Positive momentum at Methven

Positive momentum at Methven

RESULTS FOR THE 12 MONTHS ENDED 30 JUNE 2016

New Zealand’s leading shower and tapware designer Methven Ltd (MVN) today reported a 30.6% increase in Net Profit After Tax (NPAT) and a 23.9% increase in NPAT excluding non-recurring items1. Methven Chairman Phil Lough commented that “We are encouraged by the results that are reported today and delighted that innovative products designed, developed and manufactured in New Zealand are having such a positive impact on our performance. These results are in line with previously announced guidance for the fourth consecutive time and evidence our improved revenue forecasting and internal controls.”

Net debt2 was reported to have decreased by 7.3% to $22.1 million, the result of earnings growth and underlying inventory reduction of $2.9 million. Mr Lough highlighted “that the company remained comfortably within its banking covenant limits.”

The Directors and Management remain positive regarding future outlook and as such, the Directors were pleased to declare a partially imputed final dividend of 4.5 cents per share payable on 30 September 2016.

Reported sales revenue of $105.8 million was up 8.1% ($8.0 million) on the prior year and on a constant currency basis, was up 6.0%, the first material increase since 2009. The Group reported particularly good sales performances in the NZ and Australian markets (+10.8% in NZ and +6.9% in Australia), with market share growth in NZ supported by double digit tapware growth and AioTM performance. Earnings from Methven Heshan were in line with expectations. The UK market showed a strong earnings increase of 122%, though revenue was below expectations as the start of contracts that have been won over the course of the year were delayed. June 2016 sales performance in the UK was encouraging and registered the highest monthly sales in four years.

Group CEO David Banfield stated “We have been pleased with the improvements we have made to the business throughout this year, though we appreciate much remains to be done. Our work continues on the systematic improvement in products and services for our customers, and we remain fully committed to deliver long term profitable growth for our Shareholders and team, and to becoming a truly world class business operating on the world stage. We are positive that activity, either agreed or underway, will help us deliver that goal.”

On 12 March 2015, Methven launched its new patented shower spray technology, Aurajet®, and industry-first Ecobrass (lead and heavy metal free) tapware range globally. Mr Banfield said “Aurajet® is now the most awarded product in the history of Methven, with design awards achieved in 2015/2016 in America, Europe, Australasia and the UK. We also launched AioTM Phase 2 in late May 2016, and are delighted that we have already

received our first award for this product after only a few weeks in market and as importantly, a promising response from customers”

Methven also highlighted the ongoing investment in technologies and products that can support its longer term aspirations, and were therefore pleased to get to a design freeze on their next technologies, providing good cadence in this crucial area.

In September 2016, Methven celebrates its 130th year in business, having been founded in 1886. Mr Banfield said “We are incredibly proud to join a prestigious group of companies around the world that have been in business for over 130 years. With Aurajet® and other technologies in development, we aim to prove that the ‘Spirit of Innovation’ that was a founding principle of the business in 1886 is alive and well in the business today. It’s also particularly pertinent that we moved into our new Head office in Auckland in May 2016, reflecting our longer term ambition. It also gives the ideal opportunity to evidence our long term commitment to manufacturing in New Zealand, with us implementing Design, Engineering, Tool making, Foundry, polishing and assembly on site. We also moved into new offices in the UK in November 2015 complete with its own Experience Centre – this centre has seen more customers visit since its launch than in our entire history in the UK. It is also important to note that both new sites have the same or lower net operating cost as the previous sites.”

Mr Banfield went on to say “The team remain fully committed to deliver our Methven 130 goals of revenue of $130 million by June 2018 and NPAT towards our longer term target of 10% of sales. Positive progress has been seen in many areas of strategic focus.

The Group is targeting revenue growth of 5% or above and NPAT growth of 10% to 20% in constant currency for the year ending 30 June 2017

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