Good afternoon and welcome, everybody, to Vulcan Steel 's 2025 Annual Shareholders' Meeting. My name is Russell Chenu. I am an independent director and Chair of the Board of the company. I will be chairing today's annual meeting. We have a quorum of shareholders present, so I now declare the annual meeting formally open. Today's meeting is a hybrid meeting with shareholders here with us in Auckland and also online. This is Vulcan Steel 's fourth annual meeting as a listed company, and welcome all. On behalf of the Board and the wider Vulcan team, we thank you, our shareholders, for your continued support and also for joining us today. I will firstly cover off a few housekeeping points. For those present in the room, if a fire alarm goes off, please follow the directions from MUFG staff who will direct us to the appropriate fire exit.
For those online, if you do have any technical issues during the meeting, please phone MUFG 's Help Desk. The number to call is now being presented on screen. We will take questions related to the Chair and CEO reports and the five Resolutions after each presentation. We will also have time for any general questions towards the end of the meeting. In terms of process, I will first ask for any questions from those who are in attendance with us in Auckland today and then move on to any online questions submitted during this meeting. We ask that you please state your full name and also whether you are a Shareholder, Proxy Holder, or other interested party before you ask your question. Thank you.
While we will try to get through as many questions as possible, we apologize in advance for any questions that we are unable to answer due to time constraints. I would now like to introduce my Board colleagues. Firstly, we have Adrian Casey on screen, I hope. Adrian is dialing in today due to having COVID, which is most unfortunate. Adrian, we hope you are on the mend. Welcome. Then, with us in person today and starting from my far right, we have three of our independent directors: Nicola Greer, Bart de Haan, and Carolyn Steele, and then our current Chief Commercial Officer and incoming CEO, Gavin Street. To my left is our current Managing Director and Chief Executive Officer, Rhys Jones, and our Company Secretary, Sarah- Jane Lawson. Vulcan 's Board currently comprises six directors.
From the beginning of next year, when Gavin becomes Managing Director, we will become a Board of seven directors. A brief summary of each of our backgrounds was included in Vulcan 's Financial 2025 Annual Report. As you are aware, Adrian Casey and Rhys Jones are both seeking election today. They will each speak to you before their Election Resolution is put to a vote. In the audience today is also our Chief Financial Officer, Kar Yue Yeo, and Lou Cadman, who is leading our New Zealand business, as well as a number of other Vulcan team members. I encourage you to speak with our team after we finish the meeting today. Vulcan 's external auditor is Deloitte, and here today from Deloitte are Andrew Dick and Phoebe Chang. They are available to answer any questions directed to the Audit Team.
Also present with us are representatives from our legal advisors, Harmos Horton Lusk, as well as our Share Registrar, MUFG Corporate Markets. Now moving to the Agenda and the order of events for today's meeting. I will shortly say a few words. Following that, Rhys Jones, Vulcan 's current Managing Director and CEO, and Gavin Street, who from January 2026 will be our new Managing Director and CEO, will jointly present on Vulcan 's operating performance for the 2025 Financial Year. Following the conclusion of our presentations, we will be happy to answer any questions you may have. We also welcome any feedback. We will turn to the formal business of the meeting, where we have five Resolutions to consider. All five Resolutions are Ordinary Resolutions for shareholder approval.
We will take questions relevant to each Resolution at the time that such Resolution is presented to you, our shareholders. Voting on the Resolutions will be conducted by way of a poll rather than a show of hands. Once voting has closed on the Resolutions, we should have time for further questions and answers. At that point, shareholders will have the opportunity to ask any general questions. Just a reminder that Vulcan 's Financial Statements for the year-end of June 2025, together with Deloitte's Audit Report, are contained in Vulcan 's annual report, which was released on 26 August. An electronic copy of our annual report is available on our Investor Website. We also have some hard copies of the annual report on MUFG 's Registration Desk, so please feel free to take a copy home with you. I will now give my chair address.
Fellow Shareholders, the financial year 2025 presented a challenging environment for our company. Vulcan experienced continuing headwinds in all of our major market segments in Australia and in New Zealand. Low levels of business confidence and restrained government spending resulted in reduced private sector and public sector investment in both countries. The outcomes were weak metals markets and lower sales volume with increased competition. Our sales volume declined 6% in Financial 2025, and that followed a 9% decline in the prior year, Financial 2024. Sales revenue declined 11% as a result of both volume reduction and increased competition. Although Vulcan's statutory net profit after tax declined by a disappointing 61% to NZD 16 million in 2025, the company's net cash flow continued to be strong, and we reduced net debt by NZD 44 million, from NZD 276 million at June 2024 to NZD 232 million at June of this year. That was a very positive achievement.
We finished 2025 with cash and unutilized committed borrowing facilities of NZD 177 million. Rhys will address the 2025 year in more detail in his address. I will turn now to dividend. The total dividend declared for 2025 was NZD 0.06 per share, amounting to just over NZD 8 million, representing 55% of net profit after tax. The dividend was 67% imputed for New Zealand shareholders and 100% franked for Australian shareholders. Turning now to climate disclosure. Vulcan's annual report for 2025 incorporated our second annual climate-related disclosures in accordance with New Zealand legislation. The report disclosed a further modest reduction in Scope 1 and 2 carbon emissions compared with recent years. I will now discuss Board and management changes. In June of this year, we announced proposed changes to the Board and also our senior Management Team.
