OTHER PAYABLES
49,4 6 6
10,391
9, 7 7 0
$69,627
51,557
6,916
5,419
$63,892
Trade and other payables ($000s)
20222021
Employee benefits
Accrued expenses
Trade Payables
The carrying amounts of the above items are equivalent to their fair values and subsequently measured at amortised cost using
the effective interest method.
56STEEL & TUBE ANNUAL REPORT 2022
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2022
This section includes details of the Group’s long term assets including tangible and intangible assets and related capital commitments.
C1: PROPERTY, PLANT AND EQUIPMENT
KEY POLICY
Plant and equipment are stated at cost less accumulated depreciation. Assets are tested annually for indicators of
impairment and adjusted if required.
Depreciation is charged on a straight-line basis over the estimated useful lives of the assets. This allocates the cost of an asset,
less any residual value, over its estimated remaining useful life. The residual values and useful lives are reviewed annually.
The estimated useful lives are as follows:
Plant, machinery and motor vehicles 3 - 20 years
Furniture, fittings and equipment 2 - 10 years
Gains and losses on disposals are determined by comparing proceeds with carrying amounts and are included in profit or loss.
Land & buildings
at fair value
Plant, machinery
& vehicles at cost
Furniture, fittings
& equipment
at costTotal
2022$000 $000 $000 $000
Opening cost - 82,880 1 7, 2 9 3 100,173
Opening accumulated depreciation - (50,852)(14,928)(6 5,78 0)
Opening net book value - 32,028 2,365 34,393
Additions - 3,202 2,561 5,763
Disposals - (52)(6 2)(114)
Depreciation - (3,122)(9 95)(4,1 1 7)
Closing net book value - 32,056 3,869 35,925
Comprised of:
Cost or fair value - 85,606 19, 3 09 104,91 5
Accumulated depreciation - (53, 550)(15,440)(68,990)
Property, plant and equipment - 32,056 3,869 35,925
2021
Opening cost5,900 85,752 18,794 110,446
Opening accumulated depreciation(39)(53,227)(16,17 1)(69,4 3 7)
Opening net book value5,861 32,525 2,623 41,009
Additions - 3,297 675 3 ,9 7 2
Disposals(5,835)(782)(1)(6,618)
Depreciation(26)(3,012)(9 3 2)(3 ,9 70)
Closing net book value - 32,028 2,365 34,393
Comprised of:
Cost or fair value - 82,880 1 7, 2 9 3 100,173
Accumulated depreciation - (50,852)(14,9 2 8)(6 5,780)
Property, plant and equipment - 32,028 2,365 34,393
Included within the plant, property and equipment categories is capital work in progress totalling $1.6m (2021: $2.5m).
FIXED CAPITAL
SECTION C
57STEEL & TUBE ANNUAL REPORT 2022
C2: INTANGIBLES
Goodwill
Software &
LicencesOtherTotal
2022$000 $000 $000 $000
Opening cost4 7,1 7 1 28,262 2,522 7 7,9 5 5
Opening accumulated amortisation and impairment(4 7,1 7 1)(19,519)(2 ,131)(68,821)
Opening net book value - 8,743 391 9,1 3 4
Additions - 418 - 418
Amortisation charge - (1,575)(102)(1,677)
Closing net book value - 7, 5 8 6 289 7, 8 7 5
Comprised of:
Cost4 7,1 7 1 28,680 2,522 78,373
Accumulated amortisation and impairment(4 7,1 7 1)(2 1,0 94)(2 , 233)(70,498)
Closing net book value - 7, 5 8 6 289 7, 8 7 5
2021 Restated
Opening cost4 7,1 7 1 30,429 2,522 80,122
Opening accumulated amortisation and impairment(4 7,1 7 1)(19,0 4 0)(2,025)(6 8, 2 3 6)
Opening net book value - 11,389 497 11,886
Committee decision for Software as a Service in opening
intangibles in relation to 2020 - (2,85 4) - (2,85 4)
Adjusted opening net book value - 8,535 497 9,0 3 2
Additions - 3,596 - 3,596
Amortisation charge - (2,343)(106)(2,4 49)
Committee decision for Software as a Service in
intangibles in relation to 2021 - (1,045) - (1,045)
Adjusted closing net book value - 8,743 391 9,13 4
Comprised of:
Cost4 7,1 7 1 28,262 2,522 7 7,9 5 5
Accumulated amortisation and impairment(4 7,1 7 1)(19,519)(2,131)(68,821)
Adjusted closing net book value - 8,743 391 9,13 4
Included within the intangibles categories is capital work in progress totalling $0.2m (2021 restated: $0.1m). Other intangibles
comprises customer relationships and customer contracts arising from business combinations.
During the year, the Group revised its accounting policy in relation to configuration and customisation costs incurred in
implementing SaaS arrangements in response to the Committee’s agenda decision clarifying how current accounting standards
apply to these types of arrangements. The Group’s accounting policy has historically been to capitalise costs related to the
configuration and customisation of SaaS arrangements as intangible assets in the balance sheet. Following the adoption of the
above Committee agenda decision, current SaaS arrangements were identified and assessed to determine if the Group has
control of the software. For those arrangements where control does not exist, the Group derecognised the intangible asset
previously capitalised.
58STEEL & TUBE ANNUAL REPORT 2022
KEY POLICY
Goodwill is recognised on a business combination and represents the excess of the acquisition cost over the fair value of the
acquired net assets. Goodwill is allocated to cash-generating units, tested annually for impairment, or more frequently if
events or circumstances indicate it may be impaired, and is carried at cost less accumulated impairment losses.
Computer software and licences are capitalised on the basis of costs incurred to acquire and use the specific licences and
are amortised on a straight-line basis over their estimated useful lives of 3 to 10 years. Computer software and licence
amortisation charges are included in operating expenses.
Customer relationships and customer contracts are capitalised at fair value on acquisition date and are amortised on a
straight-line basis over their estimated useful lives of 10 and 2 years respectively. Amortisation charges are included in
operating expenses.
Software as a Service arrangements are service contracts providing the Group with the right to access the cloud provider’s
application software over the contract period. As such the Group does not receive a software intangible asset at the
contract commencement date. For SaaS arrangements, the Group assesses if the contract will provide a resource that it
can ‘control’ to determine whether an intangible asset is present. If the Group cannot demonstrate control of the software,
the arrangement is deemed a service contract and any implementation costs including costs to configure or customise the
cloud provider’s application software are recognised as operating expenses when incurred.
Where the SaaS arrangement supplier provides both configuration and customisation services, judgement has been applied
to determine whether each of these services are distinct or not from the underlying use of the SaaS application software.
If distinct, such costs are expensed as incurred when the services is provided. If not distinct, such costs are expensed over
the SaaS contract term.
In implementing SaaS arrangements, the Group has incurred customisation costs which creates additional functionality
to a cloud based software. Management has determined that it has rights to the intellectual property and has owned the
developed software which meets the definition and recognition criteria for an intangible asset.
Cost incurred for the development of software that enhances or modifies, or creates additional functionality to an
on-premise software that meets the definition and recognition criteria of intangible assets are recognised as intangible
assets. When these costs are recognised as intangible software assets they are amortised over the useful life of the software
on a straight line basis.
The Group reviewed the agreements and supporting documentation for all capitalised software and associated projects.
The Group has applied the required treatment retrospectively. Comparative information has been restated to reflect the
retrospective application of the SaaS guidance. The following table presents the impact of the restatement on the comparative
information presented in the financial statements:
59STEEL & TUBE ANNUAL REPORT 2022
Balance Sheet
Previously
ReportedAdjustmentRestated
Balances as at 1 July 2020:$000 $000 $000
Intangibles 11,886 (2,85 4)9,03 2
Deferred tax11,595 799 12,394
Other assets/(liabilities)1 5 7, 8 0 9 - 1 5 7, 8 0 9
Net assets181,290 (2,055)179,235
Retained earnings22,541 (2,055)20,486
Other equity balances15 8,749 - 158,749
Total equity181,290 (2,055)179,235
Previously
ReportedAdjustmentRestated
Balances as at 30 June 2021:$000 $000 $000
Intangibles 13,033 (3,89 9)9,1 3 4
Deferred tax11,773 1,092 12,865
Other assets/(liabilities)171,754 - 171,754
Net assets196,560 (2,807)193,753
Retained earnings41,721 (2,807)3 8,914
Other equity balances154,839 - 154,839
Total equity196,560 (2,807)193,753
Statement of Profit or Loss and Other Comprehensive Income
Previously
ReportedAdjustmentRestated
Balances for the year ended 30 June 2021:$000 $000 $000
Operating expenses (79,903)715 (79,18 8)
Software as a Service (SaaS) upfront expenditure - (1,760)(1,760)
Profit before tax15,998 (1,045)14,95 3
Ta x c r e d i t125 293 418
Profit for the period attributable to owners of the Company16,123 (752)15,371
Statement of Cash Flows
Previously
ReportedAdjustmentRestated
Balances for the year ended 30 June 2021:$000 $000 $000
Payments to suppliers and employees(43 1, 5 6 5)(2,118)(4 3 3 , 6 8 3)
Net cash inflow from operating activities31,450 (2 ,118)29, 3 3 2
Property, plant and equipment and intangible asset purchases( 7, 6 5 6)2,118 (5, 538)
Net cash inflow from investing activities994 2,118 3,112
60STEEL & TUBE ANNUAL REPORT 2022
KEY JUDGEMENT – IMPAIRMENT TESTING ON NON-FINANCIAL ASSETS
NZ IAS 36 Impairment of Assets (NZ IAS 36) requires the Group to assess at the end of each reporting period for any
indicators of impairment and also to test the recoverable amount of the Group’s assets against its carrying value to assess
whether there is any indication that an asset may be impaired. The recoverable amount is the higher of an asset’s fair value
less costs of disposal (FVLCD) and value-in-use (VIU).
For the purpose of assessing impairment, assets are grouped in the smallest identifiable group of assets that generates cash
inflows that are largely independent of the cash inflows from other assets or groups of assets (cash generating unit or CGU),
which as at 30 June 2022 were identified as being Distribution, Reinforcing, CFDL and Rollforming.
As at 30 June 2022, the Group has not identified any indicators of impairment over the assets held at the CGUs. The Group’s
market capitalisation is above net assets at year end and accordingly provides evidence that the Group’s net assets value
is supported. Furthermore, the Group has seen an improved trading performance in the current financial year when
compared to the previous financial year.
The Group has therefore concluded that no impairment is required as at 30 June 2022. The Group has also concluded
that no reversal of the previous impairment of intangible assets should be made following an assessment that previous
assumptions applied remains consistent in the current financial year.
C3: COMMITMENTS
Capital commitments
The Group has contractual commitments of $1.1m (2021: $0.8m) for purchase of plant and equipment.
61STEEL & TUBE ANNUAL REPORT 2022
C4: LEASES
KEY JUDGEMENT – IMPAIRMENT TESTING ON RIGHT-OF-USE ASSETS
The Group has assessed for any indicators of impairment on its right-of-use assets for the financial year ended 30 June 2022.
The Group has re-assessed the assumptions used for the previously impaired sites with longer term leases (> 3 years) based
on current market outlook and consideration over the sites’ space utilisation in line with the Group’s network strategy.
Based on the assessment performed, the Group has recognised a reversal of impairment of $0.5m on these leases as at
30 June 2022 which represents a partial recovery of the total impairment charge recognised previously.
The below outlines the recognised right-of-use assets and corresponding lease liabilities by the Group as at 30 June 2022:
PropertiesMotor VehiclesEquipmentTotal
$000$000$000$000
Right-of-use asset at 1 July 2021 81,624 3,074 839 85,537
Additions to right-of-use assets3,8191,741 238 5,798
Depreciation(11,437)(1,495)(2 3 6)(13,168)
Impairment loss reversed527 - - 527
Disposals - (6) - (6)
Total right-of-use assets at 30 June 2022 74, 53 3 3,314 841 78,688
PropertiesMotor VehiclesEquipmentTotal
$000$000$000$000
Right-of-use asset at 1 July 2020 83,001 3,232 853 87,086
Additions to right-of-use assets8,8141,46517410,453
Depreciation(10,749)(1,623)(188)(12, 560)
Reassessments29 - - 29
Impairment loss reversed1,878 - - 1,878
Disposals(1, 3 49) - - (1, 3 49)
Total right-of-use assets at 30 June 2021 81,624 3,074 839 85,537
A portion of the Group’s right-of-use assets is being used for sub-lease which would meet the definition of an investment
property under NZ IAS 40 Investment Property. The Group accounts its investment property at cost. The portion recognised as
investment property for the current financial year is $1.5m (30 June 2021: $0.5m). Income from sub-leasing right-of-use assets for
the year ended 30 June 2022 was $0.3m (30 June 2021: $0.2m).
Amounts recognised as lease liabilities are presented below.
Lease liability maturity analysis
PrincipalInterestGross
2022$000$000$000
Between 0 to 1 year13,5554,2331 7, 7 8 8
Between 1 to 5 years44,82211,59656,418
More than 5 years3 7, 6 9 55,63643,331
Lease liabilities as lessee96,07221,4651 1 7, 5 3 7
2021
Between 0 to 1 year13,0794,6141 7, 6 9 3
Between 1 to 5 years43,80213,3185 7,1 2 0
More than 5 years4 6 ,94 07, 7 8 554,725
Lease liabilities as lessee103,82125,7171 29, 5 3 8
62STEEL & TUBE ANNUAL REPORT 2022
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2022
This section includes details of the Group’s cash, borrowings and capital reserves which provide funds for current and future activities.
D1 : BORROWINGS
20222021
$000$000
Bank loans 51,000 -
KEY POLICY
Borrowings are recognised initially at fair value and net of transaction costs incurred. Borrowings are subsequently stated
at amortised cost and any difference between the net proceeds and redemption value is recognised in profit or loss over
the period of the borrowings using the effective interest method. The movement in borrowings shown in the Statement of
Cash Flows is the net of repayments and drawdowns of borrowings. Borrowings are classified as current liabilities if there is
no unconditional right to defer settlement for greater than 12 months.
The Group is required to comply with certain financial covenants that relate to interest cover, group coverage and leverage.
The Group has in place committed bank borrowing facilities of $100m, comprising a three year $80m Revolving Cash Advance
Facility with an expiry date of 15 February 2024 and a $20m Trade Loan facility with an expiry date of 15 February 2024. Borrowing
facilities arranged with the Group’s banking partner can be drawn at any time, subject to meeting the terms of the Group’s Facility
Agreement. As at 30 June 2022, the Group is compliant with all financial covenants.
