Annual Shareholder Meeting 2015 - NZX5ae1ea0a6ebbaab50ba1-1b288aa5ac29195b015695f2a82ca5c4.r60.cf3.rackcdn.com/...
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Annual Shareholder Meeting 2015
14 July 2015
Phil Lough Chairman
ASM 2015 • Chairman’s address • Group CEO’s address
• General business • Refreshments
–3–
Group performance
Refer to Slides 73 and 74 for definitions of non-GAAP financial information, constant currency variance and non-recurring items. No adjustment has been made for non-recurring items as year-on-year movement is immaterial. –4–
Group performance
• Despite funding of acquisition, the Business remains comfortably within banking covenants
–5–
Dividend history
• Dividend maintained in line with half year • Final fully imputed dividend of 4.0 cps paid on 30th June 2015 –6–
Progress against our goals
–7–
Market performance – New Zealand
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Market performance – New Zealand
–9–
Market performance – Australia
– 10 –
Market performance – Australia
– 11 –
Market performance – United Kingdom
– 12 –
Market performance – United Kingdom
– 13 –
Market performance – China
– 14 –
Market performance – China
– 15 –
Balance date • Balance date changed to 30th June 2016 • Helps improve forecast and predictability of results Rationale • Four events materially affected our second half performance:
Historical sales variation in December and January Less trading days in second half Chinese New Year in February means we have committed to stock in December March clearance of stock imbalances
– 16 –
FY2015 summary The last financial year was characterised by: • Successful integration and earnings from Methven Heshan • Successful launch of Aio and Aurajet technology • UK and Australia profits • $3.9m invested in our future Aio shower and tapware Enhanced digital presence New team capability to supplement existing skills
– 17 –
Outlook for 12 months ending June 2016 • • • •
Revenue growth of at least 5% NPAT growth between 15 and 25% Net Debt forecast to decrease Business to remain well within banking covenants
– 18 –
Fit for the future • Improved business practice • Focused on consumer and customer • Better leveraging NZ capability • Investment in future
– 19 –
David Banfield Group CEO
Agenda • Our three point plan Thinking and acting like the Market leader Know the consumer better than anyone else Give clarity and focus to the organisation for the next three years
– 21 –
Think and act like the market leader
– 22 –
Successful launch of Aio • Aio launched in NZ, UK, Australia and China • Excellent feedback at all events
• Successful trials in many high profile London hotels
– 23 –
NZ
UK
Australia
China
Aio TV campaign Focus on execution
Video removed
New website live and performing well
– 26 –
Realise earnings potential from Heshan • NPAT contribution FY15 NZ$1.1m • Earnings on track to deliver at least US$2m NPAT annualised
• 100% staff retention • Group ERP successfully implemented • Passed full quality and ethical audit by ISO Global
• Methven NZ global Health & Safety standard implemented though existing standards good
– 27 –
Activity based on sell through Customer
% Sales in vs. PYS
% Sales out vs. PYS
Customer 1
8%
14%
Customer 2
19%
20%
Customer 3
16%
35%
Customer 4
7%
2%
Customer 5
4%
26%
– 28 –
Thinking and acting like one Methven Group • Focus on business model in Australia • Price increases passed on to offset impact of weak A$
• Overheads reduced to focus on long term profitable growth • Operational metrics under focus to increase performance and decrease cost • Focus on delivering EBITDA ratio through Australia
– 29 –
Our Auckland-based team design, develop and manufacture products for global markets
Video removed
Know the consumer better than anyone else
Research continues • Aio insight effective at understanding market potential • UK Net Promoter Score (NPS) of 42% (market leading score) • Australian customer satisfaction at 94% • Work on’s identified to deliver even more loyalty and relevance • Innovation focus to support long term profitable growth
– 33 –
Our Latest TV campaign achieved record results
NZ plumbers support Methven • Methven remains a clear leader in showers and tapware with 95% brand preference • Top 5 drivers of brand choice identified • Methven significantly outranking competitors on key criteria for plumbers
• Methven have a very strong NPS of 70% • Nefa valves have 67% brand preference and 30% NPS
– 35 –
Strategic direction
Global megatrends: The 5 foundations
– 37 –
The home of the future: The foundations Shared Spaces • Communal living • Communal courtyards, shared washing and eating areas more common.
• Multi-generational and shared living The Village House, Sjaelland, Denmark
“Friends are continuing to live together even when kids come into the equation. Before this was the cut-off point for shared housing, but today young people enjoy the mix and community feel of having families and mixed ages around.” - Birgit Berghardt, CEO, Trenburo, Hamburg
– 38 –
The home of the future: The kitchen The Kitchen will continue to be the social heart of the house and more space will be given to this zone: A work space
“Kitchens will be influenced by the farm. There will be long thin benches which are big enough for lots of people.”