After 19 years of service to Vulcan, including 14 years as Managing Director, Rhys Jones will retire from executive duties at the end of this calendar year. Our Chief Commercial Officer, Gavin Street, will succeed Rhys as Chief Executive Officer and Managing Director of Vulcan from the beginning of next year. Gavin has significant experience in industrial distribution businesses. He joined Vulcan in October last year and has contributed significantly to business improvement in the past 12 months. We congratulate Gavin on his appointment. All directors look forward to working with him in pursuit of value creation. In a further change, I will step down as Chair of the Board to be replaced by Rhys from January next year. I will remain as a Director and will serve as the Lead Independent Director.
Rhys has led a management team that has created and expanded a significant presence in metals merchandising in both New Zealand and Australia. His approach has been disciplined and focused, resulting in significant shareholder value creation through a number of business and economic cycles. We wish you, Rhys, the best in the transition from executive roles to a governance role. Importantly, and notwithstanding these changes, the Vulcan will continue to have a majority of independent directors. I'd like to turn now to the acquisition of Roofing Industries . At the time of announcing our Financial 2025 results at the end of August, Vulcan also announced the acquisition of Roofing Industries , a business which takes Vulcan into a new product segment in New Zealand.
The NZD 88 million required for the purchase of Roofing Industries was funded with a capital raising in a one-for-nine share issue, which provided all existing shareholders with entitlements to subscribe for new shares at AUD 5.95 or NZD 6.60 each, or to sell their rights to those new shares. The equity issue has resulted in diversification of our shareholder base, and early evidence suggests increased liquidity in the form of average daily traded volume on both the New Zealand Exchange and on the Australian Securities Exchange. The acquisition of Roofing Industries closed at the end of September this year, and we welcome all Roofing Industries employees to the Vulcan family. Rhys will include more detail on Roofing Industries in his presentation. The metals distribution sectors in both New Zealand and Australia are characterized by overcapacity at current activity levels.
As far as we can determine, very few of our peer companies in Australasia are trading profitably. The Board and management of Vulcan are proud that the company continues to be profitable, although at reduced levels compared with more buoyant economic times. We are currently reminded of the cyclicality of the metals industry. Our very experienced management team remains relentlessly focused on delivering superior customer service, continuing our people development programs, and investing in other assets such as upgrades to our physical facilities and IT systems in order to build our capabilities. Vulcan is in a very strong position to leverage its considerable strength when the market turns and business activity increases.
As in past years, and on behalf of your Board, I would like to thank all employees for their commitment, our customers for their trust in our company, and you, our shareholders, for your continuing support. I will now ask Rhys to present his Chief Executive's address.
Thank you, Russell. Thank you, Russell, and thank you for all those who are joining us for this annual shareholder meeting. First of all, I'd like to start with a summary of our financial year 2025 performance. The 2025 financial year ended up being an even more challenging year than FY 2024. Global economic growth highlighted due to heightened geopolitical and trade policy uncertainties tempered our results. Australian economic activity was well below trend, while New Zealand businesses continued to experience a recessionary environment during the last 12 months.
Over the course of the last financial year, Vulcan generated NZD 105 million in operating cash flow and further reduced debt by NZD 44 million. This is despite Vulcan 's adjusted net profit after tax falling to NZD 18 million for FY 2025 from NZD 40 million in the previous year. Our return on capital employed was 8.8% for full year 2025. While this compares well to our peers in the industry in the context of the present conditions, we're unsatisfied with our results and are absolutely focused on driving improved outcomes for shareholders. In our operations, stock management was a key focus area for business leaders in FY 2025. We were able to reduce stock levels by 10% while maintaining a high level of product availability to our customers. We further invested for growth. During the year, we added or hybridized six locations across Australia and New Zealand.
Pleasingly, our team maintained a high customer service level, reflected in an industry-leading 98% order fulfillment rate, or DIFOT, across all orders in FY 2025. A key plank in Vulcan 's value creation is our growth strategy, and this is through a disciplined expansion into new verticals within our industry. I'm pleased to say that since 1 October, the Vulcan Group is now able to serve New Zealand's roofing and cladding needs through our recently completed purchase of Roofing Industries Limited. This purchase was our 12th acquisition since 1995. I'd now like to invite Gavin Street, our incoming Managing Director and CEO, to share with you more detail on the roofing business with our priorities and outlook for FY 2026. Gavin.
Thanks, Rhys. Thank you, Rhys.
I would first of all like to thank our Board and you, our shareholders, for the opportunity to be part of Vulcan 's growth journey going forward. The success of our company over the last 30 years is a result of our culture and our people, which is our most important asset, with a shared vision and outcome and aligned processes. It is a privilege to have the opportunity to be part of the Vulcan team as we further grow our value for our shareholders. Looking at our acquisition of Roofing Industries , it's one such opportunity that will allow us to grow shareholder value over time. As Rhys mentioned, Roofing Industries represents a new vertical for the Vulcan Group, and the business is a great fit and platform for Vulcan .
Roofing Industries has a strong alignment to Vulcan 's culture and the same unwavering commitment to customer service. Our roofing business operates nationally in New Zealand, supported by more than 250 employees. One of the reasons for Roofing Industries' success to date is its local partnership with owner-operators at a branch level, whose service mindset and financial interest are aligned through an equity stake in the business. We again welcome all our employees in the roofing business to the Vulcan Team. The addition of the 15 roll-forming, folding, and water goods supply operations brings the Vulcan network footprint to 80 locations across Australia and New Zealand. Turning to health and safety, Vulcan is committed to providing a safe and healthy work environment.