The Group is exposed to interest rate risk through its drawings under the Group’s bank borrowing facilities at variable interest rates.
During the year ended 30 June 2022, if bank interest rates had been 100 basis points higher/lower with all other variables held
constant, it would change post-tax profit/equity for the year by $0.36m lower/higher (2021: $nil).
The Group manages its liquidity risk by maintaining availability of sufficient cash and funding via an adequate amount of
committed bank borrowing facilities. Owing to the nature of the underlying business, the Group aims to maintain funding
flexibility through committed credit lines. The Group monitors actual and forecast cash flows on a regular basis and rearranges
credit facilities where appropriate.
The table below analyses the Group’s financial liabilities and derivative financial instruments into maturity groupings based on the
remaining period from balance date to the contractual maturity date. The amounts disclosed are the contractual undiscounted
cash flows.
Average
Interest
rate
6 months
or less
$000
6 to 12
months
$000
1 to 3
years
$000
Total
$000
Carrying
Value
$000
2022
Borrowings
1
4.81% 52,223 353 471 53,047 51,000
Trade payables & accruals - 69,627 - - 69,627 69,627
Cash flow hedging of
derivatives:
Outflow - 3 7, 2 9 9 - -3 7, 2 9 93 7, 2 9 9
Inflow - (38,782) - -(38,782)(38,782)
- (1,483) - - (1,483)(1,483)
2021
Trade payables & accruals - 63,892 - - 63,89263,892
Cash flow hedging of
derivatives:
Outflow - 36,533272 - 36,80536,805
Inflow - (37,088)(277) - (37,365)(37,365)
- (555)(5) - (560)(560)
1
The Group’s Facility Agreement allows drawdowns to be rolled over, subject to meeting the terms of the agreement
FUNDING
SECTION D
63STEEL & TUBE ANNUAL REPORT 2022
D2: NET DEBT RECONCILIATION
Cash and cash
equivalentsBorrowings
Current lease
liabilities
Non-current
lease liabilitiesTotal
$000$000$000$000$000
Net debt as at 1 July 202125,033 - (1 3,079)(90,742)(78,788)
Cash flows(16,987)(51,000)13,176 - (54,811)
Non-cash movements - - (13,652)8,225(5,427)
Net debt as at 30 June 20228,046(51,000)(13,555)(82 , 517)(1 3 9,0 26)
Net debt as at 1 July 20201 7, 4 1 8(10,000)(12,647)(95,060)(100,289)
Cash flows7, 61 510,00012,821 - 30,436
Non-cash movements - - (13,253)4,318(8 ,9 3 5)
Net debt as at 30 June 202125,033 - (13,079)(90,742)(78,788)
D3: SHARE CAPITAL
The Group’s capital includes share capital, treasury shares, reserves and retained earnings. The objectives for managing capital
are to safeguard the Group’s ability to continue as a going concern, to provide returns and benefits for Shareholders and other
stakeholders and to maintain a strong capital base for investor, creditor and market confidence. The Group may adjust the dividends
paid to Shareholders, return capital to Shareholders, issue new shares or sell assets to maintain or adjust its capital structure.
Capital Structure Policy Targets
The Group’s formal capital structure targets are as follows:
1. Net Debt: EBITDA less than 2.0x
2. Gearing ratio less than 30 – 35%
3. Dividend pay-out of between 60% - 80% of Net Earnings (NPAT) adjusted for any significant non-trading items
There has been no material change in the management of capital during the year.
2022 2021 2022 2021
$000 $000 SharesShares
Fully paid:
Balance at the beginning of the year 156,668 156,668 165,972,540 165,972,540
Balance at the end of the year 156,668 156,668 165,972,540 165,972,540
Partly paid:
Balance at the beginning of the year 1 1 25,000 25,000
Balance at the end of the year 1 1 25,000 25,000
Total balance at the end of the year 156,669 156,669 165,997,540 165,997,540
The holders of ordinary shares are entitled to receive dividends declared from time to time and to one vote per share at meetings
of the Company. Ordinary shares issued and partly paid as part of the Senior Executives’ Share Scheme 1993 do not have dividend
or voting entitlements until the shares are paid in full but qualify for bonus and cash issues.
Ordinary shares are classified as equity. Where any controlled entities purchase Company shares that have not been allocated,
the consideration paid and directly attributable costs are deducted from equity and classified as treasury shares.
2022 2021 2022 2021
Treasury shares$000 $000 SharesShares
Balance at the beginning of the year 2,896 2,896 972,849 972,849
Balance at the end of the year 2,896 2,896 972,849 972,849
Treasury shares are unallocated Company shares held by the Trustee of the Executive Share Plan 2003 and are recognised as a
reduction in shareholders’ funds of the Group. There were no Treasury shares purchased during the year.
64STEEL & TUBE ANNUAL REPORT 2022
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2022
This section contains additional notes and disclosures which do not form part of the primary sections but which are required to
comply with financial reporting standards.
• Financial risk management
• Provisions
• Contingent liabilities
• Auditor remuneration
• Related party and share based plans
• Financial instruments
• Financial assets
• Subsequent events
• Other accounting policies
E1: FINANCIAL RISK MANAGEMENT
The Group is exposed to financial risk: market risk, credit risk and liquidity risk.
The Group’s Treasury Policy is approved by the Board and is reviewed every three years. The Treasury Policy establishes principles
and risk tolerance levels to guide management in carrying out risk management activities to minimise potential adverse effects
on the financial performance of the Group. Compliance with policy is monitored and reviewed on a monthly basis.
Detail relevant to the following risks are covered in relevant sections:
Foreign exchange risk (a market risk) Inventories B1
Interest rate risk (a market risk) Borrowings D1
Credit risk Trade & other receivables B2
Liquidity risk Borrowings D1
E2: PROVISIONS
Restructure
Provision
Make Good
Provision
Holiday Pay
Provision
Other
ProvisionsTotal
$000 $000 $000 $000 $000
Opening balance 149 2,775 854 509 4,287
Additions - 283 - 200 483
Used(22)(95 1) - (204)(1,17 7)
Unutilised(127)(5 74)(85 4) - (1,555)
Closing balance - 1,533 - 505 2,038
Current - 262 - 505 767
Non Current - 1,271 - - 1,271
OTHER
SECTION E
65STEEL & TUBE ANNUAL REPORT 2022
KEY POLICY
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event.
This occurs when it is probable that a cost will be incurred to settle the obligation and a reliable estimate can be made of
that obligation. Where material, provisions are determined by discounting the expected cash flows at a pre-tax rate that
reflects current market assessments of the time value of money. Where discounting is used, the increase in the provision
due to the passage of time is recognised as an expense.
• Restructure Provision. The Group undertook a business restructure following the impact of Covid-19 in the preceding year
and the activities related to the restructure have largely concluded as at 30 June 2021. All remaining committed restructuring
activities have been completed as at 30 June 2022.
• Make Good Provision on existing tenanted properties. The Group held a make good provision for the remediation work carried
out on one of its existing tenanted properties, one being Stonedon Drive which was agreed as part of the sale and purchase
agreement. Remediation work has completed as at 30 June 2022 and the Group has utilised $1.0m of the initial provision against
total remedial costs incurred and a subsequent release of $0.5m of the unutilised provision. Actual payment dates and costs for
other properties will be known once each lease reaches its expiry date.
• Holiday Pay Provision. The Group recognised a Holiday Pay Provision of $0.85m as at 30 June 2021. The provision related to the
Group’s potential backdated holiday pay obligations following a High Court judgement on an unrelated company on a similar
matter. Following the Court of Appeal ruling in this case, the Group has released its Holiday Pay provision of $0.85m as at
30 June 2022.
• Other Provisions relates to an estimate of the costs of customer claims for faulty or defective products supplied.
E3: CONTINGENT LIABILITIES
Indemnities given to the Group’s banking partner in respect of performance bonds were $2.7m (2021: $3.5m) at balance date and
were transacted in the ordinary course of business. These relate to performance guarantees held primarily for the construction
contracts entered into by the Group.
In the normal course of business, the Group can be party to lawsuits and claims, both as a plaintiff and as a defendant. Provisions
are made in accordance with accounting policy and disclosed in Note E2.
E4: AUDITOR REMUNERATION
20222021
Fees paid to auditors$000 $000
Annual audit & half year review 379 443
To t a l 379 443
The appointed auditor for the year ended 30 June 2022 is KPMG (2021: PricewaterhouseCoopers).
66STEEL & TUBE ANNUAL REPORT 2022
E5: RELATED PARTY AND SHARE BASED PLANS
The Group has related party relationships with its controlled entities and with key management personnel.
The subsidiaries in the Group are:
2022 2021
SubsidiariesPrincipal ActivityBalance DateHoldingHolding
Steel & Tube New Zealand LimitedNon-trading30 June100%100%
Composite Floor Decks Holdings LimitedNon-trading30 June100%100%
Studwelders LimitedNon-trading30 June100%100%
S & T Plastics LimitedNon-trading30 June100%100%
S & T Stainless LimitedStainless Distributor30 June100%100%
Manufacturing Suppliers LimitedFastenings Distributor30 June100%100%
Composite Floor Decks LimitedFloor Decking Installer30 June100%100%
2022 2021
Transactions with Key Management Personnel$000 $000
Short-term benefits 5,733 4,333
Share-based benefits (accounting expense) 356 311
Termination benefits - 155
6,089 4,799
The Key Management Personnel are the Non-Executive Directors and Executive Management. Included in short term benefits
are Directors’ fees of $526,250 (2021: $448,983). The aggregate value of sales transacted with Key Management Personnel in the
current financial year amounts to $25k.
Other Transactions with Related Parties
Certain Directors, shareholders and Management have relevant interests in a number of companies with which the Group has
transactions in the normal course of the business. A number of the Group’s Directors are also non-executive Directors of other
companies, and a register of Directors’ interests is maintained. Any transactions undertaken with these entities have been
entered into in the normal course of business.
Certain Directors and Management hold shares in the Group and receive dividends in the normal course of business.
67STEEL & TUBE ANNUAL REPORT 2022
Performance Rights Plan 2017
In February 2018 a new Executive share plan was approved by the Board, known as the Performance Rights Plan 2017 (PRP).
The performance period for this scheme runs for 3 years and comprises two performance conditions (50% each) as follows:
a) The Benchmark Comparator (BC) ranks the Company’s Total Shareholder Return (TSR) relative to the TSR of the NZX 50 Index
securities.
• Where the Company TSR equals the 50th percentile TSR of the Index Companies over the Performance Period, 50% of (BC)
Performance Rights will vest
• Where the Company TSR equals or exceeds the 75th percentile TSR of the Index Companies over the Performance Period,
100% of (BC) Performance Rights will vest
• Where the Company’s TSR over the Performance Period exceeds the 50th percentile TSR of the Index Companies but does
not reach the 75th percentile, then between 50% and 100% of the (BC) Performance Rights, will vest as determined on a
linear pro-rata basis
b) The Absolute Comparator (AC) ranks the Company’s TSR relative to the Company’s Cost of Equity (CoE) plus a premium of 2%
annualised and compounding.
• Where the Company TSR is less than or equal CoE no (AC) Performance Rights will be vested
• Where the Company TSR is equal to or greater than CoE + 2%, 100% of (AC) Performance Rights will vest
• Where the Company TSR is greater than CoE but less than (CoE) + 2%, then between 50% and 100% of the (AC) Performance
Rights will vest as determined on a linear pro-rata basis
Performance Rights are only able to be exercised after completion of the three year performance period, providing and only
to the extent that the performance conditions, and other relevant service and non-market performance conditions, have been
satisfied. Any Benchmark and Absolute Comparator Performance Rights that do not vest at the Measurement Date will lapse.
During the year the following movements of rights to shares occurred in accordance with the rules of the share plans:
No. of Rights
Available
No. of Rights
Available
20222021
Opening Balance3,678,476 2,271,834
New Shares Granted1,353,114 2,067,187
Rights Forfeited(370,380)(470,798)
Rights Lapsed(7 13,6 69)(189,747)
To t a l3 ,9 4 7, 5 4 1 3,678,476
Rights Performance Conditions Start DatesExpiry date
Issue date
fair value
Total Rights
Issued
Rights Available
30 June 2022
Rights
Available
30 June 2021
12 September 2018 – Tranche 212/09/2021 $1.20 1,160,204 - 713,669
6 September 2019 – Tranche 36/09/202 2 $0.80 1,215,524 855,125 961,9 3 6
11 September 2020 – Tranche 411/09/202 3 $0.75 2,002,871 1,783,230 2,002,871
7 September 2021 – Tranche 57/0 9/ 2 0 24 $1.15 1,353,114 1, 3 09,186 -
To t a l 5,731,713 3 ,9 4 7, 5 4 1 3,678,476
Weighted average remaining contractual life of options outstanding at end of period 1.28 1.52
2022 2021
$000 $000
Share-based benefits (accounting expense)443425
The fair value of rights is determined using a Monte Carlo share price simulation model. The significant inputs into the model for
shares granted during the period were the market share price at grant date, an exercise price of zero (as shares are issued to the
employees at nil consideration on vesting), volatility of 35.9%, expected option life of between 1 and 3 years and an annual risk free
interest rate of 1.7%. Volatility has been calculated based on the annualised volatility for the three years prior to the rights issue.
68STEEL & TUBE ANNUAL REPORT 2022
KEY POLICY
The Performance Rights Plan 2017 is considered to be an equity settled scheme under NZ IFRS 2 and the vesting conditions
for the scheme include both service and performance conditions.
Performance Rights Plan 2017
The cost associated with this plan is measured at fair value at grant date and is recognised as an expense in profit or loss
over the vesting period, with a corresponding entry to the reserve in equity. The estimate of the number of rights for
which the service conditions are expected to be satisfied is revised at each reporting date, with any cumulative catch-up
adjustment recognised in profit or loss in the period that the change in estimate occurred. Any rights not vested after the
expiry of three years are cancelled.
