Vulcan Steel Limited (VSL) Earnings Call Transcript & Summary

Good morning, and welcome, everybody. For those that are present with us at MUFG Corporate Markets offices today, please find a seat, and we will start Vulcan's 2024 Annual Shareholder Meeting. For those who may not be aware, the Link Group was acquired by the MUFG Group in May this year, and Link Market Services has recently rebranded to MUFG Corporate Markets. So references in Vulcan's notice for this annual meeting to Link Market should now be taken as references to MUFG. We are pleased to see so many familiar faces with us today. For those who do not know me, my name is Russell Chenu, and I'm an Independent Director and Chair of the Board of Vulcan Steel. I will be chairing our annual meeting today. I'm informed that in accordance with Vulcan's constitution, we have a quorum present. And so now I declare this Annual Shareholders Meeting formally open. On behalf of the Board and the team at Vulcan, we thank you for your continued support and also for joining us today. This is Vulcan's third ASM as a listed company, although I understand there have been many more in the 28 years since Vulcan's incorporation. As you know, we are running a hybrid meeting today. So we have shareholders with us in Auckland, and we also have shareholders joining us online via MUFG's online platform. Welcome all. Our online participants should be able to hear us, see the PowerPoint presentations as well as vote and submit written questions online. Just before we get started, we should cover off a few housekeeping points. For those of us in Auckland -- for those of you with us here in the room, if the fire alarm goes off, please follow directions from MUFG staff who will direct us to the appropriate fire exit. To locate the toilets, you will need to turn right after exiting this room. Then after the reception area, there is a corridor to your left. Please follow the signs provided. For those online, if you do have any technical issues during the meeting, please ring MUFG's help line. The telephone numbers are included in the PowerPoint slide that is now being presented. Online shareholders, if you have questions, please submit them via the online platform as soon as you can. The PowerPoint slide on your screen now identifies where the Q&A tab can be located on the online platform. We will endeavor to ensure that all questions are answered at an appropriate time during this meeting. We will take questions related to the Chair and CEO addresses and the 5 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. For any shareholders with us in Auckland who wish to ask a question or make a comment, roving microphones will be available to ensure that everyone present and online can hear you. Please wait for a microphone to be brought to you prior to asking your question. We also ask that you please state your full name and also whether you are a shareholder, a proxy holder or other interested party before you ask your question. Thank you. If there are any questions, whether asked online or from the audience today relating to the same or similar subject matter, we may amalgamate those questions together and answer them in one response. This will help us with the flow and timing of the meeting. 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. For any such question that we do not have time to respond to or for which we consider requires a more detailed response, our Investor Relations team will contact you, and we will endeavor to provide you with a written answer either to your registered e-mail or your postal address. We will also publish any written answers on our investor website, which can be accessed through Vulcan's investor website, the address, which is in the glossary on Page 24 of the Notice of Meeting. After the closing of the meeting, we invite those with us in Auckland to join us for a light lunch and a cup of tea or coffee. I would now like to introduce my Board colleagues. Starting from my far right, we have Wayne Boyd, Nicola Greer, Bart de Haan, Carolyn Steele and I'm sorry, I missed Adrian. Adrian Casey. I apologize, Adrian. Carolyn Steele and Rhys Jones. And to my left is our Company Secretary, Sarah-Jane Lawson. There are currently 7 directors, including myself, and a brief summary of each of our backgrounds has been included in Vulcan's financial 2024 annual report, which was released on the 27th of August and which you should have all received a copy of. As you are aware, Carolyn Steele and I are both seeking reelection today, and we will each speak to you before our resolutions are put to a vote. In the audience today is our Chief Financial Officer, Kar Yue Yeo, our Chief Commercial Officer, who recently joined us, Gavin Street; and Lou Cadman, who is now leading our New Zealand business. Gavin and Lou just seated behind Kar Yue. We also have a number of the Vulcan team with us today. From our finance team, we have Christine Burns, Zubair Khan and Bogdan Dida. Also from our East Tamaki sites are Neil Downing, Paul Tomich, Bryan Mould, Salend Nath, Anthony German and Nick Trifunovich to name a few. The Vulcan team should be readily identifiable by their name badges. I encourage you to speak with our team after we finish the meeting today. The team will also be assisting with reading any online questions submitted by shareholders during the meeting. Vulcan's external auditor is Deloitte, and here today from Deloitte is Andrew Boivin. Andrew is available to answer any questions directed to the audit team. Also present with us are representatives from our legal advisers, Harmos Horton Lusk, as well as our share registrar, MUFG Corporate Markets. We will now show a short video showcasing Adena and Shelby from our IT team, providing some insight of what our employees think about working at Vulcan. [Presentation]

