Vulcan Steel Limited, Annual Meeting 2025

20 October 2025

Vulcan Steel Limited (VSL)

The company will hold its Annual Shareholders Meeting at 1.00pm Friday 31 October 2025.

The location is MUFG Corporate Markets, at level 30, PWC Tower, 15 Customs Street West, Auckland CBD, New Zealand.

You can also join the meeting online at this link.

Company Overview

The company was founded in 1995 by Peter Wells and listed on the ASX (primary listing) and NZX in 2021. VSL is a distributor and value-added processor of steel and metals in New Zealand and Australia, supplying carbon steel, plate processing, coil processing, stainless steel, engineering steels and aluminium to the Australasian markets. 

It has 66 warehousing, manufacturing, and processing facilities throughout Australia and New Zealand, employing 1,344 staff.

Rhys Jones will retire as Managing Director and CEO 31 December 2025, having served for over 14 years and been a Director since 2006. He will take up the role of Non-Independent Chair from 1 January 2026, replacing Russell Chenu.

He will be replaced as Managing Director and CEO by the current Chief Commercial Officer (COO) Gavin Street. The current Chair Russell Chenu will take up the role of Lead Independent Director.

Current Strategy

The strategy to be the most service-focused and efficient steel and metal products distributor and value-added processor in Australasia.

Previous Year Shareholder Meeting

NZSA recorded the following key items at last year’s annual shareholder meeting:

1. Continuing headwinds in Australia and NZ, with reduced business and consumer confidence in both markets.
2. Synergies continue to be found following the merger with the Ullrich Aluminium Group two years ago.
3. Vulcan Steel was more optimistic for the following 12 months with interest rate cuts, boosted business confidence and better pre-sales activities among customers, but that business conditions remained soft, especially in NZ.

The meeting report is available at this link.

Disclaimer

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Key

The following sections calculate an objective rating against criteria contained within NZSA policies.

Governance

NZSA assessment against its key policy criteria are summarised below.

Directors Fees: Excellent disclosure. In addition to Board and Committee fees, Directors are able to be paid for additional work. No payments were made in FY25.

Director Share Ownership:  Directors are encouraged but not compelled to own shares. We note that a majority of Directors own shares, a position encouraged by NZSA.

CEO Remuneration:  Vulcan produces a remuneration report in line with ASX standards. The company discloses its remuneration policy on its website, which includes an overview of the remuneration philosophy applicable to the company. The People and Remuneration Committee are responsible for implementing the policy.

Incentives: The CEO is paid a long-term incentive (LTI) by way of Performance Share Right. No short-term incentive (STI) is offered.

NZSA encourages fulsome disclosure in relation to any incentive payments made to the CEO, including disclosure of measures (or measure ‘groups’), weightings, targets, and the level of achievement versus target for each component associated with any awards. This methodology is supported by the NZX Remuneration Reporting Template.

Performance rights are awarded under the LTI to a maximum of 159% of base salary. Vesting then occurs after a three-year performance assessment period. The weightings and measures are 50% based on relative total shareholder returns (rTSR), a measure favoured by NZSA, and 50% based on return of capital employed (ROCE).

The company has offered a clear (and simple) disclosure to highlight the performance rights awarded in FY23, FY24 and FY25, and how the FY23 award will be reflected in vesting (paid) awards for FY26. While there is no breakdown of the FY22 award, this has resulted in a vested (paid) award for FY25, which is clearly disclosed.

NZSA notes there are no ‘clawback’ provisions in place.

The company does not disclose the gender pay gap and CEO/employee remuneration ratio.

Golden Parachutes: In the interests of transparency, NZSA believes there should be explicit disclosure around the severance terms and notice periods associated with the CEO, including whether specific termination payments are offered.

Vulcan discloses key terms associated with the MD’s and other senior employee’s employment contracts, one of the few NZ companies to do so – a disclosure appreciated by NZSA.

This disclosure notes the potential for a payment to the MD equivalent to 12 months’ salary in the event of a “no-fault” termination. This provides a ‘cap’ for any potential payment; while significantly more than what may be on offer for poor-performing lower-ranked employees, we also note the restraint to the MD’s employment for a period of 6 months.

