Steel & Tube FY23 Results Announcement
Company Announcement
21 August 2023
STEEL & TUBE FY23 RESULTS FOR YEAR ENDED 30 JUNE 2023
RECORD OPERATING CASHFLOW AND SECOND HIGHEST REVENUE RESULT FOLLOWING FY22 SUPER CYCLE
• Solid financial performance, at top of 10 May 2023 guidance
• Value of dual pathway strategy now becoming clear, with strong foundation in place and pleasing
performance from recent acquisitions and product expansion opportunities
• No bank debt and a positive cash balance, representing a ~$50m year on year improvement
• The company has also achieved a significant reduction in its inventory balance
• Robust pipeline, significant opportunities ahead and well positioned to take advantage of these
$m FY23 FY22 Var%
Revenue 589.1 599.1 (1.7%)
Volume (Ktonnes) 146.4 167.2 (12.4%)
EBITDA 51.9 66.6 (22.1%)
Normalised EBITDA
1
52.9 66.9 (20.9%)
EBIT 31.0 47.6 (34.9%)
Normalised EBIT
1
32.1 47.9 (33.0%)
NPAT 17.0 30.2 (43.7%)
Inventory 139.2 192.5 (27.7%)
Net operating cashflow 98.3 (34.1) +388.3%
Net cash/(debt) 6.5 (43.0) 115.1%
EPS 10.3 cps 18.3 cps (43.7%)
Gross Dividend (incl. imputation credits) 11.1 cps 14.5 cps (23.4%)
ROFE 10% 15% (35.7%)
For the 12 months ending 30 June 2023, Steel & Tube Holdings Limited (NZX: STU) has reported a result at the top
of guidance, with normalised earnings before interest and tax of $32.1m, compared to $47.9m in the FY22 super
cycle. This result reflects the previously advised softer trading conditions with pricing benefits offset by inflationary
pressures. Net profit after tax for FY23 was $17.0m (FY22: $30.2m).
Solid demand for steel continued in the first half of FY23, however volumes softened as activity eased. FY23 revenue
of $589.1m was the second highest reported by the company, with sales momentum continuing and elevated pricing
from steel mills almost offsetting softer volumes which were down by 12% on the prior year.
Gross margin dollars per tonne were ahead of prior year as benefits were realised from the focus on higher value
products, improved pricing disciplines and leveraging data analytics and capabilities. Inventory management
remained a priority as the company unwound the higher inventory levels built up in order to ensure customer supply
during the prior period of supply chain congestion.
The company finished the year with a strong balance sheet. Significant inventory reductions coupled with steady
revenues resulted in record operating cash inflows of circa $100m. Debt was reduced to zero with a cash balance at
year end of $6.5m. A substantial $100m bank facility is in place, which was renewed in August 2023.
1
Normalised EBITDA and Normalised EBIT have been adjusted to exclude non-trading adjustments and unusual transactions of
$(1.1)m in FY23. See Steel & Tube’s FY23 Results Presentation for a reconciliation.
The Board is pleased to have declared a final dividend of 4 cents per share, 100% imputed. This takes full year
dividends to 8 cents per share and represents 75% of Adjusted NPAT.
Chief Executive Officer, Mark Malpass, said: “We have focussed on providing high levels of service to our customers
while also strengthening the core business and maintaining a disciplined growth focus. New growth initiatives,
including plate processing and aluminium, as well as recent acquisitions (Kiwi Pipe & Fittings and Fasteners NZ) now
account for 10% of the Distribution Division’s EBIT and offer opportunities for growth and expansion.
“In a recessionary environment, the most important thing we can do is maintain a strong balance sheet and tightly
manage costs. A comprehensive cost out programme targeting $5m of operating costs is progressing well and
should offset continued inflation pressure expected in FY24. We are tightly controlling debtors and cashflow; and
investing in the right inventory and services as we shift towards higher value products and services. Our continued
focus on culture and our employee value proposition ensures that we attract and retain the best talent.
“We are cautiously optimistic that 2023 represents the bottom of the cycle and although we don’t expect a fast
recovery, we anticipate there will be some improvement from early 2024 (the second half our FY24 financial year).
Steel & Tube has significant operating leverage and we expect any uplift in activity and demand to be reflected in
our results. There are plenty of green lights ahead across our multi sector exposures. Commercial construction is
expected to improve, there is still a strong pipeline in residential construction from consents granted previously, and
large scale infrastructure projects are progressing.”
Chair Susan Paterson said: “This year marks a significant milestone for Steel & Tube as we commemorate 70 years of
successful business operation. Over the past seven decades, we have consistently embraced innovation, adapted to
changing market dynamics and invested in new technologies to ensure that we remain at the forefront of our
industry. This has allowed us to navigate through various economic cycles, expand our product portfolio and deliver
long term sustainable growth. Steel is an essential construction material and we have the capability and expertise to
deliver innovative solutions to assist in rebuilding of infrastructure, climate resilience and essential water services.
Despite the economic headwinds seen in FY23, Steel & Tube has delivered a strong performance, demonstrating
prudent fiscal management and the value in our dual pathway strategy.”
The company is hosting an analyst and investor call at NZST 10am today (Monday 21 August 2023). Call details can
be viewed here https://www.nzx.com/announcements/415242.
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 June 2023
Results for announcement to the market
Name of issuer Steel & Tube Holdings Limited
Reporting Period 12 months to 30 June 2023
Previous Reporting Period 12 months to 30 June 2022
Currency NZD
Amount (000s) Percentage change
Revenue from continuing
operations
$589,078 (1.7%)
Total Revenue $589,078 (1.7%)
Net profit/(loss) from
continuing operations
$16,997 (43.7%)
Total net profit/(loss) $16,997 (43.7%)
Final Dividend
Amount per Quoted Equity
Security
$0.04000000
Imputed amount per Quoted
Equity Security
$0.01555556
Record Date 8 September 2023
Dividend Payment Date 22 September 2023
Current period Prior comparable period
(30 June 2022)
Net tangible assets per
Quoted Equity Security
$1.17 $1.22
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
EBITDA and 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’s normalised EBITDA is $52.9m for FY23 (FY22:
$66.9m, 20.9% decrease) and normalised EBIT is $32.1m for
FY23 (FY22: $47.9m, 33.0% decrease). Further details on the
unusual transactions/non-trading adjustments are included in the
investor presentation for the year ended 30 June 2023.
Definitions:
• EBITDA: This means earnings before interest, tax,
depreciation and amortisation and is calculated as profit for
the period before net finance costs, tax, depreciation and
amortisation
• Normalised EBITDA: This means EBITDA after normalisation
adjustments
• 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
21 August 2023
Audited financial statements accompany this announcement.
---
Template
Distribution Notice
Updated as at June 2023
Please note: all cash amounts in this form should be provided to 8 decimal places, including zeros (ie 0.01001000)
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 8 September 2023
Ex-Date (one business day before the
Record Date)
7 September 2023
Payment date (and allotment date for
DRP)
22 September 2023
Total monies associated with the
distribution
1
$6,673,107
Source of distribution (for example,
retained earnings)
Retained Earnings
Currency NZD
Section 2: Distribution amounts per financial product
Gross distribution
2
$0.05555556
Gross taxable amount
3
$0.05555556
Total cash distribution
4
$0.04000000
Excluded amount (applicable to listed
PIEs)
NIL
Supplementary distribution amount $0.00705882
Section 3: Imputation credits and Resident Withholding Tax
5
Is the distribution imputed Fully imputed
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.
Partial imputation
No imputation
If fully or partially imputed, please
state imputation rate as % applied
6
28.0%
Imputation tax credits per financial
product
$0.01555556
Resident Withholding Tax per
financial product
$0.00277778
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 +64 21 646 822
Contact email address richard.smyth@steelandtube.co.nz
Date of release through MAP
21 August 2023
6
Calculated as (imputation credits/gross taxable amount) x 100. Fully imputed dividends will be 28% as a % rate applied.
---
FY23 Results Presentation
For the 12 months ended 30 June 2023
21 August 2023
Agenda
•FY23 performance
•Financial results
•Moving forward
•Outlook
•Discussion
2
3
FY23 trading conditions
Resilient business platform and track record of navigating changes through economic cycles
•Some easing in activity across most sectors in
2H23; FY23 volumes down 12.4% compared to
FY22
•Residential weak –consumer spending under
pressure, interest rates impacting housing market,
reduced business and residential investment; 12%
of STU revenue is from Residential
•Commercial construction and Manufacturing softer
but remains stable; Infrastructure investment
continues to strengthen after long period of low
investment
•Inflationary cost pressures partially offset, with
further benefits expected to flow into FY24
•Tight labour supply over most of the year, with
some easing in 2H23 as more foreign workers gain
entry
•Steel pricing remains elevated above pre-Covid
levels
•Inventory levels actively reduced to match market
demand and as supply chains opened up
•Supply chain constraints and international freight
rates eased at end of 1H23; however fuel and
compliance costs expected to see rates rise in FY24
4
Demand for steel remains solid despite economic conditions
Positive long term macro trends will drive momentum
Source: Statistics New Zealand, BNZ –BusinessNZ PMI, Statistics NZ, NZIER
Share of sales restated following a comprehensive review of all significant customers as part of our segmentation strategy
Steel & Tube is a diversified
business with limited exposure
to any one sector
Share of Sales
Activity Index: Infrastructure Construction
Robust outlook with large scale projects
50
70
90
110
130
150
170
190
Jun-19Jun-20Jun-21Jun-22Jun-23
20
30
40
50
60
Jun-19Jun-20Jun-21Jun-22Jun-23
5
6
7
8
20
40
60
Jun-19Jun-20Jun-21Jun-22Jun-23
SQM (millions)
No. Consents
(000s)
Residential Consents
Long term demand and undersupply
NumberFloor Area
2
3
4
2
4
6
8
10
Jun-19Jun-20Jun-21Jun-22Jun-23
SQM (millions)
Consents $ (bn)
Consents $bnFloor Area
35%
37%
32%
31%
12%
11%
10%
9%
7%
8%
4%
4%
FY23FY22
Others
Resellers
Infrastructure
Residential
Commercial
Manufacturing
Performance of Manufacturing Index (PMI)
Headwinds affecting activity, long term remains positive
Non-Residential Consents
Positive commercial investment continues
5
Actively managing market challenges
Market ChallengesFY23 response
Slowing economy•Resilient business platform –significant reductions in debt and inventory, solid underlying
cashflows
Commodity price
volatility, some easing
•Continued investment in the right inventory and reduced inventory cover
•Selling down longer inventory positions
•Focus on dollar margin capture on existing inventory
Inflation•Actively targeting cost inflation
•Comprehensive cost out programme –benefits to be seen in FY24
Tight labour market•Continued focus on staff training and development –leadership training, coaching,
wellbeing workshops
•Expanded investment in Māori Cadetship Programme
•At year end, all staff at or above the Living Wage
Cashflow management•Tight management of debtors
•Continuing to review debtor and creditor terms
6
Results at a glance
Successful strategy execution driving resilient performance
Revenue
$589.1m
-1.7%
EBITDA
$51.9m
-22.1%
EBIT
$31.0m
-34.9%
NPAT
$17.0m
-43.7%
Volume
146,409t
-12.4%
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 (Net Debt
(including Lease Liability) + Equity). FY22 had previously been calculated using debt, the percentage has been restated to use net debt consistent with the company’s peers | Non-GAAP earnings reconciliation at the end of the presentation
ROFE
9.9%
FY22: 15.4%
Normalised
EBITDA
$52.9m
-20.9%
Normalised
EBIT
$32.1m
-33.0%
•Solid financial
performance, at top of
guidance
•Achieved Steel & Tube’s
second highest revenue
result, just shy of last
year’s exceptional super
cycle result
•Record net cash inflow
from operating activities
of ~$100m, almost double
that of the previous
record cash inflow result
•No bank debt and a
positive cash balance,
representing a ~$50m
improvement
7
Making life easier for customers needing steel solutions
Dual pathway strategy
Grow high
value
products,
services and
sectors
Continue to
strengthen
the core
Customer -preferred supplier
for steel solutions and products
Growth-increasevalue
through organic growth and
programmatic smaller M&A
Shareholder-deliver
increasing value and returns
for our shareholders
Sustainability-financially
rewarding for our shareholders
and positive for our people,
our customers and our planet
•Best-in-class customer experience
•Cross sell products and services
•Accelerate shift to digital sales
•Drive gross margin $/tonne
•Operating efficiency
•High value products, diversified materials
and value-added services
•Diversify customer segments and build scale
•Primary focus on organic investmentand
programmatic smaller M&A in adjacent
sectors
Strategic pathwaysOur goals
8
•Best-in-class customer experience
•Cross sell products and services
•Accelerate shift to digital sales
•Drive gross margin $/tonne
•Operating efficiency
Strengthening
the core
•Continuous focus on the customer–customer segmentation to
ensure each is serviced in the most appropriate manner
•Pricing analytics driving value, consistency and fair value for
customers
•Digital offering fast and reliable customer service
•Focus on opex costs and $5m cost out programme in FY24 –
good progress already made
•Project Stronginvestmentmaximising the return from our
Auckland palletised operations
Overall goal to deliver gross margin
improvement
9
•Increased warehouse capacity for
high value, high demand
products along with reductions in
freight costs and emissions
•Improved facilities, including a
refreshed tradeshopand
collection point in West Auckland
•Investing in new racking at Bruce
Roderick Drive site, doubling our
Auckland palletised capacity
•Increased automation and
warehouse technologies to drive
safety and productivity –
improved service offer and
market advantage
•Net present value estimated at
$4m; total investment in our
facilities ~$1.5m (1/3 funded by
landlords); FY24 one-off opex
impact $0.7m
Project Strong –focus on
palletised operations
Goals –increase capacity, improve service offer and productivity
10
•Recent initiatives now
account for 10% of
Distribution EBIT
•$12.3m of investment FY22 to
FY23; delivering positive
earnings from day one
•Significant opportunities
continue to be identified
•High value products, range
extensions, diversified materials
and value-added services
•Diversify customer segments,
build scale and earnings
stability through cycle
•Primary focus is on organic
investmentand M&A in
adjacent sectors
Grow high value
products, services
and sectors
Growth initiatives as % of
Distribution Revenue
1.1%
1.1%
2.8%
4.7%
0%
1%
2%
3%
4%
5%
1H222H221H232H23
Overall goal to deliver gross margin dollar improvement
11
•Additional new high specification Plate Processing
& Press Brake installed on budget and on time
•Plate processing revenues up 76% and Gross
Margin $ up 75% year on year
•Earnings momentum building with further
geographic expansion in progress
Plate Processing
Recent organic growth initiatives
32
Aluminium
•Selected range of high demand, high value products
added from March 2023
•Initial focus on range to support existing customer base
•Immediately earnings accretive, utilisingour existing
distribution network
•Pleasing initial demand which is growing steadily
•Product margin $/tonne has exceeded expectations –
aluminium is now one of our highest margin products
•Adding selected range extensions to meet demand
-
5
10
15
20
25
30
Jul-21
Oct-21
Jan-22
Apr-22
Jul-22
Oct-22
Jan-23
Apr-23
Plate Processing Average Daily
Revenue
0
5
10
15
Jul-21
Oct-21
Jan-22
Apr-22
Jul-22
Oct-22
Jan-23
Apr-23
Thousands
Aluminium Average Daily
Revenue
12
Completed M&A
•Integration in line with expectations with
business operating on Steel & Tube systems
•Solid forward project work in the pipeline
•Leveraging our existing network to expand the
Kiwi range nationally
•Earnings per share positive in the first year
•One of our highest ROFE businesses
•FY23 revenue and EBIT slightly up on FY22
despite the slowdown in the residential sector
•New product range extensions supporting
growth
Kiwi Pipe & Fittings
Fasteners NZ
0
10
20
30
40
50
Jul-21
Oct-21
Jan-22
Apr-22
Jul-22
Oct-22
Jan-23
Apr-23
Kiwi Pipe Average Daily
Revenue
-
2
4
6
8
10
12
Jul-21
Oct-21
Jan-22
Apr-22
Jul-22
Oct-22
Jan-23
Apr-23
Fasteners NZ Average Daily
Revenue
13
Ongoing M&A
Key criteria
•Careful gate approach to M&A ensuring best fit acquisitions only
•Identified categories with high margin, low Steel & Tube market share
•In our space i.e.
‒Steel and metals distribution
‒Processing
•Culture and business fit
•Will only proceed if our criteria are met
Key:
lTask completed or offer placed
lTask in progress or may progress in future
lNot complete or opportunity exhausted
OpportunitiesInitial proposal
Non-binding
offer
Due diligenceBinding offerDeal complete
Complete
llllllllll
Active
lllllllllllllll
Non-Active
lllllllllllllllll
Over the past two years Steel & Tube has been successfully growing the business through smaller M&A with 2
acquisitions completed. A total of 17 companies have been reviewed with 8 currently under active consideration
14
Customer, employee and sustainability update
4.9
1.86
1.13
1.14
0
2
4
6
FY20FY21FY22FY23
5
19
3535
0
10
20
30
40
Jul-20Jul-21Apr-22Mar-23
Employee Satisfaction (eNPS
2
)
Employee Safety Measure
(eTRIFR
1
)
Emissions kgCO
2
e per tonne
3
24
34
40
42
0
10
20
30
40
50
FY20FY21FY22FY23
Industry Average: 32
1.eTRIFR: Employee Total Recordable Injury Frequency Rate
2.Net Promoter Score (NPS): Measure of customer/employee satisfaction
3.Reporting references the Greenhouse Gas Protocol and includes all material emissions under Scope 1 and 2, with Scope 3, except purchased goods and services
Customer Satisfaction (NPS
2
)
Industry Average: 18
Customer
•Satisfaction remains at high levels as we
maintain focus on best-in-class customer
experience and solutions
•Growing online presence, omni-channel offer
•Product offer tailored to customer needs
Sustainability
•Emphasis on safety, wellbeing and culture
•Employee satisfaction well above industry
average
•Safety outcomes are positive, remain focused
on zero injury target
•Voluntary Climate-Related Disclosures in
FY23 Annual Report
104.0
96.6
90
95
100
105
FY22FY23
7% Year on Year Reduction
15
Financial
Results
16
Group financial summary
•Volumeshave held up well, given super cycle in
FY22 and New Zealand entering a recession in FY23
•Revenues largely flat due to higher unit prices
•Effective margin management with some reduction
as excess inventory moved at reduced margin
•Opexinflationary pressure partially offset
•Strong cashflows supporting full debt repayment;
net cash $6.5m
•Fully imputed dividend of 75% of adjusted NPAT in
line with policy of 60% to 80%
Delivered strong
FY23 results
* FY23 and FY22 Normalised EBITDA and Normalised EBIT have been adjusted to exclude non-trading adjustments. Further details included in appendix to this presentation.
