koutou katoa. Good afternoon, or good morning, rather, everyone, and warm welcome to you all. My name is Susan Paterson, and I'm the Chair of your board of directors. Thank you for taking the time to join us today and for your support of Steel & Tube. I declare that a quorum is present, and as such, I'm pleased to declare the annual shareholders' meeting open. The notice of meeting, which includes the explanatory notes, has been circulated to all shareholders, and I intend to take it as read. The audited financial statements for the year ended 30 June were released on the 26th of August and included in the annual report. You can always find documents about the company, financial accounts, announcements, and so on on our website in the investor section. Shareholders and proxies may ask questions and vote at today's meeting.
For our online participants, you can do this by using the meeting portal and the tabs on your screen. We will answer any questions after the presentations. Voting today will be conducted by way of poll. If you are eligible, you will be able to cast your vote under the vote tab. You have the ability to vote at any time up until I declare the voting closed. Should you require any assistance, you can type your query, and one of the Computershare team will assist with the chat function and reply to your query. Alternatively, you can call Computershare on +64 9 4888 700. I now declare voting open on all items of business. We will start today's meeting with presentations from myself and Mark Malpass, Steel & Tube CEO. Then there will be an opportunity for shareholder questions and discussion.
We will then move to the resolutions. There will be an opportunity for you to ask questions on each resolution before it is put to the vote. Following the resolutions, we will open the meeting for any other business shareholders may wish to discuss. Following the close of the meeting, shareholders are invited to join your board and the management team for refreshments. You may note that we are holding our annual meeting later this year. There were two considerations to this. Firstly, to move away from the busy earnings and meeting season and provide shareholders with more opportunity to attend, and secondly, to be a bit further into the financial year, which has allowed us to give you a more comprehensive trading update. I will now move on to my address. I am pleased to introduce your directors, Steve Reindler, Karen Jordan, Chris Ellis, Andrew Flavell, and John Beveridge.
Karen and I are both standing for re-election today. At the front of the room, we also have Mark Malpass, our Chief Executive, and Richard Smyth, Steel & Tube's Chief Financial Officer. We consider director succession on a regular basis, taking into account such things as tenure, experience, and director workload. The board has a skills matrix, and this is a crucial tool in evaluating our board composition, enabling us to align the diverse expertise of our directors with the strategic needs of our company. We believe that the current directors offer valuable and complementary skill sets. Importantly, Steve, Chris, John, and myself have either worked in or held governance positions in the steel sector. Andrew brings global technology expertise, and Karen brings strong finance and risk experience. The key pillar of our success is our exceptional leaders and the wider Steel & Tube team.
Our people continue to work together to deliver for our customers and our businesses every day. On behalf of the Board, I'd like to acknowledge and thank them all for their efforts as we have navigated a particularly challenging environment. Our leadership team has expertise and experience across key areas and are passionate and dedicated. A number of them are here today, which I would like to stand because then our shareholders can see who they can come and talk to after the meeting. Please feel free to have a chat with any of our team. Over the past eight years, our purpose of making life easier for our customers has driven our strategy.
Our goals remain unchanged: to position Steel & Tube as the preferred supplier for steel solutions and products, to increase the company's valuation by growing our existing offer and M&A in adjacent sectors, and to deliver increasing returns and value for our shareholders. We remain committed to these goals while also helping transform and modernize the steel industry in New Zealand. The strategic decisions we have made over the past few years are positioning our company for success. We have the resilience and robustness to successfully navigate through the current cycle, the capability and expertise to leverage the increase in demand when it returns, and the balance sheet capacity to take advantage of opportunities both in the current market and in the future. The FY24 year delivered some of the most challenging trading conditions seen in the industry in recent times.
Cost inflation continued to rise, and demand for steel reduced significantly as businesses cut costs, public spending was put on hold, and large projects were paused. We focused on controlling what we can control, strengthening customer relationships and maintaining market share, growing higher value products and services, expanding our share of wallet, and managing costs tightly. Our balance sheet has been successfully positioned, providing strength during these more challenging times and the capacity to invest in strategic opportunities. At the end of October, we had no borrowings, cash of NZD 16.7 million, and a NZD 100 million facility to fund growth and other initiatives. In this current cycle, we are carefully managing working capital. Operating cash flows remain strong, with benefits from inventory management and good cash collections in a softened trading environment.
Our balance sheet supports our capital investment program, which is focused on both maintenance spend as well as strategic investments into new operating equipment such as purlins and plate processing machinery. The dividend payout of NZD 0.06 per share for the financial year 2024 represented a gross yield for investors of 9.7%, including imputation credits, and compares well to our peers. We also established a dividend reinvestment plan, something that our shareholders have asked for, and this was effective for the final dividend. The board's position is to pay a dividend to shareholders dependent on the company's financial position and growth prospects. We think our current share price is good value given the underlying performance of the group, the yield, the talent in the business, and the strength of our balance sheet. We have continued to take action on creating a strong and enduring business.
Our customer satisfaction scores continue to be at high levels of 42 and above and remain significantly above the industry average of 32. This is a testament to efforts across the business, from our in-depth quality assurance program to the breadth of the products and solutions we provide, the expertise of our team, and our unwavering commitment to delivering best-in-class customer service. Our strong position as a preferred supplier will serve us well as market conditions improve and demand reignites. Health and safety are embedded into our culture, and our safety measure was a historical low in FY24. We make a significant investment in safety, both in financial terms and human capital, to ensure that our people are kept safe in what is a high-risk environment. Digital innovation is important both to improve our customer offer and to help run our business more effectively.