E6: FINANCIAL INSTRUMENTS
Financial assets at
amortised cost
Derivatives for
hedging at fair
value
Financial
liabilities at
amortised cost
2022$000$000$000
Cash and cash equivalents
1
8,046 - -
Trade and other receivables excluding prepayments 89,005 - -
Derivative financial instruments ² - 1,491 -
Total financial assets 9 7, 0 5 1 1,491 -
Borrowings - - 51,000
Trade and other payables - - 69,627
Derivative financial instruments ² - 8 -
Lease liabilities - - 96,072
Total financial liabilities - 8 216,699
2021
Cash and cash equivalents
1
25,033 - -
Trade and other receivables excluding prepayments 81,603 - -
Derivative financial instruments ² - 607 -
Total financial assets 106,636 607 -
Trade and other payables - - 63,892
Derivative financial instruments ² - 47 -
Lease liabilities - - 103,821
Total financial liabilities - 47 167,713
1
Cash and cash equivalents comprise cash in bank balances and cash on hand.
2
Derivative financial instruments are measured at fair value calculated using forward exchange rates that are quoted in an active market (Level 2 of the fair value hierarchy).
69
STEEL & TUBE ANNUAL REPORT 2022
E7: FINANCIAL ASSETS
The Group classifies its non-derivative financial assets as being measured at amortised cost, including any expected credit loss
allowance provisions. They are included in current assets, except for those with maturities greater than 12 months after the end
of the reporting period, these are classified as non-current assets. The Group’s non-derivative financial assets comprise trade and
other receivables and cash and cash equivalents.
Derivatives are measured at fair value. The portion of any fair value movement that is an effective hedge is measured in other
comprehensive income, but any ineffective portion is included in profit or loss.
Management determines the classification of the assets at the initial recognition and re-evaluates the designation at each
reporting date based on the business model and whether cash flows represent solely payments of principal and interest.
Purchases and sales of financial assets are recognised on the date the Group has committed to the transaction. De-recognition of
financial assets occurs when the rights to receive cash flows have expired or the Group has transferred substantially all the risks
and rewards of ownership.
E8: SUBSEQUENT EVENTS
On 11 July 2022, the Group entered into an unconditional agreement to acquire Kiwi Pipe and Fittings Limited. Final settlement of
this acquisition has been completed on 1 August 2022 for $8.9m. The Group is in the process of completing a fair value exercise
over the assets and liabilities acquired as part of accounting for this transaction. Given the limited time between final settlement
and the date of the issuance of the Group’s financial statements, the Group will disclose all necessary information in the next
financial year.
On 19 August 2022, the Board declared a final dividend (partially imputed) of 7.50 cents per share (2021: 3.29) totalling $12.4m
(2021: $5.5m). The dividends will be paid to shareholders on 23 September 2022.
E9: OTHER ACCOUNTING POLICIES
Basis of consolidation
The Group applies the acquisition method to account for business combinations. The Group financial statements comprise the
financial statements of Steel & Tube Holdings Limited and its controlled entities (subsidiaries) (see Note E5).
The Group controls an entity when the Group is exposed to, or has rights to variable returns from its involvement with the entity
and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are consolidated
from the date on which control is transferred to the Group and deconsolidated from the date control ceases.
Consideration transferred is the fair value of assets transferred, liabilities incurred to the former owners of the acquiree and
equity interests issued by the Group. Consideration transferred also includes the fair value of any asset or liability resulting from
a contingent consideration arrangement. Identifiable assets acquired and liabilities (including contingent liabilities) assumed in a
business combination are measured initially at their fair values at acquisition date.
All inter-company transactions and balances between Group companies are eliminated.
Foreign currency
Transactions in foreign currencies are translated at the foreign exchange rate at the date of the transaction. Gains and losses
resulting from the settlement of such transactions and from translation of monetary assets and liabilities at balance date are
recognised in profit or loss except when deferred in equity as qualifying cashflow hedges. The Group’s hedging largely comprises
cashflow hedges for future purchases of inventory. The Group’s current practice is to recognise the accumulated gains or losses
on the hedging instrument / derivative against the carrying value of the inventory when inventory is recognised.
70STEEL & TUBE ANNUAL REPORT 2022
Derivatives – Cashflow hedge
The Group uses derivative financial instruments to hedge its exposure to foreign exchange risks arising from operational,
financing and investing activities. In accordance with its Treasury Policy, the Group does not hold or issue derivative financial
instruments for trading purposes. Derivative financial instruments are recognised initially at fair value on the date a derivative
contract is entered into. Subsequent to initial recognition, derivatives are re-measured at fair value.
The Group designates certain derivatives as hedges of a highly probable forecast transaction (cashflow hedge). The effective
portion of changes in the fair value of derivatives designated as cashflow hedges is recognised in equity. The gain or loss on
the ineffective portion is recognised in profit or loss in other gains/(losses). When the hedged item is a non-financial asset (for
example, inventory or property, plant and equipment) the amount recognised in equity is transferred to the carrying amount of
the asset when it is recognised. In other cases the amount recognised in equity is transferred to profit or loss in the same period
the hedged item is recognised in the Statement of Profit or Loss and Other Comprehensive Income. If the hedging instrument no
longer meets the criteria for hedge accounting, expires, is sold, terminated or is exercised, any cumulative gain or loss previously
recognised in equity remains in equity until the forecast transaction is ultimately recognised in profit or loss. When a forecast
transaction is no longer expected to occur, the cumulative gain or loss reported in equity is immediately transferred to profit or
loss within other gains/(losses).
Derivative financial instruments are classified as current assets or current liabilities if expected to be settled within 12 months;
otherwise, they are classified as non-current.
Impairment of non-financial assets
Assets that have indefinite useful lives that are not subject to amortisation and intangible assets not yet available for use are
tested annually for impairment. Assets (including intangibles and property, plant and equipment) subject to amortisation and
depreciation are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount may not
be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an asset’s fair value, less costs to sell and value in use. For the purposes of
assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cashflows (cash-
generating units).
Revenue recognition
Revenue is measured based on the consideration specified in a contract with a customer. The Group derives its revenue from the
distribution and processing of steel and associated products. Revenue is recognised at a point in time when a Group entity has
transferred control, which is when it has delivered the products to the customer, the customer has accepted the products and
collectability of the related receivables is highly probable.
71STEEL & TUBE ANNUAL REPORT 2022
The table below provides further information on the revenue recognition across the Group based on each contract portfolio.
Contract
PortfolioDescriptionKey JudgementsOutcomeTiming of Recognition
Cash or Credit
Supply Sales
Any sales from individual
orders without a formal
written contract.
No major judgement
required.
There is one performance
obligation, being the supply
of the product.
Point in time
Revenue is recognised at point
of sale when the product is
delivered.
Supply and
Installation
Sales
Any contracts that
contain supply and
installation performance
obligations.
Determining whether
or not the supply and
installation components
are distinct within the
context of the contract.
There are two performance
obligations, being supply of
the product and installation
of the product.
Installation of the product
is considered a distinct
performance obligation as
supply only contracts are also
available on a stand-alone basis.
Over time
Revenue relating to the supply
performance obligation follows
the same recognition process
as for the ‘Supply Only Sales’
contract portfolio.
Installation of the product
enhances an asset controlled by
the customer as the installation
is completed. Revenue relating
to the installation performance
obligation is recognised on a
stage of completion basis based
on the input of labour costs, as
this corresponds directly with
the value to the customer of the
Group’s performance completed
to date.
Supply Only
Sales
Any contracts/sales
agreements that only
have supply of steel
product clauses.
Determining whether
each act of supply should
be treated as a separate
performance obligation
within the contract.
There is one performance
obligation, being the act of
the supply. Irrespective of how
many supply events occur,
the products supplied are all
highly interrelated in that they
all are required for the same
construction project, and
therefore represent a series of
distinct supply events which are
substantially the same and use
the same method to measure
progress towards completion.
They are therefore accounted
for as a single performance
obligation.
Over time
The products supplied are
required to be modified
to a significant extent and
do not create an asset with
an alternative use to the
Group. The Group has a right
to consideration from the
customer in an amount that
corresponds directly with
the value to the customer
of the Group’s performance
completed to date.
Revenue relating to Supply
Only Sales is recognised in the
amount to which the Group
has a right to invoice under the
terms of the contract.
The Group has also utilised the practical expedients specified in NZ IFRS 15 Revenue from Contracts with Customers in respect
of the requirement to disclose the transaction price allocated to unsatisfied (or partially unsatisfied) performance obligations,
where the contract has an original expected duration of one year or less, or where the Group has applied the practical expedient
to recognise revenue at the amount to which it has a right to invoice, which corresponds directly to the value to the customer of
the Group’s performance completed to date. Any volume-based rebates extended to customers by the Group are recognised as
a deduction from revenue, in line with the pattern of transfer of control of the relevant good or service to the customer, where
payment is deemed to be highly probable.
72STEEL & TUBE ANNUAL REPORT 2022
Leases
Under NZ IFRS 16, the Group recognises right-of-use assets and lease liabilities for a number of categories of operating leases,
including:
• Property leases – The Group has a variety of property leases across its national network of branches and processing facilities.
Where the Group has entered into sub-leases in respect of its property leases, each sub-lease will be assessed under the new
standard to determine if it qualifies as a finance lease or an operating lease under NZ IFRS 16;
• Motor vehicle leases – The Group leases motor vehicles for staff use in sales and day-to-day operations;
• Equipment leases – The Group leases certain equipment for use in its distribution, manufacturing and warehousing activities.
This includes material handling equipment such as forklifts and pallet trucks; and
• Other leases – other leases includes the lease of assets such as IT equipment, photocopiers and other plant or office
equipment.
On inception of a new lease, the lease liability is measured at the present value of the remaining lease payments, discounted
using the Group’s incremental borrowing rate at that date. The right-of-use assets are measured at an amount equal to the lease
liability, and are depreciated over the estimated remaining lease term on a straight-line basis. The Group presents the right-of-use
assets and lease liabilities separately on the face of the Balance sheet.
The Group has utilised the recognition practical expedients specified in NZ IFRS 16 in respect of short-term and low value leases
where appropriate, as well as the use of a single discount rate to a portfolio of leases with reasonably similar characteristics.
Adoption status of relevant new financial reporting standards and interpretations
Change in intangible assets accounting policy
In March 2021 the IFRS Interpretations Committee (the Committee), which is responsible for interpreting the application of IFRS,
issued a decision on configuring and customising software provided under SaaS arrangements. The decision considers whether
configuration or customisation expenditure relating to SaaS arrangements can be recognised as an intangible asset and if not,
over what time period the expenditure is expensed. Where it is determined that the costs are to be expensed and they are
in respect of a service that is distinct from the access to the software, the expense is recognised in profit or loss as incurred
i.e. as the service is received. If the service is not considered distinct, the costs are recognised as an expense as the entity
receives access to the customised software i.e. over the contract term. The decision was subsequently ratified by the
International Accounting Standards Board in April 2021.
The Group’s accounting policy has historically been to capitalise costs related to the configuration and customisation of SaaS
arrangements as assets in the balance sheet. In response to the Committee’s decision, the Group revised its accounting policy in
relation to these configuration and customisation costs for SaaS arrangements. The new accounting policy and the impact of the
adoption is outlined in Note C2.
New standards and interpretations issued and not yet effective
A number of new standards, amendments to standards and interpretations are effective for annual periods beginning on or
after 1 July 2022. The Group is currently assessing the impact of these new standards to the Group to determine if they will have
a significant impact on future financial statements. On this basis, the Group has not adopted and currently does not anticipate
adopting, any standards prior to their effective dates.
73STEEL & TUBE ANNUAL REPORT 2022
© 2022 KPMG, a New Zealand Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private
English company limited by guarantee. All rights reserved.
Independent Auditor’s Report
To the shareholders of Steel & Tube Holdings Limited
Report on the audit of the consolidated financial statements
Opinion
In our opinion, the consolidated financial statements
of Steel & Tube Holdings Limited (the ’company’)
and its subsidiaries (the 'group') on pages 40 to 73:
i.present fairly in all material respects the group’s
financial position as at 30 June 2022 and its
financial performance and cash flows for the year
ended on that date in accordance with New
Zealand Equivalents to International Financial
Reporting Standards and International Financial
Reporting Standards.
We have audited the accompanying consolidated
financial statements which comprise:
— the consolidated balance sheet as at 30 June
2022;
— the consolidated statements of profit or loss and
other comprehensive income, changes in equity
and cash flows for the year then ended; and
— notes, including a summary of significant
accounting policies.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (‘ISAs (NZ)’). We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We are independent of the group in accordance with Professional and Ethical Standard 1 International Code of
Ethics for Assurance Practitioners (Including International Independence Standards) (New Zealand) issued by the
New Zealand Auditing and Assurance Standards Board and the International Ethics Standards Board for
Accountants’ International Code of Ethics for Professional Accountants (including International Independence
Standards) (‘IESBA Code’), and we have fulfilled our other ethical responsibilities in accordance with these
requirements and the IESBA Code.
Our responsibilities under ISAs (NZ) are further described in the Auditor’s responsibilities for the audit of the
consolidated financial statements section of our report.
Other than in our capacity as auditor we have no relationship with, or interests in, the group.
Materiality
The scope of our audit was influenced by our application of materiality. Materiality helped us to determine the
nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually
and on the consolidated financial statements as a whole. The materiality for the consolidated financial
statements as a whole was set at $2 million determined with reference to a benchmark of the group’s revenue.
We chose the benchmark because, in our view, this is a key measure of the group’s performance.
74STEEL & TUBE ANNUAL REPORT 2022
2
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit
of the consolidated financial statements in the current period. We summarise below those matters and our key
audit procedures to address those matters in order that the shareholders as a body may better understand the
process by which we arrived at our audit opinion. Our procedures were undertaken in the context of and solely
for the purpose of our statutory audit opinion on the consolidated financial statements as a whole and we do not
express discrete opinions on separate elements of the consolidated financial statements.
The key audit matter How the matter was addressed in our audit
Existence of Inventories
Refer to Note B1 to the Financial Report.
At 30 June 2022, the group held inventories on hand
of $171.8 million which represents 40% of the total
assets.
The existence of inventories is considered a Key Audit
Matter as inventory is located across multiple
operating sites throughout the country. This along
with a broad product offering and the nature of
inventory held, presents inherent challenges to
controlling inventory. The group is reliant on regular
cycle and wall-to-wall counting to ensure the accuracy
of inventory records.
.
We evaluated the existence of inventory by performing
audit procedures including;
-obtaining an understanding of the nature and
value of inventories, complexity in counting the
items and historical inventory count
adjustments.
-determining which locations to observe the
inventory count processes based on the value
and nature of inventory at each location.
Undertaking, on a sample basis, our own test
counts at those locations.
-reviewing the accuracy of inventory count
adjustments posted by management.
We did not identify any material misstatements in
relation to the existence of inventories.