$mFY23FY22Var%
Revenue589.1 599.1 (1.7%)
Volume (Ktonnes)146.4 167.2 (12.4%)
EBITDA 51.9 66.6 (22.1%)
Normalised EBITDA*52.9 66.9 (20.9%)
EBIT31.0 47.6 (34.9%)
Normalised EBIT*32.1 47.9 (33.0%)
NPAT17.0 30.2 (43.7%)
Net operating cash flow98.3 (34.1)388.3%
EPS10.318.3(43.7%)
Dividend (cents per share)8.0 13.0 (38.5%)
Gross Dividend (cents per share)
(including imputation credits)
11.114.5(23.4%)
17
Repositioned the business for
more challenging economic
cycle while investing in growth
Group balance sheetsummary
•Significant reduction in inventory
•Freeing up cash as inventory position reduced
•Disciplined management of working capital
•Strong cashflows supporting strategic initiatives
•Fully repaid debt with substantial bank facility in
place to fund growth
•Subsequent to 30 June 2023, completed the
renewal of the $100m bank facility
$mFY23FY22
Trade and other receivables79.3 103.3
Inventories139.2 192.5
Trade and other payables(69.4)(89.0)
Working Capital149.1 206.8
Total Facility
100.0 100.0
Borrowings
-(51.0)
Available Facility/Undrawn
100.0 49.0
Cash and cash equivalents
6.5 8.0
Borrowings-(51.0)
Net Cash/(Debt)6.5 (43.0)
Net Tangible Assets (NTA) 194.6 202.2
ROFE (%)
9.9%15.4%
18
Resilient revenue
Momentum driven by strong focus on our
customers, pricing disciplines and growth of
high value products, services and sectors
Revenue $589.1m: lower by $10m (1.7%)
Continuing sales momentum, despite market conditions
Volume 146.4 Ktonnes: lower by 20.8 Ktonnes(12.4%)
Sustained customer demand for comprehensive range of
products
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
-
100
200
300
400
500
600
700
FY21FY22FY23
Average Selling Price ($/t)
Sales ($m)
Sales & Average Selling Price
Average Selling PriceRevenue
-
50
100
150
200
-
100
200
300
400
500
600
700
FY21FY22FY23
Tonnage (000s)
Sales ($m)
Sales & Volume
VolumeRevenue
19
Year-on-year growth in gross margin $/tonne
•Strategic focus on higher value products, services and sectors
•During early calendar 2023 margins contracted as selling
price didn’t increase as fast as the moving average price; in
the May-July quarter this reversed
•Some margin percentage reduction as excess inventory was
reduced
•Direct cost inflation partially offset through labour and
freight efficiencies
Gross margin includes freight, direct and sub-contract labour
Improvement in Gross
Margin $/tonne
581
621
799
850
500
700
900
Jun-20Jun-21Jun-22Jun-23
Gross Margin $/tonne
12 Month Rolling Average
19.0%
20.4%
22.3%
21.1%
15.0%
20.0%
25.0%
Jun-20Jun-21Jun-22Jun-23
Gross Margin %
12 Month Rolling Average
20
Business performance
Resilient performance in a softening market
Distribution –high volume business
•Solid performance despite market conditions
•Benefiting from inventory management, pricing and
supply chain disciplines
•Significant operating leverage –expect margins to
improve longer term
Infrastructure –processing products before sale
•Reinforcing business turn-around driven by margin and
cost management
•Risk reduction –focus on supply only projects
•Transitioned to projects where capability can be
leveraged; solid pipeline of work from new tenders;
some large projects delayed into FY24
Gross margin includes freight, direct and sub-contract labour
*FY22 restated to be consistent with the group’s segment reporting in the financial statements
DistributionFY23FY22
% of Group revenue60.5%64.0%
Revenue ($m)$356.3$383.4
Gross Margin $/tonne$826$890
Gross Margin*20.9%24.1%
InfrastructureFY23FY22
% of Group revenue39.5%36.0%
Revenue ($m)$232.8$215.7
Gross Margin $/tonne$913$667
Gross Margin*22.0%19.5%
21
Normalised operating expenses
Targeting $5m of operating expense savings in FY24
•Ongoing focus on streamlining operational costs
•Continued efficiencies have resulted in network
leverage and led to a reduction in carbon emissions
•Increase in FY23 normalised operating expenses of
$6m:
‒Inflationary pressure –wage/salary, the return to
more normalised travel and other costs as we exit
the Covid environment and increasing IT costs
‒Increased depreciation and amortisation (D&A)
$1.8m –mostly growth related
Normalised Opex excludes Holiday Pay provisions/reversal and the impact of SaaS, as well as non-trading adjustments previously reported
0%
15%
30%
0
25
50
75
100
FY21FY22FY23
$m
Normalised Operating
Expenses
Normalised OPEXD&AOpex/Sales %
22
Normalised EBIT
Pricing benefits offset by
inflationary pressures
•Normalised EBIT at top of guidance
•Focus on higher value products,
ensuring inventory availability
•Improved pricing disciplines,
leveraging analytics and digital
capabilities
•FY23 Normalised EBIT $32.1m;
reported EBIT $31.0m
NormalisedEBIT has been adjusted to exclude non-trading adjustments. Further details included in appendix to this presentation.
23
Inventory management
Managing inventory levels carefully to ensure
best use of working capital
•Inventory levels increased in FY22 in response to
supply chain congestion
•FY23 inventory positions significantly reduced –35%
reduction in volumes (tonnes) on hand FY22 –FY23
•Unit finished product prices remain at elevated levels
•Inventory cover has been reduced by 1.1 months
compared toFY22
•Active stewardship and use of detailed analytical tools
to ensure investments are made in higher margin
products; reducing lower margin products
192.5
139.2
19.5
8.9
(60.1)
(21.6)
100
120
140
160
180
200
220
240
Opening SOH
Pricing
Strategic Initiatives
Inventory Optimisation
Supply Chain Improvements
Closing SOH
$ in Stock Inc GIT (m)
Inventory Position FY22 to FY23
24
Cashflow
•Record operating cash inflows reflecting
steady revenues
•Decreased inventory on hand as a result
of careful inventory management and
supply chain normalisation
•Dividends of $19m paid during FY23
25
Capital expenditure
Careful management of funds in current environment
•FY23 capex of $6.2m (FY22: $6.2m)
•Capital spend below depreciation levels
•Priority capital allocation to business improvement /
growth projects (63%) andsupporting digital (37%)
Planned investment for FY24
•Investment in processing equipment and other growth
opportunities
•Continued investment in digital technology
•Strong balance sheet 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*FY22FY23
$m
Capital Expenditure
26
Investor returns
1
Gross dividends include the benefit of imputation credits
2
Based on share price at 30 June each year –FY23 $1.12, FY22 $1.27
•Return on funds employed above cost of capital for both
FY22 and FY23
•Recessionary environment during 2H23
•High dividend yield maintained
FY23FY22
Interim Dividend
cps (net)4.05.5
Final Dividend
cps (net)4.07.5
Total
cps (net)8.013.0
cps (gross)
1
11.114.5
Dividend Yield (Gross)
2
%9.9%11.4%
27
Moving
Forward
28
Macro opportunities
Significant exposure to climate resilience, infrastructure and essential water services
Infrastructure
•Govt budget in excess of $71bvs
$45b in previous 5 year period
•In excess of $92b in project
value in the pipeline
-Rebuild following extreme
weather events
-Major projects across health,
education, community
facilities, energy, water and
transport
-Mix of region-wide and
national projects
Steel is one of the world’s
most essential and sustainable
building products –
permanent, forever reusable
and the most recycled
substance on the planet.
Steel offers a number of
advantages in a future where
climate change and extreme
weather events are likely to
become more common.
Climate resilience
•Proven capability, capacity, and
expertise to deliver innovative
project solutions:
-Port rebuilds
-Wind and solar energy
-Coastal protection
-Resilient buildings
29
Economic drivers
Build share of sales in growth sectors
Share of Sales (FY23)
35%
32%
12%
10%
7%
4%
Others
Resellers
Infrastructure
Residential
Commercial
Manufacturing
Demand primarily driven by residential market trends
Strong long term pipeline driven by climate investments, rebuild following
weather events, and catch up on low investment in prior years
Economic headwinds impacting growth, expected improvement mid-2024
Modest fall from peak 2023 levels expected, however strong pipeline
Expected to remain subdued in the short to medium term
Resellers
FY24
FY27
Infrastructure
Residential
Commercial
Manufacturing
Customer First
M&A / Growth Activity
Focus on Costs
30
FY24 outlook
Market outlook
•Economic cycle likely to remain challenging;
recessionary environment to continue 1H24, as
well as usual slowdown in activity prior to election.
Expect 2H24 will see easing of macro trends –
interest rates, labour market, construction and
cost inflation
•Elevated Government investment offset by
weaker business and residential investment
•Significant medium to long term
opportunities; climate resilience, seismic
strengthening, rebuild activity and essential water
services. Government budgeted $71b spend on
infrastructure 2022 to 2026, excluding cyclone and
flooding rebuild costs
•Steel pricing volatility has reduced; stabilised
above pre-Covid levels
Well positioned to respond to the challenging
economic cycle and to take advantage of new
market and product opportunities, including
the rebuilding programme
•Healthy pipeline of infrastructure and commercial
projects in place; manufacturing remains steady
•Strong balance sheet and cashflowsto support
growth initiatives; focus remains on gross margin
$/tonne and actively managing costs with $5m
cost out programme underwayin FY24
•Business growth to continue through organic
expansion and M&A
Discussion
32
Non-GAAP financial information
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 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 FY23 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 years ended 30 June 2023 and 30 June
2022 reconcile to normalised earnings. Non-trading adjustments of
$(1.1) million are included in the FY23 results.
Year ended 30 JuneEBITDAEBIT
$000sFY23FY22FY23FY22
Reported 51,876 66,598 31,009 47,636
Loss on de-recognition of finance lease receivable128 -128 -
Holiday pay provision release-(854)-(854)
NZ IFRS 16 reversal of impairment(177)(527)(177)(527)
Software as a Service (SaaS) upfront expenditure1,109 1,645 1,109 1,645
Normalised52,936 66,862 32,069 47,900
33
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 (Net 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
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
34
•This presentation has been prepared by Steel & Tube Holdings
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 advise that Steel & Tube Holdings Limited’s Annual Report
for the year ended 30 June 2023 (FY23) is available to view on
our website https://steelandtube.co.nz/investor/reports.
This year marks a significant milestone for Steel & Tube as
we commemorate 70 years of successful business operation.
Over the past seven decades, we have consistently embraced
innovation, adapted to changing market dynamics and
invested in new technologies to ensure that we remain at
the forefront of our industry. This has allowed us to navigate
through various economic cycles, expand our product
portfolio, and deliver long term sustainable growth.
Despite the economic headwinds seen in FY23, Steel & Tube
has delivered a solid performance, demonstrating prudent
fiscal management and the value in our dual pathway
strategy. Financial results were at the top of 10 May 2023
guidance and, along with record operating cashflows, FY23
revenue was the second highest reported by the company.
The board is pleased to have declared a final dividend of
4 cents per share, 100% imputed. This takes full year gross
dividends to 11.1 cents per share and represents a yield of 10%.
We continue to actively manage the softer trading conditions
and remain focussed on providing high levels of service to
our customers while also strengthening the core business
and maintaining a disciplined growth focus. New growth
initiatives are performing well and offer opportunities for
growth and expansion.
We are cautiously optimistic that 2023 represents the bottom
of the cycle and although we don’t expect a fast recovery,
we anticipate there will be some improvement from early
2024 (the second half our FY24 financial year). Steel & Tube
has significant operating leverage and we expect any
uplift in activity and demand to be reflected in our results.
There are plenty of green lights ahead across our multi
sector exposures. Commercial construction is expected
to improve, there is still a strong pipeline in residential
construction from consents granted previously, and large
scale infrastructure projects are progressing.
Steel is an essential construction material and we have the
capability and expertise to deliver innovative solutions to
assist in rebuilding of infrastructure, climate resilience and
essential water services.
We remain committed to delivering value to our shareholders
and confident in the prospects for our company. Thank you
for your continued support.
Susan Paterson Mark Malpass
Chair Chief Executive Officer
2023
Review
Steel & Tube Holdings Limited
1
Gross dividends include imputation credits of 3.1cps. Yield based on share price of $1.12 at 30 June 23
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
KIWI
PIPE & FITTINGS
FY23 at a Glance
Steel & Tube’s resilience and strength comes to the fore,
delivering solid results in a challenging environment.
+
Solid financial performance, at top of
guidance
+
Achieved Steel & Tube’s second-highest
revenue result, just shy of last year's
exceptional super cycle result
+
Record net cash inflow from operating
activities of ~$100m, almost double that of
the previous record cash inflow result
+
No bank debt and a positive cash balance,
representing a ~$50m improvement
+
Significant reduction in inventory balance
+
Disciplined management of costs in an
inflationary environment; good progress
on $5m cost-out programme
+
Maintained dollar margins on softer
volumes through effective price
management
+
Continued investment in digital
technologies delivering business
efficiencies, high levels of customer
service and competitive advantage
+
Excellent turnaround in Infrastructure
business; Distribution business operating
leverage constrained in a softer business
environment
+
New growth initiatives account for 10% of
Distribution EBIT and offer opportunities
for growth and expansion
+
Launch and expansion of aluminium
product range from March 2023, with
demand growing month on month
+
First full year of enhanced plate
processing service offer, with EBIT
increasing by 70% in a short period and
plans for further expansion
+
Fasteners NZ (acquired July 2021)
continues to outperform, providing
a strong complement to the Fortress
Fasteners brand
+
Kiwi Pipe and Fittings (acquired
August 2022) performing in line with
expectations, geographic expansion
delivering growth
Strengthening
the Core
Grow High
Value Products,
Services and
Sectors
$mFY23FY22Var%
Revenue5 89.159 9.1(1.7 %)
Volume (Ktonnes)146.41 6 7. 2(12.4%)
EBITDA5 1.966.6(2 2.1%)
Normalised EBITDA
1
5 2 .96 6 .9(20.9 %)
EBIT31.04 7. 6(3 4.9 %)
Normalised EBIT
1
32.14 7.9(33.0%)
N PAT1 7. 030.2(43 .7 %)
Inventory13 9. 2192.5( 2 7. 7 %)
Net operating cashflow98.3(3 4.1)+388.3%
Net cash/(debt)6.5(43 .0)115.1%
EPS10.3 cps18.3 cps(43 .7 %)
Gross Dividend (incl. imputation credits)11.1 cps14.5 cps(2 3.4%)
ROFE10%15%(3 5.7 %)
1
Normalised EBITDA and Normalised EBIT have been adjusted to exclude non-trading adjustments and unusual transactions of $(1.1)m in FY23. See Steel & Tube’s FY23 Results
Presentation for a reconciliation.
---
Celebrating 70 Years
Steel & Tube Holdings Limited
2023
Annual
Report
It is with pleasure that we present
Steel & Tube’s Annual Report for
the year ended 30 June 2023.
Susan Paterson
Chair
Mark Malpass
Chief Executive Officer
18 August 2023
2Steel & Tube Annual Report 2023
About Us 06
Our Business 07
Our Strategic Roadmap 08
FY23 at a Glance 10
Chair and CEO's Report 12
Our Businesses 16
Enabling Our Business 22
Building a Sustainable Business 26
The Board 32
Leadership Team 34
Financial Measures 36
Five Year Financial Performance 37
Financial Report 38
Financial Statements 40
Independent Auditor's Report 74
Governance 78
Climate-related Disclosures 89
Remuneration 99
Disclosures 103
Glossary 106
Directory 107
Contents
3Steel & Tube Annual Report 2023
1950s to 1970s
+
Formation of Steel &
Tube through merger of
three steel merchandising
companies
+
Public listing on NZX in 1967
1980s
+
Growth strategy and
diversification away from
core activities
+
One of NZ’s largest
industrial businesses
2000s
+
Commenced centralised
commercial ERP platform
+
Continued acquisition
growth
2010s
+
Consolidation of
operations
+
Acquired the NZ business
of Tata Steel, Fortress
Fasteners, Composite Floor
Deck
2020s
+
Digital transformation
commenced
+
Launch of webshops
+
Acquired Kiwi Pipe and
Fittings, and Fasteners NZ
1990s
+
Restructuring and return to
core business
+
Acquisition of steel sector
businesses
4Steel & Tube Annual Report 2023
This year marks a significant milestone for Steel & Tube
as we commemorate 70 years of successful business
operation. In a world where less than half of businesses
make it past the first ten years, our longevity and strong
standing is testament to our enduring spirit, our ability to
move with the times, the dedication of our team and the
loyalty of our customers.
Since our inception in 1953, we have steadily grown from
a modest operation to become a trusted name in the
steel and building materials sector, serving customers
across New Zealand. Our commitment to excellence
and continuous improvement has been the cornerstone
of our success. Over the past seven decades, we have
consistently embraced innovation, adapted to changing
market dynamics and invested in new technologies to
ensure that we remain at the forefront of our industry.
This has allowed us to navigate through various economic
cycles, expand our product portfolio, and deliver long
term sustainable growth.
In celebrating this significant anniversary, it is important
to acknowledge the contribution of our shareholders,
who have played a pivotal role in our journey, providing
us with the resources and support necessary to pursue
our strategic objectives.
As we look ahead, we recognise that the business
landscape is constantly evolving, and new challenges
and opportunities lie on the horizon. With a rich legacy
across 70 years and a strong sense of purpose, we are
well-positioned to embrace the future with confidence
and determination. We will continue to invest in our
people, nurture strong customer relationships and
leverage our expertise to drive innovation and create
value for all stakeholders.
Celebrating 70 Years Together
5Steel & Tube Annual Report 2023
1
Excludes vacancies and contractors |
2
Excluding one transitional site in Hamilton |
3
eTRIFR: Employee Total Recordable Injury Frequency Rate per 1 million work hours
4
Net Promoter Score. Employee NPS industry average is 18 and Customer NPS industry average is 32
About Us
Our purpose is to
make life easier for our
customers needing
steel solutions.
Steel & Tube offers New Zealand’s most
comprehensive range of steel products,
services and solutions.
We source, process and distribute steel and
metal products – including fastenings, fire
reticulation pipes and valves, chain and rigging,
stainless, engineering steel and processed
plate and sheet. We also make steel products
to order on a project basis, including roofing,
ComFlor decking and reinforcing.
We have expertise across a diverse range
of sectors, offering our customers a wide
range of products and solutions to meet
their steel needs.
We serve our customers through our
nationwide network and our online platform,
helping them to build stronger projects and
create better outcomes.
Our competitive advantage is our ability
to cross sell our extensive offer to customers,
leveraging our national footprint and breadth
of product offering.
We are a proud New Zealand company in
our 70th year of trading. Our people are our
greatest strength – the backbone of our
company. We’re passionate, innovative,
capable and proud of what we do.
851
Te a m
members
1
27
Sites across
New Zealand
2
14,000
Active
Customers
1.14
Safety eTRIFR
3
Well below industry average
7.9/ 1 0
Employee
Engagement Score
35
Employee NPS
4
Above industry benchmark
42
Customer NPS
4
Above industry average
96.6
kgCO2e/Tonne sold
Scope 1, 2 and 3 emissions
intensity
6Steel & Tube Annual Report 2023
KIWI
PIPE & FITTINGS
Infrastructure
+
Products processed before sale, typically
on a contract or project basis, including
onsite installation services
Distribution
+
Products sourced from preferred
steel mills and distributed through our
national network
1
3
2
2
2
2
2
8
1
1
1
1
1
Our Business
Our stable of best-in-class
businesses are some of this
country’s leading steel suppliers
7Steel & Tube Annual Report 2023
Customer
+
Preferred supplier for steel
solutions and products
Shareholder
+
Deliver increasing value and returns
for our shareholders
Growth
+
Increase value through
organic growth and M&A
Sustainability
+
Financially rewarding for our
shareholders and positive for our
people, our customers and our planet
Strategic
Goals
To Make Life Easier For Our Customers
Needing Steel Solutions
Purpose
Our Strategic Roadmap
C
O
M
M
I
T
T
E
D
T
O
H
E
A
L
T
H
,
S
A
F
E
T
Y
,
Q
U
A
L
I
T
Y
A
N
D
E
N
V
I
R
O
N
M
E
N
T
A
W
I
N
N
I
N
G
T
E
A
M
A
N
D
P
O
S
I
T
I
V
E
C
O
M
M
U
N
I
T
Y
E
N
G
A
G
E
M
E
N
T
C
R
E
A
T
I
N
G
A
S
U
C
C
E
S
S
F
U
L
A
N
D
R
E
S
I
L
I
E
N
T
B
U
S
I
N
E
S
S
C
U
S
T
O
M
E
R
F
I
R
S
T
8Steel & Tube Annual Report 2023
Our dual pathways underpin our strategy,
helping us build a diversified and
resilient business and driving our strong
performance in the market. By focusing
on these pathways, we are strengthening
our business foundation while capitalising
on new avenues of growth, ensuring long
term value for our stakeholders.
Strengthen
the Core
Building On Our Strong
Foundation
Strengthening the core involves
building on the strong business
foundation we have established,
to deliver best-in-class customer
experiences, operational efficiency
and a strong financial performance.
The breadth of our product range,
scale of our network, our IT and digital
platform and our team of talented
people are all paramount to achieving
our goal of being New Zealand’s
preferred supplier of steel products
and solutions.
Sustainability is also a key consideration
in strengthening our core. We are
committed to sustainable practices,
focusing on environmental
stewardship, responsible sourcing,
and reducing our carbon footprint.
Growing High
Value Products,
Services and
Sectors
We will grow our business by expanding
our offering and investing in new
products, services and sectors that
provide high value to our customers.
While our primary focus is on organic
growth, we remain open to considering
opportunities in adjacent sectors that
align with our strategic objectives
and provide synergistic benefits.
We will leverage our expertise, market
knowledge, and customer relationships
to identify and capitalise on these
growth opportunities.
9Steel & Tube Annual Report 2023
FY23 at a Glance
Steel & Tube’s resilience and strength
comes to the fore, delivering solid results
in a challenging environment.
+
Solid financial performance, at top
of guidance
+
Achieved Steel & Tube’s second-
highest revenue result, just shy of
last year's exceptional super cycle
result
+
Record net cash inflow from
operating activities of ~$100m,
almost double that of the previous
record cash inflow result
+
No bank debt and a positive cash
balance, representing a ~$50m
improvement
+
Significant reduction in inventory
balance
+
Disciplined management of costs
in an inflationary environment;
good progress on $5m cost-out
programme
+
Maintained dollar margins on
softer volumes through effective
price management
+
Continued investment in digital
technologies delivering business
efficiencies, high levels of
customer service and competitive
advantage
+
Excellent turnaround in
Infrastructure business;
Distribution business operating
leverage constrained in a softer
business environment
+
New growth initiatives account
for 10% of Distribution EBIT and
offer opportunities for growth and
expansion
+
Launch and expansion of
aluminium product range from
March 2023, with demand growing
month on month
+
First full year of enhanced plate
processing service offer, with
EBIT increasing by 70% in a short
period and plans for further
expansion
+
Fasteners NZ (acquired July
2021) continues to outperform,
providing a strong complement to
the Fortress Fasteners brand
+
Kiwi Pipe and Fittings (acquired
August 2022) performing in line
with expectations and geographic
expansion delivering growth
Strengthening
the Core
Grow High
Value Products,
Services and
Sectors
10Steel & Tube Annual Report 2023
Volume
FY23
FY22
FY21
FY20
FY19
Tonnes (000's)
169
137
158
167
146
Revenue
$(m)
498
418
481
599
589
Gross Margin $/Tonne
GM$/Tonne
$656
$581
$621
$799
$850
FY23
FY22
FY21
FY20
FY19
FY23
FY22
FY21
FY20
FY19
Volume
FY23
FY22
FY21
FY20
FY19
Tonnes (000's)
169
137
158
167
146
Revenue
$(m)
498
418
481
599
589
Gross Margin $/Tonne
GM$/Tonne
$656
$581
$621
$799
$850
FY23
FY22
FY21
FY20
FY19
FY23
FY22
FY21
FY20
FY19
Volume
FY23
FY22
FY21
FY20
FY19
Tonnes (000's)
169
137
158
167
146
Revenue
$(m)
498
418
481
599
589
Gross Margin $/Tonne
GM$/Tonne
$656
$581
$621
$799
$850
FY23
FY22
FY21
FY20
FY19
FY23
FY22
FY21
FY20
FY19
Record operating cashflow and
second highest revenue result
following FY22 super cycle
Revenue
$ 5 89.1m, -1. 7 %
Volume
146,409t, -12.4%
EBITDA
$51.9m, -22.1%
EBIT
$ 3 1.0m, -3 4.9 %
N PAT
$17.0m, -43.7%
Normalised EBITDA
$ 5 2 .9m, -20.9 %
Normalised EBIT
$32.1m, -33.0%
Net operating cashflow
$98.3m, +388.3%
Net Cash/(Debt)
$6.5m, 115.1% improvement
Total FY23 Dividends
8 cents per share
fully imputed
Normalised EBITDA and Normalised EBIT
have been adjusted to exclude non-trading
adjustments and unusual transactions. See
reconciliation and more details on page 36.
