METHVEN LIMITED - 2018 ANNUAL SHAREHOLDERS MEETING Wednesday 31 October 2018 Opening Speech – David Banfield

SLIDE 16 - Introduction

Tēnā koutou, tēnā koutou, tēnā koutou katoa

Good afternoon ladies and gentlemen, fellow shareholders and members of the Methven team.

I am delighted to welcome you back to the Methven Experience Centre for the second year running. I hope that you enjoy your time here today, and can see first-hand the improvements, innovations and new additions to our operations in New Zealand over the last year. In this room you can see Tūroa – our new award-winning shower – added to the wet display to my left, and also a global category first, our interactive display that has been rolled out into four of our premiere stockists (one in NZ, one in Australia, one in China, and one in the UK). You can also see our new brand expression. I will share more of this with you later.

For any shareholders that haven’t undertaken a tour of the factory, you will be able to take a short tour after the presentations and formalities today, if you wish. We are in the process of implementing our new finishing line that we announced a few weeks ago. This will enable us to finish (colour) products to meet consumer needs close to market, and gives us significant regional competitive advantage, further evidence of our long-term commitment to manufacturing in NZ.

SLIDE 17 - FY18 performance

At last year’s Annual Shareholder Meeting, we set out our plans to fix the issues that had caused underperformance in New Zealand, transform and simplify our operations through our Fit for the Future programme, and accelerate international growth. Today I will give you an update on our performance in these areas, but also some more information on our draft 2025 strategy plans that are set to enable us to disrupt a global industry from New Zealand – more on this later.

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I now move on to the results.

Today, for the purpose of comparability, I will mainly focus on the constant currency results that take local results and translate them at a consistent rate across both years but will also cover reported performance.

I am encouraged to report that for the third time in four years, we delivered results in line with our guidance, and also results that show the impact that a focus on profitable international growth can have on our performance.

Earnings before interest and tax (“EBIT”) finished at $10.7m, a 20.4% increase on the same period FY17 and up 17.3% in constant currency (this was +15.4% reported and +12.6% in constant currency, excluding the positive impact of prior period adjustments).

Revenue finished the year at $105.1m, a 5.1% increase on the same period FY17 and a 2.4% increase in constant currency.

Net profit after tax (“NPAT”) finished at $6.6m, up 21.9% on FY17 and up 19.1% in constant currency (+14.4% reported and +11.9% in constant currency, excluding the positive impact of prior period adjustments), slightly improved verses guidance.

We experienced strong momentum in international sales, with revenue improved by 11.6% and EBIT contribution up 54.1%. EBIT margins improved in all international markets due to consumer-led innovation, focused cost-out activity, and better operating leverage. Market share gains were achieved in all markets outside New Zealand.

More detail on this later.

We saw good management of debt and cash with Net debt decreased by $4.5m or 17.0%, and cashflow from operating activities improved by $9.4m due to improved inventory control, and SKU reduction activity supporting organisational simplification.

Our final dividend was 4 cents per share, bringing the total to 8 cents for the whole year, an increase of 33% on the 2017 final dividend. The dividend was partially imputed.

SLIDE 18 – Key priorities and focus

We endeavour to give you transparency about our goals and also performance against those goals using a simple slider mechanism colour coded green, amber, red. As you can see from the chart on the screen, we achieved four of our goals, partially achieved three, and failed to achieve one. I will focus on four areas today, three relating to our ongoing business and one relating to global disruption as we look to fix underperformance in New Zealand, transform and simplify our operations through Fit 4 the Future, and accelerate international growth, with a special focus on China. Finally, I will share the final element which will enable Methven to disrupt the global plumbing industry from New Zealand and at the same time,

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significantly reduce our long-term working capital needs.

SLIDE 19 – New Zealand

I start with our immediate goal to fix our sales in the New Zealand market. The New Zealand market finished the year with revenue -7.2% versus the prior period and EBIT +$97k. Tapware underperformance and normalisation of demand in the Canterbury region caused this sales decline.

The market showed signs that it was stabilising, with sales broadly flat year-on-year in the last quarter of the year.

EBIT impact was minimised due to the efficiency initiatives previously disclosed.

There has been a huge focus on delivering consumer-relevant tapware NPD. This NPD is in the process of being rolled out to the market in FY19, but includes Tūroa (showers, taps and accessories), a total revamp of our Satinjet range, new Nefa valving, new colour/finishes and solutions utilising our chamber that will be operational by January, and finally, most exciting of all, our new tapware platform that will launch in May/June, delivering 3 times as many products for the same investment.

SLIDE 20 – Fit 4 the Future programme progress

Our ongoing work to transform and simplify our core operations though our Fit 4 the Future programme continues at pace.