Thanks to the 2 stars of the video. 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 Managing Director and Chief Executive Officer, will present on Vulcan's operating performance over the 2024 financial year. Following the conclusion of both of our presentations, we will be happy to answer any questions you may have. We also welcome any feedback. Then we will turn to the formal business of the meeting, where we have 5 resolutions to consider. All 5 resolutions are ordinary resolutions for shareholder approval. Resolutions will be conducted by way of a poll rather than a show of hands. The first resolution is that the Board is authorized to fix the remuneration of Deloitte as auditors for the current financial year. The next 2 resolutions relate to the election of directors and the final 2 resolutions relate to the grant of performance share rights to our 2 executive directors: Rhys Jones, our Chief Executive; and Adrian Casey, our Chief Operating Officer. Vulcan's financial statements for the year ended 30 June 2024, together with Deloitte's auditor's report, are in Vulcan's annual report, which has been available on the company's website since 27 August. We also have some hard copies of the annual report on the registration desk, so please feel free to take a copy of the annual report home with you. And if anybody in the room want some of this, they're available over there. As I mentioned earlier, we will take questions relevant to each resolution at the time that such resolution is presented to you, our shareholders. 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. I will now give my Chair address. Ladies and gentlemen, fellow shareholders. Vulcan experienced continuing economic headwinds in all of our major market segments in Australia and in New Zealand in the financial year ended June 2024. As a result of elevated interest rates and inflation, there was reduced business and consumer confidence in both countries, and our sales volume declined 9% with sales revenue down by 15% compared with the previous year. Notwithstanding this challenging environment, Vulcan's cash flow was strong and we reduced net debt by $64 million from $340 million at June 2023 to $276 million at June 2024. Significantly, in the 2 years since Vulcan debt funded the acquisition of Ullrich Aluminium for $165 million, the company's net debt has declined by almost $160 million from a peak of $435 million. And this is after $137 million of dividends that were distributed to shareholders during this 2-year period. We finished financial 2024 with cash and unutilized committed banking facilities of $124 million. Our teams have continued to focus on the realization of synergies arising from the acquisition of Ullrich in August 2022. Rhys will address the 2024 financial year's outcomes in more detail in his address. The dividend declared for financial 2024 was $0.24 per share, amounting to $31.5 million and representing 79% of net profit after tax. The dividend was 65% imputed for New Zealand shareholders and 100% franked for Australian shareholders. The company's annual report for financial 2024 included our inaugural climate-related disclosures prepared in accordance with New Zealand legislation. Preparation of this report required a significant effort by management, assisted by external advisers and was overseen by the Board Audit and Risk Committee. We disclosed a modest reduction in Scope 1 and Scope 2 carbon emissions in financial 2024 compared with the prior year. I would now like to make some comments about the Board and the composition. I thank all my director colleagues for their contributions during the year. We have made considerable progress in consolidating our efforts and achievements in the transition from a listed enterprise -- or sorry, from a private to a listed enterprise in the 3 years since the company's initial public offering in 2021. I would like to acknowledge the work undertaken by the Board's People and Remuneration Committee and senior management in leading our people development programs aimed at having a strong bench of talent to support the company's significant growth aspirations. We made an announcement a few weeks ago advising that Wayne Boyd will be retiring as a director following this meeting. Together with Peter Wells, Wayne was a founding shareholder of Vulcan. He has been a director since 1995, and has made a sterling contribution for almost 30 years to Vulcan's growth and success. Wayne has been a wonderful colleague, a mentor and a wise counsel to many people in Vulcan, and he leaves with our best wishes for his retirement. Thank you, Wayne, and we will miss your contributions. In due course, we intend to recruit and recommend a replacement for Wayne. Vulcan operates in a highly cyclical industry. The company is very experienced in managing through periods of reduced demand like we experienced in financial 2024, and which has persisted so far into this new financial year. However, opportunities for a robust business with a strong balance sheet abound in this type of market, and we remain relentlessly focused on