Steel & Tube Holdings Ltd chair Susan Paterson & director Anne Urlwin were re-elected at the company’s annual meeting in Auckland yesterday, Ms Paterson with 94.24% support, Ms Urlwin with 93.97% – a rebuff for anyone who thought the company had previously been on the right track and was now on the wrong one.
That rebuff was a reminder of the distinct differences between share traders & long-term investors and, as a national preference, short-term thinking over long-term.
All the company’s directors are independent.
Ms Paterson, who joined the board in 2017 and took over as chair in February, confirmed the company was on track to achieve its 2019 guidance, $25 million earnings before interest & tax – a day after it was hit by a $1.885 million fine for breaching the Fair Trading Act by making false & misleading representations about its steel mesh products (in 2016, before Ms Paterson joined the board and new management was installed).
In her written address (I’m out of town so wasn’t at the meeting), Ms Paterson acknowledged the historical issues that had led to the disappointing 2018 financial year result (a $38 million loss), but said these had now been addressed and the new board & management team were focused on the business turn-around & delivering shareholder value.
“The early results of our business transformation initiatives are now starting to show and, following the capital raising, we have a strong financial platform to continue building our position as a leading steel products & solutions provider.
“One of Steel & Tube’s strengths is its diversity of revenue across different sectors – rural, manufacturing & construction. We are seeing positive growth trends across the majority of these and are well positioned to take advantage of this.”
Ms Paterson commented on a range of issues in her annual meeting address, 3 of which I’ve highlighted here. You can check the full presentations by her & chief executive Mark Malpass below. First, she said Fletcher Building Ltd’s takeover bid followed support from Steel & Tube when Fletcher’s financial woes meant it breached covenants. Steel & Tube had offered to buy Fletcher’s EasySteel & Reinforcing business, but noted that both that offer & the subsequent bid by Fletcher would have been hard to get past regulatory hurdles.
She commented on the notion that institutional investors in Steel & Tube might be disgruntled after a heavily discounted rights issue that raised $80.9 million and set the company on its transformative path.
Fund manager Milford Asset Management Ltd sold its 15.8% of Steel & Tube to Bluescope Steel of Australia’s local subsidiary, NZ Steel Ltd, days before the annual meeting. Ms Paterson said Milford, “given their recent cost of acquiring shares, was in favour of the Fletcher Building approach”.
Following the capital raising, Ms Paterson said Steel & Tube had a strong financial platform to continue building its position as a leading steel products & solutions provider. That was in sharp contrast to the company’s gambit in recent years, which was to use debt to embark on expansion, without recourse to shareholders, and to pay high dividends.
24 October 2018: Steel & Tube fined $1.885 million for misleading steel mesh representations
19 October 2018: Shareholding deal changes landscape at Steel & Tube
16 October 2018: Fletcher gets miffy over Steel & Tube time to get advice, pulls what was only ever a “non-binding & indicative offer”
5 October 2018: The price was moving, the confidentiality remains, and still-weak Fletcher insinuates Steel & Tube takeover “compelling”
13 September 2018: Steel & Tube bookbuild scaled
30 August 2018: Steel & Tube completes books-clearing, future already brighter
23 May 2018: Review puts Steel & Tube ebit loss at $38 million
Attribution: Annual meeting presentations.