FY22FY23
Interim Dividendcps (net)5.54.0
Final Dividendcps (net)7. 54.0
To t a lcps (net)13.08.0
cps (gross)
1
14.511.1
Dividend Yield (Gross)
2
%11.4%9.9 %
1
Gross dividends include the benefit of imputation credits
2
Based on share price at 30 June each year – FY23 $1.12, FY22 $1.27
11
Steel & Tube Annual Report 2023
Chair and CEO’s Repor t
Tēnā koutou
On behalf of the board and management, we are pleased
to present this year’s Annual Report. Despite the economic
headwinds seen in the financial year ended 30 June 2023
(FY23), Steel & Tube has once again delivered a strong
performance, demonstrating prudent fiscal management
and the value in our dual pathway strategy.
Over the past three years we have seen a full gambit of
economic conditions, from pandemic lockdowns in FY21
to the construction boom once restrictions lifted in FY22
(which was a record year for our company), followed by a
period of contraction in FY23 as interest rates have been
increased to quell inflation. The whole team has worked
tirelessly over this time to strengthen our business, and the
lessons learnt, have made us stronger, more resilient and
better able to navigate changing economic cycles.
Solid demand for steel continued in the first half, however,
as activity eased in most sectors, we saw volumes soften.
Inventory management remained a priority as we unwound
the higher inventory levels we had built up in order to ensure
customer supply during the prior period of supply chain
congestion, while successfully managing pricing and margins.
Along with a focus on debt reduction and cashflows, the
company finished the year with a very strong balance sheet,
a 28% reduction in inventory (35% reduction in tonnes), no
bank debt and a positive cash balance of $6.5m.
Our Infrastructure Division (which includes our reinforcing,
rollforming, roofing, coil and purlins, and ComFlor
products) provided another strong result as the reinforcing
business delivered an outstanding turnaround performance.
A number of initiatives are coming to fruition which are
making the Infrastructure Division stronger and have
improved our customer offer.
Distribution, which is more susceptible to the softening
construction and manufacturing markets, saw demand
weaken during the year, however, effective price
management and cost control minimised the impact on
margins. New growth initiatives, including plate processing
and aluminium, as well as recent acquisitions (Kiwi Pipe
and Fittings and Fasteners NZ) now account for 10% of
the Distribution Division’s EBIT and offer opportunities for
growth and expansion.
All of our growth investments are delivering positive returns
and we have identified a number of other opportunities
to grow our business and offering. We have a robust
M&A process in place and any potential acquisition or
investment must meet a stringent set of criteria. This is
demonstrated by our ‘go forward’ rate with 17 opportunities
identified during the year and 20% of these proceeding to
due diligence, resulting in a select number of high value
opportunities being taken through to the next stage.
We have focussed on providing ever higher levels of service
to our customers while also strengthening the core business
and maintaining a disciplined growth focus.
Steel continues to be recognised as one of the most recycled
products in New Zealand with an estimated 85% of steel
from demolition sites returned to steel mills for recycling.
Innovative uses of steel offer resilience to earthquakes and
climatic events, and enable less use of other materials (e.g.
concrete) due to its strength and flexibility.
Trading Conditions
Steel & Tube has a resilient business platform and a
track record of successfully navigating changes through
economic cycles.
Over the 12 months, we saw a deterioration in trading
conditions. Consumer spending was under pressure, higher
interest rates are impacting the housing market, and we
have seen a reduction in business and residential investment.
Commercial construction remains stable and manufacturing
has held up well, although cooled in the second half of the
financial year (2H23). Infrastructure investment continues
to strengthen after a long period of low investment. Steel
& Tube’s diversified strategy is of value in this environment,
limiting our exposure to any particular sector.
Other macro-economic trends have also impacted on
trading. Inflationary cost increases have affected margins,
and the tight labour market that developed over the last
two years continued, with some easing in 2H23 as more
foreign workers have gained entry.
Elevated steel pricing softened in 2H23, although it remains
above pre-COVID levels.
Pleasingly, supply chain constraints and international freight
rates eased at end of 1H23. However, fuel and compliance
costs are on the rise and we expect to see further increases
in FY24.
We continue to actively manage these conditions, with
carefully considered responses including a comprehensive
cost out programme (with benefits to be seen in FY24),
tight control over debtors and cashflow, and a continued
focus on culture, and our employee value proposition to
ensure we attract and retain the best talent. We continue to
invest in the right inventory and services as we shift towards
higher value products and solutions.
12Steel & Tube Annual Report 2023
Susan Paterson
Chair
Steel & Tube has proven
its resilience and ability
to navigate through
economic cycles.
13Steel & Tube Annual Report 2023
Financial Performance
After coming off a super cycle in FY22, Steel & Tube has
maintained a strong performance, notwithstanding the
recessionary environment.
FY23 revenue of $589.1m was the second highest reported
by the company, with sales momentum continuing and
elevated pricing from steel mills almost offsetting softer
volumes which were down by 12% on the prior year.
Benefits are being realised from the focus on higher value
products, improved pricing disciplines and leveraging
data analytics and capabilities. Gross margin dollars per
tonne were ahead of prior year, however, there was some
margin percentage reduction as excess inventory has been
reduced. Stock on hand tonnes reduced by 35% during
FY23. Input costs have also increased, with operating
expenses held in line with inflation.
Normalised earnings before interest and tax were $32.1m,
compared to $47.9m in the FY22 super cycle. This was mostly
attributable to the volume decline with pricing benefits
offset by inflationary pressures. The company reported a
net profit after tax of $17.0m for FY23 (FY22: $30.2m).
The business has been successfully repositioned with balance
sheet strength enabling continued investment in growth.
Inventory was reduced significantly as supply chain issues
eased, which freed up cash to pay down debt. Record
strong cash inflows were achieved, reflecting steady
revenue. A substantial $100m bank facility is in place to
fund growth and this was renewed in August 2023.
Shareholder returns
The board is pleased to have declared a final dividend
of 4 cents per share, 100% imputed. This takes full year
dividends to 8 cents per share and represents 75% of our
Adjusted NPAT.
This is in line with our policy to pay out 60% - 80% of
Adjusted NPAT to our shareholders. The full year dividends
of 8 cps represent a yield of 10% , which compares well to
our peers. Earnings per share are 10.3 cents per share (cps),
with Net Tangible Assets per share at $1.17.
Steel & Tube has once again proven its resilience and ability
to navigate through economic cycles and looks forward to
this being reflected in the share price.
Looking Forward
The value of our dual pathway strategy is now becoming
clear, and this remains the framework for our actions as
we continue to strengthen our core and build high growth
products, services and sectors.
Macro-economic conditions continue to deteriorate,
inflation has pushed up the cost of living and high interest
rates are expected to remain in the near term. This is having
a roll on effect on many sectors, with projects delayed or
demand reduced.
In a recessionary environment, the most important thing
we can do is ensure a strong balance sheet and tightly
manage costs. We have made good progress on the $5m
cost out programme which we expect to complete in 1H24.
We are confident in our business model and our ability to
traverse the softer economic environment.
There are plenty of green lights ahead for us. The diversity
of our customer base is a significant advantage, in that
we are not heavily exposed to any particular sector.
Commercial construction is expected to improve, there
is still a strong pipeline in residential construction from
consents granted previously, and large infrastructure
projects are progressing. There are many opportunities
to add value to our business, including some that will
present themselves as a direct result of the economic
environment, and plans are in place to take advantage of
these opportunities.
We are well positioned to support New Zealand’s
infrastructure rebuild, including Three Waters, and the
cyclone and floods rebuild over the next few years. Steel
is an essential construction material and we have the
capability and expertise to deliver innovative solutions to
assist with rebuilding vital assets. The Government has a
multi-billion dollar capital expenditure plan across 2023 to
2026, with $6b allocated to ‘build back better’ following the
recent weather events, and a further $71b infrastructure
spend over the next five years.
We are cautiously optimistic that 2023 represents the
bottom of the cycle and although we don’t expect a fast
recovery, we anticipate there will be some improvement
from early 2024 (the second half of our FY24 financial
year). We have proven our ability to deliver strong results
in challenging conditions and would expect any uplift in
activity and demand to be reflected in our results.
We have continued our strategic investment in technology
and the environment, with various initiatives as outlined
in our sustainability report. We were proud to have paid
the living wage during FY23 and have continued multiple
investments in growing our people and their wellbeing.
We remain committed to delivering value to our
shareholders and remain confident in the prospects for our
company. Thank you for your continued support.
Susan Paterson
Chair
Mark Malpass
Chief Executive Officer
14Steel & Tube Annual Report 2023
Mark Malpass
Chief Executive Officer
We continue to focus on
providing high levels of
service to our customers
while also strengthening
the core business and
maintaining a disciplined
growth focus.
15Steel & Tube Annual Report 2023
Our Businesses
Distribution
Carbon steel, stainless steel, fasteners.
Products sourced from preferred steel
mills and distributed through our national
network
Revenue
$ 3 5 6 . 3 m , -7.1 %
EBIT
$21.2m, -47.3%
Normalised EBIT
$ 2 1 .1 m , - 4 7. 3 %
Normalised EBITDA
$ 3 1.9m, -3 6.1%
Infrastructure
Rollforming, ComFlor/CFDL, Reinforcing
& Wire Products processed before sale,
typically on a contract or project basis,
including onsite installation services
Revenue
$232.8m, +7.9%
EBIT
$9.9m, +31.5%
Normalised EBIT
$9.8m, +39.7%
Normalised EBITDA
$17.1m, +23.6%
Normalised EBITDA and Normalised EBIT have been adjusted to exclude non-trading adjustments and unusual transactions.
See reconciliation and more details on page 36.
Distribution
Infrastructure
EBITRevenue
16Steel & Tube Annual Report 2023
Distribution
Marc Hainen | GM Distribution
Momentum into the first half of the year was strong, easing
off in the second half as the weakening economy began to
impact on customer projects and demand.
Compared to the extraordinary demand in the previous
year, volumes were down 13% year on year.
Of particular note has been the significant reduction in
inventory, which increased to historically high levels in FY22
to ensure our customers had access to products during
a time of supply chain disruption. Data analytics, supply
chain initiatives, pricing disciplines and the new warehouse
management system ensure that we are efficiently sourcing
and holding inventory, in a cost effective manner, to meet
customer demand. We are also continually reviewing the
products we sell, to ensure that we are offering – and
generating – value for our customers and our business.
Growth investments have performed well, and have been
successfully integrated into our business, often optimising
spare capacity and improving utilisation. We continue to
consider M&A prospects, particularly small to medium sized
bolt-on acquisitions.
+
Fasteners NZ, which we acquired in 2021,
is a very good business. It is known for its
high quality products and continues to
perform despite the slowdown in residential
construction.
+
Kiwi Pipe and Fittings is a specialist business
which we acquired in August last year.
Revenue is predominantly generated through
the distribution of fire pipe, valves, fittings and
associated products to a variety of customers.
The customer base is predominantly in
Auckland and Waikato and we are leveraging
our existing network to expand this product
offer into other regions.
+
We have also grown organically with new
products and services. Our new high value
aluminium range was launched in March 2023
with a limited range of products targeted
at existing customers. This has been very
well received and we are now expanding the
products we offer.
+
We expanded our plate processing capabilities
in FY22, with EBIT increasing by 70% in a
short space of time. We currently process
plate in Auckland but are investing in further
equipment in Christchurch to better serve our
South Island customers. There are a number
of growth opportunities in plate processing
and we are actively pursuing these.
Growth investments have performed
well, and have been successfully
integrated into our business, often
optimising spare capacity and
improving utilisation.
17Steel & Tube Annual Report 2023
Our strategy to invest in higher value products, services
and sectors is focussed on extending what we can offer to
our customers. This includes adjacent materials and value-
added services.
Our most recent initiative has been our entry into the
aluminium market with an initial range of products launched
in March 2023. This is targeted towards a select range of
high demand, high value products, largely servicing existing
customers. This product diversification provides scale,
customer share of wallet growth and was immediately
earnings accretive. Although this is a new product range, we
have been able to leverage our existing sales and operating
model to minimise costs.
We have seen steady month on month growth, reaching a
new daily sales record in June this year. Margin dollars per
tonne has been ahead of expectations and consistent with
our strategy of growing in high value product and customer
segments.
The addition of Steel & Tube as a distributor has been
welcomed by consumers and opened the market to more
opportunities for sourcing aluminium. Customer feedback
has been very positive and we are continuing to expand the
range of products we offer to meet demand. We expect
this new aluminium offer to make a material contribution to
Distribution's earnings in FY24.
Our Strategy in Action
Growing Our Aluminium Offer In Response
To Strong Demand
18Steel & Tube Annual Report 2023
Infrastructure
Reinforcing
Peter Ensor | GM Reinforcing/Wire and CFDL
The reinforcing business supplies reinforcing steel, mesh
and ComFlor (a composite steel decking product). CFDL is
the home of ComFlor composite steel decking, providing
sales, technical advice and specialised installation services.
The last two years has seen a significant improvement
in the performance of this business as a result of new
leadership, customer engagement, data insights and
innovative thinking as well as a strong focus on operational
efficiencies.
Reinforcing is moving away from solely being a commodity
provider, by offering innovative, higher value solutions
and service offerings. Pre-fabrication is one example,
where products are pre-fabricated in our high quality, safe
manufacturing plants rather than being pieced together
on-site, often in more complex environments.
The introduction of digital modelling has also been a
valuable tool, allowing Steel & Tube to participate early in
customer projects and optimise outcomes. It provides cost
savings and time efficiencies for our customers and opens
up other opportunities for our business.
The main revenue generators for steel reinforcing,
mesh and CFDL are large infrastructure and commercial
developments such as the Christchurch Stadium, where
more than 1,800 tonnes of reinforcing steel was delivered
over a seven month period, and Kāinga Ora’s multi-
level apartment developments where we have supplied
reinforcing, mesh and ComFlor steel decking.
We continue to invest in new products, including our
recently launched ComFlor SR profile.
Weather events have had an impact on larger infrastructure
projects this year and we have worked closely with our
customers to reschedule jobs and accelerated work to help
them make up for lost time. High interest rates have created
some uncertainty around the timing of future projects,
however demand remains strong and our businesses are in
good heart to continue their positive performance.
In FY24, we are investing in new mesh straightening
machinery in Auckland. This has more capacity, better
technology, is safer and more efficient. It will enable us to
manufacture both existing standard products, as well as
new, innovative products that make installing mesh easier
and more effective.
Rollforming
Mohammed Afroz | GM Rollforming
The rollforming business comprises roofing, coil and
purlins, and the manufacture of ComFlor steel decking
which is sold through Steel & Tube’s CFDL business.
While commercial roofing demand has remained strong,
roofing demand in the residential sector slowed. The
summer period was softer than usual for residential, with
many sub-contractors taking longer holidays and bad
weather impacting on activity levels. However, while
consents have declined, there is still significant work
expected from builds which are already in progress or
about to start.
Meanwhile, commercial roofing saw a big uplift in activity
and enquiries, with a number of substantial roofing projects
completed. Kāinga Ora volumes for re-roofing and new
builds increased significantly as we continued our four year
contract.
Coil and sheet sales and fabrication work have moved back
towards more normal levels following the super cycle effect
on the manufacturing sector in the prior year, and we are
seeing good growth in customer numbers.
A refreshed leadership team and a focus on standardising
processes across all branches has led to an increase in
efficiency and productivity across the Rollforming business.
As well as our new ComFlor SR profile, we are also investing
in a new purlins machine and an automated stacker which
will be commissioned later in FY24.
The outlook for FY24 remains positive due to the large
number of consents issued last year, suggesting there is
a sizeable pipeline of works ahead. Longer term macro-
economic trends are also positive, with forecasted
strong immigration fuelling housing demand and further
confidence from the commercial construction sector.
19Steel & Tube Annual Report 2023
Strength From The Ground Up
Te Kaha is Canterbury’s new state-of-the-art multi-use arena.
The $683m Christchurch City Council project will have a
seating capacity of 30,000 for major international sports
events and will hold at least 36,000 spectators for
large music events. Construction commenced in mid
2022 and the project is due to be completed in 2026.
The initial focus has been on preparing foundations of the
building. Working for lead contractor, BESIX Watpac, Steel
& Tube delivered 1,800 tonnes of reinforcing in the space
of seven months, ensuring a strong foundation for the
superstructure as it rises from the ground.
(Artist’s impression)
Our Strategy in Action
20Steel & Tube Annual Report 2023
21Steel & Tube Annual Report 2023
Enabling Our Business
Our priority is to make it easier for our customers to do
business with us. We do this through our omni-channel and
digital platform, the breadth and quality of our product
range and the expertise of our people and the solutions we
offer. We continue to invest in areas that enable the growth
and success of our business.
Innovation and Technology
Technology remains a key enabler for our business,
providing data, insights and management tools to help us
run our business more effectively, as well as improving our
customer experience. Our ecommerce platform allows our
customers to order anywhere and at any time, and we are
seeing an increasing number of our large customers utilising
our EDI (electronic data integration) platform.
Digital is also a key enabler for our supply chain and
distribution team, providing them with the data and ability
to make our operations more efficient. In particular, in the
last year, we have continued to roll out the Warehouse
Management System and introduced a new platform
to standardise operating procedures for inventory
management across the group.
Our digital platform also supports our team, with our online
training modules and wellbeing programme continuing
to be popular. Health, safety, quality and sustainability
performance is also enhanced by our ability to capture data
and use the insights to drive improvements across
our business.
Supply Chain and Operational
Platform
The challenges seen in the last two years have highlighted
the importance of having a robust and resilient supply chain.
We have taken on the learnings and have continued to look
at ways we can source, transport, store and deliver steel
goods more effectively.
Shipping steel from international steel mills is an important
part of our supply chain. After a rigorous tender process, we
have changed to a new international freight forwarder from
1 July 2023, which has enabled better stock control, cost
efficiencies and traceability.
Project Strong has been initiated and is a substantial
investment to double our palletised capacity, allowing
a greater range, and improving efficiencies and service
for customers.
Our Last Mile focus has seen further optimisation of routes
between our hubs and our customers to reduce our freight
costs and also lessen carbon emissions from trucks on
the road.
We are further optimising the supply chain for our sheeted
products, across carbon, stainless and aluminium standard
and cut-to-length sheets. This is delivering improved service
and products for our customers while enabling better use of
our resources and cost efficiencies.
22Steel & Tube Annual Report 2023
High quality products and services
Quality is key in everything we do, from the sourcing and
production of products, through to customer service
and delivery.
We source our steel from independently audited and
verified steel mills, have further enhanced our ability to
track and trace products and, in the last year, received IANZ
accreditation for our purpose-built reinforcing steel testing
laboratory. Our lab operates to international standards
and certifies that our products comply with the New
Zealand reinforcing steel standard. The IANZ certification
demonstrates our competence and ability to generate valid
results, instilling confidence in our work.
We were also particularly pleased to achieve Triple ISO
Certification comprising recertification for ISO 9001 Quality
Standard and certifications for ISO 45001 International
Standard for Occupational Safety and Health, as well as
ISO 14001 Environmental Standard. These achievements
demonstrate our unwavering dedication to these principles
and the seamless integration into our daily activities.
Our People
Despite the hurdles of the past year, our people have
consistently delivered excellent service to our customers
and provided unwavering support to our business. The
higher cost of living has been challenging for many and we
have ensured that all our staff are on at least the living wage.
We have seen labour constraints ease and our retention
rate has noticeably improved, along with our ability to fill
roles. We believe this is, in part, due to the efforts we put
into fostering a workplace that is rewarding, inclusive and
recognises achievements.
We strongly believe in actively engaging with our
employees to understand how we can continuously
improve. Over the course of the past 12 months, we have
seen our employee engagement remain at high levels,
well above the industry average. This reflects the positive
sentiment and satisfaction within our workforce.
