2018 Annual Report

Annual Report 2018

Alan Clarke
Chairman
Sarah Haydon
Director
This Annual Report is dated 24 September 2018 and
is signed on behalf of the Board of Directors by:
History of Cavalier
Corporation
2
Year in Review4
Chairman and Chief
Executive Officer's
Report
6
A New Strategic Focus10
– Marketing12
– Sales14
– People16
Board of Directors18
Financial Statements20
Governance and
Other Disclosures
78
Shareholder Information95
Corporate Directory96
FY18 has been a turnaround year for
Cavalier Corporation. As we roll out our
new strategy, to be a marketer of high
end carpet solutions, we are confident
we are on track to long-term sustainable
growth, with improving margins and
quality earnings.
The Board, management and staff are
excited and optimistic about our future,
particularly the company’s renewed focus
on wool, and the opportunity this presents
locally and globally.

1959
1983
1967
1995
1964
1972
1988
Manufacturing
innovator Doug
Bremner establishes
the Bremworth
Carpet Company
UEB Industries purchases
the Bremworth Carpet
Company and establishes
spinning and scouring plants
throughout New Zealand
Cavalier Carpets
lists on the NZX as
Cavalier Corporation
Cavalier acquires
wool buying firms
and Elco Direct is born
Bremworth becomes
the world’s first carpet
company entitled to use
the official Woolmark
seal of quality
Cavalier Carpets
is founded by
Tony Timpson
and Grant Biel
Cavalier buys
the highly valued
Bremworth name,
distribution rights
and plants
HISTORY OF CAVALIER CORPORATION
Our history runs deep. With almost
60 years in operation, Cavalier
certainly has a wealth of experience
in carpet manufacturing. Take a look
at just how far we’ve come...
2 CAVALIER CORPORATION ANNUAL REPORT 2018

2016-17
2011
2002
2008
2015
2018
Cavalier acquires 75%
stake in Christchurch
felted yarn company
Radford Yarn Technologies,
increased to 100% in
December 2012
Cavalier acquires
Australian carpet
tile business Ontera
Cavalier restructures
its woollen spinning
operations
Cavalier Bremworth launches
its rug offering to retailers and
consumers online
Cavalier launches new
high margin focused strategy
Cavalier acquires a
70% stake in Auckland
carpetmaker Norman
Ellison Carpets. This
was increased to 100%
in early 2012
Australian
tile business
Ontera sold
2019
3

YEAR IN REVIEW
Revenue
A NEW
STRATEGIC FOCUS.
FY19
OUTLOOK.
Normalised earnings
1
STRONGER
FINANCIAL
POSITION.
Compared with previous year’s $156.1 million –
with the $8.0 million/5% reduction attributed to
the broadloom carpet operation as a result of
softer market conditions in both New Zealand
and Australia and a short-term impact on
supply to Australian customers as a result of the
FY17 manufacturing consolidation programme.
$4.0 million net profit after tax and
$10.0 million EBITDA, compared with
$1.9 million loss and $2.6 million the previous
year – largely as a result of the internal
transformation in FY17, better operating
conditions and focus on costs.
Reduction in net debt from $40.2 million to
$29.4 million coming from $12.1 million in
operating cash flows as a result of improved
profitability and reduction in inventory.
With significantly reduced debt and
lower working capital employed.
A new strategy has been developed that
focuses on building a great New Zealand
flooring business with an increased focus on
wool and higher-margin products. This will
be realised through new marketing, sales and
people programmes, underpinned by efficient
manufacturing and high quality standards.
A further year of improving financial
performance and growth, with the company
better positioned to benefit from more
favourable operating conditions and realising
a full period of operating efficiencies.
$148.1m
$4.0m
NPAT
EBITDA
$10.0m
$10.8m
Balance sheetReduction in net debt
4 CAVALIER CORPORATION ANNUAL REPORT 2018

