Skellerup HY17 Result Presentation

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HY17 Results
16 February 2017
David Mair | CEO & Executive Director
Graham Leaming | CFO

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•Commodity prices headwinds recently abating
‒International milk price up, market demand solid with exception of Europe.
‒Oil and gas prices recently up, no substantive sign of increased demand for Skellerup as yet.
‒Iron ore prices also higher but approach to maintenance still reactive and to “make do”.
‒Well positioned to capitalise on lift in demand.
•NPAT at $8.9 million
‒Down 7% on prior corresponding period (pcp).
‒European market, Australian mining and currency driving the reduction.
•Revenue down 10% on pcp to $97.3 million
‒Down 2% in constant currency terms. 77% of Skellerup revenue derived in USD/AUD/GBP/Euro.
‒European market down, other markets mixed.
•Financial position strong
‒Operating cash flow solid at $9.7 million but down on pcp due to working capital movements.
‒Capital expenditure of $6.9 million well down with Wigram facility complete.
‒Net debt of $35.6 million gives debt to equity ratio of 23%.
•Interim Dividend pay-out unchanged at 3.5 cents per share
•Project Viking
‒Fully operational. Agri manufacturing transfer complete. Smaller Industrial manufacturing transfer complete by year end.
Skellerup Key Points HY17

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•Revenue down
10% on pcp but
down2%in
constant currency
terms.
•Interest expense
up due to Viking
expenditure (and
nil capitalisation)
•Operating cash
reduction –lower
earnings and
working capital
movements.
•Capex primarily
Viking (HY17: $6.0
million)
Skellerup Financial Highlights HY17
NZ$ Million (Unaudited)HY17HY16
Change
Revenue97.3107.6(10.3)
EBITDA16.917.5(0.6)
Depreciation & amortisation(3.6)(3.8)0.2
EBIT13.313.7(0.4)
Interest expense(0.6)(0.1)(0.5)
Tax expense(3.8)(4.0)0.2
NPAT8.99.6(0.7)
Earnings cents per share4.65.0(0.4)
Dividend cents per share3.53.5-
Operating cash flow9.713.7(0.4)
Net Debt(35.6)(17.6)(20.0)
Capital &intangible expenditure6.921.114.2

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Skellerup HY17 Revenue by Geographic Market
•United States share up
‒Despite stronger NZD. Reflects strong focus and success in this market with both Agri and Industrial products.
•Australia market mixed
‒Civil infrastructure up, mining down.
•New Zealand share steady
‒Demand for essential dairy consumables and footwear solid.
•Europe share down
‒Market demand down, rapid depreciation in GBP and Euro impacting, but winning new business.
NZ
22%
AU
25%
US
27%
EUR
19%
Asia
6%
Other
1%
FY16
NZ
22%
AU
25%
US
28%
EUR
17%
Asia
6%
Other
2%
HY17

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Skellerup HY17 Agri Division
NZ$ Million*HY14HY15HY16HY17
Revenue37.639.341.036.6
EBIT8.99.78.48.4
EBIT %23.724.720.423.0
*Unaudited
Revenue down 11% but EBIT up 1% on pcp
•Revenue down 2% in constant currency terms
‒European sales down. Milk production down and
customers managing inventory levels more closely.
‒US sales up. Liner innovations and introduction of milk
filters providing growth in a solid market.
‒NZ market solid. Footwear sales up, dairy rubberware
sales solid given market environment has been tough.
•Wigram & Woolston
‒Relocation of Agri business complete. Wigram facility
operating well.
‒Woolston land and buildings being marketed for sale.

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Skellerup HY17 Industrial Division
NZ$ Million*HY14HY15HY16HY17
Revenue59.659.766.660.8
EBIT9.26.87.67.2
EBIT %15.411.811.411.8
*Unaudited
Revenue down 9% and EBIT down 6% on pcp
•Revenue down 2% in constant currency terms
‒Growth in range and depth of products into potable and
waste water applications. Division wide focus for
Skellerup.
‒Successfully supplying couplings to tier one European
automotive customer. Further opportunities in Europe
and USA emerged as a result.
‒Increased sales of roofing products into Asia and Middle
East.
‒Winning new vacuum systems business in USA with
recently overhauled product range and well placed to
continue momentum.
‒Reduction in sales into Australian mining industry and no
success in Brazil.

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Skellerup HY17 Focus & Progress
•Key theme underlying our business strategy unchanged
‒Global demand for protein, safe food and water.
‒More than 50% of Skellerup sales revenue into food grade dairy, potable water and waste water applications.
•International markets to drive revenue growth
‒US is our largest market. We continue to win new business and this will provide revenue growth.
‒Vacuum Systems range completely overhauled and winning further market share in liquid waste.
‒Dairy consumables range broadened –filters and silicone liners and tubing.
‒Australia is our second largest market.
‒Good opportunities to build on expanded range of civil products
‒Whilst the overall environment is tough, Europe is a significant market for Skellerup.
‒Opportunities opening up in Eastern Europe
‒Sales into Asia and the Middle East continue to grow. We continue to target product areas where we can deliver value and
achieve good margins.
•Competitive cost base
‒Efficient capability in multiple locations including in market.

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Skellerup HY17
NZ$ Million (Unaudited)HY17HY16
Change
AgriEBIT8.48.4(-)
Industrial EBIT7.27.6(0.4)
Corporate EBIT(2.3)(2.2)(0.1)
EBIT13.313.7(0.5)
Interest expense(0.6)(0.1)(0.4)
Tax expense(3.8)(4.0)0.2
NPAT8.99.6(0.7)
Reconciliation of Segment EBIT to Group NPAT

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This presentation contains not only a review of operations, but also some forward
looking statements about Skellerup Holdings Limited and the environment in which
the company operates. Because these statements are forward looking, Skellerup
Holdings Limited's actual results could differ materially.
Although management and directors may indicate and believe that the assumptions
underlying the forward looking statements are reasonable, any of the assumptions
could prove inaccurate or incorrect and, therefore, there can be no assurance that the
results contemplated in the forward looking statements will be realised.
Please read this presentation in the wider context of material previously published by
Skellerup Holdings Limited.
Skellerup HY17 Disclaimer