Director Independence:  Whilst a majority of Directors (4 of 6) are independent at present, following the Board changes noted in the introduction to this document, the Board will comprise 3 independent and 3 non-independent Directors. The NZX Corporate Governance Code and NZSA policy states that Boards should comprise a majority of independent Directors to protect the rights of minority shareholders.

Board Composition:  Following the Board changes the Chair will be a non-independent Director. NZSA expects the Chair to be independent, a position supported by the Corporate Governance Code.

In addition, we note that the company operates with a CEO / Managing Director, and will continue to do so following the Board changes proposed. While this model is prevalent in Australia, this is not the case in New Zealand and is (generally) not supported as best practice.

Vulcan discloses a “collective” skills matrix in its Corporate Governance Statement (see page 12). This does not, however, attribute skill sets to individual Directors to demonstrate how they contribute to the governance of the company. NZSA believes that it is in the interests of directors to highlight how their skills and experience add value to the company.

Director Tenure:  NZSA looks for evidence of ongoing succession or ‘staggered’ appointment dates that reduce the risks associated with effective knowledge transfer in the event of succession. We also prefer a term maximum of 9-12 years, unless there are exceptional circumstances that may apply.

The incoming Chair, Rhys Jones, has served on the Board since 2006 – almost 20 years. NZSA acknowledges founders and significant / majority shareholders are likely to retain significant tenure; in this case, we also recognise Jones’ prior role as CEO/Managing Director. By proposing him as Chair, the company has offered a clear signal that his succession as a director is not contemplated in the short-term.

We do note the presence of other long or medium-term directors, minimising the risk of a sudden loss of institutional knowledge.

ASM Format: Vulcan Steel Limited is holding a ‘hybrid’ meeting, (i.e., physical, and virtual), a format preferred by NZSA as a way of promoting shareholder engagement while maximising participation.

Independent Advice for the Board & Risk Management: NZSA looks for evidence, through disclosures, that a Board has access to appropriate internal and external expertise to support board assurance activities. We also look for evidence that Boards are across their risk management responsibilities. 

The Board Charter notes that “Directors may obtain independent professional advice at Vulcan’s expense on matters arising in the course of their Board and committee duties, after obtaining the Board Chair’s approval.”  It also discloses “The Board appoints and removes the Company Secretary. All directors are to have direct access to the Company Secretary.”  Whilst the company does not have an internal audit function the Corporate Governance Statement discloses the processes used by the CFO and Finance Team to ensure internal controls including regular visits to the company’s sites.

Vulcan offers clear disclosure of strategic, business, and financial risks and current mitigations, as well as the processes that support risk management. 

Audit

NZSA assessment against its key policy criteria are summarised below.

Audit Independence:  Good disclosure.

Audit Rotation:  It is not clear from disclosures as to whether the company rotates the Lead Audit Partner every 5 years as required by the NZX Listing Rules or the Audit Firm at 10 years. We note the rotation of Audit Partner is not specified in ASX rules, as it is a requirement in legislation (unlike New Zealand). We encourage future disclosure around the audit tender/review process.

Nonetheless, the Notice of Meeting clearly discloses the Audit Firm was appointed in 2011 with the Lead Audit Partner appointed from FY22.

Environmental Sustainability

Overall approach: Vulcan Steel has now completed its second Climate-related Disclosure (CRD) report, continuing to strengthen its climate disclosures. Compared to its first CRD in FY2024, the company has expanded coverage and clarified its use of adoption provisions, while delivering measurable emissions reductions in Scope 1 and 2. Vulcan has initiated supplier engagement programs to prepare for full Scope 3 disclosure in FY2026.

Beyond climate, Vulcan has invested in technology to cut waste and ensure all offcuts are recycled through local re-melting facilities. These steps support a circular materials economy and reflect broader environmental stewardship aligned with NZSA’s call for wider sustainability disclosures.