-4
-2
0
2
4
6
8
10
20142015201620172018
Financial results (normalised)
1
$ millions
Profit/(Loss) before tax
Profit/(Loss) after tax
Income tax (expense)/credit
7.3
5.8
(1.5)
0.7
1.2
0.5
8.2
6.3
(1.9)
(1.1)
4.0
5.1
(2.8)
(1.9)
0.9
-4
-2
0
2
4
6
8
10
20142015201620172018
Return (normalised)
1
on average
shareholders’ equity
percentage
5.7
6.2
1.5
9.3
(2.7)
-4
-2
0
2
4
6
8
10
20142015201620172018
Earnings (normalised)
1
and
Dividends paid per ordinary share
cents
Earnings per ordinary share (normalised)
Dividends paid per ordinary share
8.5
7.0
1.7
0.0
9.2
0.0
5.8
0.00.0
(2.7)
0.0
0.3
0.6
0.9
1.2
1.5
20142015201620172018
Net tangible asset backing
per ordinary share
$
1.24
0.93
0.98
0.95
1.02
0
50
100
150
200
20142015201620172018
Total assets employed and
Shareholders’ equity
$ millions
Total assets employed
Shareholders’ equity
198
93
169
66
147
69
139
68
133
72
0
10
20
30
40
50
60
20142015201620172018
Net debt
$ millions
58.8
53.9
40.2
29.4
36.5
-4
-2
0
2
4
6
8
10
20142015201620172018
Financial results (normalised)
1
$ millions
Profit/(Loss) before tax
Profit/(Loss) after tax
Income tax (expense)/credit
7.3
5.8
(1.5)
0.7
1.2
0.5
8.2
6.3
(1.9)
(1.1)
4.0
5.1
(2.8)
(1.9)
0.9
-4
-2
0
2
4
6
8
10
20142015201620172018
Return (normalised)
1
on average
shareholders’ equity
percentage
5.7
6.2
1.5
9.3
(2.7)
-4
-2
0
2
4
6
8
10
20142015201620172018
Earnings (normalised)
1
and
Dividends paid per ordinary share
cents
Earnings per ordinary share (normalised)
Dividends paid per ordinary share
8.5
7.0
1.7
0.0
9.2
0.0
5.8
0.00.0
(2.7)
0.0
0.3
0.6
0.9
1.2
1.5
20142015201620172018
Net tangible asset backing
per ordinary share
$
1.24
0.93
0.98
0.95
1.02
0
50
100
150
200
20142015201620172018
Total assets employed and
Shareholders’ equity
$ millions
Total assets employed
Shareholders’ equity
198
93
169
66
147
69
139
68
133
72
0
10
20
30
40
50
60
20142015201620172018
Net debt
$ millions
58.8
53.9
40.2
29.4
36.5
-4
-2
0
2
4
6
8
10
20142015201620172018
Financial results (normalised)
1
$ millions
Profit/(Loss) before tax
Profit/(Loss) after tax
Income tax (expense)/credit
7.3
5.8
(1.5)
0.7
1.2
0.5
8.2
6.3
(1.9)
(1.1)
4.0
5.1
(2.8)
(1.9)
0.9
-4
-2
0
2
4
6
8
10
20142015201620172018
Return (normalised)
1
on average
shareholders’ equity
percentage
5.7
6.2
1.5
9.3
(2.7)
-4
-2
0
2
4
6
8
10
20142015201620172018
Earnings (normalised)
1
and
Dividends paid per ordinary share
cents
Earnings per ordinary share (normalised)
Dividends paid per ordinary share
8.5
7.0
1.7
0.0
9.2
0.0
5.8
0.00.0
(2.7)
0.0
0.3
0.6
0.9
1.2
1.5
20142015201620172018
Net tangible asset backing
per ordinary share
$
1.24
0.93
0.98
0.95
1.02
0
50
100
150
200
20142015201620172018
Total assets employed and
Shareholders’ equity
$ millions
Total assets employed
Shareholders’ equity
198
93
169
66
147
69
139
68
133
72
0
10
20
30
40
50
60
20142015201620172018
Net debt
$ millions
58.8
53.9
40.2
29.4
36.5
-4
-2
0
2
4
6
8
10
20142015201620172018
Financial results (normalised)
1
$ millions
Profit/(Loss) before tax
Profit/(Loss) after tax