The adoption of modern technology is making us more productive in areas such as online orders, test certificates, and advanced forecasting, procurement, and pricing. The number of customers buying online continues to grow, with more than 300 logging into our website every day. This is becoming an increasingly important revenue channel, and we continue to enhance it with new tools and features to make it easier for our customers and provide a better experience. Technology is also playing an important role in making our operations safer and more efficient. As an example, we're trialing the use of AI software alongside our existing CCTV camera network to identify possible risk situations or events and potentially take action to prevent any harm. Our team remains engaged and committed, with employee satisfaction in the industry top quartile.
We are conscious of the cost of living pressures on our people and have initiatives to support them, such as financial planning and budgeting workshops, our back-to-school finance assistance program, our HealthNow program, which provides support to meet basic family health costs like doctors, dentists, and pharmacy bills. We also continue to invest in training and development opportunities to allow our team to upskill and progress in their careers and move to a level where they can earn a living wage in all parts of our business. We're proud of our diverse team, with groups like our employee-led Kōpūia team leading the way in shaping our commitment to Māori, both for our people and the communities in which we serve. Our community support is anchored around helping young people realize their potential.
We offer First Foundation scholarships and support The Rising Foundation to transition high-potential school leaders in low-decile schools in South Auckland into employment. 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. Following on from our disclosure this year, Steel & Tube has reported for the first time under the Aotearoa New Zealand Climate Standards. This report is available on our website. We are focused on those things we can control, from the transport emissions of our fleet to energy use and the reduction of waste produced during manufacturing in our plants. We support a work ride scheme to encourage people to cycle to work, have begun installing submetering equipment in key sites to monitor energy use and understand where further efficiencies can be made, and are exploring solar energy options.
The increase in emissions per tonne this year was driven by the expansion of our delivery fleet, which conversely reduces our Scope 3 emissions. As scale returns, our emissions per tonne are expected to reduce. Steel is everywhere in our lives, where we play, live, work, in our transportation networks, our buildings, and our infrastructure. It is one of the world's most essential and sustainable building products, permanent, forever reusable, and the most recycled substance on the planet. Steel is what makes our cities resilient to the climatic and seismic conditions that are prevalent in New Zealand, yet it contributes only a small percentage of New Zealand's CO2 emissions. We are committed to building a strong, sustainable future for Steel & Tube and delivering value for our shareholders. At all times, we ensure that we are operating to the highest ethical and corporate governance standards possible.
Important topics of discussion in our boardroom revolve around risk and resilience, how to better serve our customers and our people, and the growth of our business. We recently provided an update on trading in the first four months of the FY25 year. It has been a continued deterioration in the economy, and activity has slowed down across the sector, which is having a sizable impact on our top line. The absolute priority for your board is to deliver a return to profit. We will do this by controlling the controllables and staying the course on our strategy, continuing to strengthen our core and invest in high-value products and services. In the short term, we are continuing to take cost out while ensuring we retain sufficient inventory, resource, and capability to allow us to scale up quickly when demand returns. Management is doing an excellent job managing this balance.
M&A is a key ingredient in our growth, and the weak economic conditions are providing opportunities for industry consolidation. Every potential acquisition must go through multiple gateways and is robustly tested before we decide to proceed. Over the past 70 years, we have proven our ability to successfully navigate through down cycles. Our dual pathway strategy is delivering tangible results, and this remains the framework for our actions. Our market share is strong, we have a loyal customer base, and we have quality inventory, meaning we can provide the products and solutions we know customers will need when their projects start up again. Our inherent operating leverage will deliver profit expansion as demand returns, and our strong balance sheet is providing resilience and supporting growth. While impacting on trading, current economic conditions are also providing market opportunities.
Long-term drivers are favorable, and Steel & Tube is strongly positioned for when demand expands. We are confident of our ability to see through this cycle and are optimistic for Steel & Tube's future. On behalf of the board, I'd like to thank all our shareholders for your continued support. I will now hand over to Mark Malpass, Steel & Tube's CEO.
Tēnā koutou, thank you and welcome to everyone that's come along today. Thank you for your attendance. It's great to see such a good turnout. Look, my first chart here, I'd like to cover the market challenges that we're seeing. At Steel & Tube, we're working very hard to control the things we can that are within our wheelhouse. That said, we're not immune to the significant slowdown that's occurred in the market. The market conditions are very challenging.
The high interest rates over the last few years have reduced consumer demand, and that's, of course, impacted our customers. Many businesses are putting projects on hold or stopping projects altogether. The second factor is the government has cancelled or paused many large infrastructure projects, and while the Fast-track Approvals Bill, or excuse me, the Fast-track Bill that has yet to be approved is a really positive step, the approvals and funding will take time, as Susan had said, the tough economic conditions have continued into the 2025 financial year, so from July through to October, the first four months, we saw a deterioration in the market. As other industry participants have pointed out, the demand for steel has hit recent lows and margin pressures have intensified. As a result of these weaker trading conditions, our year-to-date revenue and earnings have been very soft.