A big focus this year has been on workforce development,
through career coaching, leadership training, literacy and
safety programmes, sponsorship of Girls in Infrastructure
in Northland and cultural awareness programmes. This is in
addition to the wellbeing workshops we run online which
are also open to family members and revolve around topics
such as better sleep and building positive relationships.
We would like to acknowledge the efforts of our great team
of people and thank them for all they do to support our
customers, their teams and our company.
Health and Safety
We prioritise employee health and safety and empower
every employee to contribute to a safe workplace and
uphold high safety standards. Our safety score, measured
by total recordable injury frequency rate, has significantly
improved over the past seven years. This year’s result of 1.14
was in line with last year’s historic low.
To achieve this, we have established comprehensive safety
programmes, fostered a culture of safety through open
communication and adhere to stringent equipment and
machinery safety standards.
Our Customers
The combination of our expert team, high quality goods
and services and our digital platform all work together to
help us achieve our goal of being the preferred provider of
steel products and solutions in New Zealand.
We are well on the road towards creating an organisation
that is data driven, ensuring robust, analytical decision
making and efficient operations. An important part of this is
around our customers and we are using data insights to gain
a clear and in-depth understanding of our customers. This
allows us to provide the best commercial offer and tools to
customers, depending on their differing size and needs.
23Steel & Tube Annual Report 2023
What drives steel pricing
internationally?
The price of steel is influenced by a variety of factors such
as the price trends for the raw materials used in steel
making (including iron ore, metallurgic coking coal and
scrap steel), changes in general manufacturing costs,
specific demand fluctuations for finished and semi-finished
steel products, carbon footprint, currency fluctuations,
time of year, unforeseen events and the general economic
conditions for the foreseeable future.
More specifically, steel product price refers to the cost of a
specific steel product, such as a steel coil, plate or beam of
a particular grade and size.
Steel product prices internationally can be different
between regions and suppliers, and may depend on the
countries' import protection policies, volumes ordered,
type and timing of orders. Holidays, weather, and seasonal
highs and lows can raise or lower demand for shipping
routes and transit times, impacting availability levels of
product, and fluctuating prices. Often these prices are
summarised into regional price indexes published by
various market analysts.
It's essential to remember that while a correlation does
exist between global index prices and downstream steel
product prices, the two will never be the same. Just like
the price of flour may influence the price of bread, it does
not determine the final cost - the same goes for hot rolled
steel coil. The farther down the manufacturing value-
added stream you go, the more factors (e.g. time on the
manufacturing line, labour, energy, and transport costs) will
influence the final price.
What are the main drivers of steel
pricing you expect to see in the next
12 months?
Over the coming months, most steel product and
transportation cost curves will likely be at the bottom of
their price cycle and potentially begin to trend upwards,
albeit with some fluctuation.
With many of the world’s biggest economies defying
warnings of a slowdown despite still-high inflation and
painful interest rate hikes, mills are likely to translate this as
robust demand – especially with likely Chinese government
stimulus packages to boost China’s beleaguered property
sector, the world’s largest steel consumer.
As distributors conservatively re-stock at incrementally
increased prices over the coming months, steel product
prices have the potential to increase in 2024. If demand
bounces back post the New Zealand election, there may be
product availability issues in the market as suppliers struggle
to predict demand in what remains a volatile market.
How does Steel & Tube manage
supplier pricing?
The price of steel products in our local market is mainly
determined by key supplier and competitor pricing, how
specialised the product is and what value-added elements
are applied to the product.
Key market suppliers consider published global index prices
for raw materials and finished products like steel coil and
bar, as well as additional factors such as their mill capacity
utilisation levels, cost of production (energy and labour)
and volumes to finalise their price.
We assess our preferred supplier offers, factoring in where
appropriate New Zealand dollar foreign exchange rate
fluctuations, transportation costs, product lead times, our
inventory levels, carbon footprint to determine the timing
of the price changes on our operations and customers.
It can take several months for international material cost
trends to flow through into our market pricing, as we seek
every advantage of our operational scale to maintain a
stable price offer for our loyal customer base.
5 Minutes with
Brendan Smith
National Product and Procurement Manager
24Steel & Tube Annual Report 2023
We want to support our team to live healthy and productive lives.
As part of our focus on wellbeing, Steel & Tube has been running a
series of wellness workshops.
Each month, we invite an expert to cover off a different topic, with
subjects traversed to date including healthy sleep, nutrition, mental
health, financial management, parenting and positive relationships.
These have proven to be very popular and can be watched by our team
and their families either live or on-demand at a time that suits them.
Wellness
Workshops
25Steel & Tube Annual Report 2023
Building a Sustainable Business
At Steel & Tube, we recognise that our achievements extend
beyond financial performance alone. Whether it is through
supporting local initiatives, promoting sustainable practices,
or fostering a culture of diversity and inclusion within our
organisation, we remain committed to being a responsible
corporate citizen.
Our primary objective is to meet the needs of our
customers, in a profitable manner, while having a beneficial
influence on our people, communities and the planet.
Environmental sustainability is a critical part of our decision
making and is embedded in our strategy. We believe this will
enhance the value of our business for our shareholders.
We are continually looking for ways we can ‘do business
better and smarter’. Our results this year demonstrate the
resilience of our business and prove that we are on the right
path with our dual strategy. Best practice governance and
robust financial oversight are fundamental to our business.
You can read our Governance Report on pages 78 to 88.
Responding to climate change
Steel & Tube is well positioned to respond to a low emission
future and we are supportive of New Zealand’s net-zero
ambitions by 2050. Our goal is clear: to maximise steel’s
contribution to a sustainable and low emissions society,
whilst continuing to grow our business and deliver value to
our shareholders.
Sustainability is integrated into our strategy and is a key part
of our decision making across the group. This can be seen
in our recent shipping tender, where a key criteria in the
decision making was around reducing carbon emissions. It
is also demonstrated in the support that we provide for our
people and our aim to deliver value to our shareholders.
We are focussed on those things that we can control. One
of the most useful things we can do is to reduce re-work by
ensuring the right products, with the right specifications
are delivered to our customers first time. This then reduces
waste, as well as the time and transport emissions from
collecting and replacing the faulty item. Pleasingly, our
DIFOTIS measure (delivered in full, on time, in spec) rates
highly at above 97%. This is reflected in our customer
satisfaction rating of 42, compared to an industry
average of 32.
We continuously assess what we can do better to achieve
our goals while meeting regulatory requirements. By taking
proactive measures and focusing on what we can control,
we can contribute to a more sustainable future for all.
We are mindful that a transition to a low emissions economy
brings both risks and opportunities to Steel & Tube.
As one of New Zealand’s largest steel distributors and
manufacturers, climate change has the potential to have a
transformative impact on the way we do business. This is
why we have committed to engaging with policymakers on
climate change legislation over the last two years and will
continue to do so in the future. With the help of Deloitte,
our work in the current year to identify key climate risks
and opportunities has set the foundation for a robust
climate change strategy which we will continue to develop
over the coming years.
We are well progressed towards the mandatory climate
related reporting regime that comes into effect in FY24.
This year we have made voluntary disclosure against
those areas that we have already put in place. You can
read Steel & Tube’s response to climate change on pages
89 to 98 of this report.
During FY23, we completed our first climate risk
assessment, conducted a full materiality assessment and
deployed our emissions tracking software to ensure we
can accurately report on our emissions profile. In late 2022,
Steel & Tube became a member of the Sustainable Business
Council, strengthening our commitment to reducing our
environmental impact through proactive collaboration
with our peers.
26Steel & Tube Annual Report 2023
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 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.
Reducing Our Emissions
Focusing On The Controllables
An important part of our emissions management is
controlling the controllables in our business. Steel & Tube’s
fleet of around 250 cars and light commercial vehicles is
our largest source of controllable Scope 1 emissions. In line
with this, earlier this year we were pleased to welcome our
first electric vehicle to our fleet in Christchurch. This pool
vehicle is available to all our people needing to move around
Christchurch and will also help reduce the current reliance
on rental vehicles for out of town staff.
Although Steel & Tube leases all of our warehouse
facilities, we understand the importance of investing
in energy efficient technology where feasible. Over the
last 18 months, we have switched over 1,400 lights in our
operating sites from conventional to LED bulbs. All replaced
bulbs were recycled. These are brighter, improving visibility
for our team, and have an extended lifespan meaning less
frequent replacements and reduced waste generation.
This has lead to a 13.1% reduction in power consumption
across participating sites.
More recently, we have completed feasibility for our first
electric light truck, with phase two to commence in 1H24.
If successful, we will run the pilot programme over the
following 12 months to gauge the viability of expanding to
other suitable locations.
27Steel & Tube Annual Report 2023
Committed to Health, Safety, Quality
and Environment
Operating at the highest levels to de-risk our business
FY23 HIGHLIGHTS IN OUR FOCUS AREAS
+
Historically low employee TRIFR,
maintained for second year in a row
5
+
Achieved ISO 45001 International
Standard for Occupational Safety
and Health
+
Achieved ISO 14001 International
Standard for Environmental
Management Systems
+
8.8 out of 10 employee rating on
Steel & Tube’s commitment to
providing a safe work environment
+
Continued training in best practice
crane and forklift operation
+
Well progressed towards
mandatory climate related
disclosures reporting regime with
voluntary disclosure in FY23
+
Trialling electric vehicles as part of
Steel & Tube’s fleet
+
Improvements in recycling and
waste reduction
+
Recycled 124 tonnes of material
destined for landfill and 2,723
tonnes of scrap steel
+
Completed replacement of all
lightbulbs at operating sites with
LEDS, delivering a 13.1% reduction
in power consumption across
participating sites
+
We have partnered with Meridian
who generate 100% of their
electricity from renewable sources
+
Conscious integration of social,
ethical and environmental
performance factors into the
process of selecting suppliers
+
Helping customers understand
the carbon embodied in their steel
purchases
+
Including sustainability as a key
factor in supply chain decisions
+
B+ score in Forsyth Barr's Inaugural
Carbon & ESG Ratings
Material Topics
+
Health & Safety
+
Climate change,
emissions and
environment
+
Product life cycle
and circularity
1
eTRIFR: Employee Total Recordable Injury Frequency Rate per 1 million work hours |
2
The group has made an assessment around the relevance and materiality of its emissions
sources, with a full breakdown on page 97 of our climate-related disclosure
Licence #: 5717145
Certifications/Memberships
1.14
Safety eTRIFR
1
4,945,180kWh
Electricity
consumed
14,175t CO2e
Greenhouse gas
emissions
2
124t
Recycled waste
diverted from
landfill
(plus 2,723t scrap steel)
28Steel & Tube Annual Report 2023
Creating a Successful and Resilient Business
Always looking for ways to work smarter, and using technology and great
thinking to pull it all together and enable a better business
Material Topics
+
Resilient Supply
Chain
+
Digital
Innovation
+
Financial
Performance
+
Corporate
Governance
+
New warehouse and palletisation
project underway
+
Continued adoption of technology
to enhance operational efficiency
+
Centralisation of planning
and procurement through
implementation of new Standard
Operating Procedure platform
+
Commenced discussions
with other parties to identify
opportunities to better utilise
logistics capacity (shipping, ports,
domestic freight)
+
Re-tendered international shipping
contract with new supplier
appointed
+
Strong financial performance
against economic headwinds
+
Appointed inaugural Future
Director participant, Cherie
Kerrison
+
Continued focus on best practice
governance and oversight by the
board
Customer First
Providing a one-stop shop for the most essential steel products,
and making it easier for our customers to do business with us
+
Net promoter score of 42
(FY22: 40)
+
Use of data analytics to provide
enhanced understanding of
customers’ needs and segments
+
Increasing uptake by customers
of EDI integration, enabling
easy ordering and reducing
administrative costs and improving
DIFOTIS
+
Increased digital adoption of
webshop channels
+
Resources aligned to key customer
segments
Material Topics
+
Customer
satisfaction and
service
29Steel & Tube Annual Report 2023
A Winning Team and Positive
Community Impact
Building one great team across Steel & Tube
35
Employee
NPS
1
26%
Proportion of
females in the
workforce
30
Different
ethnicities across
our workforce
FY23 HIGHLIGHTS IN OUR FOCUS AREAS
Material Topics
+
Human Capital
Management
+
Culture and
Wellbeing
+
Diversity, Equity
and Inclusion
+
Community
Engagement
+
All employees on at least the Living
Wage
+
Māori cadetship with Te Puni Kōkiri
wellbeing education programme
+
Sponsorship of Girls in
Infrastructure in Northland
+
Refresh of values and purpose
underway in FY24
+
Executive Cultural Awareness
Training
+
Workforce development
programme
1
Net Promoter Score. Employee NPS industry average is 18 and Customer NPS industry average is 32
30Steel & Tube Annual Report 2023
FY23 HIGHLIGHTS IN OUR FOCUS AREAS
Developing Talent in Our Team
Steel & Tube’s Auckland Manufacturing
and Operations Manager, Carolyn
McGivern, was always destined to work
in the engineering sector. Growing
up, her holiday job was helping her
dad in a manufacturing plant making
metal components for the electronics
industry. This grew into an interest in
mechanical manufacturing and she
went on to University after school,
completing a Bachelor of Mechanical
Engineering. After building up her
experience over two decades, Carolyn
joined the Steel & Tube team in 2021.
Already, she has been identified as a
leader within the group, and Steel &
Tube will be supporting her to pursue an
MBA. This is part of Steel & Tube’s focus
on developing and retaining internal
talent - several other future leaders have
completed MBAs over the last few years,
as well as other internal and external
leadership programmes.
Continuous improvement and learning
has been the constant in my career.
Making the boat go better and faster
is what I love doing.
31Steel & Tube Annual Report 2023
Chris Ellis
Independent Director
BE, MS, CMINSTD
Appointed a director on 29 September
2017, 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-focussed 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' directorships include Hiway
Group and Horizon Energy Group, he
is Independent Chair at Oxcon CLL Ltd
and is Advisory Chair of John Fillmore
Contracting Limited.
Cherie Kerrison
Future Director
CFINSTD, DIPLOMA TE REO
Cherie was appointed as a Future
Director on 31 March 2023. Cherie has
a background in executive leadership.
Prior to her appointment as Future
Director she was Managing Director of
JBHIFI and General Manager/Executive
Director of the Appliance Shed. She is
currently on the board of Ōtorohanga
Kiwi House Trust. She brings expertise
in sales, marketing, pricing, Te Ao Māori,
and network management.
John Beveridge
Independent Director
BA, POST GRAD BUSINESS DIPLOMA,
CMINSTD
John was appointed to the board on
14 August 2019. He 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.
The
Board
Steel & Tube’s board comprises six independent
directors, all of whom have significant market and
sector experience.
This year, the board was pleased to appoint its
inaugural Future Director, Cherie Kerrison. Future
Directors is an initiative of the New Zealand
Institute of of Directors aimed at giving talented
executives exposure to a company board for
a 12 to 18-month period in order to develop
governance experience. Future Directors attend
board meetings to observe and participate in
discussions, but they do not have voting rights.
We liked Cherie’s enthusiasm, connection to Te Ao
Māori and her leadership experience in the retail
sector. She’s a great fit for our company and will be
a valued contributor over the next 12 months.
32Steel & Tube Annual Report 2023
Susan Paterson
Chair and Independent Director
ONZM, CFINSTD, MBA (LDN), BPHARM
Susan was appointed Chair in Feb
2017 ( joined Jan 2017). A professional
Director since 1996 Susan became an
Officer of the Order of New Zealand
(ONZM) in 2015 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 include the Reserve
Bank of NZ, Arvida Group, Les Mills NZ,
Evolution Healthcare (Chair), Theta
Systems (Chair), Lodestone Energy,
and EROAD (Chair).
Steve Reindler
Independent Director
BE MECH (HONS), AMP, FIPENZ,
CFINSTD
Steve was appointed a director on 28
August 2017. 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 a
President of the New Zealand Institution
of Professional Engineers. His current
directorships include Ports of Auckland,
Broome International Airport Group,
Christchurch Multi Use Arena - Te Kaha,
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 is also an
independent advisor to the Museum
of NZ Te Papa Tongarewa Governance
Group and AgResearch at the Lincoln
Campus.
Karen Jordan
Independent Director
BSOCSC, FCMA, CFINSTD
Karen was appointed in December
2020. She is a director experienced
across private, public and not-for-profit
sectors. She is a Chartered Fellow of
both the IOD NZ and 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 Lyttelton Port Company and an
Independent Member of the NZDF Risk
& Assurance Committee.
Andrew Flavell
Independent Director
NZCE, BE (HONS), ME, DR. ENG
Dr. Flavell was appointed in October
2021. He has extensive international
experience in the information
technology space. This includes
leading large teams, driving digital
transformations, delivering compelling
consumer experiences, 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.
Dr. Flavell is a director of SNGLRTY
Limited and Ports of Auckland Limited
and the chair of the ASB Technical
Advisory Group.
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
focussed 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. Our governance framework
takes into consideration the NZX Listing Rules as
well as the NZX Corporate Governance Code.
A detailed report against the Code can be read
on pages 78 to 88.
33Steel & Tube Annual Report 2023
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.
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.
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.
Leadership team
34Steel & Tube Annual Report 2023
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.
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.
Peter Ensor
GM Reinforcing/Wire and CFDL
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.
35Steel & Tube Annual Report 2023
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 FY23 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. FY23 EBITDA and EBIT were impacted by non-trading
adjustments totalling $1.1m.
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 believes 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
FY23
FY22FY23
FY22
Year Ended 30 June$000$000$000$000
Reported 51,876 66,598 31,009 4 7, 6 3 6
Loss on de-recognition of finance lease receivable 128 - 128 -
Holiday Pay provision release - (85 4) - (85 4)
NZ IFRS 16 reversal of impairment(177) (527) (177) (527)
Software as a Service (SaaS) expenditure 1,109 1,645 1,109 1,645
Normalised 52,936 66,862 32,069 4 7,9 0 0
Financial Measures
36Steel & Tube Annual Report 2023
5 Year Financial Performance
20232022202120202019
$000$000$000$000$000
Financial Performance
Sales 5 89,078 59 9,14 8 481,043 4 1 7,9 2 3 498,110
EBITDA 51,876 66,598 38,614 ( 3 7, 2 3 6) 24,085
Depreciation and amortisation(20,867) (18,962) ( 1 7,9 0 7 ) (20,458) (7,290)
EBIT 31,009 4 7, 6 3 6 20,707 (5 7, 6 9 4) 16,795
Net interest expense( 7, 2 3 9) (5,701) (5,754) (6,6 61) (2,828)
Profit / (loss) before tax 23,770 41,9 3 5 14,95 3 (6 4, 3 5 5) 13 ,967
Tax (expense) / benefit(6,7 7 3) (11,742) 418 4,342 (3,552)
Profit / (loss) after tax 16,9 9 7 30,193 15,371 (60,013) 10,415
Operating cash inflow / (outflow) 98,280 (34,117) 2 9, 3 3 2 3 9,6 0 6 21,304
Funds Employed
Equity 208,154 210,101 193,753 181,290 2 5 3 ,9 01
Non-current liabilities 86,509 83,788 92,023 106,084 26,699
294,663 293,889 285,7 76 2 8 7, 3 74 280,600
Comprises
Current assets 224,940 303,790 222,510 193,761 213,827
Current liabilities(69,426) (13 9,9 7 1) (80,024) (58,87 1) (45 , 5 6 3)
Working Capital 155,514 163,819 142,486 134,890 168,264
Non-current assets 1 3 9,149 130,070 143,290 152,484 112,336
294,663 293,889 285,7 76 2 8 7, 3 74 280,600
Statistics
Dividends per share (cents)
1
8.0 13.0 4.5 - 5.0
Basic earnings per share (cents) 10.3 18.3 9. 3 (36.4) 6.8
Return on Sales2 .9%5.0%3.2%(14.4%)2.1%
Return on Equity8.2%14.4%7.9 %(33.1%)4.1%
Working Capital (current ratio)
2
3.2 2.2 2.8 3.3 4.7
Net tangible assets per share$1.17$1.22$1.11$1.03$1.19
Equity to total assets5 7. 2 %48.4%53.0%52.4%7 7. 8 %
Gearing (debt to debt plus equity) - 19. 5% - 5.2%5.6%
Net interest cover (times)
3
4.3 8.4 3.6 (4.9) 5 .9
Ordinary shareholders7, 2 7 9 7, 3 8 5 7, 5 2 8 8,036 8,310
Employees 851 829 799 884 1,003
-Female 221 224 201 192 214
-Male 630 605 598 692 789
Directors & Officers
-Female3 3 3 4 6
-Male 11 12 11 10 9
1
Dividends per share are calculated based on dividends issued in respect of the financial year |
2
Calculated using current assets/current liabilities |
3
Calculated as EBIT over net interest expense
37
Steel & Tube Annual Report 2023
Steel & Tube Annual Report 202338
Financial Statements 2023 40
Statement of Profit or Loss and
Other Comprehensive Income 42
Statement of Changes in Equity 43
Balance Sheet 44
Statement of Cash Flows 45
Notes to the Financial Statements
Section A – Performance 46
Section B – Working Capital 52
Section C – Fixed Capital 57
Section D – Funding 63
Section E – Other 65
Independent Auditor's Report 74
General Information
Governance 78
Climate-related Disclosures 89
Remuneration 99
Disclosures 103
Glossary 106
Directory 107
Financial
Report
Steel & Tube Annual Report 202339
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.