delivering superior customer service, investing in our people development programs and investing in our physical infrastructure such as our distribution facilities and IT systems in order to build our capability. This commitment is aimed at preparing Vulcan to be in the best possible position to leverage our considerable strengths when the market turns and business activity begins to increase. On behalf of your Board, I would like to thank all of our 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, and welcome, everyone, to Vulcan Steel's 2024 Annual Shareholders Meeting. I'd first like to start with a summary of 2024. The past year has been the most challenging period since at least the GFC with poor global economic growth rates, suppressing product pricing, while domestically, both Australia and New Zealand Central banks maintained high interest rates to reduce historically high inflation. Despite these multiple challenges, Vulcan Steel's financial performance produced a number of highlights. Our business generated NZD 169 million of operating cash flow from an earnings before interest, tax, depreciation and amortization or EBITDA of NZD 148 million at a gross margin of 35.2%. The EBITDA of $148 million on sales revenue of $1,064 million represented a return on sales of 13.9%. Our $99 million earnings before interest and tax or EBIT represented a return on capital employed of 13.4%. Excluding the impact of lease accounting standard IFRS 16, our return on capital employed was 19.6% in 2024. This is a key performance metric and incentive hurdle. A net profit after tax of $40 million was achieved, while the net debt-to-EBITDA cover was 2.6x at the end of the financial year. We're pleased with the improving trend in operational and financial performance at aluminium, which when coupled with new hybrid site openings, we'll continue to make a meaningful contribution to our financial performance. Now I'd like to talk about the Vulcan business. Despite adverse economic conditions, which saw significant declines in construction, manufacturing, and capital investment, our team was able to grow our active customer base by 3.6%, while achieving a delivery in full on time or DIFOT of 97.9%. The Aluminium business was fully integrated into our Metals division with 7 element in sites exited, of which 6 were integrated into existing locations, creating hybrid sites. We've opened one greenfield site in Victoria, while expanding 3 existing sites to become full hybrids. By investing and growing the metals division through the creation of hybrid sites, despite the challenging economic climate, we believe this will generate excellent outcomes in the coming years. The deliberate and multiyear strategy of diversifying our portfolio to include metals and steel across a significantly broader geographic base was clearly beneficial this past year. The metals division of Aluminium, engineering steels and stainless, proved to be more resilient than the steel division due to the broader range of customer segments served and geographic reach. The Vulcan network now operates in 66 locations with plans in place to widen our footprint next year through the implementation of more hybrid sites. The geographic coverage and market knowledge has been greatly enhanced by the acquisition of Ullrich Aluminium. The network will continue to grow in a planned manner, which emphasizes high customer service, complementary products and high inventory availability. The inventory management disciplines are now in place across the entire network while there's been a significant increase in the number of customers that now purchase multiple product verticals. These hybrid sites confirm improved multiproduct availability to our customers while reducing unit costs through scale benefits. This mutually enhancing process is particularly beneficial in smaller regions, which have previously experienced poor local product availability and high transport costs. I'm turning now to our growth strategy. The core screening criteria behind Vulcan's growth strategy is that it must add value to the customer in Vulcan's shareholders. Careful consideration is also paid to ensuring readily actionable synergies are present. In the current environment, we've concentrated on ensuring we maintain or improve our share of a customer's total spend by offering other products in our range or services such as product processing. The proprietary Vulcan IT system enables the screening of these individual customer growth strategies to be continually and easily targeted and monitored. The organic growth strategy of opening new hybrid sites will continue into the foreseeable future, which over coming years will primarily become new greenfield sites where we have weak or no geographic coverage. This expansion plan will be a deliberate and focused approach, mergers or acquisitions or businesses that are operating in our existing portfolio or adjacent to our portfolio, which offer consolidation opportunities or geographical diversification are also being identified. These options are constantly reviewed and considered. Our