In FY 2025, we reinforced this with the launch of the Safety Step Change program to further improve our practices and invested in a new on-site health and safety platform to enhance awareness, reporting, and management. We've also commenced the use of Inviol, which is an artificial intelligence-assisted video technology, to mitigate high-risk events across a range of workspaces. If we now turn to Vulcan's financial performance, so far in FY 2026, our revenue in the September quarter declined by 3% year-on-year. This was as a result of lower average selling price due to product mix compared with the September 2024 quarter. Our September quarter EBITDA was lower year-on-year due to lower gross profit per dollar ton. Sales tons per day in our first quarter improved by 2% year-on-year.
This reflected a 5% year-on-year increase in our steel segment and a 5% year-on-year decline in our metal segment. At the 30th of September 2025, Vulcan's net debt was NZD 182 million, following completion of Vulcan's equity raise and the first payment of the acquisition of Roofing Industries . The final payment for the acquisition is due in January 2026. If we look at our priorities, we intend to add our foundation for growth. This means maintaining and nurturing our customer service mindset in preparation for an economic upswing going forward. We will continue to expand into the roofing segment, integrate cross-selling initiatives across the company, including opportunities for new hybrid sites, and we'll explore other opportunities. As we have done over the last two years, we will ensure we have sufficient bench strength to support our growth.
If we have a look at the outlook, overall volume activity for the Vulcan Group showed gradual stabilisation in the first quarter of FY 2026. With a pace of recovery, anticipate a strengthen for the second half of the financial year. There is some uncertainty around global trade policies, which remain a risk for investment appetite and timing of sustained recovery in our regions. The economic recovery in New Zealand is progressing, with encouraging signs of improvement for some of our customers and sectors, supported by lower interest rates. However, construction and infrastructure projects are expected to recover more slowly over the couple of years. Competitive intensity remains high, as some participants choose to focus on market share over profitability. Australia activity level was steady to improving in the first quarter of FY 2026.
Tons per day for our Queensland, New South Wales, and Western Australian operations were steady on a year-on-year basis and are expected to show gradual improvement. Victoria showed promising progress in the first quarter of FY 2026 and is positioned for stronger growth in the balance of the financial year. From the 1st of October 2025, Roofing Industries ' results will be consolidated into the Vulcan Group, with our FY 2026 half-year results due to be released in mid-February 2026. In closing, as always, our employees are the most important asset in our business, which is even more so in difficult times. Our culture, customer focus, and teamwork continue to shine through despite a difficult environment. I really want to thank our employees for their commitment and great teamwork, as well as our customers for their ongoing support.
Thank you, Gavin.
I will now open the floor to anybody who has questions or comments on any matter referred to in either Rhys' or my presentations, as well as Gavin's, obviously. Are there any questions that anybody has? Sure.
I appreciate meeting you early on. Ricky Munirungi, the Shareholders Association. Just a couple of general questions I might have. I suppose I could ask them now if you feel they're relevant to the Resolutions, and you can perhaps save the answer for them.
Could I suggest we come back to you in relation to each of those Resolutions as we go through?
Yes, that's what I mean. The questions in relation to the questions that I have, you may feel better to answer those during the Resolution, some of them, but some questions are perhaps relevant to both your presentations.
Okay. Let's take the questions on the addresses if we can. Perfect.
In terms of the report, it notes that over 90% of Vulcan 's total emissions footprint is in Scope 3, embedded in purchased steel and aluminum. With disclosure deferred to FY 2026, what specific and measurable progress has been made in FY 2025 in engaging with our top suppliers to obtain accurate carbon data and set joint decarbonization targets?
Rhys, could I ask you to
yeah.
Would you like to
yeah, sure.
Take the microphone.
Actually, Adrian Casey's the best person to answer this, but he's got COVID, so I'll give it a good crack. Very specifically, I think the issue here is who we buy from. For example, aluminum, when we first bought the aluminum business, we weren't purchasing off Tiwai, which is 100% hydro electricity from the aluminum throughput. That was a big move we made, and we made it very deliberately.
Similarly, we buy and we strongly support New Zealand Steel. You're probably familiar with the New Zealand Steel move to greener steel. There will be another specific example. I don't know the exact numbers of how much these savings are, but I think they're on record, and you can check those. We specifically focus on suppliers that have that ability and are making progress. Frankly, green steel is a trend that's emerging. What you'll see going forward is clients specifying and wanting products that are green, traceability, and reduced carbon embedded in the steel. We see it as a market and customer trend, as well as a practical supply trend. Our goal is to get aligned with all those parties. That would be a practical answer to your question.
Thank you. There's mention of global trade tensions and uncertainties risks.
How's Vulcan proactively managing its supply chain to mitigate potential disruptions from geopolitical events or further shifts in global trade policies, especially for product sourced out of Europe and Asia?
Very specifically, when you're getting a lot of product out of Asia, shipping disruption can be a major problem. As you probably appreciate, when you have this dislocation of trade flows, shipping frequency changes. A couple of things you've got to do: you've got to look at how much product you have as buffer stock within your markets in Australasia so you make sure you don't run out. Also, what we've got to do is look at our absolute suppliers and how they're positioned, and we select and choose our suppliers appropriately based on that. At a practical level, I see the steel element coming in from China and Asia has definitely lowered the price of steel.