This is obviously disappointing for us, and it's disappointing for our shareholders. That said, we do see these conditions as relatively short-term. While the timing remains uncertain, we expect to see some improvement from mid-2025 as lower interest rates stimulate demand in both the manufacturing sector and also the construction sectors, and construction will also benefit from government projects being activated. We're making short-term adjustments to adapt to the current market challenges, and we're focused on emerging from this cycle a lot stronger business than when we went into it. Capturing revenue and driving profitability is absolutely our key priority for the teams at this point in time. We've achieved more than NZD 10 million in cost savings over the last two years, so that's effectively completely offset inflation.
Although we did add 20 Roadex drivers as part of that acquisition this year, over the last six months, we've been continually streamlining and reducing our workforce while at the same time maintaining sufficient muscle in the business to ensure that we can move quickly to capture revenue opportunities as demand recovers. We've continued to carefully manage cash and working capital. Active inventory management is an essential ingredient in a trading business like ours. We have a very experienced team on board that are used to managing cycles. Our goal is to ensure that we're not overstocked, but conversely, we also have enough product and the right product to meet customer demand when activity returns. We're shifting our investment from commodities towards high-value products as we provide our customers with more and better solutions.
Margin growth had continued through most of the last two years, where we'd seen a shift in our product mix towards higher value products and have increased our share of wallet and converted more customers to our online platforms. However, over the last four or five months, margins have reduced as competitor activity has intensified. We're maintaining our market share and have about 13,500 active customers. We continue to strengthen our customer relationships and work closely with our customers on future projects to ensure that we're the preferred supplier when projects do recommence. Our M&A activity is delivering value, and the strong balance sheet we have provides us with capacity to take advantage of opportunities both in the current market and future. Our growth strategy is delivering value, and we're very focused on staying the course in the strategy, which I'll outline shortly.
Our overall strategic goal is to deliver gross margin improvement, and we're doing this through two key pathways. The first is strengthening our core, which involves building on the strong business foundations that we have in place, making life easy for our customers, and delivering best-in-class service and solutions that provide great experiences for those customers, providing operational efficiency and a strong financial performance. Secondly, strategic growth is about going deeper and wider in high-value areas that create value and scale. So that is the products where we have lower share, but we now deliver higher margins. It's also about improving the mix of added value versus commodity products. We have a big opportunity to grow our share of wallet by cross-selling more of our products to our existing customers. Often, customers will purchase from multiple suppliers.
Our aim is to be the preferred supplier for a broader range of products. One way we can do this is by bringing product combinations together. For example, when we're selling structural steel to a customer, there's also an opportunity to couple other products into that package. For example, plate, processed plate, purlins, ComFlor, fasteners, chain and rigging, roofing, and mesh. We have a full bundle of products that we can offer that customer. This makes life easier for them and significantly increases our share of wallet per customer. We're in the early phases of this work, but you can see we've made really good inroads with customers buying more than three categories of product from us. The work we have done to improve our operating leverage will expand profits when volumes return. Our fixed cost base has been streamlined, and we have tight control over our variable costs.
So what this graph is showing is that with significant improvement in earnings that flows from increased volume. This is what we call our operating leverage. And you can see if you looked at the 2022 financial year, which was one of our better volume periods, if we had the same operating leverage then as we do now, our earnings would be 35% higher. We have a disciplined approach to growth, and our investments are all based on very clear criteria that have been approved by the board, and every potential opportunity must pass through that criteria before it's even evaluated. This criteria is a mix of financial, strategic rationale, which takes into consideration the fit of the business with our overall objectives, our ability to operate and add value to the business under Steel & Tube's ownership, the cultural fit, and also various compliance criteria.
Any potential acquisition then has to pass through a series of gates that starts with, do we commit resources to actually looking at the businesses that have enough value in the early phase? We then get into a non-binding offer phase, then due diligence, and then a binding offer, and so on. So a series of gates to track through. Over the past two years, we have reviewed 29 different companies, with several currently under active consideration. We've successfully grown the business through smaller M&A, and these investments are performing particularly well. So Kiwi Pipe and Fittings, Fasteners NZ, the Roadex business that we've created a group freight business around, and also our organic growth into the aluminum sector. We're seeing unprecedented opportunities coming forward. Some of this is due to founders not having good succession plans or those plans not working out.
But there's no doubt there's a trading environment that's very difficult at the moment for many participants. High commodity prices and that's put pressure on working capital and debt levels for many businesses. So we are seeing quite a lot of opportunity coming up. While the timing of an economic recovery remains uncertain, there are some positive themes that should lead to improved activity over the next 12- 18 months. Interest rates cuts, and we just saw another 50 basis points yesterday, will help stimulate the manufacturing and construction sectors. There's a massive shortfall of housing with more than 115,000 new homes that need to be built to fix the current housing crisis. Commercial investment into new buildings will start again as borrowing costs reduce. Longer term, there's a significant need for maintenance and new infrastructure: roading, health, water, climate resilience, and renewable energy.
These are all areas where Steel & Tube has significant expertise and experience, for example, wind farm construction. The government also has an important role to play in lifting confidence and activity. While a large number of infrastructure projects have been paused or cancelled, which is having a chilling effect on the construction sector, there is some good news. The 149 projects which have been selected for immediate referral to the expert panel under the Fast-track Approvals Bill, this is good to see and these projects, once approved and funded, will be very positive for our industry, but we do acknowledge that it will take time before the projects actually start. Our purpose is to make life easy for our customers by delivering best-in-class customer solutions and experiences. We've taken a number of steps to ensure we are in the optimal position to capture revenue when opportunity and demand returns.
