Opening Speech Alison Barrass

Transcription

1 METHVEN LIMITED ANNUAL SHAREHOLDERS MEETING Wednesday 1 November 2017 Opening Speech Alison Barrass SLIDE 1 Disclaimer SLIDE 2-3 Cover page and ASM 2017 Shareholders, ladies and gentlemen, welcome to our 2017 Annual Shareholder Meeting. I m your Chair, Alison Barrass, and it s my pleasure to be here today with your Board and members of the Methven team, hosting you at our Methven Experience Centre here in Avondale. After over 130 years, we are proud to showcase our innovation here with you today and to provide an opportunity for you to tour the site. methven.com

2 PAGE 2 At today s meeting, I will give you a topline review of Methven s 2017 performance. I will share our response to what has clearly been a poor outcome for the year; how we are intending to strengthen the core business, and create a simple and efficient platform for long-term, profitable growth. David will then share our results and performance versus our goals in more detail, highlighting the issues that impacted our performance and how these are either fixed or in the process of being fixed. He will then take you through our transformation plan, Fit 4 the Future, and finally, detail our plans to accelerate innovation across all categories including the testing of digital routes as a platform for access to new markets. We will then move on to General Business and the Resolutions as detailed in the Notice of Meeting. We are once again voting by poll, and this will be conducted at the end of the formal business. There ll be time after this for your questions and comments before I close the meeting, after which you have the opportunity for a site tour, and to join us for refreshments. Before we start the formalities I d just like to mention a few housekeeping matters: Mobile phones could you kindly ensure all mobile phones are turned off, or muted. Bathrooms Toilets are located through the door behind me, on the right of the corridor. For your safety, you must not enter the office area upstairs, factory or warehouse area unless you are accompanied by a Methven member of staff and wearing appropriate Hi-viz clothing.

3 PAGE 3 Evacuation Procedure in the event of an emergency which requires us to evacuate, please proceed through the closest safe exit, and assemble outside the gates on the footpath to the right of the cul-de-sac. Methven staff will be available to direct you to the assembly point. Methven is a smoke free workplace. No smoking is allowed anywhere on the site either inside or outside the building. SLIDE 4 Introductions Before we start I d like to make some introductions. To my immediate left is DAVID BANFIELD, our Group CEO, and a director since Next to David is: RICHARD CUTFIELD, an independent director since 2001, and Chair of Audit and Rem Next to Richard is STEVE TUCKER, an independent director appointed to the Board in 2017; and Chair of Health & Safety

4 PAGE 4 Seated beside Norah is DEIDRE CAMPBELL, our Company Secretary and Methven Group CFO. Subject to approval at this meeting, our most recently appointed independent director, TONY BALFOUR, who joined the Board on 1 October 2017, is unable to be with us today due to a prior commitment. However, thanks to modern technology, we will be playing you a message from Tony in the General Business later in the meeting. NORAH BARLOW had intended to be with us today (her last meeting), however due to circumstances beyond her control, has reluctantly passed on her apologies. In attendance this year are our solicitors, Simpson Grierson, our bankers, BNZ, our company auditors PwC and our Registry, Link Market Services who will act as scrutineers for the meeting today. SLIDE 5 Formalities The Company Secretary has confirmed that the Notice of Meeting has been sent in time to all registered shareholders and others entitled to receive it.

5 PAGE 5 We have a quorum present. So I declare Methven s 2017 Annual Shareholder Meeting to be properly constituted and open for business. Proxies have been appointed for the purposes of this meeting in respect of approximately 12.9 million shares, representing over 18% of the total number of shares. My fellow Directors and I declare that it is our intention to vote all discretionary proxies we hold, in favour of all resolutions. The financial statements for the period together with the auditor s report, are set out in our Annual Report. The Annual Report was made available on Methven s website on 25 September 2017 and hard copy reports were sent to all shareholders who requested one. A limited number of hard copies are still available in the registration area. There will be opportunity to ask any questions on these, at the end of the formal business. Your Board and Management have made significant improvements across many key governance areas including Health & Safety, Environment and People & Culture throughout this year, and I am delighted to share details with you.

6 PAGE 6 SLIDE 6 Health & Safety Our vision is to be recognised as an industry leader in setting standards for workplace Health and Safety. During the 2017 financial year, we moved from lost time injury reporting to near miss reporting, and I am pleased to report a near miss reduction of 18% year-on-year. From FY18, we will further enhance our reporting and focus on total recordable injuries, segmented depending on severity and likelihood for repetition. This will increase our monitoring of lead indicators and allow for acceleration of preventative activities. We conduct regular cross-functional walks across the business, where staff team up with other departments and objectively assess areas for improvement, not only driving improved safety awareness but also improving collaboration and crossfunctional engagement. At the heart of this is an ethos based on continuous improvement that we are rapidly embracing through the business to continue to challenge ourselves to raise the bar.