priorities for 2025 include: one, ensuring that Vulcan's customer mindset -- customer service mindset and owner-operated culture are resilient and nurtured in a currently hostile economic environment. Two, that we position ourselves to take full advantage of the upswing in economic activity that is forecast to emerge in the near future; three, that we build bench strength in Australia and New Zealand to enable Vulcan to grow seamlessly; And lastly, we explore other complementary product platforms and adjacencies while rolling out new hybrids. I'd now like to turn to health and safety, employee and community initiatives. Improving our performance in health and safety remains a top priority. The program to improve the safety systems and processes at aluminium has developed well with strong support from our colleagues. We invested in Inviol, which is an AI-based health and safety system, which identifies high-risk activities through surveillance in real time and alert anyone in danger of their risk. This tool is also used to coach colleagues who have been notified of being in a dangerous position. Separately, a significant safety risk exists when we commence a hybrid site as typically new products are being handled. Dedicated training is conducted to reduce this risk before any hybrid commences. As a distributed business with sites across Australasia, it is critical that a consistently high stand of leadership in cultural alignment is maintained. One initiative which has been highly effective to achieving these goals is the leadership hub, where over 60 people meet online and learn in a structured environment how to share and reflect on their own leadership experiences as well as the academic literature around that issue. To create a transparent but non-threatening environment, where leader share their successes and challenges is a great example of how our culture is a key driver of our performance. It is critical in an environment where the economic news has been overwhelmingly negative that our colleagues know and understand the direction of Vulcan, how we're going to get there as a team and their individual role and accountability within the team. The alignment of all our colleagues to think and act as one team to service our customers to higher standards possible is reinforced 3x a year by our Principles and Ethos roadshow where every person in the company has provided with a detailed description of how our values and behaviors are to be applied. These interactive sessions provide clarity or reassurance, but most importantly, unity. Now on to the community. Vulcan continues to contribute to the wider arts, sports, educational community through long-standing partnerships and the direct involvement of our colleagues. Vulcan is proud to support the Halberg Youth Council, the New Zealand Dance Company, the Arts Center Melbourne and the Auckland Rescue Helicopter Trust. I'd now like to turn to the first quarter trading update, which we provided recently. In the September trading update, revenue decline of 13% year-on-year was driven by lower average selling price and volume compared with the previous corresponding period. The 30% year-on-year decline in first quarter '25 EBITDA was principally due to a combination of lower volume and margin. Sales volume for the first 3 months of '25 declined by 10% driven by 12% year-on-year decline in our steel segment volume and a 7% decline in Metals segment. Our outlook as outlined previously in our September 2024 trading update last month indicated that business conditions for our industry remains soft across most market verticals and geography, especially in New Zealand. These conditions are expected to continue for the balance of the 2024 calendar year. Despite the challenging conditions, Vulcan is more optimistic now about 2025. Since August 2024, the Reserve Bank of New Zealand's reduction in the official cash rate has boosted business confidence in presales activity among our customers, though the timing of these improvements translating into tangible results in 2025 does remain uncertain. In Australia, financial market participants are expecting the Reserve Bank of Australia to begin reducing its official cash rate target early next year. We anticipate better trading conditions for suiting operations in some locations in 2025 as business confidence grows in other present industry disruption in the market subsides. Turning to our debt. Our net debt since the end of '24 has further reduced by NZD 22 million to NZD 254 million at the end of September 2024. We will stay agile and manage working capital appropriately. In closing, it's always critical that we meet on our employees who are the critical element of our company's success, which is even more so in difficult times. Therefore, I want to thank our employees for their personal commitment and great teamwork as well as our customers for their ongoing support over the past year. Our culture and our employee work ethic and teamwork continue to shine despite a very difficult market environment. Thank you. I'd like to hand over to Russell.