We have the scale and expertise to source good quality product from preferred mills at the right prices and the ability to deliver effectively and efficiently. The breadth of our product offer remains an unmatched advantage of ours, and our customers are increasingly buying multiple products from across our range. This is a big opportunity for us and something that we know that we'll be able to make good progress on. We're trusted by our customers to provide the products they need. Customer partnerships are key, and we have strong and loyal customer relationships within construction, engineering, architectural community, and also manufacturing companies across New Zealand. We have a deep technical know-how and expertise and work with clients from design through to implementation, advising them on products and solutions for delivering project efficiencies.
This ensures that we're involved right from the start of a project, and that positions us to be the supplier of choice right through that project's life. We continue to provide high-quality products and delivery reliability. Excuse me. We have introduced specialist sales teams, continued to enhance our online channels through digital, and we've recently expanded our last-mile fleet of trucks. Pleasingly, our default score, so delivered in full on time, remains in the high 90s. Several of our exec team, including myself, attended EuroBLECH in Germany a month or so ago. This is the world's largest trade fair for sheet metal working. It's run every two years. We also took the opportunity to visit several suppliers and potential suppliers and various companies throughout Europe and the U.K. while we were up there.
There's a lot of innovation going on in the steel space, and it's really driven by technology and digital. Lean manufacturing is obviously big, and companies around the world look to work more efficiently and reduce waste. Automation and AI are helping to increase safety and improve productivity. While most of these businesses operate on significantly bigger scale than Steel & Tube, it was great to be able to share learnings and build knowledge around best practices. We've identified several good avenues to further optimize our business and are investing in a number of new product opportunities as a result of that visit. So thank you for listening, and I'll now hand back to Susan.
Thank you, Mark. Before I move to the discussion, I'd like to reiterate the key themes of today's presentation. While economic conditions are challenging, we see this as short-term in nature, and long-term drivers for the industry are favorable. Steel & Tube has positioned its balance sheet to ensure the resilience and robustness to operate through the current cycle, the capability and expertise to leverage the increase in demand when it returns, and the balance sheet capacity to take advantage of opportunities both in the current market and the future. I'd now like to invite questions in relation to the annual report or today's presentations. There will be an opportunity to ask questions about the resolutions once they are put to shareholders. Questions may be moderated if we receive multiple questions on one topic and amalgamated together.
Any questions not answered in time will receive an email response after the meeting. I'll start with questions in the room. Please wait for somebody to bring you a microphone.
Thanks very much, Chair and CEO. I strongly agree with the general direction the company is going for. In detail, I would like to discuss more about solar energy. For example, how much can it save for the company, for example? Because now in New Zealand, they're talking about the increase of electricity price increase for households, and then while in Europe and U.S., they benefited from the negative electricity price. So I wonder, given that the company can get solar panels in bulk and I guess maybe good quality, affordable solar panels, so I'm excited to see how much can the company save on the electricity cost in this. The other things I would like to discuss is that do you think five directors are enough instead of six? Thank you.
Thank you. If I just address the solar energy proposal to start with, certainly there's no doubt that the cost of solar panels has dropped significantly in recent times, and so it is becoming much more affordable. There are also emerging in the market opportunities to sign long-term contracts to buy renewable energy from solar farms and locking in for things like 10, 20 years of solar production from solar farms, and solar production from solar farms is far more economic than just rooftop solar, so there are a number of offerings emerging in the market, and we're actively reviewing those and lining those up for value against our current offerings and against our current energy suppliers, but Mark or Richard, you're doing the financial analysis. Anything you'd like to add to that?
I mean, I'd just add, Susan, that we're actively reviewing that at the moment on the supply side. So our energy bill is about NZD 3 million a year, so we're really incentivized to reduce that. On the demand side, we've done quite a bit in terms of LED lights across the business a couple of years ago, and that's saving or reduced our energy costs by about 13%. We're also looking at a number of different initiatives in terms of what time of day we run machinery, sensors on all of our lights so that they turn off at night, those type of things. So we're doing quite a lot in that energy space to try and reduce consumption as well as looking at supply side.
Probably the only thing I'd add to that is you would have seen a lot of price volatility in electricity in recent times. We've been very fortunate or lucky to have some quite good fixed price contracts, so we haven't suffered from that quite drastic swing in electricity prices. So as Susan said, we are investigating solar as we come towards the end of those contracts, so we make sure that we are making the best decision possible.
And then just, sorry, did you want a follow-up question on that? I was just going to move to the director question that was also asked. We actually have six directors because we have five directors and a chair, so I count as a director as well. And naturally, that's something that we review, but we have a skills matrix. We look at our strategy and say, what skills do we actually need and what competencies do we need around the board to make sure that we have the right people with the right expertise that can provide management with the right challenge in all the different areas that we're covering. And at the moment, when we look at that skills matrix and look at the coverage from the existing directors, we believe that we have each of those areas well covered. Thank you. Another question.
Thank you. Corinne Evain Kemp, shareholder. First of all, something positive. Great that you've got zero debt. Now, I would love to have seen a video of some of your production lines in action. Scott Technology have got fantastic poultry trussing and meat boning machinery, and I just would have loved to, unless of course you're bringing in everything ready-made.
Let me pass on to Mark, because actually we've spent about an hour on that topic this morning and looking at some of the new technology coming in, some of the new machines on order. So Karen, thank you. We will make sure that in next year's presentation, we will definitely show you some of that new technology because it is really exciting. Not only does it take the variability and the cost of labor out through automation, but it delivers a finer, more specified product for the customer, and we can add variation in that. But from a health and safety point of view as well, you do not get a second chance with steel. It's sharp, it's heavy, and so the more we can automate some of those things, the better.