Hence, quite a lot of margin pressure has emerged because steel is still looking for a home. That's certainly happened in Australia. In particular, it's happened in reinforcing bar. We're not in reinforcing bar, but that's an indicator of what can happen. What we've tried to do is very carefully position our growth in options where we're not so exposed to that area. To be specific, you've got to select your suppliers very carefully and very consciously to make sure you get the right arrangements long term. It's definitely a bigger risk than it used to be, and you can't just take it for granted.
This one's a debt and investment capacity question. Net debt reduced NZD 232 million, which is positive. However, the committed facilities of NZD 410 million. With the committed facilities, what's the strategic rationale for maintaining this level of undrawn debt?
Is this primarily a buffer for continued tough times, or is it earmarked for specific creative acquisition opportunities you're currently evaluating?
We had NZD 177 million of unutilized committed facilities at the end of June this year. That is in place for working capital funding. As and when there is a recovery in the market, we will need to fund extra working capital to be able to maintain our service level. That's largely why we have that facility available. Does that answer your question?
It does. It does. Thank you. As I say, normally the general business questions are at the end, and some of these questions relate to, obviously, the movement which is happening with the transition. Perhaps I can ask them, and you can decide whether you answer them now or at the Resolution, see if it's appropriate.
I prefer to hold anything specific to the Resolutions to the discussion about that Resolution. If you have more general business questions, I'm happy to take one or two more. In the interest of everybody having an opportunity, I'd like to then move on.
Yeah, absolutely. I'll give you this last question for this purpose. The final dividend of NZD 0.035 brings FY 2025 total to NZD 0.06, a significant reduction from previous years. With the payout ratio at 44%, what's the Board's view on the sustainability of the current dividend level if challenging market conditions persist deeper into FY 2026?
That's a very good question. We have a policy of paying between 40% and 80% of net profit after tax by way of dividends. Obviously, the extent to which we maintain dividends depends upon the level of profitability. We're not here today to forecast that.
I can assure you that each year or each half-year, when the results are announced, we will consider the dividend in the context of both the historic result for that half as well as expectations for the future. We will be paying within that 40% to 80% payout ratio. That's what drives our decisions around dividend.
Perfect. Thank you. I'll let the microphone circulate, sick of my own voice.
There is a gentleman there beside you, Brendan, who will take care of the microphone and any further questions. Are there any further questions? Yes.
John Hume. Shareholder. Your capital raise to the institutions was Australian dollars and New Zealand dollars. The New Zealand dollar was NZD 6.60, and then there was a book build, and the institutions paid NZD 0.50 more under the book build for any hangover that wasn't sold to the current shareholders and the institutions.
When it came to the retailers, we still had the same NZD 6.60 price, but the book build was about NZD 1.30 more. It disadvantaged the retailers by nearly NZD 1, and that was disappointing in the sense that I think the price was, I can't recall exactly, but was it NZD 7.85 or something like that, what we paid? We were scaled, and it was only about NZD 0.20 or NZD 0.30 below the current price. The retailers got canned as far as the institutions were concerned. I just thought the way it was done was poor. Of course, if you didn't take it up, the ones that didn't take it up got NZD 1.30, and the institutions got NZD 0.50 for not taking it up. I mean, could that have been done better?
Could it have been done better? I think it's a very difficult situation that takes place with those sorts of equity issues.
There is always a staged process under the way the law works, where, because institutions have the capacity to actually make quick decisions that is not allowed for in the retail timetable, they tend to be driven in two stages, one for the institutional market and one for the retail market. We can't control the share price after any announcement has been made to an equity raise. That's a function of the way in which the market operates. Would we have preferred a different outcome, a more equitable outcome between the two, perhaps? Once it's announced, the timetable has been set according to the laws, and we don't have control over the way in which the price moves during that timetable period.
When you saw that it was NZD 0.50, you thought, "Oh, that's good value." You think, "Yeah, I'll have a piece of that." Of course, when it came to the time of paying the money, we got scaled and said we paid, I think, about NZD 1.30 or whatever it was. It was disappointing in the sense it was almost back up to the current share price, and I probably wouldn't have done it. Yep. Fortunately now, the share price is ahead of that, which it doesn't matter. At the time, it was, as I said, quite disappointing.
Yeah. I accept that it's just like any other trading in a marketplace where there's buyers and sellers. The supply and demand drives the price. As I said, it's a function of the way in which the markets operate. We don't control the share price, and therefore we couldn't control the rights.
The alternative was we do a placement, perhaps, but a placement typically results in retail shareholders not having any right to participate in the share issue, which is a trade-off as well. We thought the equitable approach was to actually do a renounceable rights issue where all shareholders had an equitable position relating to participation or not participating.
I just thought if you had the situation where you could apply for, say, 5,000 or 10,000 more at that price, and if it was going to be scaled, you got that price, and the ones that didn't take it up. Didn't take it up. As I said, it was basically applying for more. It was against you rather than being able to state a price, an amount of money that we wanted to invest into it. We got money back and paid more for the shares.
Yep. Yep. I accept your argument, but we'll bear it in mind in relation to any future issues that we have. I hope so. I can just say the AREO that we did, that structure is the one that is most equitable for existing shareholders, and that was very significant in bearing on our decision. Okay. Any further questions in the room? Okay. If not, let's see if there's anything further. Wayne, are there any questions submitted online?
No questions at this point.
No. Okay. Thank you. Let's move on to part four. Let's proceed to the five Resolutions being put to Vulcan shareholders to vote on today. All five Resolutions were set out in the notice of meeting and in the proxy voting form that was sent to shareholders on September 29.