7 PAGE 7 SLIDE 7 Environment We believe that businesses have a responsibility to respect the environment in which they operate. At Methven, our purpose clearly states that we are pursuing amazing water experiences that don t come at a cost to our planet. With this in mind, I am delighted to report on our core environmental improvements: We have saved 3400L per day of water by capturing rainwater on site here at Avondale. We have implemented a new sub-micron air filtration system, resulting in our air discharge emissions being reduced by 30% from our previous site, and 80% below the Council minimum requirement. Our Green Car Policy in NZ ensures that 100% of our company vehicles have CO 2 emissions of less than 185G per kilometre, which includes two electric cars in our fleet. Over half our Auckland team are voluntarily involved in the Whau River Trust, helping to restore the Rosebank Peninsula waterways, right here on our doorstep

8 PAGE 8 We have a number of activities happening in tandem in our international offices and as an example, in China, we were recently awarded the new Environmental Protection Certificate for Guangdong Province, which meets the latest standard set by the Chinese government. SLIDE 8 People & Culture It is well known that business performance is enhanced through diversity of thinking. As an innovator of consumer goods, the closer we are to our consumers and the more representative we are as an organisation, the stronger our innovation and performance is likely to be. At Methven, we have over 300 team members based in NZ, Australia, UK and China. With 30% of the team being women and with us having gender pay equality in all countries, we are making good progress towards our broader objectives around diversity and inclusion. In addition to diversity, giving employees a sense of ownership and accountability for outcomes is also an important business driver. We are delighted that as a result of our employee share scheme, in October 2016, 100% of our staff became shareholders.

9 PAGE 9 SLIDE 9 Governance The Board plays a vital role in overseeing the strategic direction of Methven, and the implementation of strategic priorities. The Board regularly reviews its governance structures to ensure they are consistent with best practice. We are currently in the process of refreshing the Board following the resignation of Phil Lough in July, and Norah Barlow not standing for re-election due to her ongoing commitments in Australia. We are delighted to have secured Tony Balfour as an independent director, subject to approval at this meeting and are currently recruiting an additional independent director, in line with the outputs from our board skills matrix and succession planning framework.

10 PAGE 10 SLIDE in review Let me now move on to the 2017 results. I d first like to acknowledge that the business performance for the 2017 financial year was not in line with our expectations. David will talk to you shortly about the detailed performance but in essence, we were impacted through the year by revenue shortfall in Australia and New Zealand that was compounded by increased costs associated with a supply issue, and planned overhead increases in New Zealand not delivering expected performance. The combination of timing on market shortfalls and one-off impacts early in the year made it tough for the Board and Management to assess the full year effect of these impacts until late in the year, and we were obviously extremely disappointed with the subsequent results. Having said that, we also saw some encouraging signs in the market. Despite tapware falling well short of our plans in New Zealand, Shower performance globally was strong, indicating that when our new product pipeline is strong the results will follow. In addition, after a long road of recovery we were delighted with the results out of the UK and it is a credit to the team there that they are starting to deliver the upside performance as a result of their foundational work over the last 18 months.

11 PAGE 11 SLIDE 11 Response It is clear that with a significant shortfall in our numbers this year, the status quo continuing is not acceptable. The Board and the Executive team have reviewed our strategy and have taken immediate action to curb costs in the first instance while we implement our Fit 4 the Future programme. In essence, Methven is a medium size business that is carrying more complexity than it needs and complexity costs in both time and money. In addition, the business is exposed by the fact that relatively small top line movements either positive or negative produce material bottom line variances due to the high fixed cost base. David will talk in more detail about our Fit 4 the Future program, but through this plan we are implementing a rigorous program of simplification, automation and digitisation that will 1. Enable Methven to carry a cost base that is more appropriate for its revenue generation and consistent profit delivery 2. Reduce our substantial SKU count to free up working capital and supply chain complexity

12 3. Streamline and automate processes to reduce the burden of administration on the team thereby reducing the risk of error and process failure. PAGE 12 Growing a business from a platform of complexity expands the complexity and often erodes margin further. We are committed to Methven having a simple and efficient platform so that global growth becomes fully margin accretive and we have the agility for widespread effective innovation and delivery. SLIDE 12 Strategy for growth Once we have our foundation reset, we know that we are in a strong position to deliver on the promise of real growth that we have made to our shareholders and that this Board and the Executive team are jointly committed to. We already have a culture of innovation generated by a strong organisational goal. We are continuing to invest in talent at all levels of the company but in particular, have the opportunity to refresh the thinking around the board table and to build on the talent we already have at executive level.

13 PAGE 13 Our commitment is to accelerate the delivery of innovation across all categories including both core to category products and products that will reset the purchase cycle to accelerate consumer engagement with our brand. We then need to look to the digital space as a platform for new markets so that we are ready for the digital transformation that is coming both globally and locally across supply, business innovation channels, to market. Thank you. I now hand over to David to share more details on FY17 improvements, our organisational transformation plan (FFF), and our platform for long term growth.