But definitely got a lot of new technologies on order and coming, but we'll put it into next year's. Thank you for that suggestion. Any other questions? Thank you, Bruce. Oh, we've got one at the back. Bruce, you're next.
Hi. My name is Jagat Dawe. I have three questions. So first question is I see that trade receivables are more than trade payables. In balance sheet, trade receivables are almost.
Sorry, could you just speak a little more slowly? I didn't quite catch that.
Yeah. So on balance sheet, I could see that trade receivables are more than trade payables, current assets, current liability side. So the first impression is that the other party in any contract has upper hand. That's the reason you have more account receivables rather than account payables. It's like converting the account into cash is a bit slow. It looks like that. Or maybe it's just because of industry pressure. So is it like that? Second question is I see that the profit is only NZD 2 million, but for the last year, profit was only NZD 2 million, but the dividend is around NZD 12 million. So retained earning was used to pay the dividend. So was it necessary to pay the dividend? And my third question is who is the largest shareholder in this company?
Okay. Let me pass the questions over to Richard, our Chief Financial Officer.
So the first question, I'll just repeat to make sure I have it correctly. You were asking why our accounts receivable at June was NZD 58 million, almost NZD 59 million, and our accounts payable was only NZD 41 million, I think was the question. So we have intentionally been reducing the level of inventory we've held. So over time, you'll see our inventory over the last couple of years has come down. So the biggest part of our accounts payable is payables to the mills that supply us with inventory. Sorry, electricity. So as we've intentionally brought that down, that balance has come down. We're actually still continuing to sell to our customers, so that's why we have the high receivable balance. We track very closely the number of days that it takes our debtors to pay and the number of days it takes we pay our creditors.
So clearly, within the rules, we try to reduce the number of days it takes debtors to pay, so we're focusing on collecting as soon as possible, and we pay as late as possible, but within the rules, our creditors. So that was your first question. Did you want me to keep going?
Keep going. I'll take over the dividends.
The second question on the dividends. In the financial statements, the dividends are mismatched timing-wise by six months. So the dividend that relates to the final dividend that relates to FY24 is actually accounted for in the 2025 year. So the dividends that you're seeing in the 2024 year, part of that relates to the better results we had in 2023, but also the board, when it declared the last dividend, looked at the cash position of the company, looked at our need for that cash, and looked at the confidence they had in the ability of the company to continue to pay dividends. And based on all of those factors, reached a decision to pay more than our normal policy range, which is 60%- 80% of adjusted net profit. That is a decision that the board reviews every six months. And your last question.
Larger shareholding.
Larger shareholding is BlueScope. They hold just under 16% of our shares. So in the back of the annual report, there's the top 20 shareholders as well, so I can show you that page later if you'd like.
One further factor that I did mention was that we introduced a Dividend Reinvestment Plan at the end of last year, which applied to the last dividend, which was taken up by some shareholders, and again, that helps us preserve cash in the business. We've got Bruce here and then one.
Thanks. Bruce Parks, shareholder. What impact, if any, has cost saving and M&A activity having on your branch network?
Pass over.
Hi, Bruce. Yeah, look, I mean, the M&A activity has certainly helped from an EBIT standpoint across our network. We've been able to, for an example, Kiwi Pipe and Fittings was an Auckland Waikato-based business. And part of the positive synergies we've been able to capture there is to be able to spread that product suite right across our network of 27 sites. And so we know a lot of the gains we've had out of that business, in fact, excluding working capital, we've paid for that business in the two and a bit years we've owned it because we've been able to spread the products right through our network and offer them to our broad range of customers.
In terms of cost savings, I mean, they're right through our system, so we've been really focused in on things like our, if you think about our cost structure, it's really people, freight, facilities, and then goes down to smaller numbers. But those areas have all been areas that we've been focusing on. And so people, we have reduced our headcount significantly over the last 12 months. We've also been able to reduce freight runs and optimize freight runs with our own trucks. We bought Roadex trucks, which has been mainly focused around the Auckland, Waikato, Bay of Plenty area, and they've also performed very well. We've been able to replace third-party trucks with our own. So yeah, it's a good question, and we've been able to see some really good value coming from those acquisitions.
Thank you. Second question on the environment. I thought I heard you say in your presentation that your Scope 3 emissions, that's your customers' emissions, will drop with increased volumes. Is that right?
No, no. We said that the Scope 3 emissions had decreased when we bought our transport fleet. So the transport would have been Scope 3 because they're not our direct emissions, but they're ones by suppliers to us. But when we bought those in as a direct fleet that Steel & Tube operates, then that came into our Scope 2 emissions. Yeah.
Thank you.
Great. Another question, middle back. Thank you.
Franco Pellegrino, shareholder. In these challenging economic conditions, my standard concern is about possible bad debt if some large customers not paying their bills and if in case this is related to the last loss, if there are some sort of connection.
Franco, you're absolutely right. It's a key focus of the board, and we discuss it at absolutely every board meeting. Management are very, very carefully controlling the debtors and the debtors list. But Mark, why don't I pass on to you or Richard on detail, but the management team are all over it looking at the quality of our customers, and we have had really, really good collection rates. So that's one thing that has not let us down so far, but I'll find some wood to touch on that because it's a constant, really active management.