The five Resolutions are each ordinary shareholder Resolutions, which must be approved by more than 50% of the votes of those shareholders entitled to vote and voting on that Resolution. The notice of meeting will be taken as read. Just as a reminder, to be entitled to vote, you must have been registered as a Vulcan shareholder at 9:00 P.M. New Zealand time last Wednesday, October 30. Votes can be lodged during the meeting today or by proxy. If you lodged your vote by proxy, your proxy voting form must have been received by MUFG by 11:00 A.M. last Wednesday. The number of valid proxy votes received are set out in our PowerPoint slides and will be shown as we get to each Resolution. Voting on all five Resolutions today will be conducted by poll only. Vulcan Share Registry Provider, MUFG Corporate Markets, will conduct the poll.
Votes will be counted after the end of today's meeting, and the results will be published on the Australian Securities Exchange, the New Zealand Stock Exchange, and Vulcan's investor website later this afternoon. For shareholders voting online, you will be able to cast your vote using the electronic voting card, which you will receive when online registration is validated, which will occur shortly. To vote, you will need to click "Get Voting Card" within the online meeting platform. You will be asked to enter your shareholder or proxy number to validate. Please then mark your voting card in the way you wish to vote by clicking "For" or "Against" or "Abstain" on the voting card. Once you have made your selection, please click "Submit Vote" on the bottom of the card to lodge your vote.
For those who are voting at MUFG Corporate Markets' offices today, please use the voting paper that should have been handed to you at the registration desk. The MUFG Corporate Markets team will ensure that your voting forms are collected at the appropriate time. As indicated in the notice of meeting and on the proxy voting form, my intention as Chair of today's meeting is to vote all discretionary proxies and any undirected proxies held by me in favor of each Resolution. Starting with the first Resolution, I move as an ordinary shareholder's Resolution that the Board of Vulcan is authorized to fix the fees and expenses of Deloitte Limited as Vulcan 's auditor for the financial year ending June 30, 2026. The Board unanimously recommends you vote in favor of this Resolution. Now, are there any questions relating to this Resolution from any shareholder present here today?
I don't see any hands going up in the room. Wayne, have we received any questions online relating to this question?
No questions.
Thank you, Wayne. We will now move to Resolution two. This Resolution relates to the re-election of Adrian Casey as a director. Adrian has been a director of Vulcan for over three years, having rejoined Vulcan 's Board in September 2022. He was also a Vulcan director for more than 14 years from 2001 to 2015. As you know, Adrian is an Executive Director as he is also Vulcan 's Chief Operating Officer. A short biography about Adrian was set out in the notice for this meeting. The Board, other than Adrian, recommends Adrian to you as a Vulcan director and unanimously supports his re-election. I will now hand over to Adrian for him to speak to you.
Thank you, Russell. Good afternoon, everyone, and apologies, I cannot attend today's meeting in person. Having joined the Vulcan Board September 2022, it is my pleasure to stand for re-election as an Executive Director. Before I speak about a possible re-election, I would just like to comment on the importance of Vulcan 's culture. Both Rhys and Gavin touched on it, but this has been built up over 30 years and sets the platform for a successful future. Our principles and ethos or values apply to everyone at Vulcan , including our Board. I consider these crucial to maintaining not only strong financial results, but reinforcing our commitment to our people and enabling the great customer service we currently provide. Why re-elect me? My professional background involves 43 years within the metals industry in both New Zealand and Australia, 27 of these with Vulcan.
I feel well qualified to add value to our Board and shareholders as we continue to grow. Over the past two years, we have seen both headwinds and opportunities. As a Board, we have faced decisions that not only impact financial outcomes, but people's livelihoods and futures. I've taken that responsibility seriously, bringing not only industry experience, but a commitment to the Board of transparency, accountability, and steady leadership. I stand for re-election today not because I want to repeat the past, but because I believe I can add value as we move into the future and continue to achieve ongoing success in delivering value and sustainable investment returns to you, our shareholders. I welcome your support as an Executive Director. Thank you.
Thank you, Adrian. I just endorse the significant contribution that Adrian makes to the Board.
His years and years of relationships in the metals industry, the way in which he influences our culture in the company is invaluable. I now move, as an Ordinary Resolution, that Adrian Casey be re-elected as a director of Vulcan. I note that no questions relating to the Resolution for Adrian's election were received prior to this meeting. Are there any questions relating to the Resolution for any shareholders present in Auckland? I do not see any hands go up, so let's turn to questions via the online platform. Wayne, have we received any questions online relating to this question?
No questions.
Thank you, Wayne. Let us move to our next Resolution, which is Resolution three. This Resolution relates to the election of Rhys Jones as a director of Vulcan. Vulcan's constitution exempts those people who hold the position of Managing Director from the three-year rule regarding director tenure.
As Rhys is Vulcan's Managing Director and CEO until 31 December of this year, he is not officially required to offer himself up for election at this point in time. However, as part of Rhys's proposed transition from Managing Director and CEO to Non-Executive Director, Rhys is offering himself up for election early. The Board's intention is that he become the Chair of the Board from the beginning of next year. The Board, other than Rhys, recommends Rhys to you as a Vulcan director and unanimously supports his election. I will now hand over to Rhys for him to speak to you.
Thank you, Russell. Look, it's my pleasure to put myself forward as a director of Vulcan and the Chair-elect. The practical reality is that it's been an absolute privilege working with Vulcan.