Thank you, Rhys. I will now open the floor to anybody who has questions or comments on any matter referred to in either Rhys's or my presentations. And just as a reminder, would you please identify yourself by name and whether you are a shareholder, proxy holder or other interested party prior to asking your question. Thank you. Bogdan, do we have any questions? Sorry. My apologies, I missed your hand.

Barbara O'Connor from New Zealand Shareholders' Association. It's my first one with Vulcan. I would be interested to know what proportion of your revenue comes from New Zealand vis-a-vis Australia?

It's approximately 2/3 Australian revenue and 1/3 New Zealand.

Is that stable overtime?

Rhys, would you like to answer that?

Yes, very briefly. It's actually growing stronger in Australia than New Zealand. So over time, we started as a wholly New Zealand company then grew in Australia, then our growth is principally in Australia. And it's -- for a few reasons for stainless and aluminum, we've got -- we don't cover the whole geographic range in Australia nor do we do that in steel. So there's plenty of more growth in Australia. So over time, the proportion should be higher in Australia.

Thank you. Any further questions? Okay. Bogdan, do we have any questions submitted online relating to either the MD CEO or Chair addresses? No? Okay. Thank you. As there are no further questions, I will now proceed to the formal business of today's meeting. As I mentioned earlier, there are 5 resolutions being put to Vulcan shareholders to vote on today. All 5 resolutions were set out in the Notice of Meeting and the proxy voting form that was sent to Vulcan shareholders on 30 September. All 5 resolutions are ordinary shareholder resolutions. An ordinary shareholder resolution is simply a resolution that 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. But just as a reminder, voting entitlements have been determined as at 9:00 p.m. New Zealand time last Wednesday, 30 October. Registered shareholders at that time are the only persons entitled to vote and only the shares registered in those shareholder names at that time may be voted at this meeting. Votes can be lodged during the meeting today or by proxy. For your proxy to be effective, your proxy voting form must have been received by MUFG by 11:00 a.m. on Wednesday of this week. The valid proxy votes received are set out in our PowerPoint slides and will be shown as we get to each resolution. Voting on all 5 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 Australian Securities Exchange, 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, 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's offices today, please use the voting paper that should have been handed to you at the registration desk. The MUFG 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. So starting with the first resolution, I move as an ordinary shareholders' 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 30 June 2025. The Board unanimously recommends you vote in favor of Resolution 1. Now are there any questions relating to this resolution from any shareholder present here today? It would appear not. Have we received any questions, Bogdan, relating to this resolution? No? None. Thank you, Bogdan. As there are no further questions or no questions, voting on this resolution will proceed to a poll. We will now move to Resolution 2. This resolution relates to the reelection of Carolyn Steele as a director. Carolyn has been a Director of Vulcan for more than 3 years, having joined Vulcan's Board in August 2021, just before our initial public offering. A short biography about Carolyn was set out in the notice of this meeting. But I just wanted to note that given her background as a well-credentialed and qualified financial expert, Carolyn has very ably served as the Chair of the company's Board, Audit and Risk Committee since her appointment as a Director. She has also been a member of our People and Remuneration Committee for more than 2 years. Carolyn actively contributes to the Board's deliberations in a range of other areas, including but not limited to business strategy and people development. I will now hand over to Carolyn for her to speak to you.

[Foreign Language] So greetings to the many chiefs gathered here today. Well, good morning, fellow shareholders and guests. It's my pleasure to stand for reelection to the Vulcan Board. As Russell said, I joined just over 3 years ago right before the IPO. And in that first meeting with Kar Yue Yeo and Rhys, I remember being blown away by the sheer size of Vulcan, which was relatively under the radar company at the time and by its outstanding growth profile. I think I recall Kar Yue Yeo's graphs all went like this at the time on the way up. And as I've joined -- I had the opportunity to join Vulcan and visit the branches, whether at [ Stane's ] team in Hamilton or whether it's Sam's in Melbourne, it's very clear to me that behind this outstanding growth profile, as a really committed, capable team. They will do their utmost to deliver, whether it's delivering a customer's order and full on time that very afternoon, whether it's delivering leadership opportunities and a safe and enjoyable work space for all as we saw on the video today or whether it's delivering on ambitious results and long-term shareholder value for shareholders the Vulcan team deliver. And it's certainly something that I, as a director, I'm very mindful of being a guardian of this very unique and committed culture. So what do I add to the Vulcan team? Well, my skills and experience are largely complementary to the team you have before you. They are primarily related to finance, investment management and capital markets. My qualifications include a Bachelor of Management Studies with first class honors. My work experience includes 10 years investment banking, where I worked on mergers, acquisitions, divestments and capital structure mandates for some of New Zealand's largest companies and some which had Australian operations. I also worked for 6 years for the NZ Super Fund, whereas responsible for acquiring, overseeing and sometimes representing the Super Fund on the board of some large companies, including Datacom, which had a lot of Australasian operations a bit like Vulcan today. So these roles all required me to apply a very high level of financial and commercial judgment. And I think it is this commercial judgment that has stood me really well, served me very well as a professional director over the last 7 years on a range of companies. The companies that I serve on, in addition to Vulcan as Audit and Risk Chair include: Green Cross Health, property for industry and well networks; and I'm also an Investment Committee Member and Director of Oriens Capital, a private equity fund, and I Chair the Halberg Foundation. So in summary, I believe my skills and experience are well suited to serve as a Director of Vulcan. And I kindly ask that you support my reelection. And if reelected today, I look forward to contributing to Vulcan's ambition to be the most efficient, most customer-focused industrial products distributor and value-added processor. [Foreign Language] And I hand you back to Russell. Thank you.