Income tax (expense)/credit
7.3
5.8
(1.5)
0.7
1.2
0.5
8.2
6.3
(1.9)
(1.1)
4.0
5.1
(2.8)
(1.9)
0.9
-4
-2
0
2
4
6
8
10
20142015201620172018
Return (normalised)
1
on average
shareholders’ equity
percentage
5.7
6.2
1.5
9.3
(2.7)
-4
-2
0
2
4
6
8
10
20142015201620172018
Earnings (normalised)
1
and
Dividends paid per ordinary share
cents
Earnings per ordinary share (normalised)
Dividends paid per ordinary share
8.5
7.0
1.7
0.0
9.2
0.0
5.8
0.00.0
(2.7)
0.0
0.3
0.6
0.9
1.2
1.5
20142015201620172018
Net tangible asset backing
per ordinary share
$
1.24
0.93
0.98
0.95
1.02
0
50
100
150
200
20142015201620172018
Total assets employed and
Shareholders’ equity
$ millions
Total assets employed
Shareholders’ equity
198
93
169
66
147
69
139
68
133
72
0
10
20
30
40
50
60
20142015201620172018
Net debt
$ millions
58.8
53.9
40.2
29.4
36.5
-4
-2
0
2
4
6
8
10
20142015201620172018
Financial results (normalised)
1
$ millions
Profit/(Loss) before tax
Profit/(Loss) after tax
Income tax (expense)/credit
7.3
5.8
(1.5)
0.7
1.2
0.5
8.2
6.3
(1.9)
(1.1)
4.0
5.1
(2.8)
(1.9)
0.9
-4
-2
0
2
4
6
8
10
20142015201620172018
Return (normalised)
1
on average
shareholders’ equity
percentage
5.7
6.2
1.5
9.3
(2.7)
-4
-2
0
2
4
6
8
10
20142015201620172018
Earnings (normalised)
1
and
Dividends paid per ordinary share
cents
Earnings per ordinary share (normalised)
Dividends paid per ordinary share
8.5
7.0
1.7
0.0
9.2
0.0
5.8
0.00.0
(2.7)
0.0
0.3
0.6
0.9
1.2
1.5
20142015201620172018
Net tangible asset backing
per ordinary share
$
1.24
0.93
0.98
0.95
1.02
0
50
100
150
200
20142015201620172018
Total assets employed and
Shareholders’ equity
$ millions
Total assets employed
Shareholders’ equity
198
93
169
66
147
69
139
68
133
72
0
10
20
30
40
50
60
20142015201620172018
Net debt
$ millions
58.8
53.9
40.2
29.4
36.5
-4
-2
0
2
4
6
8
10
20142015201620172018
Financial results (normalised)
1
$ millions
Profit/(Loss) before tax
Profit/(Loss) after tax
Income tax (expense)/credit
7.3
5.8
(1.5)
0.7
1.2
0.5
8.2
6.3
(1.9)
(1.1)
4.0
5.1
(2.8)
(1.9)
0.9
-4
-2
0
2
4
6
8
10
20142015201620172018
Return (normalised)
1
on average
shareholders’ equity
percentage
5.7
6.2
1.5
9.3
(2.7)
-4
-2
0
2
4
6
8
10
20142015201620172018
Earnings (normalised)
1
and
Dividends paid per ordinary share
cents
Earnings per ordinary share (normalised)
Dividends paid per ordinary share
8.5
7.0
1.7
0.0
9.2
0.0
5.8
0.00.0
(2.7)
0.0
0.3
0.6
0.9
1.2
1.5
20142015201620172018
Net tangible asset backing
per ordinary share
$
1.24
0.93
0.98
0.95
1.02
0
50
100
150
200
20142015201620172018
Total assets employed and
Shareholders’ equity
$ millions
Total assets employed
Shareholders’ equity
198
93
169
66
147
69
139
68
133
72
0
10
20
30
40
50
60
20142015201620172018
Net debt
$ millions
58.8
53.9
40.2
29.4
36.5
1
All references to “normalised” are to the normalised results used in the underlying calculations. Normalised is a non-GAAP (Generally Accepted
Accounting Practice). A reconciliation between reported and normalised can be found on pages 76 and 77 of the Annual Report.
5 5

