Methven ASM Presentation FINAL

mETHvENmETHvENA NNUAL M EETING

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wELCOME

AGENdA

Year In Review PHIL LOUGH

Looking To The Future RICK FALA

The Outlook RICK FALA

G l iGeneral Business PHIL LOUGH

YEAr IN REVIEwPHIL LOUGHPHIL LOUGH

YEAr IN REVIEw

Tough market conditions continued.

Tight cost discipline.

Sound financial positionSound financial position.

Payment of final dividend of 4.5 cps.

HIGHlIGHTS

NZ division earnings improved as market conditions i dimproved.

UK recovery – profitable in second half.y p

Operating costs down 8.6% year-on-year.

Commenced acquisition process of key supplier.

Awarded Technology Development Grant - $2.3 million.gy p $ 3

Brand reputation benefits from global design awards.

GrOUP PERFORmANCEFOCUS ON COST REDUCTION IN TOUGH CONDITIONSFOCUS ON COST REDUCTION IN TOUGH CONDITIONS

1 EBITDA is earnings before interest, tax, depreciation, amortisation, impairment, non-operating foreign exchange gains/(losses) and inter-segmental charges.2 EBITDA excluding one-offs is EBITDA1 adjusted for the impact of due diligence costs of $316,000 and, in the prior year, one-off recoveries of $425,000 relating to Focus (DIY) Limited which include the debt recovery, inventory recovery and associated one-off costs. 3 Net profit after tax excluding one-offs is net profit after tax adjusted for the impact of due diligence costs of $316,000 and, in the prior year, one-off recoveries of $314,000 relating to Focus (DIY) Limited which include the debt recovery, inventory recovery and associated one-off costs.

cORE mARKET REVIEw

NEW ZEALANDEarnings improve as market conditions improve.g p pEBITDA2, excluding one-offs, up 6.9%.

AUSTRALIAEBITDA1 down 1.9% due to rapid decline in market 9 pdemand with operating revenue down 12.9%.Costs down 17.7% to ensure stable EBITDA1 earnings.7 7 g

UNITED KINGDOM Modest recovery of UK division, with small second half EBITDA1 profit, reversing first half loss.p , g

GrOUP PERFORmANCEUNDERLYING HEALTH OF BUSINESS REMAINS SOUNDUNDERLYING HEALTH OF BUSINESS REMAINS SOUND

4 Underlying net debt is net debt adjusted for one-off extended supplier payment terms and favourable debtor collections at 2012 year end.

NEt DEbT LEvEL

Increase in net debt level largely due to higher than anticipated stock levels in Australia.than anticipated stock levels in Australia.

Net debt now back to normal.

Comfortably within our bank covenants and facilitiesfacilities.

SUsTAINABLE DIVIdENDS

Never missed paying a dividend despite global financial crisis.financial crisis.

Final dividend of 4.5 cps, paid 28 June 2013.

GROwTH OF THE BUsINESS

World class products and pipeline of new innovations.innovations.

Lean and efficient operations.

Acquisition ensures international competitiveness.

Expanding our marketing capabilities.

F i h liFocus on growing the top line.

NEw LEAdERSHIP

Rick Fala to step down 30 September 2013 as Group CEO.Group CEO.

Expertise and skill set of new Group CEO:Proven track record. Marketing and brand development expertise.Passion, inspiration and energy.

LOOkING TO ThE FUTUrERICK FALA

IMPrOVED

mARkETING

To DrIVE

Top LINETop LINE

GROwTHGROwTH

STrATEGIC FOcUS

1. Lean and efficient.

i i i l b l i i2. Acquisition ensures global competitiveness.

3. Innovation and design – our foundation.g

4. Becoming more marketing-oriented.

i bl h h ld5. Sustainable returns to shareholders.

LEaN AND EFFIcIENT

Operating costs down 8.6% year-on-year.

i f iContinue to focus on stringent cost management:Simplify the business – centralise and automate. SKU reduction.Reduce lead times.Reduce lead times. Reduce cost and investment in stock levels.Tight cashflow managementTight cashflow management.

AcQUISItION

Acquisition of premium Chinese tapware and valve manufacturer, Invention Sanitary.manufacturer, Invention Sanitary.

Invention Sanitary:d d d d b i h lFounded and owned by Mr Hui Zhuang to supply

product exclusively to Methven. Successful 12 year partnership with strong operational and cultural fit. World-class manufacturing plant with the latest technology and unique systems to ensure high gy q y gquality products to regulatory standards.

AcQUISItION CONT …

Purchase 100% of business and assets.

Takeover date 1 July 2014Takeover date 1 July 2014.

Methven to put in General Manager to learn business prior to takeover.

Owner to stay on for two years through untilOwner to stay on for two years through until 30 June 2016, allowing retention of expertise and business contacts, prior to formally retiring.business contacts, prior to formally retiring.


Purchase price is four times the NPAT earned by Invention Sanitary in the 12 months ended 30 June y 32014, up to maximum of US$8 million (NZ$10 million).

Purchase price will be US$4 million (NZ$5 million) inPurchase price will be US$4 million (NZ$5 million) in cash and up to US$4 million (NZ$5 million) in the issuance of new shares in Methven.