Revenue recognised on Construction Contracts within the Infrastructure Division
Refer to the Infrastructure Division segmental
information in Note A3 to the Financial Report.
$89.3 million of revenue was recognised on
construction contracts within the Infrastructure
Division.
The construction contracts typically have a duration of
many months, with some spanning more than a year.
Revenue is recognised over time based on either the
estimated stage of completion of each project or
according to the value to the customer of the group’s
performance completed to date.
When estimating stage of completion, revenue is
calculated based on the proportion of total costs
incurred at the reporting date compared to the group’s
estimation of total costs of the project, multiplied by
the total expected revenue from the project.
We evaluated revenue from construction contracts
within the Infrastructure Division by performing audit
procedures including;
-obtaining an understanding of the group’s
processes and controls relating to recognition
of revenue on construction contracts.
-in respect of completed projects, on a sample
basis, we assessed the evidence of
completion of the contract and vouched
collection of customer receipts.
-in respect of in-progress contracts, we
selected contracts according to a risk-based
criteria. For selected contracts, we made
inquiries with management to understand the
status and risks of the project. We obtained
the customer contract to evaluate whether the
contractual terms were reflected in the
group’s estimation of total costs and total
75STEEL & TUBE ANNUAL REPORT 2022
3
The key audit matter How the matter was addressed in our audit
In the event that a project is expected to make losses,
an adequate provision is recorded for the estimated
future unavoidable losses of the project.
Revenue from construction contracts is a Key Audit
Matter due to the large volume of individual projects
which are in progress at each reporting date.
Furthermore, estimating the stage of completion
requires consideration of the specific contractual
terms, and judgement is required when estimating
the expected costs to complete and the total
expected revenue from the project.
expected revenues. We challenged the
completeness by comparison to supporting
evidence such as cost to date and material and
labour pricing.
-made inquiries about the project performance
in the period since reporting date to assess
whether this had any bearing on the
judgements made within the year ended 30
June 2022.
-considered the adequacy of the associated
disclosures in the financial statements.
We did not identify any material misstatements in
relation to the recognition of revenue on construction
contracts within the Infrastructure Division.
Other information
The Directors, on behalf of the group, are responsible for the other information included in the entity’s Annual
Report. Other information includes the Chair and Chief Executive’s report, disclosures relating to corporate
governance and other group specific information. Our opinion on the consolidated financial statements does not
cover any other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with the
consolidated financial statements or our knowledge obtained in the audit or otherwise appears materially
misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Other matter
The consolidated financial statements of the group for the year ended 30 June 2021, was audited by another
auditor who expressed an unmodified opinion on those statements on 23 August 2021.
Use of this independent auditor’s report
This independent auditor’s report is made solely to the shareholders as a body. Our audit work has been
undertaken so that we might state to the shareholders those matters we are required to state to them in the
independent auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the shareholders as a body for our audit work, this independent
auditor’s report, or any of the opinions we have formed.
76STEEL & TUBE ANNUAL REPORT 2022
4
Responsibilities of the Directors for the consolidated financial
statements
The Directors, on behalf of the group, are responsible for:
— the preparation and fair presentation of the consolidated financial statements in accordance with generally
accepted accounting practice in New Zealand (being New Zealand Equivalents to International Financial
Reporting Standards) and International Financial Reporting Standards;
— implementing necessary internal control to enable the preparation of a consolidated set of financial
statements that is fairly presented and free from material misstatement, whether due to fraud or error; and
— assessing the ability to continue as a going concern. This includes disclosing, as applicable, matters related
to going concern and using the going concern basis of accounting unless they either intend to liquidate or to
cease operations or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the consolidated financial
statements
Our objective is:
— to obtain reasonable assurance about whether the consolidated financial statements as a whole are free
from material misstatement, whether due to fraud or error; and
— to issue an independent auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance
with ISAs NZ will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these
consolidated financial statements.
A further description of our responsibilities for the audit of these consolidated financial statements is located at
the External Reporting Board (XRB) website at:
http://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-1/
This description forms part of our independent auditor’s report.
The engagement partner on the audit resulting in this independent auditor's report is Laura Youdan.
For and on behalf of
KPMG
Auckland
19 August 2022
77STEEL & TUBE ANNUAL REPORT 2022
Corporate governance at Steel & Tube is predicated on high standards of ethics and performance and is achieved through robust
governance policies, practices and processes to ensure a culture that is open, transparent and focused on adding value for our
stakeholders. The Board regularly reviews Steel & Tube‘s governance structures and processes to identify opportunities for
enhancement, ensure they are consistent with best practice and reflect Steel & Tube’s operations.
The Board believes that the Company’s corporate governance framework materially complies with the NZX Corporate
Governance Code (the Code). A summary of Steel & Tube’s governance actions and performance against each of the Principles in
the Code is detailed on the following pages.
Easy access to information about the Company, including financial and operational information and key corporate governance
policies and charters, is available through the Company’s website at https://steelandtube.co.nz.
The information in this report is current as at 19 August 2022 and has been approved by the Board of Steel & Tube.
CODE OF ETHICAL BEHAVIOUR
“Directors should set high standards of ethical behaviour, model this behaviour and hold management accountable for these
standards being followed throughout the organisation.”
We expect our Directors and staff to act with integrity and professionalism, and undertake their duties in the best interests of the
Company, taking into account the interest of shareholders and other stakeholders.
The Board has adopted a Code of Ethics, which is available on the Company website and staff intranet. The Company Policy
Manual also includes detailed standards of integrity, conduct and behaviour required of all employees. This forms part of the new
employee induction programme.
We encourage employees to speak out if they have concerns. The avenues for doing so are detailed in the Company’s
Whistleblower Policy which is on the Company website. Steel & Tube does not donate to political parties.
Insider Trading Policy
Steel & Tube has an Insider Trading Policy which, along with the Financial Markets Conduct Act 2013, imposes limitations and
requirements on Directors and employees in dealing in the Company’s shares. These limitations prohibit dealing in shares while
in possession of inside information and impose requirements for seeking consent to trade.
While there is no formal requirement to do so, most Directors hold shares in the Company either directly or through affiliates.
Details of Directors’ share dealings are set out on page 90 of this report.
BOARD COMPOSITION AND PERFORMANCE
“To ensure an effective Board, there should be a balance of independence, skills, knowledge, experience and perspectives.”
The Steel & Tube Board comprises six Independent Directors, who have significant relevant industry and market experience,
skills and expertise that are of value to the Company. Profiles of Directors are available on the Company website and included in
the Annual Report. Directors’ interests are disclosed on page 89 of the Annual Report.
Andrew Flavell was appointed as an Independent Director from 1 October 2021 and will stand for election by shareholders at the
2022 Annual Shareholders’ Meeting. Andrew is an accomplished senior technology executive with significant global success in
developing and executing strategies to promote business and organisational growth, and driving optimal use of cutting edge
technologies, tools and processes. His extensive digital and IT experience is of significant value to Steel & Tube and meets a need
identified in the Board skills matrix.
The roles and responsibilities of the Board are detailed in the Board Charter, which is reviewed at least every three years and is
available on the Company website. The Board’s primary objective is to enhance shareholder value and protect the interests of
other stakeholders by improving corporate performance and accountability.
The Board has delegated authority for the day to day management of the business to the CEO and the wider senior management
team with specified financial and non-financial limits. A formal Delegations of Authority Policy documents delegated authorities
and is reviewed annually by the Board.
The Company has written agreements with each Director, outlining the terms of their appointment. The Board is satisfied
that each Director has the necessary time available to devote to the position, broadens the Board’s expertise and has the
competencies to ensure the effective functioning of the Board.
The Board supports the separation of the roles of Chair and CEO and Steel & Tube’s Chair is required to be an Independent Director.
Director independence is determined in accordance with NZX Listing Rules and with regard to the factors described in the Code.
GOVERNANCE
78STEEL & TUBE ANNUAL REPORT 2022
All Directors have access to executives to discuss issues or obtain information on specific areas in relation to matters to be
discussed at Board meetings, or other areas as they consider appropriate. The Board Committees and Directors, subject to the
approval of the Board Chair, have the right to seek independent professional advice at the Company’s expense, to enable them to
carry out their responsibilities.
Professional Development
Directors are encouraged to undertake appropriate training and education to ensure they remain current on how to best
perform their duties. In addition, Management provides regular updates on relevant industry and Company issues, including
briefings from senior executives. All Directors are current members of New Zealand Institute of Directors.
Board Performance
The Board monitors its own performance and from time to time commissions external reviews to assess the performance of
individual Directors and the Board’s effectiveness. An external review was undertaken in calendar year 2021, which noted great
progress made and on a positive trajectory, in regards to business turnaround and a great collegial board culture.
Director Appointment
Membership, rotation and retirement of Directors is determined in accordance with the Company constitution and NZX Listing
Rules. The Nomination Committee has delegated responsibility from the Board to make recommendations on Board composition
and nominations, subject to the Company constitution.
Directors will retire and may stand for re-election by shareholders at least every three years, in accordance with the NZX
Listing Rules. A Director appointed since the previous Annual Shareholders’ Meeting holds office only until the next Annual
Shareholders’ Meeting but is eligible for election at that meeting. The Board asks for Director nominations each year prior to
the Annual Shareholders’ Meeting, in accordance with the Company constitution and the NZX Listing Rules. Key information is
provided to shareholders when a Director stands for election or re-election.
The Board has developed a skills matrix and takes into account a number of factors including qualifications, experience and skills.
The collective capability of the current Board is assessed against requirements and the search then focuses on finding a Board
member who will best complement the current mix of capability on the Board. Shareholders may also nominate candidates for
election to the Board. The Board believes that the current Directors offer valuable and complementary skill sets. Importantly, the
majority of Steel & Tube’s Directors has either worked or is involved in directorships in the sector.
SKILLS MATRIX
DIRECTOR EXPERTISEHighModerate
Governance
••••
Commercial
••••••
Financial Acumen (F&A)
•••••
M&A
••••
HSQET and associated systems
•••••
Business Turnaround
••••••
Steel Industry
••••
Manufacturing
•••
Construction/ Infrastructure
••••
Logistics, Supply Chain & Procurement
••••••
Sales Marketing and Brand
••••
Digital Technology and Change
••••
People, Culture and ER
••••••
79STEEL & TUBE ANNUAL REPORT 2022
Diversity
Equality and diversity are cornerstones of our organisational culture. We believe that diversity at Steel & Tube is integral to
creating a collaborative workplace culture, competitive advantage and ultimately, sustainable business success. Diversity provides
us with a broad range of perspectives and experience that enhance the quality and depth of our decision-making and helps
create a united team approach across all levels of our organisation.
Our approach to diversity is outlined in the Diversity Policy, which is available on the Company website. A number of initiatives are
in place to support diversity and the Board believes the principles in the Policy were adhered to in FY22.
Key areas of focus are:
• Recruitment and retention of a diverse workforce
• Fair and consistent reward and recognition
• Flexible working arrangements
• Employee engagement
• Agreed standards of conduct and behaviour
Steel & Tube has a diverse workforce, representing more than 30 different ethnicities. English is a second language for a number
of these staff, so Steel & Tube has initiatives in place to support them in the workplace, including the opportunity to participate in
Steel & Tube’s Numeracy and Literacy Programme.
The Officers of the Company (as defined by the NZX Listing Rules for the purposes of diversity reporting) are the CEO and
specific direct reports of the CEO having key functional responsibility. As at 30 June 2022, females represented 20% of Directors
and Officers of the Company (FY21: 21%).
As at 30 June
FY22
Male
FY22
Female
FY21
Male
FY21
Female
Directors4232
Officers 8181
Female representation at Steel & Tube
33%
11%
27%
40%
11%
25%
0
1020304050
Board of Directors
Lead Team/Snr Execs
Overall Workforce
27%
35%
Management
2022
2021
80STEEL & TUBE ANNUAL REPORT 2022
BOARD COMMITTEES
“The Board should use Committees where this will enhance its effectiveness in key areas, while still retaining Board responsibility.”
The Board has established several standing committees, each of which has a Board approved written charter summarising
the role, responsibilities, delegations and membership requirements. The Board regularly reviews the charters of each Board
committee, the committees’ performance against those charters and membership of each committee. The Board believes that
committee charters, committee membership and roles of committee members comply with recommendations in the Code.
Current membership of each of the Board committees at 30 June 2022 is set out below.
CommitteeRoleMembers
Quality, Health, Safety & EnvironmentAssist the Board to meet its
responsibilities in relation to the
Company’s Quality, Health and Safety
(H&S) and Environment policies and
procedures, and legislative compliance
Chris Ellis (Chair)
John Beveridge
Karen Jordan
Audit and RiskAssist the Board in its oversight of the
integrity of financial reporting, financial
management and controls, external
audit quality and independence, and the
risk management framework
Karen Jordan (Chair)
John Beveridge
Steve Reindler
Andrew Flavell
People and Culture (previously
Governance and Remuneration)
Assist the Board to establish and
maintain a strong governance
framework overseeing the management
of the Company’s people, remuneration
and diversity policies
Steve Reindler (Chair)
Chris Ellis
Susan Paterson
NominationAssist the Board in ensuring appropriate
Board performance and composition
and in appointing Directors
Susan Paterson (Chair)
John Beveridge
Chris Ellis
Karen Jordan
Steve Reindler
Andrew Flavell
Board committees assist the Board by focussing on specific responsibilities in greater detail than is possible in Board meetings.
However, the Board retains ultimate responsibility for the functions of its committees and determines their responsibilities.
The Board appoints the members and chair of each committee, with the committee chair reporting committee
recommendations to the Board. Management attendance at committee meetings is by invite only.
In the case of a takeover offer, Steel & Tube would follow its takeover protocols including forming an Independent Takeover
Committee to oversee disclosure and response and to engage expert legal and financial advisors to provide advice on procedure.
The table below sets out committee membership and Director attendance at Board and committee meetings during FY22. Board
meetings are scheduled throughout the year, with other meetings to deal with certain matters arising from time to time being
held when necessary.
81STEEL & TUBE ANNUAL REPORT 2022
Board
Quality, Health,
Safety &
Environment
Committee
Audit & Risk
Committee
People &
Culture
Committee
Nomination
Committee
Total number of meetings133432
Susan Paterson 13-432
Chris Ellis133-32
Steve Reindler13-332
John Beveridge 1334-2
Karen Jordan 1334-2
Andrew Flavell
1
7----
1
Andrew Flavell was appointed to the Board from 1 October 2021
REPORTING AND DISCLOSURE
“The Board should demand integrity in financial and non-financial reporting, and in the timeliness and balance of corporate
disclosures.”