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 1 April 2023)
• 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 2023
Steel & Tube Annual Report 202340
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.
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 (EBIT)
Steel & Tube Annual Report 202341
Statement of Profit or Loss and Other Comprehensive Income
For the year ended 30 June 2023
Notes
2023
$000
2022
$000
Sales revenueA3 5 89,078 59 9,14 8
Other operating incomeA6 654 1,463
Cost of salesA2(4 6 4,676) (4 6 5 , 5 14)
Operating expensesA2(9 3,17 3) (86, 305)
Software as a Service (SaaS) upfront expenditure(1,109) (1,645)
Earnings before interest, tax, other gains and losses and impairment 30,7 74 47,147
Other gains / (losses) 58 (38)
Earnings before interest, tax and impairment 30,832 4 7,1 0 9
Reversal of impairment of Right-of-use assetsC4 177 527
Earnings before interest and tax 31,009 4 7, 6 3 6
Interest income 405 106
Interest expense(7,644) (5,807)
Profit before tax 23,770 41,9 3 5
Tax expenseA5(6,7 7 3) (11,742)
Profit for the year attributable to owners of the company 16,9 9 7 30,193
Items that may subsequently be reclassified to profit or loss
Other comprehensive income - hedging reserve(551) 157
Total comprehensive income 16,446 30,350
Basic earnings per share (cents)A1 10.3 18.3
Diluted earnings per share (cents)A1 10.2 18.1
Steel & Tube Annual Report 202342
Statement of Changes in Equity
For the year ended 30 June 2023
Share
capital
Retained
earnings
Hedging
reserve
Treasury
shares
Share-based
payments
Total
equity
Notes$000 $000 $000 $000 $000 $000
Balance at 1 July 2022 156,669 54,770 560 (2,896) 998 210,101
Comprehensive income
Profit after tax - 16,9 9 7 - - - 16,9 9 7
Other comprehensive income
Hedging reserve (net of tax) - - (551) - - (551)
Total comprehensive income - 16,9 9 7 (551) - - 16,446
Transactions with owners
Dividends paid A1 - (19,0 26) - - - (19,0 26)
Employee share schemes 499 - - - 134 633
Balance at 30 June 2023 1 5 7,1 6 8 52 ,741 9 (2,896) 1,132 208,154
Balance as at 1 July 2021 156,669 38,914 403 (2,896) 663 193,753
Comprehensive income
Profit after tax - 30,193 - - - 30,193
Other comprehensive income
Hedging reserve (net of tax) - - 157 - - 157
Total comprehensive income - 30,193 157 - - 30,350
Transactions with owners
Dividends paid A1 - (14,589) - - - (14,589)
Employee share schemes - 252 - - 335 587
Balance at 30 June 2022 156,669 54,770 560 (2,896) 998 210,101
Steel & Tube Annual Report 202343
Balance Sheet
As at 30 June 2023
Notes
2023
$000
2022
$000
Current assets
Cash and cash equivalentsE6 6,481 8,046
Trade and other receivablesB2 69,798 9 0,9 7 1
Contract assetsA4 9, 2 2 5 10,822
InventoriesB1 139,158 192,460
Derivative assetsE6 278 1,491
224,940 303,790
Non-current assets
Deferred taxA5 7,0 74 7, 5 8 2
Property, plant and equipmentC1 35,647 3 5 ,9 2 5
IntangiblesC2 13,523 7,875
Right-of-use assetsC4 8 2 ,90 5 78,688
1 3 9,149 130,070
Total assets 364,089 433,860
Current liabilities
Trade and other payablesB3 49,0 2 5 69,6 2 7
BorrowingsD1 - 51,000
Income tax payable 5,603 5,014
ProvisionsE2494 767
Derivative liabilitiesE6 69 8
Short term lease liabilitiesC4 14,235 13,555
69,426 13 9,9 7 1
Non-current liabilities
ProvisionsE21,318 1,271
Long term lease liabilitiesC485,191 82,517
86,509 83,788
Equity
Share capitalD3 1 5 7,1 6 8 156,669
Retained earnings 52 ,741 54,770
Other reserves(1,755) (1,338)
208,154 210,101
Total equity and liabilities364,089 433,860
These financial statements and the accompanying notes were authorised by the board on 18 August 2023.
For the board
Susan Paterson | Chair Karen Jordan | Director
Steel & Tube Annual Report 202344
Statement of Cash Flows
For the year ended 30 June 2023
Notes
2023
$000
2022
$000
Cash flows from operating activities
Customer receipts 612,196 5 8 0,9 11
Interest receipts 405 106
Payments to suppliers and employees(501,625) (610,430)
Payments for interest on leases(4,49 9) (4,6 3 4)
Income tax payments(5,238) -
Interest payments(3,0 39) (1,176)
Wage subsidy received A6 80 1,106
Net cash inflow / (outflow) from operating activities 98,280 (34,117)
Cash flows from investing activities
Property, plant and equipment disposal proceeds 112 74
Property, plant and equipment and intangible asset purchases(6, 249) (6,179)
Payment for new business purchaseC5(8,909) -
Net cash outflow from investing activities(1 5,0 4 6) (6,105)
Cash flows from financing activities
(Repayment of ) / proceeds from bank borrowings(51,000) 51,000
Dividends paid(19,0 26) (14,589)
Payment for leases(14,773) (13,176)
Net cash (outflow) / inflow from investing activities(84,799) 23,235
Net decrease in cash and cash equivalents(1,565) (16,987)
Cash and cash equivalents at the beginning of the year 8,046 25,033
Cash and cash equivalents at the end of the year 6,481 8,046
Represented by:
Cash and cash equivalents 6,481 8,046
6,481 8,046
Reconciliation of profit after tax to cash flows from operating activities
Profit after tax 16,9 9 7 30,193
Non-cash adjustments:
Depreciation and amortisation 20,868 18 ,96 2
Deferred tax 508 11,742
Reversal of impairment of right-of-use assets(177) (527)
Loss on derecognition of finance lease receivable 128 -
Share scheme expense 409 443
Foreign exchange gains(585) (123)
Other 421 (243)
Gain on items classified as investing activities:
(Gain) / loss on property, plant and equipment disposals(22) 38
38,547 60,485
Movements in working capital:
Income tax payable 589 -
Inventories 56,482 ( 78 ,9 9 1)
Trade and other receivables 22,593 (18,393)
Trade and other payables and provisions(19,9 3 1) 2,782
Net cash inflow / (outflow) from operating activities 98,280 (34,117)
Steel & Tube Annual Report 202345
Notes to the Financial Statements
For the year ended 30 June 2023
This section focuses on the group’s financial performance and returns provided to shareholders.
A1: Dividends and Earnings per Share
On 14 February 2023, the board declared an interim dividend of 4 cents per share (2022: 5.5 cents) totalling $6.6m (2022: $9.1m).
The dividends were fully imputed (2022: unimputed) and paid to shareholders on 6 April 2023. On 18 August 2023, the board declared
a final dividend (fully imputed) of 4.00 cents per share (2022: 7.50) totalling $6.7m (2022: $12.4m). The dividends will be paid to
shareholders on 22 September 2023.
2023
$000
2022
$000
Dividends paid 19,0 26 14,589
Dividends paid includes the current year interim dividend and prior year final dividend.
Dividends were paid / payable in respect of the following years:
FY23
$000
FY22
$000
Interim Dividend Paid 6,578 9,128
Final Dividend Payable 6,673 12,448
Total 13,251 21, 576
Cents per share
FY23FY22
Interim Dividend (FY23: imputed, FY22: unimputed)4.00 5.50
Final Dividend (FY23: imputed, FY22: partially imputed)4.00 7. 5 0
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.
Earnings per share (EPS)
2023
000
2022
000
Profit after tax16,9 9 7 30,193
Weighted average number of shares for basic EPS 165,658 165,000
Weighted average number of shares for diluted EPS169,338 1 6 7, 6 5 3
Basic earnings per share (cents)10.3 18.3
Diluted earnings per share (cents)10.2 18.1
Performance
SECTION A
Steel & Tube Annual Report 202346
A2: Expenses
Cost of sales and operating expenses:Notes
2023
$000
2022
$000
Inventories expensed in cost of sales 4 3 0,950 431,096
Impairment of trade and other receivables 54 293
Depreciation and amortisationC 1/C 2/C4 20,867 18 ,96 2
Directors' fees 665 526
Employee benefits 74, 528 7 3,74 4
Defined contribution plans 1,9 9 7 1,700
Information technology expenses 7,300 7, 0 0 8
Foreign exchange gains(585) (123)
Short term and low value lease costs 118 313
Other expenses2 1,95 5 18,300
Total cost of sales and operating expenses 557,849 551,819
Inventory sold during the year is expensed as cost of sales. Inventory write-downs of $0.3m (2022: $0.6m) was incurred in the ordinary
course of business and is included within Inventories expensed in cost of sales.
Depreciation of $1.6m (2022: $1.6m) 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.
Steel & Tube Annual Report 202347
A3: Operating Segments
The group has identified two reporting segments as at 30 June 2023 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 year
ended 30 June 2023 is as follows:
2023
Distribution
$000
Infrastructure
$000
Other
$000
Reconciled
to group
$000
Timing of revenue recognition
At a point in time 356,285 136,500 23 492,808
Over time - 96,270 - 96,270
Revenue from external customers 356,285 232,770 23 5 89,078
Depreciation and amortisation(10,834) ( 7, 2 2 9) (2,804) (20,867)
Expenses(324,293) (215,690) 2,781 (537,202)
Segment EBIT 21,158 9,851 - 31,009
Interest on leases (2,681) (1,806) (12) (4,49 9)
Interest - others (net)(2 ,740)
Reconciled to group profit before tax 23,770
2022
Distribution
$000
Infrastructure
$000
Other
$000
Reconciled
to group
$000
Timing of revenue recognition
At a point in time 383,449 126,370 14 509,833
Over time - 89, 3 15 - 89, 3 1 5
Revenue from external customers 383,449 215,685 14 59 9,14 8
Depreciation and amortisation(9, 8 8 6) (6,78 3) (2,293) (18,962)
Expenses(333,418) (201,411) 2,279 (532 , 550)
Segment EBIT 40,145 7, 4 9 1 - 4 7, 6 3 6
Interest on leases (2,722) (1,899) (13) (4,6 3 4)
Interest - others (net)(1,067)
Reconciled to group profit before tax 41,9 3 5
Depreciation and amortisation recognised as at 30 June 2023 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.
Steel & Tube Annual Report 202348
A4: Revenue recognised on construction contracts
Key Policy
Refer to Note E9 for the group's accounting policy on revenue recognised on construction contracts. 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, which includes an estimation of expected
material and labour costs 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.
2023
$000
2022
$000
Contract assets 9, 2 2 5 10,822
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.
Steel & Tube Annual Report 202349
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 crystalises.
Deferred tax is not provided if it arises from the following differences:
• Goodwill not deductible for tax purposes
• Initial recognition of assets and liabilities in a transaction other than a business combination that affects neither accounting
or taxable profit
• 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
20232022
The income tax expense is determined as follows:$000$000
Profit or loss
Current income tax
Current year income tax expense 6,136 6,378
Adjustments in respect of prior periods(1) -
Deferred income tax
Depreciation, provisions, accruals, tax losses and other 657 5,437
Adjustments in respect of prior periods(19) (73)
Income tax expense in profit or loss 6,773 11,742
20232022
Reconciliation of income tax expense$000$000
Profit before tax23,77041,9 3 5
Non-deductible expenditure487256
24,25742,191
Tax at current rate of 28%6,79211,815
Prior period adjustment(19)(73)
Total income tax expense6,77311,742
Represented by:
Current tax6,135 6,378
Deferred tax6385,364
6,77311,742
Steel & Tube Annual Report 202350
Deferred tax assets and liabilities
The table below shows the movement in the deferred tax balances that are recognised at the beginning and end of the period.
Opening
balance
$000
Prior period
adjustments
$000
Recognised
in income
$000
Recognised
in equity
$000
Closing
balance
$000
Group 2023
Property, plant and equipment &
Intangibles(1,9 12) - (15 4) - (2 ,06 6)
Net lease liability 4,348 - (122) - 4,226
Employee benefits 3,218 5 (378) (8 4) 2,761
Provisions 2,147 14 (3) - 2,158
Cash flow hedging reserve(2 19) - - 214 (5)
7, 5 8 2 19 (6 5 7) 130 7,0 74
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) (424) - (1,9 12)
Net lease liability 4,656 (168) (140) - 4,348
Employee benefits 2,248 - 828 142 3,218
Provisions 2,161 154 (168) - 2,147
Cash flow hedging reserve(158) - - (61) (2 19)
Net taxable loss 5,334 199 (5,533) - -
12,865 73 (5,437) 81 7, 5 8 2
2023
$000
2022
$000
The analysis of deferred tax assets and deferred tax liabilities is as follows:
Deferred tax liabilities(2 ,071) (2,131)
Deferred tax assets 9,14 5 9, 7 13
7,0 74 7, 5 8 2
Imputation credits available at 30 June 2023 were $0.28m (2022 $0.011m).
A6: Other Operating Income
Other operating income for the financial year ended 30 June 2023 included the Covid-19 leave support scheme subsidy of $80k (2022:
$1.1m) which the group applied for and received from the New Zealand Government during the financial year. 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 leave support scheme as other income in the Statement of Profit or Loss and Other
Comprehensive Income.
Steel & Tube Annual Report 202351
Notes to the Financial Statements
For the year ended 30 June 2023
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 2023 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 $3.5m (2022: $3.6m) continues to be recognised as at 30 June 2023 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 current 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 physical wall-to-wall count where required to ensure the
accuracy of the group’s inventory records.
The group holds inventories valued at $139.2m (2022: $192.5m).
Goods in transit
Provision for
write-down
Finished goods
at cost price
(3,458)
(3,572)
Inventories ($000s)
$139,158
2023
2022
$192,460
1 3 2 ,745171,818
9, 8 7 1
24,214
Working Capital
SECTION B
Steel & Tube Annual Report 202352
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 $0.28m (2022: $1.49m) and as liabilities were $0.07m
(2022: $0.01m). The notional value of foreign exchange contracts in place as at 30 June 2023 totalled $29.20m (2022: $37.30m).
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 +$1.53m if the NZ dollar strengthened by 5% and -$1.41m if the NZ dollar weakened by 5%
(2022: + $2.06m /-$1.83m 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 based 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.
Steelā&āTube Annual Report 202353
Trade receivables at 30 June 2023 are $68.9m (2022: $87.4m) and are recognised initially at fair value and subsequently at amortised
cost less any provision for impairment. The carrying value of trade and other receivables are equivalent to their fair value.
Trade receivables
Prepayments and
sundry receivables
Provision for
impairment
Trade and Other Receivables ($000s)
5,1 41
(1,553)
2022
$90,971
2,656
(1,801)
2023
$69,798
68,94387,383
No one customer accounts for more than 6% of trade receivables at 30 June 2023 (2022: 6%).
The aging profile of the group's customer balances is shown below.
Trade receivables excluding current at 30 June 2023 ($000s)
Within
1 month
Within 1 to
2 months
Beyond
2 months
20232022
27%
7,760
1,061
90
869
2 ,1 9 9
266
Steel & Tube Annual Report 202354
At 30 June 2023, trade receivables of $2.2m (2022: $0.3m) 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.
Provision for impairment
At 30 June 2023 an impairment provision of $1.8m (2022: $1.6m) was held.
The expected credit loss allowance provision has been determined as follows:
As at 30 June 2023
Current
$000
Within 1 Month
$000
1 - 2 Months
$000
2-3 Months
$000
Beyond
3 Months
$000
Total
$000
Gross carrying amount 58,115 7, 76 0 869 511 1,688 68,943
Baseline/Aging 387 134 61 169 1,021 1,772
Region 4 2 1 1 4 12
Sector 5 4 2 1 5 17
Expected credit loss allowance 396 140 64 171 1,030 1,801
As at 30 June 2022
Current
$000
Within 1 Month
$000
1 - 2 Months
$000
2-3 Months
$000
Beyond
3 Months
$000
Total
$000
Gross carrying amount 8 5,96 6 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
Movements in the provision for impairment for the year ended 30 June 2023, are as follows:
20232022
Provision for impairment $000 $000
Provision as at 1 July 1,553 2,240
Recognised 289 347
Utilisation of provision(41) (1,03 4)
Provision as at 30 June1,801 1,553
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 and other collateral 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-.
Steelā&āTube Annual Report 202355
B3: Trade and Other Payables
49,025
69,627
Trade and other payables ($000s)
2023
2022
Employee benefits
Accrued expenses
Trade payables
35,62949,4 6 6
8,64010,391
4,756
9, 7 7 0
The carrying amounts of the above items are equivalent to their fair values and subsequently measured at amortised cost using the
effective interest method.
Steel & Tube Annual Report 202356
Notes to the Financial Statements
For the year ended 30 June 2023
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.
Plant, machinery
& vehicles at cost
Furniture, fittings
& equipment
at costTotal
2023$000 $000 $000
Opening cost 85,606 19, 3 0 9 10 4,9 1 5
Opening accumulated depreciation(53, 550) (15,440) (68,990)
Opening net book value 32,056 3,869 3 5,9 2 5
Additions 3,360 1,247 4,607
Disposals(96) - (96)
Depreciation(3,436) (1,353) (4, 78 9)
Closing net book value 31,884 3,763 35,647
Comprises:
Cost or fair value 88,624 20,539 10 9,16 3
Accumulated depreciation(56,740) (16,7 76) (73,516)
Property, plant and equipment 31,884 3,763 35,647
2022
Opening cost 82,880 1 7, 2 9 3 100,173
Opening accumulated depreciation(50,852) (14,9 2 8) (6 5,780)
Opening net book value 32,028 2,365 34,393
Additions 3,202 2,561 5,763
Disposals(52) (62) (114)
Depreciation(3,122) (995) (4,117)
Closing net book value 32,056 3,869 3 5 ,9 2 5
Comprises:
Cost or fair value 85,606 19, 3 0 9 10 4,9 15
Accumulated depreciation(53,550) (15,4 40) (6 8 ,9 9 0)
Property, plant and equipment 32,056 3,869 3 5 ,9 2 5
Included within the plant, property and equipment categories is capital work in progress totalling $1.8m (2022: $1.6m).
Fixed Capital
SECTION C
Steel & Tube Annual Report 202357
C2: Intangibles
Goodwill
Software &
LicencesOtherTotal
2023$000 $000 $000 $000
Opening cost 4 7,1 7 1 28,680 2,522 78,373
Opening accumulated amortisation and impairment(4 7,1 7 1) (21,094) (2,233) (70,498)
Opening net book value - 7, 5 8 6 289 7,875
Additions 4,761 1,94 4 862 7, 5 67
Amortisation charge - (1,75 4) (165) (1,9 19)
Closing net book value 4,761 7, 7 76 986 13,523
Comprises:
Cost 51,9 3 2 30,624 3,384 8 5,94 0
Accumulated amortisation and impairment(4 7,1 7 1) (22,848) (2, 398) (72,417)
Closing net book value 4,761 7, 7 76 986 13,523
2022
Opening cost 4 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 9,13 4
Additions - 418 - 418
Amortisation charge - (1,575) (102) (1,677)
Closing net book value - 7, 5 8 6 289 7,875
Comprises:
Cost 4 7,1 7 1 28,680 2,522 78,373
Accumulated amortisation and impairment(4 7,1 7 1) (21,094) (2,233) (70,498)
Closing net book value - 7, 5 8 6 289 7,875
Goodwill recognised in the current financial year relates to the goodwill arising from the acquisition of Kiwi Pipe (refer Note C5
Business Combination). Included within the intangibles categories is capital work in progress totalling $0.7m (2022: $0.2m). Other
intangibles comprises customer relationships and customer contracts arising from business combinations.
Steel & Tube Annual Report 202358
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 other operating expenses.
Customer relationships and customer contracts are capitalised at fair value on acquisition date and are amortised on a
straight-line basis over their estimated useful lives of 10 and 2 years respectively. Amortisation charges are included in
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.
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 2023 were identified as being Distribution, Reinforcing/CFDL and Rollforming.
As at 30 June 2023, the group has not identified any indicators of impairment over the assets held at the CGUs. The group’s
market capitalisation is slightly below net assets at year end, however this market capitalisation value excludes any control
premium and may not reflect the value of 100% of the group’s net assets.
The group has therefore concluded that no impairment is required as at 30 June 2023. 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 remain consistent in the current financial year.
Steel & Tube Annual Report 202359
Key judgement – Goodwill Impairment testing
The group’s goodwill balance of $4.7m (2022: nil) has been allocated to the Distribution CGU, for the purposes of impairment
testing.
The group has undertaken a VIU calculation for the Distribution CGU. A VIU calculation is a valuation based on forecast cash
flows. These forecast cash flows are discounted back to present value to estimate a value for the CGU. If the VIU exceeds the
carrying value of the assets no impairment is recognised.
A number of judgements have been made in respect to the assumptions used in the valuation. The key assumptions are
summarised below:
Assumption2023
Discount rate (post-tax)11.1%The group engaged an independent expert to assess the CGU’s post-tax weighted
average cost of capital.