Thank you, Carolyn. The Board, other than Carolyn recommends Carolyn to you as a Vulcan Director and unanimously supports her reelection. I now move as an ordinary resolution that Carolyn Steele be reelected as a Director of Vulcan. I note that no questions relating to the resolution for Carolyn's election were received prior to today's meeting. And I ask whether there are any questions relating to this resolution from any shareholder present in Auckland. No. Would appear no. Let's turn to questions via the online platform. Bogdan, have we received any questions online relating to this resolution?

No, we have not.

Thank you. As there are no questions, voting on this resolution will proceed to a poll. Let us move to our next resolution, which is Resolution 3. As this resolution relates to my reelection as a Director of Vulcan, I will ask Bart de Haan, who Chairs the Board's People and Remuneration Committee, to put this resolution to the meeting. Thanks, Bart.

Thank you, Russell. As Russell mentioned, he retires at this meeting and offers themselves up for reelection as a director. The Board other than Russell recommends Russell to you as a Vulcan Director and unanimously supports his reelection. I will now ask Russell to provide some background on himself and on his role of the Chairman and member of the 2 board committees that we have. Russell?

Thank you, Bart. So I have a background as a finance person who worked in manufacturing industry resources also in different countries in the world. I've spent 15 years living outside of Australia, where I'm resident. And I think I have reasonable experience in the sectors that are very important to Vulcan, including resources, engineering and construction. And I serve on the Board of Reliance Worldwide Corporation, which is a plumbing supplies company that operates in the United States, Europe and Australasia. I'm also on the Board of CIMIC, which is a company formerly known as Leighton Holdings, which operates in large parts of Asia, including Australasia and has operations in the mining and engineering sector or sectors also in South America and North America. So I think with the related industries that I've been involved in through my executive career and also in my director time, I'm able to offer some insights that are perhaps a little broader than may just be restricted to Australia and New Zealand. It's an absolute privilege to be involved with Vulcan. As Carolyn said, it's a first-class company with very, very passionate people about serving customers and looking after each other and working together. And I think we, as a Board, have tried to embrace that culture very, very strongly. We're all very proud to be part of it. And I look forward to continuing as a director, but I put myself before you as a director who is willing to be reelected. Thank you.

Thanks, Russell. I now move as an ordinary resolution that Russell Chenu, who retires as a director of Vulcan by rotation and is eligible for reelection be reelected as a Vulcan Director. Again, now it's time to invite you shareholders to ask any questions about this resolution for Russell's reelection. I note that we did not received any questions prior to today this morning. Are there any questions of the people in this room? Please raise your hand. There's no questions. So Bogdan, did we receive any questions online?

We did not.

Okay. Thanks, Bogdan. As there are no questions, we'll go to voting -- and will proceed as a poll. So back to you, Russell.

Thank you, Bart. 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 321,188 performance share rights to Vulcan's Managing Director and Chief Executive Officer, Rhys Jones, under Vulcan's FY '24 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 6 to 9 and Pages 14 through 18 of the notice of meeting. I note that we did not receive any questions relating to this resolution prior to our meeting. Prior to seeking shareholder discussion on this resolution, I would like to make some observations on Vulcan's executive remuneration framework. The first is that Vulcan is unusual in that the company deliberately has no short-term incentives for senior executives. They are paid a fixed salary and participate in a long-term incentive program in which performance share rights with a 3-year term may convert to shares in the company, but only upon realization or achievement of financial performance stretch targets. The 2 components of this are relative total shareholder return and return on capital employed, each tested over a 3-year period. To the extent that targets are not achieved, share rights lapse at the end of each 3-year grant period. It is the view of directors that this remuneration framework encourages senior executives to target long-term value accretion for shareholders rather than short-term incremental gains. The second point I would like to note is that by agreement at the time of Vulcan's initial public offering, Rhys' annual salary remained fixed from July 2021 to June 2024. We are all well aware that during that period, there was increased inflation. It was also a time of growth for Vulcan including via the acquisition of Ullrich Aluminium in August '22. As a result of the market review, Rhys' salary was increased by 20% on the 1 July this year, and the quantum of share rights in the proposed long-term incentive grant for your consideration at this meeting reflects in part an increase in his salary. Now with that in mind, are there any questions from shareholders present relating to the grant of performance share rights to Rhys? I can't see any hands raised. Bogdan, have we received any questions from shareholders via the online platform?