The plan is targeted to deliver a 300-basis point improvement in margin, reduce fixed costs by $3 million per year (to be re-invested in international brand building promoting sales growth), and reduce the

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revenue needed to break even by $1.0 million per month. In this period, we have seen strong progress, with 73% of efficiency programmes and 82% of profitability programmes on target. In-sourcing activity into our own factories is progressing well, with a more significant increase planned throughout FY19. We have simplified the business further, reducing our finished goods SKU count by 33% and freeing up cash in the process. In addition, we have digitised core operational processes, delivering scalable solutions that support our future growth ambitions while also delivering enhanced customer service. As a component of our long-term commitment to premium manufacturing capability in New Zealand. You will be able to see where our colour chamber will be homed on the tour today. The Fit 4 the Future plan will deliver an annualised gross benefit of $1.6 million before re-investment in new initiatives in FY19, and is on track to deliver to our expectations.

SLIDE 21 – Accelerating international performance

Accelerating international revenue and earnings is crucial to our long-term performance, and we are extremely encouraged by our performance, with us growing EBIT contribution and Methven market share in every market outside New Zealand.

Total international sales increased by 12% and international earnings by 54% as our focus on profitable international growth delivered. In particular, our Methven-branded growth of nearly 13% in Australia and 37% growth in the UK, showed the relevance of innovation designed and manufactured in New Zealand to international markets.

SLIDE 22 – Headlines - Australia

Australia earnings increased by 32.9% over this period as we achieved better operating leverage and margin from sales growth flowed through. We recorded revenue and market share growth. Sales increased 3.7% (A$1.4 million) over the period due to range extensions and contract wins. Methven-

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branded sales increased by 12.7%, highlighting the relevance of our innovation to the market. Second half growth slightly lagged behind our expectations as new product launches were pushed into FY19.

SLIDE 23 – Headlines - UK

The UK team achieved total revenue growth of 9%, just below the double-digit target, and EBIT by 31.0% as volume margin benefits flowed through. Methven-branded sales increased by 37%, highlighting the relevance of our innovation to the market. Gross margin was negatively impacted by GBP/USD exchange rate over the period, though is forecast to recover in FY19.

We continue to be recognised by the industry for service and innovation. Our new UK brand ambassador, George Clarke, is high profile, is totally engaged in the magic we create in our products, and is our biggest advocate – this sets us up well for the future.

SLIDE 24 – Focus on China

I now move on to China.

Many of you have asked for more information on our strategy and plans for China and the broader Asia markets. I am pleased to share with you today some of our results, our strategy and go-to-market model and as importantly, the work being done now to sow the seeds for the next ten years.

Within China and Asia, we have adopted a four-stage model.

Stage one – Market study (trade and consumer).

Stage two – Partner appointment

Stage three – Business start-up, and finally

Stage four – Ready to Grow (where we feel that we have the optimum conditions for long-term profitable growth).

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SLIDE 25 – Overview

Before I hand over to Andy Chen (our CEO for China and Asia) to share our plans in more detail, I wanted to share our long-term goal. Our aim is for China to become a strong fourth leg of the Methven group, delivering margin accretion to the group, and we are well positioned to achieve this goal. Our ultimate goal is to set firm foundations that can help us deliver 10 years of 30% compound growth. I am delighted to now ask Andy Chen to join me on the stage to share some details.

SLIDE 26 – Target consumers China

Our target consumers sit within the affordable luxury group. 67% male and 33% female, aged 26-45, are environmentally conscious, very online savvy, and have high expectations for service and quality. They thoroughly research to be assured of the authenticity of their chosen partner.

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SLIDE 27 – Route to market

We have identified four routes to market for the China market - 1 - Retail, 2 - Projects, 3 - E-commerce, and 4 - Specialist partnerships. All our partners have evidenced a long-term commitment to Methven, and we are delighted to join with them to deliver our desired outcomes.

SLIDE 28 – Activation – Mass retail

We are targeting 200 retail stores in China by 2022/3, generating over 40 million RMB in sales. There will be two routes - Methven flagship stores, and high-profile retail stores. Below are some examples of our presence in the market. I am particularly pleased to announce that our second flagship store opened last week in Yantai.

SLIDE 29 – Activation – Mass projects

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Our partner in projects in China – Mr Xia - is a project veteran with over 400 people on the ground in China. We now have a good line of sight to our project pipeline, our average project size, and average conversion ratio. This will give us a really good basis for long-term forecast accuracy. We are aiming to deliver at least 40 million RMB by 2022/3.

SLIDE 30 – Activation – E-Commerce

We are also delighted that our T-mall site went live last week – a snapshot of the site is shown above, managed by our E-Commerce partner, Mr Tian. Please feel free to visit the site for yourself.

SLIDE 31 – Specialists – Mehood Group & international brands

The final piece of the jigsaw is our partnership with international and national hotel chains that add to the overall opportunity from projects retail and E-Commerce. These projects give us high profile reference points in the market, and enable consumers to gain confidence from a relatively unknown brand. You can see below examples with the Ritz Carlton brand, and the JW Marriott brand.