Discount rate (pre-tax)14.9 %The pre-tax discount rate was calculated based on back solving from the post-tax
discount rate.
Terminal growth rate2.0%A long-term growth rate into perpetuity has been determined based on forecasted
consumer price inflation (CPI) growth.
Forecast period5 yearsBoard approved budget was used for FY24.
Forecast period cash flow
growth rate
(4.5%) – 7.9%Based on expectations of future outcomes taking into account past experience,
sector analysis and adjusted for anticipated revenue growth/decline.
Based on the calculations and assumptions outlined above, the group has not identified any impairment as at 30 June 2023.
C3: Commitments
Capital commitments
The group has contractual commitments of $1.8m (2022: $1.1m) for purchase of plant and equipment.
Steel & Tube Annual Report 202360
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 2023.
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 $0.2m on these leases as at 30 June 2023,
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 2023:
PropertiesMotor VehiclesEquipmentTotal
$000$000$000$000
Right-of-use assets at 1 July 2022 74, 53 3 3,314 841 78,688
Additions to right-of-use assets 16,107 1,98 3 606 18,696
Depreciation(12,365) (1,4 4 8) (3 4 6) (14,159)
Impairment loss reversed 177 - - 177
Disposals(105) - (392) (49 7)
Total right-of-use assets at 30 June 2023 78,347 3,849 709 8 2 ,90 5
PropertiesMotor VehiclesEquipmentTotal
$000$000$000$000
Right-of-use assets at 1 July 2021 81,624 3,074 839 85,537
Additions to right-of-use assets 3,819 1,741 238 5,798
Depreciation(11,437) (1,495) (2 3 6) (13,168)
Impairment loss reversed 527 - - 527
Disposals - (6) - (6)
Total right-of-use assets at 30 June 2022 74, 53 3 3,314 841 78,688
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 portion recognised as investment property for the current financial year is $1.6m (2022:
$1.5m). Income from sub-leasing right-of-use assets for the year ended 30 June 2023 was $0.3m (2022: $0.3m).
Amounts recognised as lease liabilities are presented below.
Lease liability maturity analysis
PrincipalInterestGross
2023$000$000$000
Between 0 to 1 year 14,235 4,653 18,888
Between 1 to 5 years49,33312,277 61,610
More than 5 years 35,858 5,651 41,509
Lease liabilities as lessee 9 9,426 22,581 122,007
2022
Between 0 to 1 year 13,555 4,233 1 7, 7 8 8
Between 1 to 5 years 44,822 11,596 56,418
More than 5 years 3 7, 6 9 5 5,636 43,331
Lease liabilities as lessee 96,072 21,465 1 1 7, 5 3 7
Steel & Tube Annual Report 202361
C5: Business Combination
The group accounts for business combinations when it obtains control of either an entity, or a group of assets and liabilities which
constitute a business. The group controls an entity when it 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 over the entity.
Acquisition of Kiwi Pipe and Fittings
On 1 August 2022, the group acquired 100% control of the operations of Kiwi Pipe and Fittings Limited, a well established specialist
and successful provider of fire and reticulation products. The acquisition is part of the group's strategy to selectively invest in high
value products, services and sectors. While the group already offers a range of fire protection products to its customers, bringing
Kiwi Pipe into the fold makes it one of the larger suppliers in this market.
For the year ended 30 June 2023, Kiwi Pipe contributed revenue of $6.2m and earnings before interest and tax (EBIT) of $1.1m. If the
acquisition had occurred on 1 July 2022, management estimates that Kiwi Pipe would have contributed revenue of $6.8m and EBIT
of $1.2m. In determining these amounts, management has assumed that the fair value adjustments that arose on date of acquisition
would have been the same if the acquisition had occurred on 1 July 2022.
Consideration transferred
The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Any
goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is recognised in profit or loss immediately.
Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities.
The total consideration transferred for the acquisition of the Kiwi Pipe business comprised of cash paid of $8.9m. No other form of
consideration was transferred.
Identifiable assets acquired and liabilities assumed
The following table summarises the fair values of assets acquired and liabilities assumed at the date of acquisition:
$000
Inventories 3,180
Property, plant and equipment 134
Trade and other payables(28)
Customer relationships 862
Total identifiable net assets acquired 4,148
Goodwill recognised
Goodwill arising from the acquisition has been recognised as follows:
$000
Consideration paid 8 ,9 0 9
Fair value of identifiable net assets acquired 4,148
Goodwill recognised 4,761
The goodwill is mainly attributable to the skills and experience of Kiwi Pipe’s workforce and the synergies expected to be achieved
when combined into the group’s business. None of the goodwill recognised is expected to be deductible for tax purposes.
Key Judgement - Identification and Valuation of Identifiable Assets and Liabilities
The group has identified the assets acquired and liabilities assumed at acquisition date, and measured these at their
acquisition date fair values.
Management has applied judgement in relation to both identifying and valuing these assets and liabilities; specifically in
respect to the identification and measurement of customer relationships. The fair value of customer relationships was
measured using the multi-period excess earnings method. This method considers the present value of net cash flows
expected to be generated by the customer relationships, excluding any cash flows related to contributory assets.
Steel & Tube Annual Report 202362
Notes to the Financial Statements
For the year ended 30 June 2023
This section includes details of the group's cash, borrowings and capital reserves which provide funds for current and future activities.
D1 : Borrowings
20232022
$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 2023, the group has not relied on financial covenant waivers and is compliant with all financial covenants.
On 4 August 2023, the group negotiated an amendment to its current banking facility, comprising a three year $30m Revolving Cash
Advance facility with an expiry date in 4 August 2026, a two year $30m Revolving Cash Advance facility with an expiry date of 4 August
2025 and a $40m Trade Loan facility.
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
2023
Trade payables & accruals - 49,0 2 5 - - 49,0 2 5 49,0 2 5
Cash flow hedging of derivatives:
Outflow- 29,201 -- 29,201 29,201
Inflow-(29,410) --(29,410) (29,410)
- (209) - - (209) (209)
2022
Borrowings
1
4.81% 52,223 353 471 53,047 51,000
Trade payables & accruals - 69,6 2 7 - - 69,6 2 7 69,6 2 7
Cash flow hedging of derivatives:
Outflow - 3 7, 2 9 9 - - 3 7, 2 9 9 3 7, 2 9 9
Inflow - (38,782) - - (38,782) (38,782)
- (1,483) - - (1,483) (1,483)
1
The group’s Facility Agreement allows drawdowns to be rolled over, subject to meeting the terms of the agreement
Funding
SECTION D
Steel & Tube Annual Report 202363
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 2022 8,046 (51,000) (13,555) (82, 517) (1 3 9,0 26)
Cash flows(1,565) 51,000 14,773 - 64,208
Non-cash movements - - (15,453) (2 ,674)(18,127)
Net debt as at 30 June 2023 6,481 - (14,235) (85,191)(92,945)
Net debt as at 1 July 2021 25,033 - (13,079) (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 2022 8,046 (51,000) (13,555) (82, 517) (13 9,0 26)
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 profit after tax adjusted for any significant non-trading items
There has been no material change in the management of capital during the year.
2023 2022 2023 2022
Note$000 $000 SharesShares
Fully paid:
Balance at the beginning of the year 156,668 156,668 165,972,540 165,972,540
Shares issued to employeesE5 499 - 855,125 -
Balance at the end of the year 1 5 7,1 67 156,668 166,827,665 165,972,540
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 1 5 7,1 6 8 156,669 166,852,665 165,997,540
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.
2023 2022 2023 2022
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.
Steel & Tube Annual Report 202364
Notes to the Financial Statements
For the year ended 30 June 2023
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
Other
ProvisionsTotal
$000 $000 $000 $000
Opening balance as at 1 July 2022 - 1,533 505 2,038
Additions 85 81 88 254
Used - - (328) (328)
Unutilised - - (152) (152)
Closing balance at 30 June 2023 85 1,614 113 1,812
Current 85 296 113 494
Non Current - 1,318 - 1,318
Closing balance at 30 June 2023 85 1,614 113 1,812
Other
SECTION E
Steel & Tube Annual Report 202365
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 costs included within this provision relate to committed restructuring activities
• Make Good Provision on existing tenanted properties. No make good activities were undertaken as at 30 June 2023. Actual
payment dates and costs will be known once each lease reaches its expiry date
• 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 $2.5m (2022: $2.7m) 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.
E4: Auditor Remuneration
20232022
Fees paid to auditors (KPMG)$000 $000
Annual audit & half year review 491 379
To t a l 491
1
379
1
Including $60k relating to the FY22 audit
Steel & Tube Annual Report 202366
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:
2023 2022
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 LimitedNon-trading30 June100%100%
Manufacturing Suppliers LimitedFastenings Distributor30 June100%100%
Composite Floor Decks LimitedFloor Decking Installer30 June100%100%
2023 2022
Transactions with Key Management Personnel$000 $000
Short-term benefits 5,454 5,733
Share-based benefits (accounting expense) 386 356
5,8406,089
The key management personnel are the non-executive directors and executive management. Included in short term benefits are
directors’ fees of $0.6m (2022: $0.5m). The aggregate value of sales transacted with key management personnel in the current
financial year amounts to $17k.
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.
Steel & Tube Annual Report 202367
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
20232022
Opening balance 3 ,9 4 7, 5 4 1 3,678,476
New shares granted 975,896 1,353,114
Rights forfeited(609,807) (370,380)
Rights vested(855,125) -
Rights lapsed - (7 13,6 69)
To t a l 3,458,505 3 ,9 4 7, 5 4 1
Rights Performance Conditions Start DateExpiry date
Issue date
fair value
Total Rights
Issued
Rights
Available
30 June 2023
Rights
Available
30 June 2022
6 September 2019 - Tranche 36/09/202 2$0.80 1,215,524 - 855,125
11 September 2020 - Tranche 411/09/202 3$0.75 2,002,871 1,507,307 1,783,230
7 September 2021 - Tranche 57/0 9/ 2 0 24$1.15 1,353,114 1,124,046 1, 3 0 9,18 6
5 September 2022 - Tranche 65/09/202 5$1.43 975,896 827,152 -
To t a l 5 , 5 4 7, 4 0 5 3,458,505 3 ,9 4 7, 5 4 1
Weighted average remaining contractual life of options outstanding at end of period 0.9 9 1. 28
2023 2022
$000 $000
Share-based benefits (accounting expense) 409 443
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 34.9%, expected option life of between 1 and 3 years and an annual risk free
interest rate of 4.03%. Volatility has been calculated based on the annualised volatility for the three years prior to the rights issue.
Steel & Tube Annual Report 202368
Key Policy
The Performance Rights Plan 2017 is considered to be an equity settled scheme under NZ IFRS 2 Share-based Payment 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
2023$000$000$000
Cash and cash equivalents
1
6,481 - -
Trade and other receivables excluding prepayments 67, 5 2 8 - -
Derivative financial instruments ² - 278 -
Total financial assets 74,009 278 -
Borrowings - - -
Trade and other payables - - 49,0 2 5
Derivative financial instruments ² - 69 -
Lease liabilities - - 90,903
Total financial liabilities - 69 1 3 9,9 2 8
2022
Cash and cash equivalents
1
8,046 - -
Trade and other receivables excluding prepayments 89,0 0 5 - -
Derivative financial instruments ² - 1,491 -
Total financial assets 97,051 1,491 -
Borrowings - - 51,000
Trade and other payables - - 69,6 2 7
Derivative financial instruments ² - 8 -
Lease liabilities - - 96,072
Total financial liabilities - 8 216,699
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).
Steel & Tube Annual Report 202369
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 4 August 2023, the group has executed an agreement with the group’s banking partner for an amendment to and extension of its
current banking facility. Refer to Note D1 for more detail.
On 7 August 2023, the group has executed a deed of surrender for the group's leased site at Rosebank Road, Avondale, Auckland. The
agreed surrender date is 31 January 2024. This will result in a $1.9m reduction in lease liability and a corresponding $1.8m reduction in
right-of-use asset on the group's Balance Sheet in the next financial year.
On 18 August 2023, the board declared a final dividend (fully imputed) of 4.00 cents per share (2022: 7.50) totalling $6.7m (2022:
$12.4m). The dividends will be paid to shareholders on 22 September 2023.
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 cash flow hedges. The group’s hedging largely comprises cash flow 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.
Steel & Tube Annual Report 202370
Derivatives - Cash flow 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 (cash flow hedge). The effective portion
of changes in the fair value of derivatives designated as cash flow hedges is recognised in equity. The gain or loss on the ineffective
portion is recognised in profit or loss in other gains/(losses). When the hedged item is a non-financial asset (for example, inventory
or property, plant and equipment) the amount recognised in equity is transferred to the carrying amount of the asset when it is
recognised. In other cases the amount recognised in equity is transferred to profit or loss in the same period the hedged item is
recognised in the Statement of Profit or Loss and Other Comprehensive Income. If the hedging instrument no longer meets the
criteria for hedge accounting, expires, is sold, terminated or is exercised, any cumulative gain or loss previously recognised in equity
remains in equity until the forecast transaction is ultimately recognised in profit or loss. When a forecast transaction is no longer
expected to occur, the cumulative gain or loss reported in equity is immediately transferred to profit or loss within other gains/
(losses).
Derivative financial instruments are classified as current if expected to be settled within 12 months; otherwise, they are classified as
non-current.
Impairment of non-financial assets
Assets that have indefinite useful lives that are not subject to amortisation and intangible assets not yet available for use are tested
annually for impairment. Assets (including intangibles and property, plant and equipment) subject to amortisation and depreciation
are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount may not be recoverable. An
impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable
amount is the higher of an asset’s fair value, less costs to sell and value in use. For the purposes of assessing impairment, assets are
grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units).
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 when the group transfers control over products
and services to its customers.
Steel & Tube Annual Report 202371
The table below shows the contract portfolios identified by the group and further information on the revenue recognition.
The grouping of the contract portfolios is based on assessment of certain contract characteristics for similarities. The effects on the
financial statements of these groupings is not expected to differ materially from applying NZ IFRS 15 to the individual contracts (or
performance obligations) within the portfolio. The group regularly undertakes a process to review the contracts’ characteristics and
assess the appropriate grouping of the contract portfolios. Characteristics considered may include identified risks, contract size and
duration, and contractual terms of the contracts.
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.
Key Supply and
Supply and
Installation
Sales
Any contracts that contain
supply and may contain
installation performance
obligations which the
group has assessed to have
similar risk characteristics.
Where the contract
contains installation
services, 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
and where applicable, installation
performance obligations
are recognised on a stage of
completion basis based on the
input of labour and labour costs,
as this corresponds directly with
the value to the customer of the
group’s performance completed
to date.
Other Supply
and Installation
Sales
Any contracts that contain
supply and installation
performance obligations
and have not been
included in the ‘Key Supply
and Supply and Installation
Sales’ contract portfolio.
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.
Over time
Revenue relating to the supply
and where applicable, installation
performance obligations are
each recognised in the amount
to which the group has a right to
invoice under the terms of the
contract.
Other 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 ‘Other 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.
Steelā&āTube Annual Report 202372
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 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
• 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.
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 2023. 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.
Steel & Tube Annual Report 202373
© 2023 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 39 to 73
present fairly, in all material respects:
i. the group’s financial position as at 30 June 2023
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 issued
by the New Zealand Accounting Standards Board.
We have audited the accompanying consolidated
financial statements which comprise:
— the consolidated balance sheet as at 30 June 2023;
— the consolidated statements of profit or loss and
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. Subject to certain
restrictions, partners and employees of our firm may also deal with the group on normal terms within the ordinary
course of trading activities of the business of the group. These matters have not impaired our independence as
auditor of the group. The firm has no other relationship with, or interest in, the group.
Steel & Tube Annual Report 202374
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 $2.4 million determined with reference to a benchmark of group revenue. We chose the
benchmark because, in our view, this is a key measure of the group’s performance.
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
Revenue recognised on construction contracts within the Infrastructure Division
Refer to the Infrastructure Division segmental
information in Note A3 to the Financial Report.
$96.3 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.
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.
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
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 2023.
- 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.
Steel & Tube Annual Report 202375
Other information
The Directors, on behalf of the group, are responsible for the other information included in the entity’s Annual
Report. Other information comprises the information included in the group’s Annual Report, but does not include
consolidated financial statements and our Independent Auditor’s Report thereon. 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.
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.
Responsibilities of the Directors for the consolidated
financial statements
The Directors, on behalf of the company, 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 issued by the New Zealand Accounting
Standards Board;
— implementing necessary internal control to enable the preparation of a consolidated set of financial statements
that is 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.
Steel & Tube Annual Report 202376
Auditor’s responsibilities for the audit of the consolidated
financial statements
Our objective is:
— to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error; and
— to issue an 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
18 August 2023
Steel & Tube Annual Report 202377
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 focussed 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 dated 1 April 2023 (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.
The information in this report is current as at 18 August 2023 and has been approved by the board of Steel & Tube.
1. Ethical Standards
1.1 Code of Ethics
We expect our directors and team members 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. Steel & Tube’s policies also include 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. During FY24, we will be providing access to a confidential third party
whistleblower agency.
1.2 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, all directors hold shares in the company either directly or through affiliates.
Details of directors’ share dealings are set out on page 103 of this report.
2. Board Composition and Performance
2.1 Board Charter
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 Delegated Authorities Policy documents delegated
authorities and is reviewed annually by the board.
2.2 Nomination and Appointment of Directors
Membership, rotation and retirement of directors is determined in accordance with the company constitution and NZX Listing
Rules.
The Nominations 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.
Shareholders may also nominate candidates for election to the board. 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.
Governance
Steel & Tube Annual Report 202378
The board has developed a skills matrix and takes into account a number of factors including qualifications, experience and skills
when making directorship recommendations to the shareholders. The collective capability of the current board is assessed
against these requirements and the search then focuses on finding a board member who will best complement the current mix
of capabilities on the board.
Key information is provided to shareholders when a director stands for election or re-election.
2.3 Written Agreements
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 company has arranged a policy of directors’ and officers’ liability insurance. This policy covers the directors and officers
so that any monetary loss suffered by them, as a result of actions undertaken by them as directors or officers, is insured to
specified limits (and subject to legal requirements and/or restrictions).
2.4 Director Information
As at the date of this report, the board comprises six independent directors, who have significant relevant industry and market
experience, skills and expertise that are of value to the company. In addition, Steel & Tube has appointed Cherie Kerrison as its
inaugural participant in the Future Directors programme. Future Directors attend board meetings to observe and participate in
discussions, but they do not have voting rights.
The board considers director succession on a regular basis, considering such things as tenure, experience and director
workload.
Profiles of directors are available on the company website and are included in the Annual Report. Directors’ interests are
disclosed on page 103 of the Annual Report.
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 held governance positions within the sector.
Skills Matrix
Director ExpertiseHighModerate
Governance
•••••
Commercial
••••••
Financial Acumen (F&A)
••••••
M&A
•••••
Quality, Health, Safety, Environmental and Training
•••••
Business Turnaround
••••••
Steel Industry
••••
Manufacturing
••••
Construction/Infrastructure
••••
Logistics, Supply Chain & Procurement
••••••
Sales Marketing and Brand
••••
Digital Technology and Change
••••
People, Culture and Employee Relations
••••••
Steelā&āTube Annual Report 202379
2.5 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.
The board encourages diversity and will not knowingly participate in business situations where Steel & Tube could be complicit
in human rights and labour standard abuses. Our approach to diversity is outlined in the Diversity and Inclusion Policy, which is
available on the company website.
Measurable objectives form part of the People & Culture plan each year and they are agreed and approved by the board. A
number of initiatives are in place to support diversity and achievement of Steel & Tube’s diversity and inclusion objectives. The
board believes the principles in the policy were adhered to in FY23.
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 many
Steel & Tube team members. To create a safe and supportive working environment Steel & Tube translates documentation into
different languages and provides safety training which also helps improve numeracy and literacy levels.
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 2023, females represented 21% of Directors
and Officers of the Company (FY22: 20%).
As at 30 JuneFY23 FemaleFY23 MaleFY22 FemaleFY22 Male
Directors2424
Officers 1718
Steel & Tube Annual Report 202380
Female representation at Steel & Tube
Board of Directors
Lead Team/Snr Execs
Overall Workforce
Management
20232022
33%
33%
10%
11%
26%
27%
26%
27%
2.6 Director Training and Education
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.
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.
2.7 Board Performance and Review
The board monitors its own performance annually and from time to time commissions external reviews to assess the
performance of individual directors and the board’s effectiveness. An external review was last conducted in calendar year 2021.
2.8 Director Independence
Director independence is determined in accordance with NZX Listing Rules and with regard to the factors described in Table
2.4 of the NZX Corporate Governance Code. The board has determined that all current directors are independent and have no
disqualifying relationships.
Directors are required to notify the company of any interests they have that could impact an assessment of their independence
or their ability to act in the best interests of Steel & Tube. Steel & Tube has processes in place to manage any conflicts of interest
with directors.
2.9 Independent Chair
Steel & Tube’s chair is required to be an independent director and is elected by the directors. Susan Paterson was appointed as
chair in January 2017 and is deemed to be independent.