Alan Clarke
Chairman
Paul Alston
Chief Executive Officer
Chairman &
Chief Executive Officer’s Report
6 CAVALIER CORPORATION ANNUAL REPORT 2018

Cavalier is on the brink of achieving
a special milestone. Next year we
will celebrate 60 years of carpet
manufacturing in New Zealand.
It has been quite a journey. From the
days of Bremworth and UEB to the
formation of Cavalier by Tony Timpson
and Grant Biel, who went on to acquire
Bremworth and become the dominant
force in carpet manufacturing in
New Zealand. This was a New Zealand
filled with 70 million sheep, little
competition in the carpet space and
no synthetic alternatives. Cavalier’s
resulting profits were high and
dividends regular.
But the market moved towards
synthetics and imported carpet hit the
shelves, putting pressure on traditional
products and supply channels.
It is on the back of these challenging
times that the modern day Cavalier
has been forging ahead. As we round
the corner into 2019 and our 60
th

Birthday, it’s pleasing to do so with
a sense of optimism and excitement
about our future. A future aligned
to high quality, high end carpets and
a strong wool focus. It is now clear
that we are a marketer of high quality
carpets – not simply a manufacturer.
In the last couple of years significant
changes have been made to the
business to address our over capacity
and better align the company to our
markets. All to ensure Cavalier is a
profitable entity and an attractive
investment vehicle for our shareholders.
We still have a great deal to do, but
we are now on track with a clear new
strategy to get us there.
We will remain New Zealand based,
we will build on our established and
proven expertise, and we will continue
to make some of the world’s best carpet
for many years to come.
7

Performance
It has been a significant turnaround
year for Cavalier with final results at the
top end of the earnings guidance issued
to the market.
The company has shifted from a net
loss position of $-2.1 million in FY17
to a net profit of $4.1 million in FY18.
Normalised EBITDA was $10.0 million,
up $7.4 million on last year. Improved
cash flows to $12.1 million resulted in
a $10.8 million reduction in debt to
$29.4 million. Inventory levels improved
with yarn and carpet stocks reduced by
$3.3 million.
Cavalier’s internal transformation and
focus on cost management has enabled
the business to reduce debt and
increase profitability. Macroeconomic
factors, such as the lower wool price,
and exchange rates also contributed to
the improved results.
Wool buying business Elco Direct had a
strong year against a backdrop of some
of the most difficult trading conditions
in recent history.
However, carpet sales continued to
decline year-on-year with revenues
of $123.7 million, $8.0 million less
than FY17. FY18 sales were affected
by softer market conditions in both
New Zealand and Australia. There was
also a significant, short-term impact
on our ability to supply customer
orders as a result of the manufacturing
consolidation programme.
FY19 and beyond
Cavalier is now back on track. We are
focused on returning to sustainable
and profitable growth. We will achieve
this by realising additional operating
efficiencies and concentrating on sales.
We are already working closely with
our trade customers, and launching a
new sales strategy across New Zealand
and Australia.
Linked to this will be an increasing
focus on wool for Cavalier. Wool is truly
nature’s miracle fibre. Its virtues are
being rediscovered as environmentally
aware customers look for non-synthetic
solutions. We believe the increasing
environmental conversation bodes well
for wool, and very well for Cavalier in
the medium to long term.
Our home markets of New Zealand
and Australia will remain a priority,
and we will also carefully consider
opportunities in other markets that
meet strict criteria.
On the product and marketing side
we will continue to lead – particularly
in the development of innovative
carpet ranges. The sought after
Cavalier Bremworth brand was built
on the product virtues of quality and
innovation. With an impressive, and
we believe, world leading product
development pipeline now in place,
we are very confident in what we have
coming to market in FY19.
Innovation will continue to be a
differentiating factor for Cavalier
and ensure our pride of place as a
high quality New Zealand business.
We will also continue to invest in and
develop our market leading, Cavalier
Bremworth World of Difference brand
presence – something that is working
very well for us presently.
We understand without the
involvement of our staff our business
will not thrive, and in FY18 we
commenced more engagement with
our people. With new resource in this
CHAIRMAN & CHIEF EXECUTIVE OFFICER’S REPORT
8 CAVALIER CORPORATION ANNUAL REPORT 2018

area, and programmes underway, we
are already starting to see value being
delivered. Our intention is that this
will contribute to productivity gains in
coming years.
Manufacturing and operating
efficiencies will remain very important
in FY19. While significant progress
has been made from our consolidation
programme we still have much to
do. Planning is underway for a new
IT platform that will further
improve operations.
Dividends
While FY18 delivered a strong
improvement in results, dividend
payments remain suspended
as the company establishes a
sustainable earnings and growth
performance record.
Acknowledgements
This year our Warehouse Manager
Ross McKimmon retired after 47 years
with Cavalier. We’d like to thank Ross
for his commitment to our business.
To our 470 staff who contribute
their passion and energy, to not only
producing and marketing our beautiful
carpet, but to creating a World of
Difference every day, we recognise
and thank you all.
We’d also like to acknowledge
Sarah Haydon who is retiring from
the Cavalier Board after six years –
with three spent as Chair. Sarah
assisted Cavalier through a difficult
period, with her governance and
commitment to the business
much appreciated.
Summary
Cavalier remains mindful of our recent
past. We have made considerable
changes and redefined our focus to
be a marketer of carpets, not simply
a manufacturer, in order to be
optimistic about our future. We step
into FY19 with a clear purpose and
a determination that we can, in our
60th year, move our company
forward into growth and delivering
shareholder value.
We are working closely with
our trade customers and
launching a new sales strategy
across New Zealand and Australia.
Alan Clarke
Chairman
Paul Alston
Chief Executive Officer
24 September 2018
9

A NEW STRATEGIC FOCUS
It makes sense that we build on
our established reputation and
focus our efforts on higher margin
products, particularly given growing
environmental concerns regarding
the overuse of plastics. This presents
an important and very real opportunity
for our business, especially given our
heritage and expertise in wool, and
our recent introduction of recycled
products.
From manufacturing rationalisation
to profitable growth.

