Annual Shareholder Meeting 2015 - NZX


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

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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

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Market performance – New Zealand

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Market performance – New Zealand

–9–

Market performance – Australia

– 10 –

Market performance – Australia

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Market performance – United Kingdom

– 12 –

Market performance – United Kingdom

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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

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Think and act like the market leader

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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

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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

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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

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“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

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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

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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

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My STRIDES matter.

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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

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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

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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 –