2.10 Separation of the role of Chair and CEO
The board supports the separation of the roles of chair and CEO. Steel & Tube’s CEO, Mark Malpass is not a director on the Steel
& Tube board.
Steel & Tube Annual Report 202381
3. Board Committees
The board has established several standing committees, each of which has a board-approved written charter summarising the
role, responsibilities, delegations and membership requirements.
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.
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 2023 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,
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)
Steve Reindler
John Beveridge
Andrew Flavell
People and CultureAssist the board to establish and
maintain a strong governance framework
overseeing the management of the
company’s people, remuneration and
diversity policies
Steve Reindler (Chair)
Susan Paterson
Chris Ellis
NominationAssist the board in ensuring appropriate
board performance and composition and
in appointing directors
Susan Paterson (Chair)
Steve Reindler
Chris Ellis
John Beveridge
Karen Jordan
Andrew Flavell
Steel & Tube Annual Report 202382
The table below sets out committee membership and director attendance at board and committee meetings during FY23.
Board meetings are scheduled throughout the year, with other meetings to deal with certain matters arising from time to time
being held when necessary.
Board
Quality, Health,
Safety &
Environment
Committee
Audit & Risk
Committee
People &
Culture
Committee
Nomination
Committee
Total number of
meetings
Susan Paterson 82432
Steve Reindler8-432
Chris Ellis83-32
John Beveridge 832-1
Karen Jordan 834-2
Andrew Flavell 8-4-2
3.1 Audit & Risk Committee
The board has an Audit & Risk committee which acts as a delegate of the board on financial reporting, internal control and risk
management issues. There are a minimum of three members, who are all independent directors. The committee is currently
made up of four independent directors. The chair of the committee, Karen Jordan, is not the chair of the board, is independent
and has significant accounting and financial expertise. The remaining committee members have a range of qualifications and are
all experienced in commercial and operational matters.
The role and responsibilities of the committee are detailed in a written charter which is available on Steel & Tube’s website.
3.2 Management attendance at Audit & Risk Committee meetings
Management attendance at committee meetings is by invitation only.
3.3 People & Culture Committee
The People & Culture committee assists the board to establish and maintain a strong governance framework overseeing the
management of the company’s people, remuneration and diversity policies. All members of the committee are independent
directors, and it operates to a written charter which is available on Steel & Tube’s website.
3.4 Nomination Committee
The Nomination committee assists the board in ensuring appropriate board performance and composition and in appointing
directors. All members of the committee are independent directors, and it operates to a written charter which is available on
Steel & Tube’s website.
3.5 Other Board Committees
Special purpose committees may be formed to review and monitor specific projects with senior management. There were no
other board committees formed during FY23.
3.6 Takeover protocols
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.
Steelā&āTube Annual Report 202383
4. Reporting and Disclosure
4.1 Continuous Disclosure Policy
We 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, we also seek 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.
4.2 Access to key governance policies
Easy access to information about Steel & Tube, including financial and operational information and key corporate governance
policies and charters, is available through our company website at https://steelandtube.co.nz.
4.3 Financial Reporting
The board is responsible for ensuring that the financial statements give a true and fair view of the financial position of the
company and have been prepared using appropriate accounting policies, consistently applied and supported by reasonable
judgements and estimates. The board is also responsible for ensuring all relevant financial reporting and accounting standards
have been followed.
The Audit & 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.
For the financial year ended 30 June 2023, the directors believe that proper accounting records have been kept which enable,
with reasonable accuracy, the determination of the financial position of the company and facilitate compliance of the financial
statements with the Financial Markets Conduct Act 2013.
The Chief Executive Officer and Chief Financial Officer have confirmed in writing that Steel & Tube’s external financial reports
are presented fairly in all material aspects.
4.4 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.
We have identified environmental, social and governance (ESG) principles which we believe will enhance Steel & Tube and
support our growth. Oversight of ESG is set out in Steel & Tube’s Sustainability Policy. Steel & Tube’s Sustainability Manager leads
the company’s sustainability practices.
Independent director, John Beveridge has been appointed to lead the board in relation to sustainability matters.
Steel & Tube has reported on the company’s progress, outlined on pages 26 to 27.
Steel & Tube has made voluntary disclosures against the mandatory climate-related disclosures regime in FY23 and will report
against this fully from FY24. Disclosures can be read on pages 89 to 98.
Steel & Tube Annual Report 202384
5. Remuneration
Remuneration of directors and senior executives is the key responsibility of the People & Culture Committee.
The framework for the determination and payment of directors’ and senior executives’ remuneration is set out in Steel & Tube’s
Remuneration Policy. External advice is sought on a regular basis to ensure remuneration is benchmarked to the market for
senior management positions, directors and board committee positions.
Details of director and executive remuneration in FY23 are provided on pages 99 to 102.
5.1 Directors’ Remuneration
Shareholders fix the total remuneration available for directors. Approval is sought for any increase in the pool available to pay
directors’ fees, and any recommendations to shareholders regarding director remuneration are provided for approval in a
transparent manner. If independent advice is sought by the board, it will be disclosed to shareholders as part of the approval
process.
The last increase in director remuneration was approved by shareholders at the Annual Meeting in September 2022, for a total
fee pool of $642,500. Board policy is that no sum is paid to a director upon retirement or cessation of office.
While there is no formal requirement to do so, all directors hold shares in the company either personally or through affiliates.
Directors’ share dealings and interests in the company are detailed on page 103.
Remuneration for each board role as at 30 June 2023 is as follows. Specific payments made to each director during FY23, as well
as other related information, is set out in the Remuneration Report on page 99.
Chair$165,000
Director$ 8 7, 5 0 0
Committee Chair – Audit & Risk, QHSE$15,000
Committee Chair – People & Culture$10,000
5.2 and 5.3 Executive and CEO Remuneration
Steel & Tube’s executive remuneration policies and practices are designed to attract, retain and motivate high calibre people
and create a performance-focussed culture. Details of executive and CEO Remuneration are set out in the Remuneration Report
on pages 99 to 102.
6. Risk Management
6.1 Risk Management Framework
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. We apply effective risk management principles across our Business
Units to ensure risk is identified, assessed, categorised and ranked to allow the business to understand its 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.
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. Management regularly report to the board on significant business risks and treatments for
those risks. Legislative compliance is monitored across each business unit through Quantate compliance management survey.
The company is exposed to risks from a number of sources, including operational, strategic, economic and financial risks.
Steel & Tube’s risk management framework incorporates policies, procedures and appropriate internal controls to identify,
assess and manage areas of significant business and financial risks.
Key risks are assessed on a risk profile identifying the likelihood of occurrence and potential severity of impact; and are
managed with a focus on decreasing the risk likelihood and minimising the risk impact should it occur. Steel & Tube maintains
insurance policies that it considers adequate and practicable to meet its insurable risks.
Steel & Tube Annual Report 202385
Key risk areas include:
Key RiskDescriptionMitigation
Maintenance of Steel & Tube’s values
and culture
Deviation from the company’s core
values and culture could lead to
ethical and reputational issues
• Unified purpose focussed on making
life easy for customers
• Regular communication and
reinforcement of the company's
values and culture through inductions,
training and workshops
• Monitoring of employee engagement
surveys and controls environment
Strategy executionIneffective implementation of
strategic initiatives leading to
sub-optimal performance and
competitive disadvantage
• Clearly defined strategic goals with
measurable objectives and key
performance indicators (KPIs)
• Clear responsibilities and
accountability for strategy
implementation
• Regular progress monitoring and
corrective actions to address
deviations from the plan
Quality of productsRisks associated with the production and
supply of substandard or faulty products,
leading to customer dissatisfaction and
potential product under-performance
and/or legal liabilities
• Robust quality control processes
throughout the production chain
• Regular product testing to rigorous
standards
• Independent audits of supplier mills
• Internal audits and ISO certification
and compliance
• Maintaining compliance with industry
standards and regulations
Economic environment and trading
conditions
Exposure to economic fluctuations
impacting demand, pricing, and overall
financial performance
• Diversification of product offerings
and customer base to reduce
dependency on specific sectors
• Regular economic analysis and
scenario planning to anticipate and
respond to market changes
• Syndicated bank debt facility
• Active financial stewardship
Steelā&āTube Annual Report 202386
6.2 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 our number one priority.
The board is responsible for ensuring that the systems used to identify and manage health and safety risks are fit for purpose,
being effectively implemented, regularly reviewed and continuously improved. A mix of lead and lag indicators are reported,
and safety performance is tracked to identify patterns to help prevent incidents. Health and safety is a fixed agenda item at each
board meeting and the chair of the QHSE committee regularly provides updates to the board on committee proceedings.
20192020202120222023
Safety eTRIFR1.54.91.861.131.14
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 on page 28.
7. Auditors
7.1 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.
For the year ended 30 June 2023, KPMG was the external auditor of Steel & Tube. KPMG was first appointed as auditor in 2021,
with the next lead partner rotation due no later than 2026.
The Audit & 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 following their appointment as external auditors. The fees paid for audit services
in FY23 is identified in Note E4 of the Financial Report.
KPMG has provided the Steel & Tube board with written confirmation that, in their view, they were able to operate
independently during the year.
7.2 Attendance at Annual Meeting
It is Steel & Tube’s practice that the external auditors attend the Annual Shareholders’ Meeting each year and are available to
answer questions from shareholders relevant to the audit.
7.3 Internal Audit
Steel & Tube operates an outsourced internal audit function, which reports to and is monitored by the Audit & 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.
During FY23, BDO was appointed as the company’s outsourced internal audit provider.
Steel & Tube Annual Report 202387
8. Shareholder Rights and Relations
8.1 Investor website
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.
8.2 Engagement with shareholders
We are committed to open and regular dialogue and engagement with shareholders. Steel & Tube’s investor relations
programme includes semi-annual post-results briefings with investors, analysts and investor meetings, and earnings
announcements. In addition, we release semi-annual Shareholder Newsletters as part of our initiative to keep shareholders
informed about the business and the contribution our company makes to New Zealand’s economic development and
prosperity. 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. Approximately 66% of
Steel & Tube’s shareholders have opted for email communications.
We endeavour to make it easy for shareholders to participate in Annual Shareholders’ Meetings, which are held in a main centre,
streamed live online and recorded and posted on the company website. Shareholders can ask questions of and express their
views to the board, management and the external auditors at Annual Shareholders’ Meetings. In 2022, 38 shareholders attended
the meeting in person, with a further 32 shareholders joining online.
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.
8.3 Voting on major decisions
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.
8.4 Equity offers
Steel & Tube did not undertake any capital raising during FY23. Should Steel & Tube consider raising additional capital, we
will structure the offer having regard to likely levels of shareholder participation and optimising and enhancing the ability to
maximise the level of capital raised. The board will look to give all shareholders an opportunity to participate in any capital
raising.
8.5 Notice of meeting
We aim to provide at least 20 working days of the notice of the Annual Shareholders Meeting, which is posted on Steel & Tube’s
website, announced on the NZX and sent to shareholders prior to the meeting each year. This goal was achieved in 2022.
Steel & Tube Annual Report 202388
Steel & Tube’s Response to Climate Change
Steel & Tube is well positioned to respond to a low emission future and is supportive of New Zealand’s net-zero ambitions by 2050.
Our goal is clear: to maximise steel’s contribution to a sustainable and low emissions society, whilst continuing to grow our business
and deliver value to our shareholders. During FY23, we have completed our first climate risk assessment, conducted a full materiality
assessment and deployed an emissions tracking software to ensure we can track and report our emissions profile. In late 2022, Steel &
Tube became a member of the Sustainable Business Council, strengthening our commitment to reducing our environmental impact
through proactive collaboration with our peers.
We are mindful that a transition to a low emissions economy brings both opportunities and risks to Steel & Tube. As one of New
Zealand’s largest steel distributors and manufacturers, climate change has the potential to have a transformative impact on the
way we do business. This is why we have committed to engaging with policymakers on climate change legislation over the last two
years, and will continue to do so in the future. With the help of Deloitte, our work in the current year to identify key climate risks and
opportunities has set the foundation for a robust climate change strategy which will continue to develop over the coming years.
As a climate reporting entity under the Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021, Steel
& Tube will regularly report on the way in which climate change is managed in the organisation. Developed by the External Reporting
Board, Climate-related Disclosures is based on the TCFD
1
framework, which span across four key climate pillars: governance, risk
management, strategy and metrics & targets. Although these disclosures are not mandatory until our FY24 reporting, we recognise
the benefit of understanding the impact of climate change on our business and have made a number of disclosures in FY23. The
following table outlines the highlights achieved during FY23, categorised by TCFD pillar.
PillarFY23 Highlights
Governance• The board has oversight of climate related opportunities and risks
• Management has been assigned responsibility in managing climate change, including the role
of the Group Sustainability Manager in preparing climate-related disclosures
• The company’s Sustainability Policy has been updated to reflect evolving stakeholder feedback
and legislative changes
Strategy
• Steel & Tube has completed a review to understand its current climate-related impacts
experienced in FY23
• Steel & Tube has completed its first climate risk assessment, identifying climate opportunities
and risks over the short, medium and long term. This includes an understanding of the
associated impacts of these opportunities and risks
• The company has also outlined the scenario analysis it has undertaken, and started to integrate
climate opportunities and risks into its overall business strategy
Risk Management
• Steel & Tube has developed a process for identifying, assessing and managing climate-related
risks, including how it intends to engage with stakeholders for this assessment
Metrics & Targets
• Steel & Tube has deployed an emissions tracking system to manage its Scope 1, Scope 2 and
Scope 3 emissions
• Scope 3 emissions have been expanded to include transportation and distribution, and
upstream energy production. The calculation methodology has been improved to reflect best
practice in New Zealand
• The company has conducted a review of its GHG (Greenhouse Gas) organisational boundary
with the help of an independent third party
• Sustainability metrics and targets are reported to the board on a quarterly basis
1
Task Force on Climate-related Financial Disclosures
Climate-related Disclosures
Steel & Tube Annual Report 202389
Governance
Identifying, addressing, and mitigating climate change risks and opportunities involves a number of roles across Steel & Tube.
The Group Sustainability Manager leads an annual review of climate-related risks and opportunities against three approved climate
scenarios. The leadership team and selected subject matter experts recommend targets and strategies that aim to mitigate climate
risks and harness climate opportunities identified in the annual review.
Steel & Tube’s board of directors is responsible for Steel & Tube’s strategy, which include climate-related risks and opportunities.
Sustainability and climate response is a standing topic with the board and key updates are reported regularly. The board reviews and
approves the metrics and targets that measure our performance across our core strategic pillars. Progress and performance against
sustainability metrics are reported to the board quarterly. The board is responsible for oversight of climate-related disclosures,
including climate scenarios and time horizons.
Steel & Tube’s Chief Executive Officer is responsible for leading, managing and delivering Steel & Tube’s strategy. A climate risk
steering group, consisting of five General Managers are engaged to identify key climate risks and opportunities. The Group
Sustainability Manager reports to the Chief Financial Officer and works across all Business Units to ensure that decarbonisation
projects and other strategic drivers are being implemented.
Board• Oversees climate-related disclosures
• Oversees climate-related risks and opportunities, including management of these opportunities
and risks
Management
• CEO is responsible for leading, managing and delivering on Steel & Tube's strategy, including its
sustainability strategy
Group
• Group Sustainability Manager ensures there is appropriate oversight of climate-related risks and
opportunities, including consulting with the business to drive decarbonisation initiatives
• Group Financial Controller oversees financial impacts of climate-related risks and opportunities
Strategy
Steel & Tube conducted its first climate risk assessment in 2023. This was conducted in reference to a combination of best practice
guidance, including the methodology provided by the Ministry for Environment’s National Climate Change Risk Assessment
Framework, ISO 14091-2021 for physical risk and opportunities assessment and the TCFD recommended methodology for identifying
and rating transition risks and opportunities.
New Zealand’s acute weather events in the summer of 2023 have demonstrated the severity of climate hazards and their potential
impact on our assets, operations, people, ecosystem and communities.
The Auckland Anniversary floods of January 2023 saw a record amount of rainfall in parts of Auckland, with widespread flooding
and coastal inundation affecting most of the city. Whilst our assets were protected from flood damage, there was an impact on our
operations, with some deliveries delayed until it was safe to resume normal business activities. Steel & Tube was well equipped to
handle a regional shutdown, with our hub and spoke model ensuring that operations in other regions were able to continue without
issue.
Two weeks later, the North Island’s North and East coasts were struck by Cyclone Gabrielle, causing more widespread damage,
especially in the Hawkes Bay region where Steel & Tube operate two sites. Steel & Tube followed advice from meteorologists to
prepare for a potentially destructive storm, and sites prepared accordingly. Our focus was on ensuring our people were safe, and
these precautionary measures ensured that impact of Cyclone Gabrielle was considerably mitigated.
We also acknowledge the mental health impacts for staff that were affected by the Auckland floods and Cyclone Gabrielle. Financial
support was provided to those in areas with the most damage, and our staff had our full support to make necessary arrangements for
childcare until schools reopened.
Steel & Tube Annual Report 202390
Climate Scenarios
Scenarios are hypothetical pathways that adopt a set of assumptions leading to a plausible future. Steel & Tube’s climate scenarios
were developed using a combination of both global and local modelling data.
The scenarios adopted for Steel & Tube’s first climate risk assessment are described in the below table
SSP (Shared Socioeconomic
Pathway) Scenario
SSP1SSP2SSP5
NFGS (Network for Greening
the Financial System)
Scenario
OrderlyDisorderlyHothouse
IPCC (Intergovernmental
Panel on Climate Change)
Scenario
RCP (Representative
Concentration Pathway) 2.6
RCP 4.5RCP 8.5
IPCC Description
This future poses moderate
challenges to mitigation
and moderate challenges
to adaptation. Population
growth stabilises toward
the end of the century;
current social, economic,
and technological trends
continue; global and
national institutions make
slow progress toward
achieving sustainable
development goals. This
scenario limits global
warming to between 1.3°C
and 2.4°C.
This future poses high
challenges to mitigation
and high challenges to
adaptation. Population
growth continues with
high growth in developing
countries; there is an
emphasis on national issues
due to regional conflicts
and nationalism; economic
development is slow and
fossil fuel dependent; there
are weak global institutions
and little international
trade. Under this scenario
global temperatures rise by
between 2.1°C and 3.5°C.
This future depicts a worst-
case scenario, where
very little effort has been
deployed to mitigate global
warming. Current CO2
emissions levels roughly
double by 2050. Under this
scenario, economic growth
continues to be driven by
fossil fuel combustion and
energy intensive lifestyles.
By 2100, the average
global temperature has
increased by 4.4°C. This
future pose high challenges
to mitigation and low
challenges to adaptation.
Under this scenario, global
temperatures rise between
3.3°C and 5.7°C.
Steel & Tube adopted SSP1 (RCP 2.6) for our lower bound as the most plausible lower bound warming scenario using NIWA’s
downscaled context, due to the SSP1 (RCP 1.9) scenario not having available data.
The strategic time horizons to test against were determined on the basis of Steel & Tube’s asset and product design life, its asset
management regime, and its longer-term business strategy.
The three time horizons chosen are:
• present day (anchor point)
• 2030-2050
• 2050-2100
The warming scenarios and time horizons adopted by Steel & Tube provide a means of understanding the exposure and vulnerability
of Steel & Tube’s assets, operations, people, ecosystem and communities to the effects of climate change over time, and under
different scenarios.
Steel & Tube Annual Report 202391
Physical Opportunities
Our primary physical opportunities relate to steel’s resilience against climate hazards such as extreme weather and extreme winds.
We anticipate a higher demand for climate change mitigation projects, such as sea walls to protect from coastal inundation and steel
framing to offer increased structural stability against high winds. In addition to this, we expect increased demand of higher specified
products to offer further protection to extreme weather and other physical climate risks when compared to alternative materials.
Transition Opportunities
Multiple opportunities have been identified with benefits anticipated in the near term. These relate to energy sector decarbonisation
and potential revenue growth due to demand for steel products such as wind turbine blades and ground mounted solar arrays.
An increase in extreme weather events could result in increased market demand for climate resilient steel products. We continue
to closely monitor emerging technologies overseas in anticipation of lower-carbon or zero-carbon steel being available for our
customers in New Zealand.
Top Opportunities
Ty p ePhysical OpportunityTransition Opportunity
Opportunity
Statement
Extreme weather may result in heightened
demand for steel products
Energy sector decarbonisation increases the
need for steel
Time FramePresent Day – 2030 2-5 years
ImpactNew sales opportunities present an opportunity
for revenue growth
As the energy sector decarbonises, new sales
opportunities in the form of wind farms, solar
support structures, geothermal farms and
hydroelectric dams present an opportunity for
revenue growth
Financial ImpactPlanned for FY24 disclosuresPlanned for FY24 disclosures
Management
Response
Steel’s higher resilience to extreme weather
events is likely to yield an increased demand
for steel products such as piles, roofing
materials, fencing and steel framing. Secondly,
an opportunity exists to offer higher specified
products to the market, where alternative
materials are not suitable. For example, stainless
steel offers significant corrosion resistance
and can help reduce rust and deterioration in
areas affected by increased sea salt spray and
humidity. Management understands steel’s role
in developing resilient infrastructure and our
strategy aims to capture these opportunities.