Yeah. I review debtors every single week. We focus really a lot of time and effort on ensuring the quality of our debtors, so you can't just rock up and get an account without going through a process for us. The guys down here will attest that I actively follow up with them. We focus on working with customers as soon as they encounter any problems. We actually work alongside them to help them through that process. So I'm very pleased to say that in the results that we've published to date and up to now, we have had no significant bad debts, and we will continue to work very hard to keep that going to the best of our ability.
Okay. Thank you.
Can I please oh, sorry, we've got one more in the room. And then if any shareholders online would like to ask questions, please submit those questions, and our moderator, I'll come to online questions after we're finished.
Yes, Stephen Carruthers, shareholder. I was just talking about dividends. I see those dividends coming out of retained earnings and then NZD 16 million free cash flow. And then I've seen up on the board there before with directors trying to return the company back to profit. So is the company running at a loss now? And then plus furthermore, scoping the coast or Australia for doing due diligence. I seem to have read something somewhere that may be happening, which would be a bad deal for the shareholders. Just like if you don't get dividends in a company, you've got no ownership in it. Anyway, that's all. Thanks.
Mark, do you want to take that?
I'll start with the second point there, Stephen. Australia, there's a lot. If you're asking about M&A opportunities in Australia, there's certainly a lot there. We've made a decision, or the board has made a decision, that for the time being, we're focused on New Zealand in terms of opportunities. There's, as you all know, a graveyard of building construction materials companies in Australia and so that are New Zealand-based that have expanded there. We do see very positive opportunities in the steels and metal segments in Australia, having said that. But we really want to exhaust the opportunities that we have in New Zealand first. It's in our wheelhouse. Businesses that we know often may be customers or businesses that we're working around. So much rather stick to what we know.
Your first question, you covered a few items there, but I guess we did a trading update a couple of weeks ago for the first four months up until October, and yeah, we've generated on an EBIT basis, we've generated a loss of about NZD 5 million. On an EBITDA basis, we're still making money, and that is totally driven by top-line sales. Our sales are down quite significantly year on year, and so with my prepared remarks, I was talking earlier about our absolute focus and the team on the front row here will attest to just driving gross margin opportunities is really what we're focused on to get the company back into a position where we're profitable. But the reality is we have lost NZD 5 million EBIT so far this year.
So now to pass to our online moderator. Do we have any online questions?
Sorry, three questions from Paul Grant. The first question is revenue for November 2024 on track to exceed November 2023. Second question, when do you plan to implement more cost out? And the third question, lower resale prices for steel may be permanent. Can you further reduce overheads to avoid losing more market share?
Okay. Just to cover all three off. The question around cost out, we are continuing on a cost out journey. And so there are still more cost savings to come in the business. And we've been working on right-sizing, working out where we can have shorter weeks or run four days, for example, having a longer break over the summer with a smaller staff number so people can have a decent break after what actually has been a hard year and use up some of our leave liability. So there's ongoing cost out, but we will definitely have a very strong review to say if the market is not beginning to turn around next year, what is then the next phase?
And we're looking at where are the opportunities to actually take even more cost out of the business if we don't see the return of demand coming into the next year. So that's the first one. As far as November management trading, Mark, pass to you for just revenue for November versus November last year.
Yeah. Look, I mean, revenue will be down year on year as we've seen for the first four months that we provided in our trading update, so until we start seeing the items I mentioned earlier, the continued interest rate reductions that will stimulate demand in the manufacturing and construction sectors, and also the government work is a really important part here and is an important role for the government to play in terms of infrastructure projects. We have seen a lot either being terminated or stalled or resized, and we're really looking forward to that Fast-track Approvals Bill coming through so that we start seeing some more activity in that space because it does have a chilling effect on the commercial investments as well, so really important that the government get those projects moving.
Mark, just on the lower resale prices continuing.
Yeah. I mean, prices are still very high. Commodity prices, particularly steel prices, are up. Our average steel price year to date as of last week is running at about NZD 4,000 a ton, so relatively elevated. A year ago, that would have been about NZD 4,200 a ton. So there's some compression, but generally, prices are quite high. The challenge that you get into at this point in the market, well, there's two things, really. One is we're expecting prices to remain fairly high for the longer foreseeable future, certainly the next 12 months. There's a heap of global geopolitical reasons why pricing will stay relatively high for a while. In terms of margin, obviously, when you get to the bottom of the cycle, and we believe we really are at the bottom or close to the bottom, everyone is focused on capturing that volume.
And so you see quite a lot of price competition. So that does have a depressing impact on margins that you obviously need to recover your overhead. And so you do need some volume through your plants. And unfortunately, that comes at lower margins.
Thank you. Moderator, any more questions?
There's no more questions from our online. So thank you very much, everybody, for those questions. And if you do have further questions afterwards, you have your board and management team here. So please feel free to come and chat with us. I'd now like to move to the resolutions before the meeting. These were notified in the notice of meeting, and explanatory notes have been provided. Voting on each of the resolutions in the notice of meeting will be by way of poll. Only shareholders, proxy holders, or corporate representatives of a shareholder may vote on today's resolutions. For online shareholders, please cast your vote under the vote tab on the meeting platform. For those in the room, please complete your voting form. The first resolution is auditor's remuneration.