Continuous Disclosure
Steel & Tube’s Directors are committed to keeping investors and the market informed of all material information about the
Company and its performance, in a timely manner. In addition to all information required by law, Steel & Tube also seeks to
provide sufficient meaningful information to ensure stakeholders and investors are well informed. Steel & Tube is committed
to providing accurate, timely, consistent and reliable disclosure of information to ensure market participants have fair access
to information that may impact on its share price. The Company’s Continuous Disclosure Policy sets out the principles and
requirements of this commitment to timely disclosures.
Financial Reporting
For the financial year ended 30 June 2022, the Directors believe that proper accounting records have been kept which enable,
with reasonable accuracy, the determination of the financial position of the Company and facilitate compliance of the financial
statements with the Financial Markets Conduct Act 2013.
The Audit and Risk Committee oversees the quality and integrity of external financial reporting, including the accuracy,
completeness, balance and timeliness of financial statements. It reviews Steel & Tube’s full and half year financial statements
and makes recommendations to the Board concerning accounting policies, areas of judgement, compliance with accounting
standards, stock exchange and legal requirements, and the results of the external audit. All matters required to be addressed,
and for which the Committee has responsibility, were addressed during the reporting period.
The Chief Executive Officer and Chief Financial Officer have confirmed in writing that Steel & Tube’s external financial reports
are presented fairly in all material aspects. The Chief Financial Officer holds the role of Company Secretary. In all accounting and
secretarial matters, the Board ensures that the Secretary’s reports are objective and that the Secretary has unfettered access to
the Chair and the Audit and Risk Committee, without reference to the CEO.
Non-financial reporting
Steel & Tube has a commitment to ensuring that the Company adds value for all its stakeholders, from shareholders to staff
and the communities the Company operates in, as well as reducing the environmental impact of the Company’s activities.
Steel & Tube believes it is the Company’s corporate responsibility to ensure the Company plays its part in making the world a
better place. In line with this, over the last year the Company has formalised its approach to ESG – environmental, social and
governance principles – which the Company believes will enhance Steel & Tube and support its growth. Oversight of ESG is set
out in Steel & Tube’s Sustainability Policy.
In July 2021, the Company filled a new position, Sustainability Manager, to help oversee the Company’s sustainability practices.
Steel & Tube has reported on the Company’s progress in the What Matters section in this report, on pages 25 to 27.
82STEEL & TUBE ANNUAL REPORT 2022
REMUNERATION
“The remuneration of Directors and Executives should be transparent, fair and reasonable.”
Remuneration of Directors and senior executives is the key responsibility of the People and Culture Committee.
The framework for the determination and payment of Directors’ and senior executives’ remuneration is set out in the
Remuneration Policy. External advice is sought on a regular basis to ensure remuneration is benchmarked to the market for senior
management positions, Directors and Board Committee positions. The last increase in Director remuneration was approved by
shareholders in November 2017. Board policy is that no sum is paid to a Director upon retirement or cessation of office.
Details of Director and Executive Remuneration in FY22 are provided on pages 85 to 88.
RISK MANAGEMENT
“Directors should have a sound understanding of the material risks faced by the issuer and how to manage them. The Board
should regularly verify that the issuer has appropriate processes that identify and manage potential and material risks.”
Steel & Tube’s ability to deliver appropriate returns to its shareholders requires successful execution of business strategy and the
elimination, reduction and mitigation of associated risks. The Board has overall responsibility for the establishment and oversight
of the Group’s risk management framework.
The Board is responsible for overseeing and monitoring significant business risks and overseeing Management’s processes
to mitigate the identified risks. Management regularly report to the Board on significant business risks and treatments for
those risks.
The Company is exposed to risks from a number of sources, including operational, strategic, economic and financial risks.
Steel & Tube’s Corporate Risk Management System Framework incorporates policies, procedures and appropriate internal
controls to identify, assess and manage areas of significant business and financial risks. The Company applies effective risk
management principles across its business units to ensure risk is identified, assessed, categorised and ranked to allow the
business to understand its risks. Steel & Tube maintains insurance policies that it considers adequate and practicable to meet
its insurable risks.
Key Risks
Key risks are assessed on a risk profile identifying the likelihood of occurrence and potential severity of impact. Key risks are
managed with a focus on decreasing the risk likelihood and minimising the risk impact should it occur. Key risk areas include:
• Operational risk e.g. health & safety, product quality, supply chain, data and systems, business continuity
• Strategic risk e.g. execution of strategic initiatives, competitive environment, technological change
• Economic risk e.g. market risk, sector risk
• Financial risk e.g. business performance, capital management
Risk Management Process
Steel & Tube’s Corporate Risk Management System Framework mandates one framework for risk management to:
• Integrate risk management in line with the Board’s risk appetite into structures, policies, processes and procedures
• Deliver regular key risk reviews, reporting and monitoring
Key risks are owned by members of the executive leadership team. This promotes integration into operations and planning and
a culture of proactive risk management. Key risks are reported to the Board. Legislative compliance is monitored across each
business unit through Quantate compliance management software.
Quality, Health, Safety and Environment
The Board is committed to ensuring a safe and healthy environment for all Steel & Tube people and anyone in the Company’s
workplaces. Ensuring Steel & Tube employees and contractors go home safely every day is the Company’s number one priority.
Steel & Tube’s aim is to be the preferred New Zealand supplier for steel products and solutions and our expert people play an
important role in that, sharing their knowledge and experience with customers. Ensuring the quality of Steel & Tube’s products
remains a critical focus and an extensive Quality Management Programme is in place and overseen by the General Manager
Quality, Health, Safety and Environment. More information on our approach to Quality and Health & Safety is outlined in the
What Matters section on page 28.
83STEEL & TUBE ANNUAL REPORT 2022
AUDITORS
“The Board should ensure the quality and independence of the external audit process.”
External Audit
Steel & Tube’s External Auditor Independence Policy outlines our commitment to ensuring audit independence, both in fact
and appearance, so that Steel & Tube’s external financial reporting is viewed as being highly objective and without bias.
Shareholders approved the appointment of KPMG as the Company’s auditor at the 2021 Annual Shareholders’ Meeting.
It is Steel & Tube’s practice that the external auditors attend the Annual Shareholders’ Meeting each year.
The Audit and Risk Committee monitors the ongoing independence, quality and performance of the external auditors and
monitors audit partner rotation. The Committee pre-approves any non-audit work undertaken by the external auditors.
There were no non-audit services provided by KPMG in following their appointment as external auditors. The fees paid for
audit services in FY22 is identified in Note E4 of the Financial Report.
Internal Audit
Steel & Tube operates an outsourced internal audit function, which reports to and is monitored by the Audit and Risk Committee.
The Committee approves the annual internal audit plan, receives internal audit review reports on the adequacy and effectiveness
of Steel & Tube’s internal controls and monitors the implementation of recommendations arising from the internal auditor’s
review findings.
KPMG were engaged as our internal auditor for the FY17 to FY21 financial years prior to their appointment as the external auditor
effective from the FY22 financial year.
Alternative internal audit arrangements were made for FY22 and beyond, utilising both internal and external resources.
SHAREHOLDER RIGHTS AND RELATIONS
“The Board should respect the rights of shareholders and foster constructive relationships with shareholders that encourage
them to engage with the issuer.”
Shareholder Communications
Steel & Tube are committed to open and regular dialogue and engagement with shareholders. Easy access to
information about the performance of Steel & Tube is available through the Investor Centre on the Company’s website
at https://steelandtube. co.nz/investor-centre. Steel & Tube releases semi-annual Shareholder Newsletters as part of
the Company’s initiative to keep shareholders informed about the business and the contribution the Company makes
to New Zealand’s economic development and prosperity.
Steel & Tube’s investor relations programme includes semi-annual post-results briefings with investors, analysts and investor
meetings, and earnings announcements. The programme is designed to provide shareholders and other market participants
the opportunity to obtain information, express views and ask questions. Shareholders are encouraged to communicate
with the Company and its share registry electronically.
In addition to shareholders, Steel & Tube has a wide range of stakeholders and maintains open channels of communication
for all audiences, including the investing community and the New Zealand Shareholders’ Association, as well as its staff,
suppliers and customers.
Shareholder Meetings
Steel & Tube endeavours to make it easy for shareholders to participate in Annual Shareholders’ Meetings, which are held
in a main centre and also streamed live online or recorded and posted on the Company website. The notice of the Annual
Shareholders’ Meeting is announced on the NZX, sent to shareholders and posted on to the Company’s website at least 20
working days prior to the meeting each year. Shareholders are able to ask questions of and express their views to the Board,
management and the external auditors at Annual Shareholders’ Meetings.
The Board considers that shareholders should be entitled to vote on decisions that would change the essential nature of
Steel & Tube’s business. The Board adopts the one share, one vote principle, conducting voting at shareholder meetings by poll.
Shareholders are also able to vote by proxy ahead of meetings without having to physically attend those meetings.
84STEEL & TUBE ANNUAL REPORT 2022
Director Remuneration
Total remuneration available to non-executive Directors of $575,000 was last approved in 2017 and on the basis of six independent
Directors. The People and Culture Committee is currently reviewing Director remuneration and may propose a shareholders’
resolution increasing remuneration for the upcoming Annual Shareholders’ Meeting.
As at 30 June 2022, the standard Directors’ fees per annum were $145,000 for the chair and $75,000 for each non-executive
Director. Board committee Chairs also receive additional fees of between $5,000-$10,000 for their committee responsibilities.
A special pool of $30,000 is also available should extraordinary non ‘business as usual’ work arise. This pool was not utilised in FY22.
Directors’ fees exclude GST, where applicable. Directors are entitled to be reimbursed for costs directly associated with carrying
out their duties, including travel costs. Board policy is that no sum is paid to a Director upon retirement or cessation of office.
Directors do not participate in the Company's short or long term incentives.
The total amount of remuneration and other benefits received by the Directors during the year ended 30 June 2022 was $526,250
as shown in the table below:
DirectorDirectors Fees
Committee
Chair FeesF Y 2 2 To t a lResponsibility
Susan Paterson145,000-145,000Board Chair
Karen Jordan75,00010,00085,000Audit and Risk Committee Chair
Chris Ellis75,00010,00085,000QHSE Committee Chair
Steve Reindler75,0005,00080,000Governance & Remuneration Committee Chair
John Beveridge75,000-75,000
Andrew Flavell
1
56,250-56,250
1
Andrew Flavell was appointed as an Independent Director from 1 October 2021
EXECUTIVE REMUNERATION
Steel & Tube’s Remuneration Policy and practices are designed to attract, retain and motivate high calibre people at all levels
of Steel & Tube.
Board policy is that no additional amounts are paid to a Director or the Chief Executive Officer upon retirement or cessation
of office.
The CEO and executives have the potential to earn a Short Term Incentive (STI) each year. Steel & Tube’s STI is based on
performance targets and is designed to differentiate performance and reward delivery. STI values for the CEO and executives are
set as a percentage of Fixed Annual Remuneration (FAR) based on the scale, complexity and performance expectations of each
individual STI participant’s role.
The CEO and executives, together with a limited number of non-executive senior managers, also have the potential to earn a Long
Term Incentive (LTI). Steel & Tube’s LTI is designed to incentivise and retain key personnel, align the interests of executives and
shareholders and encourage long-term decision-making. LTI values for the CEO and executives are set as a percentage of FAR.
STI performance targets reflect a mixture of financial, quality & safety, customer services and strategy delivery objectives
appropriate for the position held by the individual STI participant.
The STI plan also includes a Company based performance hurdle, where no STI is payable to any participant if the year-end results
are 80% or less of the Company’s financial target.
If there is a fatality or serious harm where the Board deems either the Company as a whole or participating individuals culpable,
the Board may decide that no STIP payment (all components) will be paid to one, some or all of the participants.
The current LTI (referred to as the Performance Rights Plan (PRP)) was developed and approved by the Board in February 2018.
The PRP performance period runs for three years and comprises of two performance conditions (50% each) as outlined in Note E5
of the Financial Report.
REMUNERATION
85STEEL & TUBE ANNUAL REPORT 2022
All rights granted under the Company’s previous LTI scheme, in place since 2003, have been either vested and exercised or
forfeited, in accordance with that plan’s rules.
The STI and LTI are both variable elements of remuneration, with selected employees invited to participate each year as approved
by the Board. They are only paid if individual, Company and shareholder TSR performance conditions and targets are met.
CEO REMUNERATION
The CEO’s overall remuneration as at 30 June 2022 consists of a fixed annual remuneration (FAR), an STI at 60% of FAR and an LTI
of 40% of FAR. This is reviewed annually by the People and Culture Committee and approved by the Board each year.
The performance targets for the CEO for the year ending 30 June 2022 were as follows:
Target KPIsWeighting
Financial – Return on Funds Employed (ROFE)70%
Health & Safety – Leading and lagging indicators10%
Completion of Nominated Strategic Initiatives7%
Customer Engagement7%
Employee Engagement6%
The Board ensures that the CEO’s remuneration, including base salary, is aligned with appropriate market rates and reflects
performance and delivery of sustainable shareholder value.
The table immediately below sets out CEO FAR and the pay for performance components of the CEO’s remuneration package on
an annualised basis. This table sets out the pay for performance outcomes for STI and LTI assuming 100% is paid out.
86STEEL & TUBE ANNUAL REPORT 2022
Target Remuneration:
Fixed RemunerationPay for Performance
Total Target
RemunerationFAR¹
Non- taxable
benefits
2
Sub totalTarget STI
�
Target LTI
4
Subtotal
2022$875,500nil$875,500$458,556$ 4 0 9,13 8 $ 8 6 7, 6 9 4$1,743,194
2021$728,280nil$728,280$218,484$291,312$509,796$1,238,076
2020$714,000nil$714,000$428,400$285,600$714,000$1,428,000
2019$700,000nil$700,000$420,000$392,000$812,000$1,512,000
2018$700,000nil$700,000$420,000$210,000$630,000$1,330,000
The financial performance target for the full year to 30 June 2022 was above the transitionary scheme’s 90% hurdle requirement
and accordingly STI is payable to the CEO in relation to this.