As Adrian's rightly pointed out, the culture is the unique characteristic of this company, as is the broader understanding of the strategy required to be successful. We have achieved outlier returns. Our return on capital employed cumulatively over 30 years is around 26% to 28%. We've had a dip this year, but if you look in the wider context of the last three to five years, we're still at that long-term trend average. Part of our goal is to really let the company free, and that was to first list it and then to grow it further. We genuinely want this company to be a leading organization in Australasia and its industry. To achieve that as a Board, we've worked very closely and looked at succession planning. Part of that is to put the company first ahead of yourself.
The process of selecting the right long-term leader, which is just Gavin, has taken over two to three years. We've gone through that process. We believe we've got an outstanding CEO. Part of my motivation to support the company in putting myself forward is to enable that succession and development and nurturing of that culture and an understanding of why and how that culture can be driven and processed further. One of the unique elements of our company is its single status. Most people don't appreciate what that means. That means all people treat each other as equal colleagues and defer to a person with relevant expertise. It's a very unusual culture. By definition, we don't have hierarchy. Everybody's free to speak. Every idea is debated. Everybody's encouraged to speak up. Again, a unique defining element of our company that has made us hugely successful.
It's my pleasure to put myself forward to enable that, to enable and support and guide the company and the Board into the future with the appropriate focus on culture and strategy. Thank you.
Thanks very much, Rhys. I endorse Rhys's election in the same way I endorse Adrian's re-election. I now move, as an ordinary Resolution, that Rhys Jones, who has been Vulcan's managing director and chief executive since 2011 and is intended to be a non-executive director and chair of Vulcan's Board from the beginning of next year, be elected as a director of Vulcan. Again, now it's time to invite shareholders to ask any questions that they may have about the Resolution for Rhys's election. I note that we did not receive any questions on this Resolution prior to the start of today's meeting. Are there any questions relating to this Resolution from any shareholder present? Yes.
This is where I suppose it gets a bit tricky because you've got the two transitions going on, but I'll ask the question regardless. That transition on January 1 is a pretty significant change. While continuity is cited, could the Board elaborate on the specific governance safeguards put in place to ensure robust independent oversight and challenge, given the new chair was previously long-serving chief executive? This is where I suppose it gets a bit tricky in terms of that question because it's sort of relevant to the Resolution, but it's also relevant to other parts of changes which are going to happen as well.
Sorry, so what is the question then?
I think it's a lead independent director and oversight of safeguards.
Oh, right. Okay.
But in relation to what do you want to me to justify what Rhys is taking on here, or is it for me to describe the role of a lead independent director?
Yeah, I suppose it's tricky because in order to make that informed decision about the election, there are other things which are happening in anticipation of the election.
Can I have a chip at it? Because I think it's important that I give my opinion on it. Look. Russell's obviously an extremely experienced director. I don't think anybody doubts that. He's been in leading Australasian companies for many, many years. The opportunity is for Russell to be the lead independent director. What will actually happen is Russell and I will work hand in glove discussing any issues that emerge, any potential conflicts, or any elements that he sees that could be improved.
We're going to be very, very focused on doing the best possible job and being open and transparent and regularly discussing our performance as a Board and my performance as a chair. Part of Russell's role is he is genuinely in a transition role and a mentor as well. I think I want to make that point clear. That we're very much in an open environment where we actually talk and discuss things. Maybe, Russell, you just talk to that point about being an independent lead.
Yep. Okay. Thanks, Rhys. I might just add before I cover off the lead independent director comment. The transition in this company is important, partly because of the culture that we have. The Board considered it very important that we retain Rhys's involvement because of his historic involvement in creating the vehicle that we have as the company today.
He's going to be, I expect, a popular person for other companies to engage or try to engage with. We were very diligent in the way in which we approached securing his ongoing services for the benefit of the continuity of all people, including Gavin. That's the rationale for the move. The lead independent director role in this case is one that, because Rhys doesn't qualify for independence under stock exchange rules for a period of three years, it's important that stakeholders, whether they be employees or shareholders or any external stakeholder, have access to somebody on the Board as a channel of communication. It's nothing more than that. In some companies where there are lead independent directors, where there's a dominant shareholding position, it can be somewhat different. That's the way in which I see my role as lead independent director going forward.
In due time, Rhys will become independent, and the lead independent director role then falls away because we have an independent chairman. Does that explain?
It does. Thank you. The other questions which are related but not specific to this Resolution, you'll have a general business opportunity to ask those questions later?
Yes.
Yes. Perfect. Thank you.
Are there any further questions in the room? If not, Wayne, have we received any questions online?
No questions.
Thank you, Wayne. That now takes us to the fourth Resolution. I move, as an ordinary Resolution, that for the purposes of ASX Listing Rule 10.14 and for all other purposes, the issue of 390,543 performance share rights to Vulcan's incoming Managing Director and CEO, Gavin Street, under Vulcan's financial year 2026 long-term incentive plan, and on the terms and conditions set out in the explanatory notes of the notice of meeting, be approved.
Just a reminder that the explanatory notes relating to this Resolution were at pages seven to nine and pages 14 to 18 of the notice of meeting. I note that we did not receive any questions relating to this Resolution prior to our meeting. Are there any questions from shareholders present relating to the grant of performance share rights to Gavin? Okay. It appears as though we have no questions from people. I'm sorry. I apologize. I didn't scan far enough left. Thank you for highlighting it.
Hi, sir. My name is Jagad Devi. Sorry, I didn't go, I've got only this report. These performance shares are attached with what criteria? What would be the performance criteria for the CEO to have these shares, performance share rights? How would he be able to exercise his rights?