I am also delighted to confirm that yesterday, we announced a partnership deal with Mehood Group – a chain of 100 upmarket boutique hotels in China. Our first hotel opened in Suzhou - you can see pictures below. This should be worth over 10 million RMB per year for 5 years starting from March and more importantly, a fantastic benchmark for our brand in premium hotels.

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SLIDE 32 – Quarter on quarter, year-on-year growth

In the China market, we continued our strong growth, with sales growing to NZ$1.4 million, +639% (RMB 6.4 million) over the prior period, and also recording a 13.7% EBIT contribution in FY18.

The chart on the screen shows our quarter-on-quarter, year-on-year performance. You can see strong momentum, with a six-fold sales increase in both Q1 and Q2 year-on-year, and a ten-fold sales increase in Q4.

SLIDE 33 – New market update - China/Asia

The team and I are working tirelessly to deliver long-term profitable growth throughout the region. The map shows the stages of our development throughout Asia, so as you can see, while our growth comes from China, we are also building other markets as our opportunity for the future. We are pleased with progress but also are focused on delivering our true potential throughout Asia.

Many thanks Andy and thanks from my side for all that you are doing across the entire region.

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SLIDE 34 – Summary

In summary, we are very excited by our performance in China and optimistic about results throughout Asia. We have strong partnerships with proven operators, and we are laying the seeds now for additional markets. Our business model is low risk and high reward as we aim to deliver 10 years of 30% CAGR, meaning total revenue of around 40 million NZ dollars at 20% EBIT.

I hope that you share our excitement over the opportunity in China. I should be clear about one thing - in retail, our partners own and operate the stores. We purely provide products for them to fulfil consumer needs.

SLIDE 35 – Our Brand

I now want to turn to our second most valuable asset after our team, our brand. In FY18 and continuing into FY19, we undertook time to refine our brand positioning, look at how we turn up in store, and on pack. We are delighted with the look, and believe this will further help us differentiate verses our global competition.

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SLIDE 36 – Brand benefit

We defined what Methven stood for and how we differentiate ourselves with a perfect balance between a human-centred approach, a refined proposition, and wanting to stand out from the masses.

We captured this essence in our brand as Transforming the Everyday.

SLIDE 37 – VJet – My Shower, My Way

The first expression of this is captured in our new Tūroa campaign and some of the imagery that you see around The Source.

I now share our Tūroa advertisement.

SLIDE 38 – Tūroa car video

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And equally how we communicate the essence that “Life’s better when you’re in control”. Now you can see our digital advert.

Disrupting the global plumbing industry from New Zealand

Finally, as Alison shared, we have been working on our plans to win in the future, we looked at emerging technologies, and increasingly know that to remain competitive in our markets, we need to understand and leverage new technologies, to accelerate innovation, drive supply chain efficiency, and decrease our environmental impact.

We spent considerable time finalising our strategy to 2025, including our revolutionary digital manufacturing strategy that will enable us to disrupt the global plumbing industry from New Zealand and truly differentiate Methven from all of our competitors.

We are now at a point where we have crystallised our plans for digital manufacturing which will see us 3D printing and injection moulding metal at scale in local markets by 2025. This journey will be transformational, increasing our commercial agility, decreasing working capital, and reflecting emerging consumer needs in a timeframe unheard of in our industry globally.

We recognise the importance of future manufacturing skills to support our investment in plant and equipment, and will soon be recruiting for digital manufacturing apprentices - skills that don’t exist in NZ currently.

SLIDE 39 – FY19 Trading Update Q1 and FY19 Guidance

2019 has started well, though has been negatively impacted by some delays to new product roll outs. We have seen sales up 6%, though the New Zealand market is yet to see the benefit of its NPD. We delivered Q1 NPAT growth of $560k, as new products rolled into the markets.

For the full year, we are forecasting increasingly strong revenue growth driven by accelerating international performance, evidence of modest growth in New Zealand through H2 created by execution of our innovation pipeline and overall, we are forecasting NPAT growth of at least 10%.

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SLIDE 40 - Fix, transform, accelerate and disrupt

So in summary:

• Fixing the New Zealand market remains a significant area of activity and focus. Execution of NPD in market is crucial to delivery of NZ market results.

• Good progress on Fit 4 the Future continues, simplifying our business and creating a strong platform for growth.

• Acceleration of performance in international markets and will deliver profitable long-term growth, particularly China.

• Our new disruptive manufacturing strategy positions Methven to disrupt the global plumbing industry.

We are proud to be a New Zealand manufacturer creating the next generation of digital manufacturers, taking our technology to the world.

I will now hand back to Alison, but would like to thank her and the Board for their support over the last year. I feel this support and challenge is reflected in our performance and longer-term outlook.