Cavalier has a long and proven history
as a manufacturer of high quality
carpet solutions.
Our manufacturing facilities have been
right sized and are operating more
efficiently as a result of our relocation
and rationalisation programme.
Our core strategic purpose is now
to build a great high margin flooring
business. This means a change in focus
from manufacturer to marketer, with a
business wide emphasis on wool.
We also recognise some of our
customers will still want high quality
synthetic options, which we will
continue to make available.
So our future focus is clear. We will
focus our efforts on being a marketer
of high quality environmentally
responsible carpet solutions, with
a wool bias. All based on Cavalier’s
proven and differentiated position as
an innovator of high quality flooring
solutions.
Our Future Strategic Focus
10 CAVALIER CORPORATION ANNUAL REPORT 2018
STRENGTHEN THE
BALANCE SHEET
INVEST IN
CORE BUSINESS
REDUCE OUR
COST BASE
DO THINGS
BETTER
3241
Cavalier’s focus in recent years has been to transform the business in
response to challenging and changing markets. This was done by relocating
and restructuring our manufacturing base, selling non-core assets, and
reducing costs.
Our objectives were simple
:
In the 2018 financial year significant progress was made in the above areas.
Moving through to FY19 we now have a sound platform in place and a new
strategic focus.

How we get there
C
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Marketing
Cavalier’s highly influential Cavalier
Bremworth brand and World of
Difference positioning will continue
to evolve with our strategy. Our
alignment with fashion will continue.
We will also better develop and tell
our New Zealand wool story, both
here and abroad.
The company’s new rug proposition
will be given more marketing support
in order to drive growth, and we will
invest in showrooms in our Auckland
and Sydney offices.
Cavalier’s world class product
development pipeline will receive
even more focus and investment to
ensure we remain innovation leaders
in this space.
Sales
Realising higher margins requires a
higher margin sales focus. Cavalier
enjoys excellent retail trade, and
building and design relationships
across New Zealand and Australia.
These relationships will be expanded
and incentivised to develop higher
margin sales opportunities.
Interior designers and architects
will also receive more focus given
their alignment with our product
proposition.
We have established international
sales channels and identified new
opportunities in offshore markets.
Potential compatible investment
opportunities will be carefully
considered.
People
Cavalier has a very long serving,
skilled and diverse workforce who
care deeply about their company.
With designated resource now in
place the company is on a path to
creating more of an involvement
culture – one that harnesses the ideas
of our people and brings them to life.
A revitalised culture and communications
programme is in development for
the 2019 calendar year, with early
programmes currently underway.
11
CONTINUOUS

IMPROVEMENT

Strategic Purpose
TO BUILD A GREAT,
HIGH MARGIN,
NEW ZEALAND
FLOORING BUSINESS
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S

OUR KEY PILLARS: MARKETING
Investment in our
continued leadership
Cavalier’s marketing activities are
being further developed towards
our high margin, high end business
proposition, with a focus on our
beautiful woollen ranges.
The added investment in marketing
is based on our continued leadership,
in both product development and our
highly valued Cavalier Bremworth
brand.
Product Development
Leadership in product development
is not new for Cavalier, in fact it is
what has set us apart for many years.
It is therefore imperative and a market
opportunity that we not only maintain,
but grow our capability in this area.
This will mean investment in research
and development around yarn
technologies, more design focused
products, and the creation of ranges
that command a premium.
Underpinning this is a focus on wool,
nature’s miracle fiber, along with
synthetic options, where our clients
want the reassurance of our reputation
for quality.
Leadership in product
development is not new for
Cavalier, in fact it is what has set
us apart for many years.
12 CAVALIER CORPORATION ANNUAL REPORT 2018