Generally, what happens, any company will assign some targets like the CEO has to achieve some ROCE or absolute net profit. How will these shares be assigned to the CEO?
How will they be received, did you say?
No, no. The criteria. The criteria. Yeah.
The ROCE rights are based on the performance of the company over return on capital employed for a three-year period. It's what we call a tiered vesting. As the return increases, then more of the rights convert from rights to shares. It's quite possible that if the returns remain low, then there is no vesting at all or limited vesting. In other words, there are financial performance criteria that are applied in the test in three years' time, and only if the criteria are satisfied with the returns do they convert from rights to shares.
The GRO.
Sorry?
TGO. Yeah.
The other half is total shareholder return, which is the share price performance or actually share price plus dividend performance of Vulcan Steel versus the ASX peer group.
Thank you.
Does that answer your question?
Yes.
Sorry, I struggled to grasp the.
I think just I'm curious about another thing. Was it similar to what was for the last CEO?
Yes. Yes. Same stuff. No change. Yes. We first included these in the IPO in 2021, and the criteria have remained exactly the same each year since then. We're not bending the criteria to suit the circumstances.
Thank you.
Any further questions from within the room? Okay. Wayne, have we received any questions from shareholders via the online platform?
No questions.
Thank you, Wayne. Resolution 5 is the final Resolution for today's meeting.
I move, as an ordinary Resolution, that for the purposes of ASX Listing Rule 10.14 and for all other purposes, the issue of 126,624 performance share rights to Vulcan 's Chief Operating Officer, Adrian Casey, under Vulcan 's financial year 2026 long-term incentive plan, and on the terms and conditions set out in the explanatory notes of the notice of meeting, be approved. Again, I would like to note that we did not receive any questions relating to this Resolution prior to the meeting. Shareholders with us in the room today, do you have any questions relating to the grant of performance share rights to Adrian? No. It appears as though there are no questions from within the room. Wayne, I will now take any questions from shareholders who are online. Have any questions been received on this Resolution?
No questions.
Thank you.
As there are no further questions, voting on all five Resolutions will proceed to a poll. I will now pause to allow time for you to finalize and cast your vote on the five Resolutions.
You've got a pen. I've just got a pen. Thank you very much. I still can too. Thank you.
Well done, Wayne. It appears as though people have largely completed the forms, I think. For those with us at MUFG 's offices, members of the MUFG team will now collect your voting cards. Please ensure you hand in your voting card to ensure that your vote is counted. For those shareholders online, voting will close five minutes after this Annual Meeting closes. A timer will appear on your screen, which will provide a countdown to show how much time you have left until online voting closes.
As I mentioned earlier, once the votes have been counted, the results of the voting will be released on the Australian Securities Exchange, the New Zealand Exchange, and our investor website. We expect this to be later this afternoon. That concludes the formal business of this annual meeting. Now we move to a very important part of the annual meeting, which is the time for our shareholders to ask any general questions that you may have or to make any comments. I note that we received no general questions prior to this meeting. Do we have any questions from those who are in attendance with us today? There's some here. Up to you, Brendan, maybe too. I'll come back to your questions after this. Hi.
Thank you. My name is Warwick Jones. I'm a past director and a regional shareholder in Vulcan Steel Limited.
I didn't want the meeting to pass without. Acknowledging the extraordinary performance that Rhys Jones has made to this company. When he and Peter met many moons ago, it was a wonderful day for the company. Rhys's performance, his energy, everything about the way he operates what Vulcan Steel Limited is about. Values were set for the company by Peter back at the very start. It was not a surprise today that the word shareholders and particularly staff were mentioned so many times. The values that Rhys has developed with Peter and has held on to at personal cost at times, I expect, because he works tirelessly for this company. I thank him for his time as CEO. I am very excited about the opportunity for Rhys to be a director of this company for a long time. Thank you.
Thank you, Warwick. I endorse your comments wholeheartedly.
I've only known Rhys for about 10 years, not nearly as long as you, who I think you were a founding shareholder or close to a founding shareholder. It is very valuable to have you make those comments. I think we on the Board all would concur with what you've said. Thank you for them.
That is going to be a hard act to follow, Warwick. Perhaps I should have gone first. It is more about the interest in terms of all of those transitions. I suppose just a little bit of thoughts on that for our shareholders. Maybe the first question to you, Gavin, if you could outline as incoming Chief Executive, what do you see as the single biggest strategic priority for the first 12 months? How might your approach differ from the strategy of the past few years?
I actually will jump on the back of what Warwick said already, in that I don't think much changes around our people and our culture. One of the things that attracted me to coming to Vulcan , Rhys and I have been talking for a while, was the culture of this company. I think the culture is critical for us to move forward. I think it's a key differentiator for us from our competitors. To continue on that culture, the investment in our people, build our leadership capability is an absolute focus for us. We've also got the opportunity as the economies continue to improve in both New Zealand and Australia to make sure we're ready to go and we're actually going to maximize our opportunities as we get those kicks and those improvements in each of these countries, in both Australia and New Zealand.
We'll continue to build on some of the capability we've got today, i.e., we've got the Roofing Industries which have been put in place, and we'll continue to look at how we expand. We've got opportunities as we continue to look at our hybrid positioning as well. Hybrid, when we have multiple metals or steels into one entity, allows us to grow and build our presence and capability. I think there's a number of things we do, but really, in essence, it's underpinned by our people, our culture, and our capability. If we do that, we'll continue to succeed for the future.