Funded through existing bank facilities; no capital raising required.raising required.

Earnout -Four times excess NPAT over US$2 million (NZ$2 5 million)Four times excess NPAT over US$2 million (NZ$2.5 million) up to a maximum of US$1 million (NZ$1.25 million) for each of the years ended 30 June 2015 and 2016.y 3 5


Acquisition secures the supply chain.

l b l i iEnsures global competitiveness.

Value accretive to shareholders.

Will underpin additional profits to fund further investment in R&D and international marketinvestment in R&D and international market growth initiatives, as well as increased dividends to shareholdersto shareholders.

INnOVATIVE DEsIGN THINkING

Continued investment in R&D, bolstered by Technologybolstered by Technology Development Grant - $2.3 million.

Gl b l d i d itiGlobal design award recognition.

Continued product range refreshment.

Launch of breakthrough showerLaunch of breakthrough shower technology in 2014.

At Methven we take ideasAt Methven, we take ideas and make them a reality.

mARKETInG STEp CHaNGE

Significant investment in marketing capabilities to drive top line growthdrive top line growth.

Conducted in-depth and independent review –k d i lmarket and internal.

New approach to global brand rollout.pp g

Global marketing platform:Fresh invigorated globally aligned brandFresh, invigorated globally aligned brand.Online to be primary vehicle for marketing communicationscommunications.Launch Satinjet sales online in the UK.

SUsTAINAbLE rETURNS

Comfortably within bank facility limits and covenants.covenants.

Underlying health of business remains sound.

Confident of delivering sustainable returns over the longer term.

Final dividend of 4.5 cps, to take the total dividend for the year to 9 0 cpsdividend for the year to 9.0 cps.

ThE OUtLOOKThE OUtLOOK

Positive Year Ahead

RICK FALA

ThE OUtLOOK

Improved market outlook for New Zealand.

I i t f UK tiImproving returns from our UK operation.

Tough Australian market conditions.

Pursue growth opportunities in China and emerging marketsemerging markets.

Growth through:Innovative designs. Greater marketing focus.g

ThE OUtLOOK CONT …

New ZealandCapitalise on improving NZ market conditions withCapitalise on improving NZ market conditions with innovative marketing initiatives to drive sales and grow market position and EBITDA1grow market position and EBITDA .

dQ1 Update Sales are tracking up on last year, flowing through to

i d 2an improved EBITDA2.


AustraliaFocus on tapware growth opportunities andFocus on tapware growth opportunities and maintain tight cost control to turn around decline in sales and maintain EBITDA1in sales and maintain EBITDA .

Q1 UpdateSales stable however margins have weakened as gthe market becomes more competitive - as a result EBITDA1 down.


United KingdomExpect the UK to continue its modest top line andExpect the UK to continue its modest top line and EBITDA1 growth. Team has stabilised performance and is now executing growth strategiesand is now executing growth strategies.

Q1 UpdateImprovement on last year’s Q1. Sales stable with p y Qimproved margins and lower operating costs.


ChinaFocus on sales and margin growth withFocus on sales and margin growth with reinvestment into the market infrastructure.

Q1 UpdateQ pStrong improvement on last year’s Q1. Sales significantly up, with improved margins and only a g y p, p g ysmall increase in operating costs.

GuIDANcE

Targeting solid sales and NPAT growthand NPAT growth for the first half and f ll f /full year 0f 2013/14.

GENErAL bUSINESS

PHIL LOUGHPHIL LOUGH

aNNUAL REPOrT AND FINANcIAL STATEmENTS

To receive and consider the financial statementsfor the year ended 31 March 2013, together with thefor the year ended 31 March 2013, together with the

Directors’ and Auditors’ reports.

rESOLuTION 1: aPPOINTmENT OF AUdITORS

That PricewaterhouseCoopers be re-appointed as the auditors of the Company and that

the directors are authorised to fix the auditors’ remuneration.

DIrECTOR ELEcTIONS

l i i h d fi ld iResolution 2: To RE-ELECT Richard Cutfield as a Director

Resolution 3: To RE-ELECT Peter Stanes as a Director

rESOLuTION 2: DIrECTOR ELEcTION

To RE-ELECT Richard Cutfield as a DirectorTo RE ELECT Richard Cutfield as a Director

rESOLuTION 3: DIrECTOR ELEcTION

To RE-ELECT Peter Stanes as a DirectorTo RE ELECT Peter Stanes as a Director

OtHER BUsINESS


DIrECTORS’ FEEs

The Directors’ fee increase will be no more than the rate of profit growth.p g

OtHER BUsINESS


DELIvERING AmAZINg SHOWErDELIvERING AmAZINg SHOWEr

EXPErIENCEs TO THE WOrLD IS OuREXPErIENCEs TO THE WOrLD IS OuR

pASSION AND WE ARE FOcUSED ONpASSION AND WE ARE FOcUSED ON

hARNESSINg THE TRAnSFOrMATIVE

POwER OF WAtER AND ITS AbILITY TO

REFrESH, REsTORE AND REvITALISE

EvERYBODY, EVERY dAY.

mETHvEN

mETHvENmETHvENA NNUAL M EETING

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Methven ASM Presentation FINAL

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