Sustainability Governance: Vulcan’s Board maintains oversight of climate matters through its Audit & Risk Committee, supported by an internal ESG team. A Board skills matrix discloses director capabilities, including sustainability-related experience. Governance roles, management accountabilities, and external reviews of climate reporting processes are clearly documented, meeting NZSA expectations for transparency in sustainability governance.

Strategy and Impact: Vulcan’s FY2025 report shows progress in integrating climate considerations into business strategy. The company completed climate scenario analysis under multiple temperature pathways and disclosed strategic shifts needed to maintain long-term resilience. Initiatives such as solar energy installations, fleet upgrades, and network optimisation have delivered a 10.88% year-on-year reduction in Scope 1 and 2 emissions, demonstrating tangible impact.

Risk and Opportunity: The company provides a summary of climate-related physical and transition risks and opportunities, noting that a fuller list was disclosed in FY2024, while FY2025 focuses on five priority risks for transition planning.

Metrics and Targets: Vulcan discloses Scope 1 and 2 GHG emissions with three years of comparative data and reports emissions intensity metrics for the first time. While Scope 3 emissions are not yet disclosed, the company has mapped its supply chain, launched supplier engagement programs, and committed to full Scope 3 reporting in FY2026. However, no quantitative emissions reduction targets or milestones have been published to date, and NZSA encourages Vulcan to introduce clear, time-bound targets in future reports.

Assurance: Limited assurance by Deloitte now covers Scope 1 and 2 emissions. However, Scope 3 emissions and broader climate-related disclosures remain outside the current assurance scope. NZSA encourages Vulcan to progressively expand assurance coverage as disclosure maturity increases.

Ethical and Social

NZSA assessment against its key policy criteria are summarised below.

Whistleblowing:  Good disclosure.

Political Donations:  Whilst no donations are disclosed in the Annual Report NZSA expects an explicit disclosure around whether political donations are made.

Financial & Performance

Vulcan Steel’s share price fell from $8.90 to $8.30 (as of 8^th October 2025) over the last 12 months – a 7% fall. This compares unfavourably with the NZX 50 which rose 7% in the same period. The capitalisation of VSL is $1.1b placing it 29^th out of 115 companies on the NZX by size and makes it a large company.

¹ per share figures based off actual shares at balance date (not weighted average)

² 2021 figure has been derived by using a proxy for 2020 inventory (2021 inventory level).

For most construction-related businesses, 2025 was a difficult trading year.

For Vulcan, revenues were down 11% to $948m and a slightly lower Gross margin of 34%, contributed to a much-lowered Gross Profit of $325m. These are the lowest margins seen in 5 years, also noting the revenue figure is back at pre-2022 levels. Cost fell slightly, but notwithstanding Operating EBITDA fell 41% to $58.5m – less than one third of the $197m achieved in 2022.

NPAT fell 61% to $15.7m providing shareholders with EPS of $0.119 and places VSL on a high P/E of 70.

That said, the company is financially sound with a solid current ratio of 2.80 and cash balances of $17.3m. The debt equity ratio is high at 4.07 but continuing its downward trajectory. During the year the company paid off another $50m of long-term debt, which now stands at $250m. Finance expenses were down slightly to $36.1m. However, falling interest rates will help alleviate this pressure going forward. Note that much of the finance expense relates to the large amount of lease liabilities on the balance sheet.

Operating cashflows were down, but still robust at $105.0m as VSL decreased their inventory levels. Inventory turnover halted its decline and rose slightly to 1.80.

Following on from this reduced result, the company again decreased their fully franked, partially imputed dividends of $0.06 to its shareholders (franking is the Australian equivalent of our Imputation system).

NTA per share is $1.20 and VSL trade at a huge 594% premium to NTA.

On the 26^th August, the VSL announced they had signed a conditional sale and purchase agreement, to acquire all the shares in Roofing Industries Limited (Roofing Industries) for NZ$88 million. To fund the acquisition, Vulcan also announced an equity raise by way of an accelerated renounceable entitlement offer (AREO) to raise approximately A$87.1 million (approximately NZ$96.3 million), through the issue of 14.6 million new Vulcan shares.

On 1^st October 2025 VSL announced that the purchase of Roofing Industries had been completed.