Thank you, Kevin.
Thanks, Gavin.
With Rhys's retirement and the upcoming internal transitions, what's the Board's plan for refreshing its composition with new independent directors who can bring fresh perspectives, particularly in areas like digital transformation and sustainable supply chains?
Good question.
Obviously, like any Board of a major company, we speak often about Board renewal. We keep that on our agenda for discussion. We don't have anything immediate in mind beyond the changes that we announced in June for the current transition. It'll remain a topic that we canvass at least annually and probably more often.
Thank you, Russell. Thank you, team. Most appreciated. Cheers.
Very good. Thank you. One further question for John at the back.
The capital raise, was that money solely for that new bolt-on purchase, or was some of that used to repay some debt as well?
It was solely for the purpose of funding the acquisition of Roofing Industries. It's not by coincidence that the amount that we raised was almost identical to the acquisition consideration, as well as fees and costs incurred in the process.
It did have a byproduct, and the byproduct was that it did reduce the company's gearing. We've increased the equity base, but the debt remains exactly as it was. It's put us in a very strong financial position relating to potential acquisitions for the future. As Rhys and others have highlighted today and highlighted in prior presentations, this is a company that is acquisitive. We operate in quite a fragmented industry in terms of the number of participants. There are opportunities for acquisition that come up periodically. We tend to be opportunistic as well as strategic, so sometimes things arise a bit unexpectedly. I think the equity raising positions us in a stronger position to deal with any opportunistic acquisitions that might happen to come up from time to time. I hope that answers your question.
Yep.
Wayne, have there been any questions submitted online?
No questions at this stage.
Thank you, Wayne. If we have no further questions, that brings us to the end. I'm sorry. I apologize. I should be looking to the left wing.
Yes, sir. I'm going through page 110 of the annual report. It shows operating segment. I see that New Zealand side, it is mentioned that New Zealand geographic information. I see that EBITDA is higher compared to Australia. I just wanted to understand how. Is it that because on the upper side, when we see total operating revenue, steel and metals for NZD 110 million and NZD 538 million, I just wanted to understand how this steel and metal segment division is for Australia and New Zealand.
Do you want me to answer that?
Yeah, please.
Obviously, it varies by year, but in particular, in Australia, there's a large competitor, an integrated competitor, which owned both InfraBuild and Whaler. If you look up in the media, you'll see that Whaler went into administration, but they were joint companies commonly owned. Whaler was selling product to InfraBuild, which competed with us at below-cost prices. Eventually, Whaler went into receivership. That depressed our margins significantly in Australia, which led to a decline in our EBITDA in Australia. That would be the principal reason why there's a gap. Since then, that InfraBuild company is now closing sites, and the opportunities for us are looking more promising. Do you want to add anything to that?
No, I think that's fine.
No, it's a unique specific example of a competitor operating unprofitably, unsustainably, and we had to navigate that process.
Another question is, I've generally observed that manufacturing companies find it a bit tough to succeed in New Zealand. Are you optimistic, and are you facing the same level of challenges in both the countries?
Yes. Very specifically, we probably view New Zealand and the different states of Australia as different markets, so we don't just say Australia and New Zealand. If I went generally around the different parts of the company, Queensland, for example, the Olympics is coming. Strong economic growth is anticipated. Very strong demand for our products is likely, and we've got about a third of our business there. I go to Western Australia. It's all mining. We're very strong in mining-related products over there. A robust economy. New South Wales is showing signs of improvement. Victoria is recent signs of improvement, but it has been struggling. It's got quite high immigration, and some fundamental drivers are looking promising. In New Zealand, we see a mixed outlook.
We see very strong improvements in the rural and smaller centers, but we have yet to see the infrastructure and large construction projects be signed off in number. Once they're signed off, they have to actually start before we actually see the products. We believe that New Zealand, with the low interest rates, will start to generate improved demand in the very near future. We've got a number of options, and we've got all these different product groups, including roofing now. We've got all sorts of puts and takes. That's one of the diversified elements of this business. It's probably one of the principal reasons that we still make a cost of capital return in probably one of the most severe downturns Australia has faced for many decades.
Okay. Since this is a manufacturing company, my other question is because of so many issues about Trump's tariffs. Does this company have any cost of production which is due to imported product?
Just very briefly, a lot of steel is made in Australasia, but a lot is not made. Different types of steel are not made here, so we import that in from Asia. Some parts of all stainless steel are imported, principally from Asia. Engineering steels, a lot of it's from Europe and Asia and some in Australia, some from Japan. Then aluminum, we get a lot locally produced from the smelters of Rio Tinto, and we extrude our own products for our own mills. Sheet and plate aluminum is from Asia because it's not made in Australasia. It's quite a mixed bag, and it probably got back to your comment about that supply chain area. We deliberately focus and try to get those areas which we know are sustainable and energy efficient and are focused on the environment. It's quite a diversified portfolio.
Thank you.
Thank you.
Thanks, Rhys. Any further questions? Okay. Wayne, there were no questions I think that had come in at the point.
No, no questions.
Okay. If we have no further questions, that brings us to the end of Vulcan Steel 's 2025 annual meeting of shareholders. On behalf of your Board, I would like to thank you, our shareholders, for joining us and for your participation today. We really do appreciate your support. For those with us in Auckland, we hope that you stay for some light refreshments. I now formally declare the 2025 annual meeting closed. Thank you all very much.