Cavalier Bremworth –
A World of Difference
Our hero Cavalier Bremworth brand
is synonymous with quality and trust –
having been voted New Zealand’s
most trusted carpet brand five years
running. It is this strong platform
and the unique World of Difference
positioning which aligns with fashion
and design, that will form the basis
for further development and sharing
of the Cavalier Bremworth story.
We believe it’s time to tell our unique
New Zealand story, both locally and
internationally. This will include
showcasing our rich wool heritage
and our focus on innovation and
craftsmanship.
It is this storytelling which will
underpin selective entry to
new markets and also reinforce
and reinvigorate existing trade
relationships.
Australia will be a major marketing
focus for 2019 where Cavalier
Bremworth high end wool products
are extremely sought after.
Transpire
Transpire, launched in August
2018, uses an innovative felted yarn
technique to create a shadow effect
in the design. It is made from 100%
pure New Zealand Wool, designed
and created by Cavalier’s product
development and manufacturing
teams, felted in Cavalier’s Whanganui
plant and tufted into carpet in
Papatoetoe.
13

OUR KEY PILLARS: SALES
Proactive sales strategy
for higher margins
The creation of a higher margin
flooring business means a focus
on higher margin sales, something
that needs to be achieved without
undermining existing sales volumes.
Cavalier is now in a far better
position to exert more of a proactive
sales strategy in the market place,
our manufacturing consolidation
is complete and our stock levels
are sound.
It is now our intention to become the
dominant force in the New Zealand
market, and to grow our market share
in Australia. We are also working
with our international customers to
develop opportunities, and are carefully
considering new market options and
investment channels.
Realising sales growth will be based
on working closely with marketing
around the design and implementation
of customer relationship management
programmes, customer training
programmes and customer incentive
programmes.
A comprehensive wool training
module for retail customers, unique
to Cavalier Bremworth and our story,
has already been successfully launched
across Australasia. Retailer incentives
have been aligned to our brand and
business model incentives, and sales
training undertaken.
In addition, work is being done to
develop higher end, niche market
opportunities with interior designers
and architects – people who will
naturally identify with Cavalier
Bremworth’s premium product
offering. Rugs will also be a focus
for this segment in 2019.
In 2018, we launched our rug offering
to support our broadloom carpet
business. Rugs are available through
participating retailers or for purchase
on our website. We will continue to
develop this proposition to optimise
future sales.
It is now our intention to
become the dominant force in
the New Zealand market and
grow market share in Australia.
14 CAVALIER CORPORATION ANNUAL REPORT 2018

- World of Difference -
Hot Spot
Programme
In 2018 Cavalier kicked off a continuous
improvement programme to exceed
customer expectations and improve
business systems and processes.
This programme is strongly linked
to Cavalier Bremworth’s World of
Difference positioning. Cavalier
has adopted a World of Difference
as far more than a marketing tagline
– it has become a mantra for the
business.
We want to create a World of Difference
for our customers (internal and
external) every day. That means
exceeding expectations and looking
at our own systems and processes in
order to achieve this – which is where
the Hot Spot Programme comes in.
The World of Difference Hot Spot
Programme is all about putting the
customer at the centre of our strategy,
and building our business around their
needs. We believe this is what will
ultimately differentiate us in the
marketplace.
Through the programme we’ve
identified key customer Hot Spots that
we can target for improvement. We’ve
then prioritised these Hot Spots and
created cross-company project teams
to tackle each Hot Spot.
Staff are enjoying the opportunity to
step back and analyse a process, to
question why we do things a certain
way, and then have the capability
to enact quick change and also
recommend and explore larger scale
process improvements. This is making
things more streamlined and easier
from a business perspective, but also
directly impacting customers in a
positive way.
The World of Difference Hot Spot
Programme will be on-going in the
business. When we are satisfied
with the progress made in one area
or Hot Spot, we will identify another
Hot Spot to prioritise. Internally staff
are relishing the opportunity to create
a World of Difference in a very tangible
way, and contribute to the success
of Cavalier.
15