Details of what has been earned and been paid to the CEO in the past five years are outlined below:
Actual Remuneration Received:
FAR¹
Non-taxable
benefits
2
STI earned in FY
5
Value of LTI
vested during FY
6
To t a l
remuneration
earned during FY
FY22$794,786-$ 6 8 7, 8 3 4-$1,482,620
FY21$721,140-$273,105-$994,245
FY20$702,880---$702,880
FY19$700,000---$700,000
FY18
7
$ 5 8 7, 2 3 9-$128,214-$715,453
The CEO has personally made an investment in the Company and has acquired 348,284 shares through on-market transactions
and the pro-rata rights offer capital raise.
1
FAR includes any KiwiSaver employer contributions
2
There were no costs associated with any other benefits during the year ended 30 June 2022
3
STI target for the full year which is subject to achievement of performance targets as agreed with the Board in each year. STI payment for FY22 is calculated on the CEO’s FAR as at
31 March 2022. If financial targets are exceeded it is possible to achieve up to 150% of the target. Financial performance for FY22 has resulted in 150% payment
4
LTI value of actual Rights granted in each year (which may be exercised after the completion of the three year performance period, providing and only to the extent that the
performance conditions have been satisfied). The 2022 value of Rights issued of $409,138 included a special issue of 100,000 shares valued at $112,000
5
STI payable for the FY following the achievement of performance targets as agreed with the Board
6
LTI value of Rights as at the date vested (including the gross value of the associated dividends paid) in the FY related to Rights granted in the three years prior
7
FAR and total remuneration are for the prorated FY from 25 September 2017 to 30 June 2018
87
STEEL & TUBE ANNUAL REPORT 2022
PAY GAP
The Pay Gap represents the number of times greater the Chief Executive Officer’s remuneration is to the remuneration of an
employee paid at the median of all Steel & Tube employees. For the purposes of determining the median paid to all Steel & Tube
employees, all permanent full-time, permanent part- time and fixed-term employees are included, with part-time employee
remuneration adjusted to a full-time equivalent amount.
At 30 June 2022, the Chief Executive Officer’s fixed remuneration of $875,500 was 13.51 times (FY21: 11.69 times) that of the median
employee at $64,792 per annum.
Employee Remuneration
The number of employees or former employees who received remuneration and other benefits valued at or exceeding $100,000
during the year to 30 June 2022 are specified in the table below.
The remuneration noted includes all monetary payments actually paid during the course of the year ended 30 June 2022 and
restructuring and redundancy related compensation.
The remuneration paid to, and other benefits received by, Mark Malpass in his capacity as CEO for the year ended 30 June 2022
are detailed on pages 86 and 87, and are excluded from the table.
Remuneration Range $0002022
100 - 11043
110 - 12022
120 - 13019
130 - 1409
140 - 1506
150 - 1608
160 - 1705
170 - 1807
180 - 1901
190 - 2003
200 - 2104
210 - 2203
220 - 2301
230 - 2401
240 - 2503
270 - 2802
360 - 3703
370 - 3801
410 - 4201
480 - 4901
To t a l143
88STEEL & TUBE ANNUAL REPORT 2022
CHANGES IN DIRECTORS’ INTERESTS
Directors made the following entries in the Directors’ Interests Register pursuant to section 140 of the Companies Act 1993
during the year ended 30 June 2022:
DirectorInterests
Susan PatersonAppointed as a Chair of Evolution Healthcare
Ceased to be a member of Leadership Group of Aotearoa Circle
Andrew FlavellInterim CTO of Laybuy Holdings Limited (ceased)
Appointed director of Ports of Auckland Limited
Appointed as Chair of ASB Technical Advisory Group
Steve ReindlerAppointed as a director of Ports of Auckland Limited
Ceased to be a director of Z Energy Limited
Appointed as an independent advisor to the Museum of NZ Te Papa Tongarewa
Governance Group (effective 17 August 2022)
INFORMATION USED BY DIRECTORS
There were no notices from Directors requesting to disclose or use company information received in their capacity as Directors
that would not otherwise have been available to them.
DIRECTORS’ SHAREHOLDINGS
Steel & Tube securities in which each Director has a relevant interest as at 30 June 2022 are:
DirectorShares held
Susan Paterson262,425 beneficially owned
Karen Jordan1,069
John Beveridge20,000 beneficially owned
Steve Reindler81,17 7
Chris Ellis10,000
DISCLOSURES
89STEEL & TUBE ANNUAL REPORT 2022
DIRECTORS’ SECURITY DEALINGS
During the year ended 30 June 2022 Directors’ disclosed the following securities transactions in respect of section 148(2) of the
Companies Act 1993 and sections 297(2) and 298(2) of the Financial Markets Conduct Act 2013.
These transactions took place in accordance with Steel & Tube’s Insider Trading Policy.
DirectorDate of Transaction
Number of shares
acquired / (disposed)Nature of transactionConsideration
Steve Reindler20 September 202110,000On-market acquisition$10,500
23 November 202111,750On-market acquisition$15,349
26 April 202213,000On-market acquisition$20,429
INDEMNITIES AND INSURANCE
In accordance with section 162 of the Companies Act 1993 and Steel & Tube’s Constitution, the company has arranged Directors
and Officers Liability insurance covering Directors and employees of Steel & Tube, including Directors of subsidiary companies,
for liability arising from their acts or omissions in their capacity as Directors or employees. The insurance policy does not cover
dishonest, fraudulent, malicious or wilful acts or omissions.
SUBSIDIARY COMPANIES DIRECTORS
The remuneration of employees appointed as directors of subsidiary companies is disclosed in the relevant banding of
remuneration set out under the heading Employee Remuneration. Employees did not receive additional remuneration or
benefits for being directors during the year.
Directors of the subsidiary companies as at 30 June 2022 were:
CompanyDirectors
Steel & Tube New Zealand LimitedMark Malpass, Richard Smyth
Composite Floor Decks Holdings LimitedMark Malpass, Richard Smyth
Studwelders LimitedMark Malpass, Richard Smyth
S & T Stainless LimitedMark Malpass, Richard Smyth
Manufacturing Suppliers LimitedMark Malpass, Richard Smyth
S & T Plastics LimitedMark Malpass, Richard Smyth
Composite Floor Decks LimitedMark Malpass, Richard Smyth
90STEEL & TUBE ANNUAL REPORT 2022
TOP 20 SHAREHOLDERS
As at 6 July 2022
Twenty largest security holders as at 6 July 2022
Ordinary
SharesPercentage
NEW ZEALAND STEEL LIMITED 26,274,753 15.83%
LENNON HOLDINGS LIMITED 8,095,985 4.88%
HSBC NOMINEES (NEW ZEALAND) LIMITED* 5,118,931 3.08%
CUSTODIAL SERVICES LIMITED 3,344,149 2.02%
NEW ZEALAND DEPOSITORY NOMINEE LIMITED 2,762,507 1.66%
FNZ CUSTODIANS LIMITED 2,571,590 1.55%
HPI AVONDALE LIMITED 2,103,786 1.27%
CITIBANK NOMINEES (NEW ZEALAND) LIMITED* 1,785,134 1.08%
NEIL DOUGLAS WAITES & ANTHONY GENE WAITES & RICHARD BOYD WAITES 1,770,000 1.07%
MAXIMA INVESTMENTS LIMITED 1,450,000 0.87%
ACCIDENT COMPENSATION CORPORATION* 1,321,326 0.80%
JOHN FRANCIS MANAGH 1, 3 19,95 1 0.80%
ANDREW PAUL LISSAMAN EVERIST 1,252,000 0.75%
ASB NOMINEES LIMITED 1,085,000 0.65%
CHESTER PERRY NOMINEES LIMITED 1,000,000 0.60%
JOHN FRANCIS MANAGH & DAVID ROBERT PERCY 999,454 0.60%
TREVOR JEFFREY CORFIELD 901,186 0.54%
LEVERAGED EQUITIES FINANCE LIMITED 900,000 0.54%
PUBLIC TRUST CLASS 10 NOMINEES LIMITED* 740,670 0.45%
ASB NOMINEES LIMITED 641,738 0.39%
65,438,160 39.43%
* Shares held in New Zealand Central Securities Depository (NZCSD)
91
STEEL & TUBE ANNUAL REPORT 2022
STEEL & TUBE HOLDINGS LIMITED (STU) ANALYSIS OF SHAREHOLDING
As at 6 July 2022
Holding RangeHolder CountHolder Count %Holding QuantityHolding Quantity %
1 to 9991,49020.16% 614,445 0.37
1,000 to 4,9992,58835.02% 6 , 249, 3 6 2 3.77
5,000 to 9,9991,15215.59% 7, 8 4 7, 2 6 0 4.73
10,000 to 49,9991,72823.38% 35,291,468 21.26
50,000+4335.85% 115,970,005 69. 8 7
To t a l7, 3 9 1100.00% 165,972,540 100.00%
SUBSTANTIAL SECURITY HOLDER
The company received no Substantial Security Holders notices during the year.
Issued shares in the company at 30 June 2022 comprise:
Ordinary shares fully paid165,972,540
Ordinary shares partly paid (no voting rights)^25,000
165,997,540
^ Shares issued in the Senior Executives Share Scheme 1993
92
STEEL & TUBE ANNUAL REPORT 2022
93STEEL & TUBE ANNUAL REPORT 2022
REGISTERED OFFICE
7 Bruce Roderick Drive, East Tamaki,
Auckland 2013, New Zealand
PO Box 58880, Botany, Auckland 2163,
New Zealand
Ph: +64 4 570 5000 Fax: +64 4 570 2453
Email: info@steelandtube.co.nz
Website: www.steelandtube.co.nz
SHARE REGISTRY
Computershare Investor Services Limited
Private Bag 92119, Auckland 1142,
New Zealand
Ph: +64 9 488 8777 Fax: +64 9 488 8787
Email: enquiry@computershare.co.nz
Website: w w w.computershare.co.nz
DIRECTORY
94
95
steelandtube.co.nz
96STEEL & TUBE ANNUAL REPORT 2022
---
Template
Distribution Notice
Updated as at 18 December 2019
Please note: all cash amounts in this form should be provided to 8 decimal places
Section 1: Issuer information
Name of issuer Steel & Tube Holdings Limited
Financial product name/description Ordinary Shares
NZX ticker code STU
ISIN (If unknown, check on NZX
website)
NZSUTE0001S5
Type of distribution
(Please mark with an X in the
relevant box/es)
Full Year X Quarterly
Half Year Special
DRP applies
Record date 9 September 2022
Ex-Date (one business day before the
Record Date)
8 September 2022
Payment date (and allotment date for
DRP)
23 September 2022
Total monies associated with the
distribution
1
$12,447,941
Source of distribution (for example,
retained earnings)
Retained Earnings
Currency NZD
Section 2: Distribution amounts per financial product
Gross distribution
2
$0.08958333
Gross taxable amount
3
$0.08958333
Total cash distribution
4
$0.07500000
Excluded amount (applicable to listed
PIEs)
NIL
Supplementary distribution amount $0.00661765
Section 3: Imputation credits and Resident Withholding Tax
5
Is the distribution imputed Fully imputed
Partial imputation
No imputation
1
Continuous issuers should indicate that this is based on the number of units on issue at the date of the form
2
“Gross distribution” is the total cash distribution plus the amount of imputation credits, per financial product, before the deduction of
Resident Withholding Tax (RWT).
3
“Gross taxable amount” is the gross distribution minus any excluded income.
4
“Total cash distribution” is the cash distribution excluding imputation credits, per financial product, before the deduction of RWT.
This should include any excluded amounts, where applicable to listed PIEs.
5
The imputation credits plus the RWT amount is 33% of the gross taxable amount for the purposes of this form. If the distribution is
fully imputed the imputation credits will be 28% of the gross taxable amount with remaining 5% being RWT. This does not constitute
advice as to whether or not RWT needs to be withheld.
If fully or partially imputed, please
state imputation rate as % applied
6
16.3%
Imputation tax credits per financial
product
$0.01458333
Resident Withholding Tax per
financial product
$0.01497917
Section 4: Distribution re-investment plan (if applicable)
DRP % discount (if any)
N/A
Start date and end date for
determining market price for DRP
N/A N/A
Date strike price to be announced (if
not available at this time)
N/A
Specify source of financial products to
be issued under DRP programme
(new issue or to be bought on market)
N/A
DRP strike price per financial product
N/A
Last date to submit a participation
notice for this distribution in
accordance with DRP participation
terms
N/A
Section 5: Authority for this announcement
Name of person
authorised to make
this announcement
Richard Smyth
Contact person for this
announcement
Richard Smyth
Contact phone number 021 646 822
Contact email address Richard.smyth@steelandtube.co.nz
Date of release through MAP
22 August 2022
6
Calculated as (imputation credits/gross taxable amount) x 100. Fully imputed dividends will be 28% as a % rate applied.
---
FY22 Results Presentation
For the 12 months ended 30 June 2022
2
FY22 demonstrated Steel & Tube’s value
•Record financial performance
•Robust operating model that will deliver
through the economic cycle
•Clear focus on continuing to strengthen the
core and investing in high value products,
services and sectors
•Goal to deliver sustainable double-digit ROFE
3
ROFE
14.6%
FY21: 6.6%
Record results with improvement in all key metrics
Results driven by strong sector demand, trading disciplines, customer service,
operational performance and supply chain management
Revenue
$599.1m
+24.6%
EBITDA
$66.6m
+72.5%
EBIT
$47.6m
+130.0%
NPAT
$30.2m
+96.4%
Volume
167,209t
+5.7%
Dividend
FY22: 13.0 cps
FY21: 4.5 cps
Customer NPS
40
FY21: 34
eTRIFR
1.13
FY21: 1.86
Employee NPS
35
FY21: 19
Net Promoter Score (NPS): Measure of customer/employee satisfaction. Customer NPS industry average is 32 and Employee NPS industry average is 18
Employee Total Recordable Injury Frequency Rate (eTRIFR): Employee safety measure
Earnings Before Interest and Tax (EBIT), Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA), Net Profit AfterTax (NPAT)
ROFE: Return on Funds Employed, calculated as Normalised EBIT over Average Funds Employed (Debt (including Lease Liability) + Equity)
4
Building a sustainable
business
Our long term aim is to operate our
business in a way that is financially
rewarding for our shareholders and
positive for our people, our customers
and our planet.
Steel is one of the world’s most essential and
sustainable building products – permanent, forever
reusable and the most recycled substance on the
planet. On a cradle to cradle basis, steel’s
environmental performance compares favourably
to other materials such as concrete and timber.