The resolution is to authorize the directors to fix the fees and expenses of KPMG as the company auditors. Are there any questions with regards to this resolution? Any questions online? Nothing online. So I'll just pause while you mark your voting sheets for that. We now move to the director resolutions. Both Karen Jordan and I and myself are retiring by rotation and standing for re-election with unanimous support of the board. I'll pass over to Steve Reindler to chair the next part of the meeting as I have a conflict of interest.
Susan, you get to speak to us.
Yes.
Sorry?
I'll take the resolution as well.
Thank you, Susan. Susan is a supportive and committed board chair and is also chair of the board's nomination committee. She has been a professional director since 1996 and has been recognized for her services to corporate governance. Susan is currently chair of EROAD, a board member of the Reserve Bank Governance Board, and a director of Arvida until the time the sale process for Arvida was completed. The directors unanimously support her re-election. Are there any questions in regard to Susan's re-election?
I'll stand up and speak.
Sorry?
I'll stand up and speak.
Would you like to speak now?
Yes.
Okay.
Thanks, Steve. Just to say that I really, really enjoy being on the board of Steel & Tube, and I believe that we have built a really strong team, both a really strong team of directors for your company as well as an executive team. I believe we bring a really strong challenge to the board table. I can assure you that the management team don't get away with bringing anything to us that isn't robustly investigated. Just a little bit on my background, I actually, after doing a degree at Otago, moved into business offshore. I was overseas for 10 years and did an MBA at London Business School. Following that, I went and worked for a Boston-based company, strategy Consulting in the use of information technology.
I returned to New Zealand in 1989 and worked in management positions, including in the steel sector of Fletcher Challenge and then as general manager of one of their larger companies, Wiremakers. I went on secondment to the government to establish the electricity market. Before that time, believe it or not, nobody in New Zealand apart from ECNZ was allowed to generate electricity. And so in that two years, we came up with the scheme of how the electricity market in New Zealand would operate with a number of generators and retailers bidding into that market. I do have a diverse range and have had a diverse range of directorships, including things which are relevant to Steel & Tube, Goodman Group, and Arvida, which are both involved in property and property development, infrastructure companies such as Transpower.
I was on the board for eight and a half years, and steel technology companies, including Theta and EROAD. As Steve said, I do like to give back to New Zealand and always do one thing for the government. In the past, I've chaired Airways, which is air traffic control, as I said, Transpower, Tertiary Education Commission, and now serve on the board of the RBNZ, so I really enjoy EROAD. I believe we're still adding good value, even though the tough times at the moment, and I would be honored to continue to serve you as our shareholders in this iconic company.
Thank you, Susan. Now then, are there any questions in regard to Susan's re-election? No. Are there any questions from shareholders online? No. Okay. I'll hand the chair back to Susan.
Thank you, Steve. The next resolution is to re-elect Karen Jordan. Karen is an experienced director with over 20 years' experience in FTSE-listed energy companies. She has strong commercial and financial skills and is chair of our Board Audit and Risk Committee. Karen also sits on the board of the Lyttelton Port Company and is an independent member of the New Zealand Defence Force Risk and Assurance Committee. The board unanimously supports her re-election. Karen, would you like to say a few words?
Karen Jordan, good morning, everyone. Thank you for the opportunity to speak to you today and to seek your support for my re-election to the board of Steel & Tube. It's been my privilege to serve on the board and chair the audit committee for the last four years. And I undertake this role really understanding the trust placed in me by shareholders. I'm proud to be a New Zealand citizen, being fortunate to have been welcomed here around 10 years ago. I'm an economist by academic background, a chartered fellow of my accounting institute, CIMA, and a chartered fellow of the Institute of Directors of New Zealand. My executive career spans over 20 years as a senior general manager in U.K. energy companies and latterly in the U.K. defense industry.
I began as a finance professional, afforded extensive training, development, and experience with a FTSE Top 20-listed company, gaining expertise in the full spectrum of corporate financial management, including accounting and financial reporting, financial planning and business performance management, risk management, control assurance and internal audit, investment appraisal, and business strategy development. That's all the really interesting stuff. I then moved into senior general management, where I led high-value commercial operations, technology-enabled business transformation, and post-acquisition business integration, and that's really around delivering synergies, operational excellence, and to realize benefits from the implementation of dividend growth strategies. I've been a non-executive director for some 15 years, typically also chairing audit and risk committees across both the private sector and public sector roles.
As Susan mentioned, in addition to my role at Steel & Tube, I've joined the board of Lyttelton Port Company, where I now chair the audit and risk committee there, and I continue to serve as an independent member of the New Zealand Defence Force Risk and Assurance Committee. These roles give me valuable insights into global economic development, changing trends, and the implications of those changes to New Zealand. Please be assured that I manage my obligations responsibly, and I can allocate sufficient time to fully discharge my duties for Steel & Tube, so I bring this combined experience of the professional accountant, business leadership, and governance expertise to both the board and management, and I endeavor to do so in a collaborative manner whilst maintaining my independence in thought and judgment.
I have a very high regard for the company and the greatest respect for my board colleagues, the CEO, and the executive leadership team. It really is a pleasure and a privilege to work with them. I'm hugely committed to the future success of Steel & Tube for the benefit of all our stakeholders, but particularly for our shareholders. Given the current economic conditions, Steel & Tube is applying the necessary and appropriate disciplines to deal with these challenges and is well placed to respond to the economic upturn as it emerges. And I'm extremely keen to be a part of that shared endeavor to strengthen our core business, to pursue focused and prudent programmatic growth. I respectfully request your support for reappointment. Thank you.