We have received one from [ John Gumede ]. I do apologize if I mispronounced that. I will proceed with reading out the question verbatim. The aim is to align company performance and shareholder interest. The outcome of financial year '24 presented somewhat poor optics in the balance between the CEO's at-risk achievement compared to the shareholders' proportional dividends in primary terms over the period but more so in the last year, for example, sustained versus diminishing. The Board may like to consider why the measurements of the long-term incentive plans, for example, total shareholder return are based on the median rather than the upper quartile of peer companies if your ethos is to hold yourselves to the highest standards. End of question.

Thank you. So the way I would respond to that is that the performance share rights associated with the long-term incentive have the 2 hurdles that I explained. One is related to relative total shareholder return and one is related to the return on capital employed. The measures that are in place for each of those KPIs is actually set at the time of the IPO by the Board. And they are very objective tests of that determine the outcomes. So it's over a 3-year period rather than just looking at the FY '24 result. If we look at those 2 tests, over that 3-year period, the relative TSR was 100% -- no, sorry, the ROCE, the return on capital employed measure was 100% vesting because of the performance, not just in the FY '24 year but over a 3-year period. And certainly, the FY '24 year was more challenging for the group than FY '22 or '23 but with the threshold was achieved over an average of the 3-year period. In relation to relative total shareholder return, Vulcan share price and total return, including dividends, performed the NZX by -- 36%, Kar Yue Yeo? So it's apparent that in the last FY '24 year maybe the share price wasn't as strong as it was during '22 and '23. We were actually very, very strong performers over the 3-year period and outperformed the index by 36%, which is a very significant superior performance. And as a result of that, a very significant portion of the performance share rights vested into shares upon testing at the end of the FY '24 period. There'll be lots -- there can be lots of discussion about what the right thresholds are. But with the objective tests through the financial performance of the group, they were the outcomes. And as a result of those tests, a large proportion of the performance share rights vested and converted to shares. So that would be my response to the question. Any other questions online?

No other questions.

Thanks, Bogdan. As there are no further questions voting on this resolution, we will proceed to a poll. Resolution 5 is the final resolution for today's meeting. I note that my comments relating to the grant of performance share rights to Rhys when introducing the previous fourth resolution apply equally to this Resolution 5, which is for the grant of performance share rights under Vulcan's long-term incentive plan to our Chief Operating Officer, Adrian Casey, who you know, is also an Executive Director of the company. So with that in mind, I move as an ordinary resolution that for the purposes of ASX Listing Rule 10.14 and for all other purposes, the issue of 105,263 performance share rights to Vulcan's Chief Operating Officer, Adrian Casey, under Vulcan's financial year '24 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 received any questions relating to this resolution prior to the meeting. Shareholders with us today, do you have any questions relating to the grant of performance share rights to Adrian? I cannot see any hands raised. Bogdan, I will now take any questions from shareholders who are online. Have any questions been received?

No, we have not received any questions.

Thanks, Bogdan. As there are no questions, voting on this resolution will proceed to a poll. This concludes our discussion on the formal business of today's meeting. I will now pause to allow time for you to finalize and cast your vote on the 5 resolutions. [Voting]

It appears that people in the room have cast their poll votes. I can't see online what's happening, but for those with us at MUFG's offices, members of the MUFG team will now be collecting 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 5 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, NZ Stock Exchange, and our investor website. We expect this to be later this afternoon. That concludes the formal business of this annual meeting. And now we move to a very important part of the 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? Yes. So there's a microphone just coming to you.