Steel & Tube’s Reinforcing division plays an
integral role in supporting infrastructure
projects in New Zealand. We supplied steel
to Harapaki Windfarms in 2022 and anticipate
more projects of a similar size in the future.
Steel is essential in the production of most
renewable energy infrastructure; for example,
approximately 250 tonnes of steel is required for
a 2MW wind turbine. Similarly, the proliferation
of energy storage systems and carbon capture
systems (CCS) is likely to increase demand
for steel piping, pressure vessels and other
equipment used in these projects. Steel
also plays a significant role in constructing
hydrogen production facilities, such as
hydrogen compression vessels, storage and
transportation.
Steel & Tube Annual Report 202392
Physical Risks
As a large distributor, changes in climate have the potential to have a significant impact on our operations, our assets and our
people. We used NIWA’s (National Institute of Water and Atmospheric Research) downscaled climate change projections to inform
Steel & Tube of its relative climate risk exposure at various scenarios, which are detailed on page 91. We move a significant amount
of steel between Steel & Tube locations, from domestic and offshore suppliers, and to customers in every corner of New Zealand.
Consequently, physical risks that impact New Zealand’s roading infrastructure will also have an impact on our ability to freight
products by road. Flooding, extreme weather and landslides are the most conspicuous of these hazards. Climate change plays a
significant role in determining where we choose to operate, and our location network has been built with this flexibility in mind.
Climate Hazard Projections Relative to Steel & Tube Locations:
Increase in number of hot days per annum
Increase in drought risk
Increase in wet days
Reduction in frost days
Reduction in snow days
Increase in wind speed
Coastal inundation
Steel & Tube Annual Report 202393
Transition Risks
The steel industry faces potential transition risks relating to access to capital, reduced margins due to carbon border adjustment
mechanisms and carbon taxes, as well as market loss arising from changing consumer preferences for lower carbon alternatives. While
steel’s embodied carbon content is high, steel is one of the most recycled materials in the world and from a whole-of-life perspective,
steel has lower carbon content. The high embodied carbon content of steel plays a role during the procurement process, and our
procurement team ensures Steel & Tube secure access to lower carbon steel products where commercially feasible. The team also
undertake the conscious integration of social, ethical and environmental performance factors into the process of selecting suppliers.
During our climate risk assessment, we identified that transition risks were our most material risk type and are being closely
monitored by the board of directors.
To p R i s k s
Ty p ePhysical RiskTransition Risk
Risk DescriptionImpaired site access due to flooding and landslipsHigh embodied carbon content of steel
Time FramePresent Day – 2030 2-5 years
ImpactInability for inter-site deliveries or customer
deliveries to reach their destination in time, or at all
resulting in a loss of revenue
Steel’s reputation as having high embodied carbon
content may contribute to alternative products
being used, resulting in a reduced market size and
associated revenue for Steel & Tube
Financial ImpactPlanned for FY24 disclosuresPlanned for FY24 disclosures
Management
Response
Our hub and spoke model mitigates the risk of
widespread impact caused by regional shutdowns,
and we operate four primary distribution hubs to
support our regional centres. Cyclone Gabrielle
in February 2023 caused several access issues
for Steel & Tube sites in Napier, Hastings and
customers in Gisborne. In order to support our
team in that area, product was dispatched from
our Mount Maunganui site. Customers were
regularly updated with delivery status updates to
manage expectations and a focus was placed on
safety for our transport contractors. Steel & Tube’s
response to Cyclone Gabrielle demonstrated the
effectiveness of the hub and spoke model during
extreme weather events and ensured a speedy
recovery for our affected sites.
We are conscious that steel currently has high
embodied carbon, and this is particularly true
for products that were produced with traditional
steelmaking methods that require the use of coal.
We are closely following emerging technologies
that use alternative reductants in the steelmaking
process but are mindful that this technology will
take time to scale and offer a commercially feasible
product for the New Zealand market. In the
meantime, Steel & Tube consider embodied carbon
in procurement decisions and support HERA’s
(Heavy Engineering Research Association) verified
carbon offset programme to offer an immediate
solution for customers.
Steel & Tube Annual Report 202394
The outputs of our first climate risk assessment will support the development of Steel & Tube’s transition plan, as required by the
External Reporting Board’s New Zealand Exposure Climate Standard 1 (NZ CS 1). In FY24, Steel & Tube will complete phase 2 of our
climate risk assessment, which aims to understand the financial impacts of climate change and the subsequent transition plan to
mitigate climate risks and harness climate opportunities.
In anticipation of our transition, all capital expenditure above $50,000 will require a climate risk evaluation before being approved.
Risk Management
Steel & Tube reviews climate-related risks and opportunities on an ongoing basis. In 2023, Steel & Tube completed its first climate
risk assessment, establishing a reference point for future climate risk reporting. The assessment was conducted in conjunction with
Deloitte and applies methodology from the Ministry for the Environment’s National Climate Change Risk Assessment Framework
(NCCRA), ISO 14091-2021 and TCFD recommendations.
For physical risks and opportunities, Steel & Tube engaged several subject matter experts across the business to identify climate-
related risks and opportunities resulting from various climate hazards. Each expert also identified the relative consequence of each
risk and rated these accordingly. For transition risks and opportunities, a different group of subject matter experts in the fields of
technology, markets, legal/policy and reputation were responsible for identifying risks and rating these against a modified urgency
criteria derived from the NCCRA and UK Committee on Climate Change’s rating methodologies.
Risk Identification – Methodology
The process to identify physical risks and opportunities is
consistent with the Ministry for Environment’s National
Climate Risk Assessment Framework methodology, and
with ISO 14091:2021 by assessing the identified risks
in terms of their exposure, sensitivity, and adaptive
capacity. This process enables us to develop climate
scenarios depicting our future state exposure to climate
risk. Climate scenarios illustrate what the future might
look like under differing degrees of climate change. They
are not predictions about what will happen, but rather
hypotheses about what could happen in the short to
long term.
Transition risks and opportunities were identified and
rated using the Taskforce for Climate-related Financial
Disclosure’s (TCFD) recommended methodology for
identifying and rating transition risks. We applied the
TCFD’s four risk categories of Market, Reputation, Policy
and Legal and Technology to identify the risks arising
as global and local economies decouple from fossil
fuels. For transition opportunities, we used the TCFD’s
five categories relating to a decarbonising economy,
including resource efficiency and cost savings, the
adoption and utilisation of low-emission energy sources,
the development of new products and operations, and
building supply chain resilience. The transition risks were
then rated using a modified urgency criteria derived
from the NCCRA and the UK Committee on Climate
Change’s rating methodologies. The urgency criteria
were modified by introducing a temporal element
to further define the level of urgency and to provide
context for transition risk rating purposes.
A scoring methodology was applied to yield a materiality analysis that enables Steel & Tube to aggregate scores by climate hazard,
risk type and risk area, as well to view the risk scores by individual risk statement. The purpose of aggregation was to ensure that the
interlinked and cascading nature of climate related risks are captured in the risk summary.
These risks and opportunities were aggregated and reviewed by the climate steering group before submission to the board for
approval.
The scope of our climate risk assessment covered all parts of Steel & Tube and its subsidiaries. This includes our suppliers, upstream
transportation, and one tier downstream to our direct customers.
Steelā&āTube Annual Report 202395
A full climate risk assessment will be conducted, at a minimum, every three years. On an annual basis, a list of top risks and
opportunities will be reviewed by the leadership team and presented to the board of directors to determine whether additional
action is required.
The climate risk assessment risk ratings and criteria align with Steel & Tube’s Enterprise Risk Management Framework (ERMF).
Currently, risks are collated by management and presented to the board on an annual basis, or quarterly if urgent risks or
opportunities need addressing. Management of day-to-day climate risks occurs in a collaborative manner across several group
functions, including supply chain, QHSET, Sustainability and Legal.
Metrics and Targets
Metrics and targets are used to quantitatively measure an organisation’s sustainability performance.
We include Scope 1, Scope 2 and Scope 3 emissions in our GHG inventory:
• Scope 1: emissions we directly control. For Steel & Tube, this includes vehicle fuel and stationery combustion
• Scope 2: purchased electricity from the grid
• Scope 3: all other emissions that are outside of our direct control but sit within our organisational boundary. This includes supply
chain emissions, business travel and waste
In FY23, we focussed on identifying and measuring our GHG inventory in accordance with the Ministry for the Environment’s
Measuring Emissions: A Guide for Organisations: 2022 and the Greenhouse Gas Protocol. During this time, we worked with a climate
consultant, Proxima, to assist in establishing our organisational boundary and complete an independent review prior to our first
year of mandatory reporting. All metrics are prepared using the ‘operational control’ consolidation approach and emission factors
are sourced from the Ministry for the Environment’s “A guide for organisations: 2022 summary of emission factors”. Any emission
factors not available in the Ministry for the Environment’s Emission Factor Set are sourced from the United Kingdom’s Department for
Environment Food & Rural Affairs (DEFRA) Emission Factor Toolkit (2023).
Steelā&āTube Annual Report 202396
Table of Emissions
All figures are in tCO2e (Tonnes of Carbon Dioxide Equivalent). Prepared in reference to the GHG Protocol Corporate Value Chain
Standard.
Emissions CategoryFY22FY23Change
Total Scope 1+2+3
1 7, 4 3 514,175-3, 260
Scope 11,3501,480130
Stationery Combustion1010-
Vehicle Fleet1,3401,470130
Scope 2630600-30
Electricity Consumption630600-30
Scope 315,45512,095-3,360
C1Purchased Goods and ServicesDisclosure proposed in FY24
C3Fuel and Energy-Related Activities
Electricity Transmission/Distribution Losses6055-5
Upstream Fuel Production and Distribution 31033020
C4Upstream Transportation & Distribution
Ocean Freight8,6305,335-3, 295
Road Freight4,74 04,520-2 20
Air FreightNo data115
C5Waste Generation951005
C6Business Travel330670340
C7Employee CommutingDisclosure proposed in FY24
C9Downstream Transportation & Distribution1,290970-3 20
These figures are provisional and the company has not sought assurance over its GHG emissions. Note that these figures have been
appropriately rounded by the group. The group has made an assessment around the relevance and materiality of other emissions
sources, with a priority placed on the categories listed above.
Steel & Tube Annual Report 202397
Share of Emissions by Scope – FY23
86%
10%
4%
Emissions Split by Scope – FY23
Scope 1
Scope 2
Scope 3
Our Scope 1 and Scope 2 emissions represent 14% of our total reported emissions, where as our Scope 3 emissions represent the
remaining 86% of reported emissions.
Table of Emissions Intensity
Emissions Intensity - Tonnes Sold
2022
2023
kg CO e/Tonne Sold
104.0
96.6
Steel & Tube calculates emission intensity by tonnes sold (kgCO2e per tonne sold). In FY22, we increased the level of inventory to
ensure we had sufficient product to meet our customers’ needs during a period of significant supply chain disruption. As those
disruptions have lessened, we have been able to reduce our inventory levels. Our focus on inventory management has reduced our
gross emissions and both emission intensity measures from FY22 to FY23, primarily due to a reduction in upstream transportation (C4).
Steel & Tube’s LED lighting carbon abatement project has so far yielded an approximate reduction of 400,000kWh compared to the
previous year.
In FY24, we are establishing our base year and an emission reduction target for our group emissions.
Steel & Tube Annual Report 202398
Director Remuneration
As at 30 June 2023, the standard directors’ fees per annum were $165,000 for the chair and $87,500 for each non-executive director.
board committee chairs also receive additional fees of between $10,000 - $15,000 for their committee responsibilities.
Directors’ fees exclude GST, where applicable. Directors are entitled to be reimbursed for costs directly associated with carrying out
their duties, including travel costs. 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 2023 was $642,500 as
shown in the table below:
DirectorDirectors Fees
Committee
Chair FeesF Y 2 3 To t a lResponsibility
Susan Paterson165,000-165,000Board Chair
Steve Reindler8 7, 5 0 010,0009 7, 5 0 0People & Culture Committee Chair
Chris Ellis8 7, 5 0 015,000102,500QHSE Committee Chair
John Beveridge8 7, 5 0 0-8 7, 5 0 0
Karen Jordan8 7, 5 0 015,000102,500Audit & Risk Committee Chair
Andrew Flavell 8 7, 5 0 0-8 7, 5 0 0
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 are culpable,
the board may decide that no STI 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.
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.
Remuneration
Steel & Tube Annual Report 202399
CEO Remuneration
The CEO’s overall remuneration as at 30 June 2023 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 2023 were as follows:
Target KPIsWeighting
Financial – Return on Funds Employed (ROFE)50%
Completion of Nominated Strategic Initiatives25%
Health & Safety – Leading and lagging indicators10%
Customer Engagement8%
Employee Engagement7%
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.
Target Remuneration:
Fixed RemunerationPay for Performance
Total Target
RemunerationFAR¹
Non-taxable
benefits
2
Sub totalTarget STI
�
Ta r g e t LT I
4
Subtotal
2023$875,500nil$875,500$525,300$350,200$875,500$1,751,000
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
The financial performance target for the full year to 30 June 2023 was above the scheme’s 80% hurdle requirement and accordingly
STI is payable to the CEO.
Steel & Tube Annual Report 2023100
Details of what has 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
Total remuneration
earned during FY
FY23$875,500nil$708,871$422,321$2,006,692
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
1
FAR includes any KiwiSaver employer contributions
2
There were no costs associated with any other benefits during the year ended 30 June 2023
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)
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
Steelā&āTube Annual Report 2023101
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 2023, the Chief Executive Officer’s fixed remuneration of $875,500 was 12.99 times (FY22: 13.51 times) that of the median
employee at $67,397 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 2023 are specified in the table below.
The remuneration noted includes all monetary payments actually paid during the course of the year ended 30 June 2023, any
restructuring and redundancy related compensation, value of shares vested under the terms of the LTI scheme and all short term
performance incentive payments.
The remuneration paid to, and other benefits received by, Mark Malpass in his capacity as CEO for the year ended 30 June 2023 are
detailed on pages 99 to 101, and are excluded from the table.
There has been an increase from 2022 due to the payment of LTI and full STI payments.
Remuneration Range $0002023
100 - 11044
110 - 12033
120 - 13021
130 - 14018
140 - 15010
150 - 1607
160 - 1704
170 - 1804
180 - 1906
190 - 2006
200 - 2104
220 - 2301
230 - 2402
240 - 2501
250 - 2601
260 - 2701
290 - 3002
300 - 3102
330 - 3401
360 - 3701
400 - 4101
410 - 4201
490 - 5001
540 - 5501
620 - 6302
670 - 6801
810 - 8201
To t a l177
Steel & Tube Annual Report 2023102
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 2023:
DirectorInterests
Susan PatersonAppointed as chair of Evolution Healthcare and affiliated entities
Steve ReindlerAppointed as an independent advisor to the Museum of NZ Te Papa Tongarewa Governance Group
Chris EllisCeased to be a director of Steelpipe Limited
Appointed as advisory chair of John Filmore Contracting Limited
Karen JordanCeased to be a director of City Rail Link Limited and a member of the IRD Risk and Assurance
Committee
Appointed as director of Lyttelton Port Company (effective 1 August 2023)
Andrew FlavellCeased to be the interim CTO of Laybuy Holdings Limited
Appointed as director of SNGLRTY Limited
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 2023 are:
DirectorShares held
Susan Paterson262,425 beneficially owned
Steve Reindler95,17 7
Chris Ellis10,000
John Beveridge20,000 beneficially owned
Karen Jordan1,069
Andrew Flavell1,000
Directors’ Security Dealings
During the year ended 30 June 2023 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 Reindler11 May 202314,000On-market acquisition$14,433
Andrew Flavell14 September 20221,000On-market acquisition$1,430
Disclosures
Steel & Tube Annual Report 2023103
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 willful 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 2023 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
Steel & Tube Holdings Limited (STU) Analysis Of Shareholding
As at 30 June 2023
Holding RangeHolder CountHolder Count %Holding QuantityHolding Quantity %
1 to 999 1,477 20.29% 604,829 0.36
1,000 to 4,999 2,503 34.39% 6,071,782 3.64
5,000 to 9,999 1,143 15.70% 7, 8 1 2 ,9 6 6 4.68
10,000 to 49,999 1,722 23.66% 3 5 ,6 3 9, 5 67 21.36
50,000+ 434 5 .96% 116,698,521 69.95
To t a l 7,279 100.00% 166,827,665 100.00%
Steel & Tube Annual Report 2023104
Substantial Security Holder
On 22 August 2022, the group received notice, in accordance with Section 276 of the Financial Markets Conduct Act 2013, that Lennon
Holdings Limited held 8,741,308 Steel & Tube Holdings Limited ordinary shares representing 5.26% (at the date of notice) of the
ordinary shares of the company.
Issued shares in the company at 30 June 2023 comprise:
Ordinary shares fully paid166,827,665
Ordinary shares partly paid (no voting rights)^25,000
166,852,665
^ Shares issued in the Senior Executives Share Scheme 1993
Top 20 Shareholders
As at 30 June 2023
Twenty largest security holders as at 30 June 2023
Ordinary
SharesPercentage
New Zealand Steel Limited 26,274,753 15.75%
Lennon Holdings Limited 9,200,000 5.52%
HSBC Nominees (New Zealand) Limited* 4,402,577 2.64%
Custodial Services Limited 3 ,47 9, 5 3 8 2.09%
New Zealand Depository Nominee Limited 3,397,892 2.04%
HPI Avondale Limited 2,103,786 1. 26%
FNZ Custodians Limited 1,9 9 0,95 0 1.19%
Citibank Nominees (New Zealand) Limited* 1,831,165 1.10%
Neil Douglas Waites & Anthony Gene Waites & Richard Boyd Waites 1,770,000 1.06%
Leveraged Equities Finance Limited 1,550,000 0.9 3 %
Maxima Investments Limited 1,450,000 0.87%
John Francis Managh 1,344,738 0.81%
Andrew Paul Lissaman Everist 1,272,000 0.76%
ASB Nominees Limited 1,085,000 0.65%
Trevor Jeffrey Corfield 1,012,000 0.61%
John Francis Managh & David Robert Percy 999,454 0.60%
Grandview Grazing Limited 9 1 7, 5 5 0 0.55%
Public Trust Class 10 Nominees Limited* 742, 275 0.45%
Accident Compensation Corporation* 621,326 0.37%
Forsyth Barr Custodians Limited 620,717 0.37%
66,065,721 39.60%
* Shares held in New Zealand Central Securities Depository (NZCSD)
Steel & Tube Annual Report 2023105
Glossary
CO2: Carbon Dioxide
D I F OT: Delivered in full, on time
DIFOTIS: Delivered in full, on time, in spec
E B I T: Earnings / (Loss) before the deduction of interest and tax
EBITDA: Earnings / (Loss) before the deduction of interest, tax,
depreciation and amortisation
eTR IFR : Employee Total Recordable Injury Frequency Rate per 1
million work hours
GHG: Greenhouse Gas
ISO: International Organization for Standardization
IPCC: Intergovernmental Panel on Climate Change
kgCO2e: Kilograms of Carbon Dioxide Equivalent (a standard
unit for counting greenhouse gas emissions)
NFGS: Network for Greening the Financial System
NIWA: National Institute of Water and Atmospheric Research
Normalised EBIT/EBITDA: EBIT and EBITDA excluding non-
trading adjustments and unusual transactions
N PAT: Net profit after tax
Physical Risks: Risks related to the physical impacts of climate
change, such as sea-level risk, extreme weather and flooding
RCP: Representative Concentration Pathway – these pathways
refer to the concentration of carbon that deliver global
warming at an average number of watts per square meter
across the planet
Scope 1 Emissions: Direct emissions from owned or controllable
sources in an organisation
Scope 2 Emissions: Indirect emissions from the generation of
purchased energy
Scope 3 Emissions: All indirect emissions (not included in Scope
2) that occur in the value chain of the reporting company,
including both upstream and downstream emissions
SSPs: Shared Socioeconomic Pathways – these five pathways
refer to the different future scenarios that may occur due to
varying responses to climate policy, climate change mitigation
and socioeconomic factors
TCFD: Task Force on Climate-Related Financial Disclosures
tCO2e: Tonnes of Carbon Dioxide Equivalent (a standard unit for
counting greenhouse gas emissions)
Transition Risks: Risks related to the transition to a lower-
carbon economy, such as policy, legal, technology and market
changes
XRB: External Reporting Board
Steel & Tube Annual Report 2023106
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
Directors
Susan Paterson Chair and Independent Director
Steve Reindler Independent Director
Christopher Ellis Independent Director
John Beveridge Independent Director
Karen Jordan Independent Director
Andrew Flavell Independent Director
Auditor
KPMG Auckland
18 Viaduct Harbour Avenue, Auckland 1010
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
Bankers
ANZ New Zealand
ANZ Centre, 23-29 Albert Street, Auckland 1010
Solicitors
Chapman Tripp Auckland
Level 34, PwC Tower, 15 Customs Street West
PO Box 2206, Auckland 1140
Financial Calendar
Half year results announced February
End of financial year 30 June
Annual results announced August
Annual report August
Annual shareholder meeting September
Stock Exchange
The company’s shares trade on the New Zealand
Exchange under the code STU
Directory
Steel & Tube Annual Report 2023107
steelandtube.co.nz
KIWI
PIPE & FITTINGS
Steel & Tube Annual Report 2023108
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.