No forward-looking guidance had been provided however the company did say that they will provide a trading update at its annual meeting of shareholders in October 2025.

Takutai Limited, an entity associated with Peter Wells, is the largest shareholder with a 14.0% holding.

Resolutions

1.  That the Board is authorised to fix the auditor’s remuneration for the coming year.

This is an administrative resolution.

We will vote undirected proxies IN FAVOUR of this resolution.

Adrian Casey was appointed to the Board September 2022. He is Vulcan’s Chief Operating Officer, and his responsibilities include procurement for the Vulcan Group. Adrian has worked in the steel sector in Australia and New Zealand for over 40 years. He held management positions in a major New Zealand steel distribution operation before leaving to build his own downstream steel operation which he subsequently successfully merged with Vulcan in 1998. Adrian successfully led Vulcan’s entry into the Melbourne market in 2002. Adrian has had various oversight roles across Vulcan’s business units during his 27-year tenure with Vulcan. He holds a New Zealand Certificate in Quantity Surveying from the Christchurch Polytechnic and completed the Advanced Management Program from the Wharton Business School of the University of Pennsylvania.

We will vote undirected proxies IN FAVOUR of this resolution.

Rhys Jones joined Vulcan in March 2006, has been a director of Vulcan since September 2006 and was appointed Vulcan’s Managing Director and Chief Executive Officer in 2011. As set out in clause 24.8 of Vulcan’s Constitution, as Managing Director, Rhys is not currently subject to the three-year rule regarding directors’ tenure of office. However, as previously announced Rhys will retire from his role as Chief Executive Officer on 31 December 2025. The Board wishes Rhys to remain a director of Vulcan. Although not required by Vulcan’s Constitution, the Board (other than Rhys) has proposed that Rhys stand for election whilst still the MD/CEO of Vulcan. Rhys offers himself for election as a director at the 2025 Annual Meeting. Subject to election by shareholders, Rhys will be a non-executive director of Vulcan from 1 January 2026 If Rhys is elected as a director at the 2025 Annual Meeting, the Board proposes for Rhys to succeed Russell Chenu as Vulcan’s Chair of the Board, with such change to be effective from 1 January 2026.

Rhys has more than 30 years’ experience working in the Australasian steel, manufacturing, building, and packaging industries. Prior to Vulcan, Rhys held several management positions within the steel industry (including as an executive of Fletcher EasySteel NZ and General Manager/Chief Executive Officer of Pacific Steel and Wiremakers) and was formerly the Chief Operating Officer of Carter Holt Harvey’s Pulp, Paper, Packaging and New Ventures division. Rhys currently serves as an independent non-executive director of Ridley Corporation (ASX: RIC) and is a member of Ridley’s Remuneration and Nominations Committee and Risk and Audit Committee. He was a director of Metro Performance Glass (NZX: MPG; ASX: MPP) from March 2018 to July 2023. Rhys holds a Bachelor of Science (Chemistry) from Victoria University of Wellington, and a Bachelor of Business Studies with first class honours and a master’s in business studies by thesis, both of which are from Massey University.

NZSA holds some concern about Jones’ appointment resulting in Vulcan having a non-independent Chair, and how his (eventual) succession is being considered. We also recognise the likelihood of support from VSL’s largest shareholders.

We will vote undirected proxies IN FAVOUR of this resolution, however, we will re-assess this position at the time of his next re-election.

Approval is sought to grant Gavin Street 390,543 performance share rights under Vulcan’s FY26 Long Term Incentive Plan. Full details are set out in the Notice of Meeting.

We will vote undirected proxies IN FAVOUR of this resolution.

Approval is sought to grant Adrian Casey, 126,624 performance share rights under Vulcan’s FY26 Long Term Incentive Plan. Full details are set out in the Notice of Meeting.

We will vote undirected proxies IN FAVOUR of this resolution.

Proxies

You can vote online or appoint a proxy at this link.

Instructions are on the Proxy/voting paper sent to you.

Voting and proxy appointments close 1.00pm Wednesday 29 October 2025.

Please note you can appoint the Association as your proxy. We will have a representative attending the meeting.

The Team at NZSA