Carl [indiscernible], Shareholder. So perhaps Chair, if you indulge me a little bit, I wanted to build on your comments in relation to Wayne, so not to embarrass him somewhat, but it is his retirement from governance. So I think it is certain that we acknowledge that a little further. Wayne has never been one for the spotlight. But over his 30-year career, I thank him, many do that he has set the standard and professionalized corporate governance in New Zealand. So that he should be celebrated. He was never part of the governance -- so-called governance club but he built an impressive corporate governance, CV. He was the IPO Chair of Auckland Airport and Freightways. Chair Meridian and Chair of Telecom. And during the late 1990s and 2000s, Wayne was the Director that everybody wanted on their Board. These roles have never been particularly easy with Wayne taking the normal approach of doing what was right for shareholders but importantly, bringing people along in the decision-making process. Part of this scale was to reach out to shareholders directly unfiltered by management. They hated that, by the way, but that was all to get a good sense of the room. This is pretty standard stuff now, but back then, it was a little revolutionary. Capital Markets in New Zealand has much to thank Wayne for with many of the current crop of professional and prominent directors having had time with Wayne and observing his style. His impact extends beyond governance as he's helped many others in their careers. Of course, it's not only the corporate world where Wayne has had governance impact, he has spent time with [ Nitahu ], the blood service, the Halberg Foundation. In Capital and Coast health, all with a focus on professionalizing their operations. Chair, I do note that there is no replacement being related for Wayne at this time. Surely, that would be an impossible task. But as shareholders, what we can do is thank Wayne for his contribution to this Board and those of the mini that he has served on and led over his career for the benefit of shareholders. Personally, I'd like to thank Wayne for the many hours of advice. That's another great strength of Wayne. He doesn't get distracted by the so-called important people in the room. He just gives us time generously. So go well, my friend. You've had a great run.

Mr. Boyd, would you like to respond to that?

Not something that I do. But thank you for those kind words, Carl. In my view, as you all know, has always been shareholder first. Every shareholder is equal in my view. And I've always regarded myself and the team that's around me as the guardians of your money and what I've tried to do is make sure the shareholders got the appropriate return for the risk they were taking with the money that they had invested in the companies. And I've been lucky enough to have a great team of people in every company, that's all about people. If you've got the right people, Carl, they can make you look good. But you're just one of the team, and I think that's something that I've enjoyed. I hate having my head up here though I wasn't aware of this. So thank you very much for the kind words, and thanks for the applause. And thank you, Vulcan. It's been a great journey. I see Peter came into the room, a little bit late, Pete, but we start meetings on time now. But I just want to -- I mean it's been a great journey. I can echo what everybody else said. This is a wonderful company that's got a secret source started by the Founder and carried on and I stayed on just to make sure that the company's secret source its culture wasn't lost by a public listing. And I can honestly say I'm very comfortable with leaving our bench strengths there. The culture is really being worked on every day within the organization embraced by its people. So -- and we've got a great team and a great bench. So it's the time to go. So thanks very much.

Carl, thank you for those comments. I think you picked up some very important points way beyond Wayne's role in Vulcan. I have only known Wayne for 3 years or so, just since just prior to the IPO, and I feel as though I've been very fortunate to have his company during that time. He's made a magnificent contribution in the transition from private to listed entity that Vulcan has become. And as I said earlier, we are going to miss Wayne's continuing involvement. But your recognition of his work in the community as well as in business over a very long career in the sort of positions that he has held, I think, is a very appropriate way of recognizing it. And thanks for the comment. And Wayne, thank you for your response as well. The modesty came through. Bogdan, have there been any questions submitted online?

No, there have none.

Thank you, Bogdan. We have no -- sorry, my apologies.

So following on from what Carl's [indiscernible] I'm really interested to know what Vulcan's intent is with respect to the future directors program. Have you thought about contributing to that?

I am -- as an Australian -- although I'm Australian, I am aware of the future directors program. We have not actively sought to initiate that in the company, I think largely because we've been focused over that 3-year period and getting all the appropriate structures and policies and so on in place. But can I take that as a question on notice and maybe we come back to you. I did notice in the NZSA letter that we received that there was a reference to the question that you have asked and I think -- I'm not sure we will be allowed to keep him on to assist with it. Maybe we can speak to his family and see if we can get. Does that respond to your question, [indiscernible]? Yes. Thank you. If we have no further questions, and I'll just check because I did miss that, no, I'm sorry. Then that brings us to the end of Vulcan Steel's 2024 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 2024 Annual Meeting of Vulcan Steel closed. Thank you all very much.