Supporting our
people and
customers
Delivering value to our
shareholders
Maximising steel’s
contribution to a
sustainable and
low emission
society
5
ESG Scorecard
Positive outcomes on safety and employee engagement
*TRIFR: Employee Total Recordable Injury Frequency Rate.
4.9
1.86
1.13
0
2
4
6
FY20FY21FY22
TRIFR
5
13
15
19
29
35
0
10
20
30
40
July 20Nov 20Mar 21July 21Dec 21Apr 22
eNPS SCORE
Employee Engagement
Employee Safety Measure
•TRIFR 1.13 – substantially than industry
standards
•Emphasis on critical risks and reduction
measures
•Safety conversations program and worker
engagement providing valuable insights
•Employee Satisfaction Score 7.8/10
•Focus on wellbeing, diversity, recruitment, career
development and training
6
Customer satisfaction
Carbon Reduction*
2,261
1,972
1,948
1,700
1,800
1,900
2,000
2,100
2,200
2,300
FY20FY21FY22
tCO
2
-
e
*Reporting in accordance with Greenhouse Gas Protocols and includes all material emissions under Scope 1 and 2, with Scope 3 limited to business travel.
24
34
40
0
10
20
30
40
50
FY20FY21FY22
NPS SCORE
ESG Scorecard
Delivery for customers in challenging period; continued focus on decarbonisation
•NPS of 40 for FY22
•Improving result reflects ability to deliver for
customers in challenging period
•Greenhouse gas emissions 1,948 tCO
2
-e – in line with
prior year despite increase in activity
•21% reduction of carbon emissions per $1m revenue
•Investment in technology supporting decarbonisation
•Introduction of ‘carbon credit’ offer for infrastructure
clients
7
Five year transformation
Embedded value from turnaround programme; growth strategy now underway
495.8
599.1
FY18FY22
$m
Revenue
(28.1)
66.6
FY18FY22
$m
EBITDA
21.2
66.9
FY18FY22
$m
Normalised EBITDA
(36.2)
47.6
FY18FY22
$m
EBIT
13.1
47.9
FY18FY22
$m
Normalised EBIT
(32.1)
30.2
FY18FY22
$m
NPAT
4.2
14.6
FY18FY22
%
ROFE
150
167
FY18FY22
Tonnes (000’s)
Volume
8
Positive economic activity driving high demand for steel in FY22
Economic headwinds expected to result in some levelling off in activity in late FY23
2
3
4
2
3
5
6
Jun-17Jun-18Jun-19Jun-20Jun-21Jun-22
SQM (000s)
No. Consents (000s)
Rolling 12months
Non-Residential Consents
ConsentsFloor Area
5
6
7
8
20
30
40
50
Jun-17Jun-18Jun-19Jun-20Jun-21Jun-22
Rolling 12months
SQM (000s)
No. Consents (000’s)
Residential Consents
ConsentsFloor Area
20
40
60
Jun-17Jun-18Jun-19Jun-20Jun-21Jun-22
Performance of Manufacturing
Index (PMI)
Source: Statistics New Zealand, BNZ – BusinessNZ PMI, Statistic NZ, NZIER
Steel & Tube is a diversified
business with limited
exposure to any one sector
50
100
150
200
Jun-17Jun-18Jun-19Jun-20Jun-21Jun-22
Index (2010=100:sa)
Activity Index
Infrastructure Construction
Share of FY22 Sales
39%
31%
11%
10%
5%
4%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
FY22
Infrastructure
Others
Engineering
Residential
Construction
Manufacturing
Commercial
Construction
9
* Based on share price of $1.27 as at 30/06/2022
TSR: Total Shareholder Return. This is calculated using (Closing share price –opening share price +
dividends)/opening share price
FY22 Dividend: 13.0 cps
Represents a dividend yield of 11.4%*
Payment of 71% in line with Steel & Tube’s
dividend policy of 60% -80% of Adjusted NPAT
Earnings per share (cps): 18.3
Net Tangible Assets per share: $1.22
Price earnings ratio: 6.9
Total Shareholder Return: 19.1%
Shareholder Returns
Steel & Tube delivers a high dividend yield
5 year transition complete, now focused
on growth and continue to generate
sustainable double-digit ROFE:
•Quality business with strong
foundations embedded
•Leading supplier in a market with
strong demand –well positioned to
succeed through the economic cycle
•Delivered on turnaround strategy
•Attractive shareholder returns and
value
•Clear forward strategy and growth
opportunities
•Digital investment making a positive
impact
9
FY22 Financial Results
Richard Smyth
Chief Financial Officer
11
Group financial summary
•Volume and revenue uplift
•Gross margin continues to improve
•Held onto embedded structural reduction in
operating expenses
•Significant increase in earnings
FY22 Dividend: 13.0 cents per share
•Interim dividend: 5.5 cps (unimputed)
•Final dividend: 7.5 cps (partially imputed)
In line with Steel & Tube’s dividend policy of 60% -80% of
Adjusted NPAT
$mFY22 FY21*Var%
Revenue599.1481.024.6%
Volume (Ktonnes)1671585.7%
EBITDA66.638.672.5%
Normalised EBITDA**66.937.677.9%
EBIT47.620.7130.0%
Normalised EBIT**47.919.7143.1%
NPAT30.215.496.4%
EPS (cents per share)18.39.396.8%
Dividend (cents per share)13.04.5188.9%
Delivered record
FY22 results
* FY21 results have been restated for the impact of a change in accounting policy in regards to the accounting for Software as a Service arrangements (“SaaS”).
** FY22 and FY21 Normalised EBITDA and Normalised EBIT have been adjusted to exclude non-trading adjustments. Further details included in appendix to this
presentation.
12
Well positioned to deliver
through the economic cycle
while investing in growth
Group Balance Sheet Summary
•Utilised strong cash position to invest in critical
inventory, supporting our customers and
mitigating supply chain headwinds
•Impact of supply chain congestion on cashflow
•Strong balance sheet with low borrowings
•Substantial bank facility in place
•Double-digit ROFE
$mFY22FY21
Trade and other receivables103.384.0
Inventories192.5113.5
Trade and other payables(89.0)(80.0)
Working Capital206.8117.5
Total Facility 100.050.0
Borrowings (51.0)-
Available Facility / Undrawn49.050.0
Cash and cash equivalents8.025.0
Borrowings(51.0)-
Net Cash/Debt(43.0)25.0
Net Tangible Assets (NTA) 202.2184.6
ROFE (%)14.6%6.6%
13
-10
0
10
20
30
40
50
60
70
80
90
50
150
250
350
450
1H192H191H202H201H212H211H222H22Column1
Margin, EBIT, EBITDA $m
Revenue $m
Gross Margin
Revenue
Normalised EBITDA
Normalised EBIT
Covid-19 Impact
FY21 (1H21 & 2H21) has been restated for SaaS impact
Strong earnings momentum
Driven by business improvements, trading disciplines and solid activity
14
Record revenue
Momentum driven by a strong focus on the
customer, trading disciplines and positive
market conditions
0
40
80
120
160
0
200
400
600
FY20FY21FY22
Tonnage (000’s)
Sales ($m)
Sales & Volume
SalesTonnage
Revenue $599.1m: Up $118.1m, +24.6%
Continuing sales momentum, despite Covid-19 impact
Volume 167.2Ktonnes: Up 9.3Kt, +5.7%
Increasing customer demand for comprehensive range of
products
0
1,000
2,000
3,000
4,000
0
200
400
600
FY20FY21FY22
Average selling price ($/t)
Sales ($m)
Sales & Average Selling price
SalesAverage selling price
15
Growth in Gross Margin to 22.3%
•Disciplined governance and controls, data driven pricing decisions,
product mix focused on growing market share in attractive sectors
which offer higher margins
•Efficiency improvements, in particular labour and better freight
management
•Strategic focus on higher margin products and services
Gross margin includes freight, direct and sub-contract labour
19.0%
20.4%
22.3%
15%
20%
25%
FY20FY21FY22
Consistent Gross Margin
Improvement
Strong uplift in gross margin
Priority focus on gross margin $/tonne improvement
Product Margin: 34.0%
•Strong improvements in Distribution offset by reduction in Infrastructure due to impact of Covid-19
•Non-repeat of Covid-19 lockdowns and improvements in Reinforcing business through 2H22 are driving
margin improvement
16
Business Performance
Increases across both divisions; particularly strong performance in Distribution
Distribution – high volume business
•Excellent performance, well positioned to take advantage
of market conditions
•Benefiting from inventory management, pricing and
supply chain disciplines
•Expect margins to improve with current expansion of
plate processing and other high value product
opportunities
Infrastructure – processing products before sale
•Lift in revenue despite challenging market conditions and
impact of Covid-19 on large projects
•Non-repeat of Covid-19 and Reinforcing business model
2H22 changes driving higher return and lower risk
•Significant growth in Roofing,Purlins and demand for
steel framing
DistributionFY22FY21
% of Group
revenue
64.0%59.6%
Revenue$383.4m$286.9m
Gross Margin24.0%21.1%
InfrastructureFY22FY21
% of Group
revenue
36.0%40.4%
Revenue$215.7m$194.1m
Gross Margin18.5%19.0%
Gross margin includes freight, direct and sub-contract labour
17
Normalised operating expenses
Ongoing focus on operating expenditure
Completion of Project Strive with significant structural
changes has delivered long term benefit
•$12.3m reduction in normalised opex since FY18
•Operational costs as a percentage of sales continues
to decline
•More efficient network has also led to reduced carbon
emissions
Increase in FY22 normalised operating expenses of $7.9m:
•Inflationary pressure -mostly wage and salary inflation
•Incentive accruals provisioning
•Increased depreciation
Going forward: steady state with expenses expected to
increase in line with inflation and expansion of the business
Normalised Opex excludes Holiday Pay provisions/reversal, as well as non-trading adjustments previously reported
0%
5%
10%
15%
20%
25%
0
20
40
60
80
100
FY20FY21FY22
$m
Normalised Opex
Incentives
Depreciation & Amortisation
Other Expenses
Salaries & Wages
Opex/Sales%
18
EBIT
improvement
driven by
volume and
margin growth
FY21 Normalised EBIT
FY21 Lease Gains
Volume Growth
Margin Growth
FY22 Wage Subsidy
Net cost escalations
FY22 Normalised EBIT
19
Inventory management
Inventory management system and focus
on availability of critical items has resulted
in consistent DIFOT for customers
•Utilised strong cash position to invest in critical
inventory, supporting our customers and mitigating
supply chain headwinds
•Higher inventory value as a result of:
─Higher prices
─Longer supply chain resulting in an increase in
Goods in Transit
─Increased sales/customer demand
•Inventory turns (unit and tonnes) have remained
consistent with prior periods
•Strong partnerships with shipping and freight
forwarding suppliers have helped secure laneways
and partially mitigate costs
SOH June 2021
Cost price escalation
Local supply chain
International supply
chain
Additional to
support sales
Residual COVID
SOH June 2022
20
Cashflow
•Strong cash inflows reflecting increased
revenues
•Significant investment in inventory which
has increased $79.0m since FY21
•Dividends of $14.5m paid during FY22
•Steel & Tube to start paying Income Tax
from FY23
•Extension of existing revolving cash
advance facility from $50m to $80m, and
additional $20m trade loan
Opening Cash
EBITDA
Other Working Capital
movement/timing
Dividend
payments
Capex payments
Lease/ROU payments
Increase in Inventory
Closing Net Debt
21
Capital Expenditure
Careful management of funds in current environment
•FY22 capex of $6.2m (FY21: $5.5m)*
•Capital spend approximately equal to D&A
•Priority capital allocation to projects supporting digital
(30%) and business improvement/growth (70%)
Planned Investment for FY23
•Investment in processing equipment and other growth
opportunities
•Continued investment in digital technology
•Increased cashflow will support capital investment
programme
* FY21 capex hasbeen restated for the impact of a change in accounting policy in relation to the accounting for Software as a Service arrangements (“SaaS”)
** FY20 capex has not been restated for the impact of SaaS
***Depreciation and amortisation excludes right-of-use asset depreciation
0
2
4
6
8
10
0
2
4
6
8
10
FY20**FY21*FY22
$m
Capital Expenditure
22
Moving
Forward
23
Our purpose
To make life easier for our customers
needing steel solutions
•Providing a one-stop-shop for the most
essential steel products –from foundation
to roof and everywhere in between
•Doing everything we can to make it easy
for our customers to do business with us
•Always looking for ways to work smarter
•Using technology and great thinking to pull
it all together and enable a better business
•Building one great team right across the
Steel & Tube business
23
24
Steel procurement and pricing
Elevated pricing although expected to ease in the medium term
•Russia/Ukraine conflict –impacted global steel market and future Ukraine rebuild will absorb large
quantities of steel
•China, India and US demand for steel expected to increase –fiscal stimulus measures and management of
domestic supply shortfalls
•Shipping costs –starting to ease from historical highs although still a long road back to normal
•Cost of raw materials (iron ore, coke, coal) – increasingly turbulent as steel feedstock supply, coupled with
variable mill demand, fluctuates in response to uncertain market demand
•Finished product prices –remain at historical highs, but become increasingly volatile as mills seek to
manage capacity whilst retaining margins
•Foreign exchange –weaker New Zealand dollar putting pressure on local steel prices
•Inflationary pressure –driving up costs particularly in construction
25
Steel & Tube is strongly positioned to deliver through the
economic cycle
Key Strengths
•Unmatched breadth of high-quality product and
solutions
•National network with regional strength
•Enhanced customer value proposition and high levels
of customer service
•Operational excellence with significant cost reductions
and efficiencies
•Disciplined supply chain and inventory management
•Strong pricing governance and controls and use of
data analytics
•Experienced Board and Management team –industry
knowledge and enhanced digital capability
Sector Outlook
•Significant rebuilding of Government
investment in infrastructure (+56% over the
next decade compared to last decade,
particularly roading and water)
•Manufacturing (food & non-food) expanding
•Residential building consents have peaked
although ongoing social housing and
retirement village investment expected
•Commercial construction activity
strengthening
26
Current market challenges and how we respond to them
Market
Challenges
Our Responses
FY22FY23
Commodity
price volatility
•Careful investment in high demand, high
margin inventory items
•Keeping ahead of the price curve
•Continued investment in the right inventory
•Easing supply chain allowing reduced cover
•Focus on margin capture on existing inventory
Supply chain
constraints
•Dedicated supply lanes
•Leveraging our strong relationships with
suppliers to ensure continuity of supply
•Locked in significant increase in dedicated supply
laneways, enabling more just-in-time delivery
•Face-to-face engagement with overseas suppliers
•Further operational optimisation
Staff retention•Proactive support during Covid-19
•Holistic approach to Wellbeing, education
programme and Back to School Support
•Special bonuses for frontline staff
•Introduction of Steel & Tube Coaching Programme
•Further investment in staff training
•All staff at or above the Living Wage from 31
December 2022
Inflation•Average wage & salary inflation of 4%
•Continuous review of all costs to look for
efficiencies
•Expecting an average wage and salary increase of 4%
•Reviewing opportunities to target inflation
Cashflow
management
•Increased bank facilities
•Active management of debtor balances
•Review of all costs
•Focus on debtor collections
•Continuing to review debtor and creditor terms
27
Strategic focus
Growth focused on strengthening the core and building higher value products, services
and sectors to drive gross margin improvement – benefits expected from FY24 onwards
•Continue to build best-in-class customer
experience
•Leverage opportunities to cross sell a wide
range of products and services
•Drive gross margin $/tonne through dynamic
pricing and product procurement
•Ongoing focus on operating model –
warehouse operations, digitisingsupply
chains and customer facing channels
Continue to Strengthen the Core
•Improving resilience of earnings through
economic cycles
•Growth is targeted towards high value
products, diversified materials and value-
added services
•Continue to diversify customer segments
and build scale and footprint in these areas
•Accelerate shift to digital sales
•Primary focus is organic investment,
continue to review direct adjacent sectors
Grow High Value Products,
Services and Sectors
28
Initiatives underway
•Customer value proposition and sales optimisation
•Enhanced use of Data and Analytics
•A continued focus on Pricing and Procurement to ensure all
opportunities are maximised
•Operational improvements ensure appropriate cost of support
is balanced with customer service mix
•Continuous review of product lines to ensure focus is on highest
returning products, optimising our inventory investment
•Targeted capex investment in high demand areas
•Continue to build best-in -class
customer experience
•Leverage opportunities to cross
sell a wide range of products
and services
•Drive gross margin $/tonne
through dynamic pricing and
product procurement
•Ongoing focus on operating
model – warehouse operations,
digitisingsupply chains and
customer facing channels
Continue to
strengthen the core
29
FY23 strategic initiatives and focus areas
•Continued focus on customer and customer experience
•Use of analytics to better serve different customer segments
and types
•Integration of operational technologies into the digital
environment to achieve higher levels of automation
•Increase focus on sales technology to enhance sales
productivity, e.g. Infrastructure 3D software integrating with
both the client’s model and our internal manufacturing
systems
•Enhanced pricing governance and controls
•Investment into IT infrastructure providing operating leverage
Ecommerce
•Revenue +140% yoy
•Customer numbers +200% yoy
•20% of active customers now
using webshop
Electronic Data Interchange (EDI)
•Launch of EDI – targeted high
quantity, lower margin customers.