OUR KEY PILLARS: PEOPLE
Cavalier has a truly diverse
workforce with three New Zealand
manufacturing facilities, an
extensive North Island wool buying
network, dedicated sales teams in
New Zealand and Australia, and
centralised corporate functions
in Auckland.
Thirty percent of Cavalier staff have
been with the business for more than
15 years, and 21% for more than
20 years. This year we farewelled
Warehouse manager Ross McKimmon
after 47 years of loyal service – his
tenure is second only to that of
company co-founder and Board
member Grant Biel.
We are proudly multicultural, with
a Maori influence right across the
business, and a long-standing Pasifika
make up at our Papatoetoe plant.
Our Australian team of 30 staff – who
are themselves from varied ethnic
backgrounds – also enjoy contributing
to our company culture.
Women contribute greatly to Cavalier
across all levels from the Executive
team to the factory floor. This is not
something that has happened by
accident. The foundations for positive
gender representation were laid
by Grant Biel in the 1970’s when he
went against the labour laws of the
time to pay women at equal rates to
men. He also allowed women to work
the nightshift – something that was
‘frowned upon’ at the time.
Half of Cavalier’s eight shift supervisors
in the carpet factories are now women,
most of them long serving employees.
Two members of the eight-member
Executive team, and two of our six
directors are also female. This is not
something that has been mandated, it
is something that has been fostered on
the basis of ‘equality of opportunity’.
A look at who we are
Robert Haren
In 2016 Robert experienced a tragic,
non-work related, injury when he
jumped off a trailer at the dump.
He subsequently spent six months in
hospital, and very sadly Robert left
Burwood Spinal Unit in a wheel chair.
Robert works in our Dye House in
Napier, he’s been with the business
30 years, having even done a stint
on reception.
Robert says his return to work at the
plant was crucial to assist with mental
stimulation and wellbeing. He is also
very grateful for the ‘huge support’
from the company. This year Cavalier
purchased Robert a stand-up wheel
chair for the Dye House.
“It’s really good. Really beneficial for my
rehab, and good for my bones. It also
means I can reach things that I need!”
In line with our Health and
Safety objectives, Cavalier is
committed to providing a safe
and supportive physical and
cultural environment to all staff.
-
16 CAVALIER CORPORATION ANNUAL REPORT 2018

Business is about people
People who work for Cavalier speak of
a deep pride in the quality New Zealand
made product they produce. People
who work for Cavalier are deeply
passionate about the ongoing success
of the business. We know this because
we talk to them, and involve them in
what we do and how we do it.
Moving into 2019 it is time to harness
that passion and pride, to not just make
Cavalier a great place to work, but to
make Cavalier a desirable New Zealand
company that people want to be part of
at all levels.
As part of our strategy we will therefore
be investing more in people, culture
and communications programmes.
We need to attract key talent, and have
the ability to grow and retain
our existing people.
Plans are underway for a company-
wide engagement survey, the results
of which will inform our people
programme, and help drive our
management decisions. It is our
intention to build more of an inclusive
involvement culture by using this survey
and the Hot Spot Programme as a
reference base.
Cultural activities and celebrations
will continue. The company recently
came together to support Tongan staff
with families impacted by Cyclone Gita.
‘Wear Something for Tonga’ Day was
embraced by our people from Western
Australia to Christchurch. In addition
to funds raised for the families in Tonga,
a donation was made by the company
to help rebuild well known high school
Tupou College – a school previously
attended by a number of Cavalier staff.
This was done by involving our on-staff
Tongan Kaumatua, who guided our
efforts and ensured our support was
appropriate.
Our people want to help make Cavalier
great again, they have told us they want
to be informed and enabled to do so.
It is the task of the People programme
in 2019 to bring this to life.
Diversity and Inclusion Policy
In August 2018 the Board approved
Cavalier’s new Diversity and Inclusion
Policy, based around creating a culture
of ‘equality of opportunity’, to drive
business engagement and success.
Progress on the objectives of the policy
has already been made with the policy
being shared with staff via the Annual
CEO Roadshow.
Research suggests that a focus on
culture and people programmes is
one of the best promoters of diversity
in the workplace. Cavalier has therefore
identified cultural activities and
celebrations as a key objective in its
Diversity and Inclusion Policy.
Patti Miller
Whanganui Night Shift Supervisor
Patricia Miller (Patti) is only 32
years old and she’s already worked
for Cavalier for 10 years.
Patti is passionate about her job,
passionate about her people and
passionate about the future of
Whanganui.
Patti has been identified by the
business as emerging talent having
recently been sent on a textile course
to broaden her knowledge of the
industry. She says this opportunity
made her feel very happy to know
that the business thinks she is worth
investing in. She is keen to further her
studies and professional development,
on her own steam, to grow in herself
and her career.
When Patti was asked if she would like
to run the plant one day her emphatic
response was: “I’m going to run the
plant one day”.
“I love my job.
I want us to be
successful.”
17