New Industrial Revolution, Kitchen for Open Structures by Thomas Lommee
- Li Edelkoort, Trend Forecaster
Networked Devices
The future kitchen by Antione Lebrun
Appliances will be networked and will become more intelligent to reduce energy consumption – 39 –
The home of the future: The bathroom Self examination is predicted to be part of daily life by 2020 so the bathroom will become more of a health & wellbeing room. Isle Crawford predicted the end of the bath Self diagnosis
Self diagnosis devices will get more popular & sophisticated. From 2002 to 2007 there was a 30% rise in sales of kits to measure blood pressure, blood glucose & body fat (Future Laboratory)
Lean
Saving water will become integral to this room. Showers and taps will focus on experience, and water saving materials to minimise environmental impact Future Bathroom Concept – Dragonfly Media – 40 –
Our Cause…. The unrelenting pursuit of amazing water experiences that don’t cost the earth
Our Vision…. To be the authoritative leader in showers, taps and valves, setting industry leading standards for our customers, shareholders and team
3 Year Plan FY16 - FY18
12th June 2015
Video removed
Why “Methven 130”? • $130m revenue in FY18 • We celebrate 130 years of operation in 2016
– 45 –
“Methven 130” plan • Grow revenue from $96m to $130m • Grow NPAT from 5.9% towards our longer term goal of 10% • Focus on innovation developed by our Auckland-based team • Invest in our business in order to deliver long term profitable growth • Create a business that you are even more proud of
– 46 –
7 strategic pillars of the strategy upply & Operations echnology etail/reseller nsight
igital & Data mployees
ustainability – 47 –
Strategic pillar definitions upply & Operations
Optimise service levels, margin and inventory
echnology
Innovative new products that set new standards
etail
Best customer conversion ratios in the industry
nsight
Know the consumer better than anyone else
igital & Data
World class digital experience for customers and consumers
mployees
Creating an environment that maximises everyone’s potential
ustainability
Doing what’s right for our planet
– 48 –
STRIDES…
‘Walk with long, decisive steps in a specified direction’
– 49 –
Alignment 1. 2. 3. 4.
Group-wide strategy Group-wide implementation plan Strategic focus (STRIDES) Planned investment to enable us to meet these goals
– 50 –
My STRIDES matter.
– 51 –
ONE TEAM Act as one Methven Group
ONE GOAL $130m by FY18
ONE FUTURE The unrelenting pursuit of amazing water experiences that don't cost the earth – 52 –
2016 market focus and earnings outlook
Group
– 54 –
Our new head office
• Continuing our proud history of NZ manufacturing and development – 55 –
Outlook for 12 months ending June 2016 • • • • •
Remain cautiously optimistic Revenue growth of at least 5% NPAT growth between 15 and 25% Net Debt forecast to decrease Business to remain well within banking covenants
– 56 –
April to June 2015 year-on-year performance
• All in line with our budgeted performance and ahead of last year (excluding debt) • 3 month transition period to align to the new balance date • Customers reporting strong performance on lead measures for Aio – 57 –
2015 Summary • Revenue decline halted • Earnings growth in line with guidance • $3.9m invested in future-focused projects
– 58 –
2016 plan • First year of our “Methven 130” plan • Putting strategic foundations in place • Leveraging our NZ capability • Delivering Aio results in line with expectations • Adding services that our partners value • Delivering top and bottom line growth • Building a business that delivers long term sustainable earnings growth
– 59 –
General Business PHIL LOUGH
Ordinary Business
Resolution 1: Appointment and Remuneration of Auditors That PwC be re-appointed as the auditors of the Company and that the directors are authorised to fix the auditors' remuneration. Proxy Voting
Column2
For
24,574,049
Against
27,488
Abstain
50,632
Discretionary held by Chairman and Board
217,739
Other discretionary
479,577
TOTAL AVAILABLE PROXY VOTES
25,349,485
– 62 –
Acknowledgement The Board acknowledges and thanks long serving director Peter Stanes on his retirement from the Methven Board after eleven years of exemplary service.
– 63 –
Resolution 2: Director Election To
Alison Barrass as a Director.
Proxy Voting
Column2
For
24,574,049
Against
27,488
Abstain
50,632
Discretionary held by Chairman and Board
217,739
Other discretionary
479,577
TOTAL AVAILABLE PROXY VOTES
25,349,485
– 64 –
Resolution 3: Director Election To
Norah Barlow as a Director.
Proxy Voting
Column2
For
24,631,749
Against
26,250
Abstain
9,670
Discretionary held by Chairman and Board
202,239
Other discretionary
479,577
TOTAL AVAILABLE PROXY VOTES
25,349,485
– 65 –
Resolution 4: Director Election To
David Banfield as a Director.
Proxy Voting
Column2
For
24,582,867
Against
24,500
Abstain
60,302
Discretionary held by Chairman and Board
202,239
Other discretionary
479,577
TOTAL AVAILABLE PROXY VOTES
25,349,485
– 66 –
Special Business
Resolution 5: Methven’s Constitution That Methven’s existing constitution be revoked and the Company adopt a new constitution in the form tabled at this Annual Meeting. Proxy Voting
Column2
For
24,315,995
Against
23,263
Abstain
96,928
Discretionary held by Chairman and Board
408,222
Other discretionary
504,077
TOTAL AVAILABLE PROXY VOTES
25,348,485
– 68 –
Voting - Resolutions Tick () in box to vote
– 69 –
For
Against
Abstain
Other Business
Annual Shareholder Meeting 2015
14 July 2015
Disclaimer
– 72 –
Non-GAAP financial information •
Methven comments on non-GAAP measures to provide data that is useful in understanding the underlying and on-going operations of the Group
•
EBITDA is earnings before interest, tax, depreciation and amortisation
•
EBIT is earnings before interest and tax
•
Constant currency variances are variances when foreign subsidiary results are translated into NZD at the same foreign exchange rate as the prior period
•
Non-recurring items:
•
Merger and acquisition costs relate to the agreement to acquire the business assets of premium tapware manufacturer Invention Sanitary. Restructuring costs relate to one-off costs as a result of organisational changes made in China and the UK. Legal fees relate to costs incurred to defend a claim by a former service provider – 73 –
Non-GAAP financial information (cont’d) Reconciliation of Net Debt to the consolidated balance sheet
– 74 –