Reinforces strategic relationship
by reducing cost to purchase and
cost to serve
Launch of CRM for customer
experience team
Pricing and analytics platform
Cybersecurity, investment into
resiliency on critical sites
Digital Advantage
Competitive advantage through best in class customer
experience
30
Initiatives underway:
•Expansion of plate processing capability and offer with
investment in market leading machinery
•Increasing share of fasteners market with acquisition of
Fasteners NZ
•Building share of niche customer segment – fire and water
reticulation products through 1 August 2022 Kiwi Pipe and
Fittings acquisition
•Expanding steel framed housing – widen customer base and
investment
•Digital tools to make it easier for customers to transact with
us
•Other new product growth initiatives well advanced
•Growth is targeted towards high
value products, diversified
materials and value-added services
•Continue to diversify customer
segments and build scale and
footprint
•Accelerate shift to digital sales
•Primary focus is organic
investment, continue to assess
direct adjacent sectors
•Improving resilience of earnings
through economic cycles
Grow High Value
Products, Services
& Sectors
31
•Attractive value-added
products
•Growing market sector
•Replacement of obsolete
equipment with large, high
capacity machinery
•Market leading – digitally
enabled, automated cutting,
optimises remnants
•Operational from June 2022,
solid forward workload already
in place
•Existing footprint has
significant opportunity to
expand
Expanded plate
processing
capability and offer
31
32
•Symbolic of strategy to
selectively invest in high
value products and
segments
•Niche strength –fire and
water reticulation products
•Builds on Steel & Tube’s
existing offer
•Provides scale, market share
growth and immediately
earnings accretive
Kiwi Pipe and
Fittings
32
33
Strategic pathway: current state
Strategic InitiativeEarly
stage
Hitting
its stride
Full
benefit
Continue to
strengthen the core
Continue to build best-in-class customer experience
Leverage opportunities to cross sell a wide range of products and services
Drive gross margin $/tonne through dynamic pricing and product procurement
Ongoing focus on operating model – warehouse operations, digitisingsupply
chains and customer facing channels
High value products,
services and sectors
Continue to diversify customer segments and build scale in high value sectors
Expand plate processing offer and capability, and steel framed housing
Build niche market share through Kiwi Pipe & Fittings
Build high value product range via acquisition of Fasteners NZ
Accelerate shift to digital sales
33
34
FY23 Outlook
Robust operating model, well positioned to deliver through the economic cycle
Trading conditions:
•Continuing volatility in global and local
economies expected
•Steel pricing expected to remain elevated
•Strong demand likely to continue across
range of sectors
•Longer term, steel demand in some sectors
may moderate
Business Outlook:
•Clear focus on strengthening the core and
investing in high value products, services and
segments
•Business growth through organic expansion
and programmatic smaller M&A
•Further strategic initiatives expected to be
reflected in results from FY24 onwards
•Goal to continue to deliver sustainable
double-digit ROFE
Discussion
36
Non-GAAP Financial
Non-GAAP financial information: Steel & Tube uses several non-
GAAP measures when discussing financial performance. These
include Normalised EBIT and Working Capital. Management believes
that these measures provide useful information on the underlying
performance of Steel & Tube’s business. They may be used
internally to evaluate performance, analyse trends and allocate
resources. Non- GAAP financial measures should not be viewed in
isolation nor considered as a substitute for measures reported in
accordance with NZ IFRS.
Non-trading adjustments/Unusual transactions: The financial
results for FY22 (12 months) include transactions considered
to be non-trading in either their nature or size. Unusual transactions
can be as a result of specific events or circumstances or major
acquisitions, disposals or divestments that are not expected to occur
frequently. Excluding these transactions from normalised earnings
can assist users in forming a view of the underlying performance of
the Group. The above reconciliation is intended to assist readers to
understand how the earnings reported in the periods ended 30 June
2021 (12 months) and 30 June 2022 (12 months) reconcile to
normalised earnings. Non-trading adjustments of $(0.3) million are
included in the FY22 (12 months) results.
Period ended 30 June Restated Restated
$000sFY22FY21FY22FY21
Reported 66,598 38,614 47,63620,707
Holiday Pay provision release(854) -(854) -
NZ IFRS 16 reversal of impairment(527) (1,546) (527) (1,546)
Gain on sale of properties(1,215) (1,215)
Software as a Service (SaaS) expenditure1,6451,7601,6451,760
Normalised66,86237,61347,90019,706
EBITDA
EBIT
37
Glossary of Terms
EBIT: Earnings / (Loss) before the deduction of interest and
tax. This is calculated as profit for the year before net
interest costs and tax
EBITDA: Earnings / (Loss) before the deduction of interest,
tax, depreciation and amortisation. This is calculated as
profit for the year before net interest costs, tax, depreciation
and amortisation
ROFE: Return on Funds Employed. This is calculated as
Normalised EBIT over Average Funds Employed (Debt
(including Lease Liability) + Equity)
eNPS: Employee Net Promoter Score – assists in measuring
employee satisfaction and loyalty within the organisation
NPS: Net Promoter Score – assists in measuring customer
satisfaction and loyalty
Normalised EBIT/EBITDA: This means EBIT and EBITDA
excluding non-trading adjustments and unusual transactions
eTRIFR: Employee Total Recordable Injury Frequency Rate –
an important metric to assess safety performance
LTIFR: Lost Time Injury Frequency Rates - an important
metric to assess safety performance
Working Capital: This means the net position after Current
Liabilities are deducted from Current Assets. The major
individual components of Working Capital for the Group are
Inventories, Trade and other receivables and Trade and other
payables. How the Group manages these has an impact on
operating cash flow and borrowings
TSR: Total Shareholder Return. This is calculated using
(Closing share price – Opening share price +
Dividends)/Opening share price
38
•This presentation has been prepared by Steel & Tube Limited
(“STU”).The information in this presentation is of a general nature
only. It is not a complete description of STU.
•This presentation is not a recommendation or offer of financial
products for subscription, purchase or sale, or an invitation or
solicitation for such offers.
•This presentation is not intended as investment, financial or other
advice and must not be relied on by any prospective investor.It
does not take into account any particular prospective investor’s
objectives, financial situation, circumstances or needs, and does not
purport to contain all the information that a prospective investor
may require. Any person who is considering an investment in STU
securities should obtain independent professional advice prior to
making an investment decision, and should make any investment
decision having regard to that person’s own objectives, financial
situation, circumstances and needs.
•Past performance information contained in this presentation should
not be relied upon (and is not) an indication of future
performance.This presentation may also contain forward looking
statements with respect to the financial condition, results of
operations and business, and business strategy of STU. Information
about the future, by its nature, involves inherent risks and
uncertainties. Accordingly, nothing in this presentation is a promise
or representation as to the future or a promise or representation that
an transaction or outcome referred to in this presentation will
proceed or occur on the basis described in this presentation.
Statements or assumptions in this presentation as to future matters
may prove to be incorrect.
•A number of financial measures are used in this presentation and
should not be considered in isolation from, or as a substitute for, the
information provided in STU’s financial statements available at
www.steelandtube.co.nz.
•STU and its related companies and their respective directors,
employees and representatives make no representation or warranty
of any nature (including as to accuracy or completeness) in respect
of this presentation and will have no liability (including for
negligence) for any errors in or omissions from, or for any loss
(whether foreseeable or not) arising in connection with the use of or
reliance on, information in this presentation.
Disclaimer
---
DEAR SHAREHOLDER
On behalf of the Board and Management, we are very pleased to present this year’s annual report in what has been an
outstanding year for the company despite the ongoing challenges of Covid-19 and increasing economic headwinds.
The Steel & Tube Holdings Limited Annual Report for the year ended 30 June 2022 (FY22) is now available to view on our website
https://steelandtube.co.nz/investor/reports.
Five years ago, we embarked on a journey to reset our organisation for a stronger future. The results of our endeavours are now
evident, with Steel & Tube reporting record financial results for FY22. We would like to thank shareholders for their support on
this journey.
We are now well positioned to deliver through the economic cycle. We have a strong business foundation, focussed on our
customers, operational excellence and disciplined supply chain management. Our priority is to make it easy for our customers to
transact with us and this is driving revenue growth. Technology is a key enabler for our business, providing operational leverage
and supporting our customer value proposition. We would like to acknowledge Steel & Tube’s people, who provide excellent
service, expertise and support for our customers, day in and day out.
The benefits of our turnaround programme are now well embedded in the business, we have a clear strategy for growth and are
a leading supplier in a market with strong demand. Steel & Tube has a high gross dividend yield, with the FY22 full year dividend
of 13.0 cents per share representing a yield of 11.4%. Earnings per share are 18.3 cents per share (cps), with Net Tangible Assets per
share at $1.22.
We are focused on growth and creating a more diversified, resilient business. In particular, we are concentrating our efforts into
two key areas – continuing to strengthen our core foundation and investing in higher value products, services and sectors to
drive gross margin improvement.
Steel & Tube is positioned to respond to the changing environment and to take advantage of new market and product
opportunities. We have a strong pipeline of secured work in place and expect sustainable double-digit ROFE.
We are excited about the opportunities ahead of us to grow our business and deliver value for our shareholders.
Susan Paterson Mark Malpass
Chair Chief Executive Officer
STEEL & TUBE HOLDINGS LIMITED
FY22
REVIEW
7 Bruce Roderick Drive, East Tamaki, Auckland 2013, New Zealand
PO Box 58880, Botany, Auckland 2163, New Zealand. Ph: +64 4 570 5000 Fax:+64 4 570 2453
Email: info@steelandtube.co.nz Website: www.steelandtube.co.nz
RECORD RESULTS AND
PERFORMANCE AS
STEEL & TUBE MOVES
FOCUS TO GROWTH
CONTINUE TO
STRENGTHEN
THE CORE
• Record financial performance in
FY22, with profit almost double that
of the prior year
• Four consecutive half year periods
of revenue and earnings growth
• Year on year volume and sales uplift
and margin improvements
• Strong performance from the
Distribution business, and
continued improvement in the
Infrastructure business
• Priority focus on maintaining
availability of critical products and
high levels of service for customers
• Increased investment in high
demand, high margin inventory
items
• Earnings momentum supported by
structurally lower cost base, strong
market reputation and ability to
source and deliver product
• Continued investment in digital
technologies delivering business
efficiencies, high standards of
customer service and competitive
advantage
• Data driven pricing decisions,
strong governance and controls
providing resilience in a dynamic
environment
GROW
HIGH VALUE
PRODUCTS,
SERVICES
& SECTORS
• Accelerating shift to digital sales
with customers benefitting from
our omni-channel platform for
customers
• Acquired Fasteners NZ
• Launch of new product ranges,
including Zipclip and Rooffast
• Investment in new manufacturing
equipment to further grow market
share in existing sectors
• Invested in new plate processing
equipment – a high margin, high
value sector
• Expanding steel framed housing
– widen customer base and
investment
FY22 AT A GLANCE
Revenue
$599.1m, +24.6%
Volume
167,209 tonnes, +5.7%
EBITDA
$66.6m, +72.5%
EBIT
$47.6m, +130.0%
N PAT
$30. 2m, +96.4%
Normalised EBITDA
$ 6 6 .9m, +7 7.9 %
Normalised EBIT
$ 4 7.9 m , +1 4 3 .1 %
Investment in inventory
$ 19 2 . 5 m, + 69. 6%
Negotiated two new bank
facilities totalling $50m, in
addition to existing $50m
facilit y.
Final FY22 dividend of 7.5 cents
per share (cps), 50% imputed,
taking full year dividends to
13.0 cps.
Normalised EBITDA and Normalised EBIT
have been adjusted to exclude non-trading
adjustments and unusual transactions. See
reconciliation and more details on page 36.
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.