Thank you, Karen. Are there any questions for Karen? We have one question at the front.
So you're here, shareholder. Regarding the meetings, for example, page 37 of the annual report, I found something quite paradoxical because you attended 0% of the People and Culture meeting. Given that this company emphasizes diversity, I mean, it may look a little bit good on the report to have a higher percentage of female directors, but you don't want to contribute anything to the People and Culture meeting at all? 0%, I mean, yeah.
No, thank you for raising that, if I can clarify. So I sit on the board, and I chair the audit committee, and I'm also a member of the safety committee. My contribution to the people and culture aspects is very much from my position on the board. The board shares around those responsibilities in subcommittees. And so I'm very content that my colleagues, both chairing the P&C committee and attending it, do give us full, full understanding of the issues. And we have full opportunity to contribute, I can assure you.
Thank you, Karen. Karen's absolutely right that obviously, on any board, we do have a number of subcommittees and different people are members of different subcommittees. Everybody has the opportunity to see the papers. But the chairs of the various subcommittees, and Steve chairs our people and culture committee, do report back to the main board and ask any questions that people have. Any other board members who are not part of that committee have at the main board meeting. So Karen is always following how all our staff and the people and culture issues, but monitors them from a board role. She's not on that subcommittee herself.
Good evening. The Quality, Health, Safety, Environment, and Training meetings. So you only attended about half of those meetings, I mean, two out of four? Is that correct? I mean, that seems to be what it.
I'll just double-check because it depends when she went on to that committee.
Okay. 37.
So the way that the table works on page 37, not all directors are members of all committees. So this only records your attendance if you are a member of the committee. So various directors attend on an informal basis on some of the committee meetings. So you'll see that if you look at Audit and Risk, Chris Ellis, for example, is down as zero. That's because he's not a member of that committee, but has on occasion attended. And likewise, there's three directors under People and Culture that are not members. With regards to the Nomination Committee, the membership, I think, changed. I can't recall the exact date, but the membership changed during that period. So that is why Karen is shown as having less meetings than the other directors.
Actually, I should say I have attended, but not as a member, a number of those P&C committees too.
Do we have any other online questions for Karen?
Don't. Thank you.
Thank you. That concludes the discussions on the resolutions. In a minute, I will close the online voting system. Please ensure that you have cast your vote on all resolutions. I will now pause to allow you time to finalize these votes and for forms to be collected. There have been a number of proxies voted to the chair. So I'm just making sure that I have my paper to sign on behalf of those proxies. Thank you, Richard. The voting is now closed. I wish to advise that we have received proxies for 14.3% of the shares, with a majority of those voted in favor of the resolutions. The results of the voting will be posted on the NZX as soon as practicable. Is there any other business that any shareholders would like to raise or moderator? Are there any other questions online?
We've got one more question over there.
So my question is, I read in the report that it is written that external auditors are generally invited into the EGM. So is KPMG person here?
Yes, we have Laura in red, Steel & Tube colors down there. Thank you, Laura. KPMG colors are blue, but she's in Steel & Tube colors today. And Laura is our lead partner from KPMG. So our auditors are here if you have any questions for the auditors.
So my question is, I see that internal auditing function is outsourced. So first time I've seen that around 15, 20 companies that I've attended as an EGM. So what is the reason for outsourcing an internal audit function? Or how does it affect in finding control deficiencies? Or is there any difference if you have internal audit function? Why are you outsourcing it?
Karen, as Chair of Audit and Risk, shall I pass that to you?
So we have a different supplier of internal audit services, of course. So there is no conflict. And really, it's a cost-benefit analysis for us. The alternative to run our own internal audit function would be extremely costly. And so on a risk-based approach, we target the work plan for our internal audits, and we buy those in at the right level, at the right sort of activity levels we need to manage the risks based on the predefined risk appetite from the board. So we are content that that represents very best value for money for shareholders.
We had another question down here.
Hi Chair and CEO. I have a quick question. So for example, how do you prevent the disruption of the meeting, especially by freeloaders who don't even benefit at this meeting or have nothing to do with this company?
I'm pretty sure that the majority of people here are shareholders or interested in the company, and certainly, if we felt we had people that were disrupting the meeting, we would ask them to leave if they were not shareholders.
How do you know? Do you have any statistical evidence to prove your claim?
People signed in at the beginning. I'm sure we don't have a lot of freeloaders here. But they're welcome to a cup of tea if they have joined as partners.
I mean, I think it may happen in future because it may happen in other companies as well that have not been involved.
Sure. Yeah, well, we would make sure that we moderated it well. If there's no further questions, oh, sorry, we do have one at the back there.
Just a general question. Is BlueScope showing any interest in a takeover of Steel & Tube?
We've had absolutely no questions or discussions with regards to a takeover by BlueScope at this stage. They remain a very supportive shareholder. But obviously, as a supplier, we do keep that strong competitive tension and make sure that we're getting best value for the company from any of our purchases. So they have remained a supportive shareholder. We do update them on aspects of the business, but no more. They're treated just as any other shareholder.
Okay. Thank you.
If that's the completion of the questions, I'd like to thank our shareholders for your continued support. We remain committed to realizing the potential of our business and delivering value for your investment. Thank you very much for this large attendance today. It's great to see so many people here, and we welcome those of you in person to join the management and team for refreshments. I apologize. We can't offer the same to those online, but do join us in person another year. Thank you very much, everyone.