BOARD OF DIRECTORS
T H G (George) Adams
DipFSA(Hons), FCA, CMInstD
George Adams is an independent
Director and was appointed to the
Cavalier Board on 1 June 2018.
He is also a member of the Board’s
Audit, Remuneration and Nomination
Committees.
George brings outstanding commercial
and governance experience from more
than 25 years of international business
experience in the fast-moving
consumer goods and
telecommunications industries, as well
as a strong background in occupational
health and safety.
George was previously Managing
Director of Coca-Cola Amatil
New Zealand and Fiji, a role he held
for 10 years. During this time, George
also chaired the New Zealand Food
and Grocery Council. Prior to moving
to New Zealand in 2003, George was
Finance Director of British Telecom
Northern Ireland and Group Finance
Director of Dublin-based bottling
company Molino Beverages.
He is currently Chairman of Mix
Cosmetics Limited, Apollo Foods
Limited, Insightful Mobility Limited,
Nexus Foams Limited, the Business
Leaders Health and Safety Forum and
the Occupational Health Advisory
Board, as well as a director of Tegel
Group Holdings Limited.
G C W (Grant) Biel
B.E. (Mech.)
Grant Biel is a non-independent
Director and has been on the
Cavalier Board since July 1984.
He is also a member of the
Board’s Audit, Remuneration
and Nomination Committees.
Grant is a co-founder of the
Cavalier Bremworth broadloom
carpet operation and held the
position of executive Director
from July 1984 to September 1995.
His other directorships include
Auckland Air Charter Limited,
Heli Harvest Limited and Westburn
Investments Limited.
A W (Alan) Clarke
B.Sc.(Hons), MBA, CFInstD
Alan Clarke is an independent Director
and was appointed to the Cavalier
Board on 1 November 2017.
He was appointed Chairman of the
Board in April 2018.
Alan is also Chairman of the Board’s
Nomination Committee and a member
of the Board’s Audit and Remuneration
Committees.
Alan has extensive governance and
strategic experience as a director
of both private and publicly listed
companies in New Zealand and
Australia over the last 26 years.
He has held responsibilities as CEO
and Managing Director over that
time, formulating and implementing
several successful strategic initiatives.
These included change projects at SGS,
a Swiss based multinational, initially
in New Zealand and then Australia
in the 1990’s before he returned to
New Zealand to head ElderCare,
now Abano Healthcare Group, and
most recently Hellaby Holdings.
He is currently an independent director
of nib NZ, a health insurance provider,
and is Chairman of the Advisory Board
of Intergroup Limited.
18 CAVALIER CORPORATION ANNUAL REPORT 2018

S E F (Sarah) Haydon
B.Sc., FCA, CMInstD
Sarah Haydon is an independent
Director and has been on the
Cavalier Board since August 2012.
She was Chairman of the Board
from July 2015 to March 2018 and is
currently Chairman of the Board’s
Audit Committee and a member
of the Board’s Remuneration and
Nomination Committees.
Sarah has a strong financial, commercial
and leadership background.
She is currently a director of Ports of
Auckland Limited, The Co-operative
Bank Limited, The Institute of
Geological and Nuclear Sciences
Limited and Chairman of New Zealand
Riding for the Disabled Association.
J M (John) Rae
B.Com., LLB, CMinstD
John Rae is an independent Director
and joined the Cavalier Board in
July 2015.
He is Deputy Chairman of the Board,
Chairman of the Board’s Remuneration
Committee and a member of the Board’s
Audit and Nomination Committees.
John has degrees in Law and Commerce
and spent his early career in banking
in New Zealand and London in various
treasury and capital market roles for 10
years before returning to New Zealand
and undertaking a number of private
equity, venture capital and corporate
finance transactions in Australasia.
He is an experienced company
director, currently Chairman of Activate
Tairawhiti Limited, The National
Infrastructure Advisory Board, Smart
Environmental Limited, Thos Corson
Holdings Limited and Watson and
Son LP. He is also a director of Corson
Grain Limited, the Eastland Group
of companies, The Lines Company
Limited, Ngapuhi Asset Holding
Company Limited and WET Gisborne
Limited and a Panel Member of the
Provincial Growth Fund.
D V (Dianne) Williams
B.Com., MBA, CMInstD
Dianne Williams is an independent
Director and joined the Cavalier Board
in July 2015.
She is also a member of the Board’s
Audit, Remuneration and Nomination
Committees.
Dianne’s early career was in marketing
in the FMCG sector, driving market
dominance for some of New Zealand’s
favourite brands including Cadbury
and Sealord before taking up senior
executive roles with companies
demanding strong sales and marketing
programmes.
She is currently a director of Chartered
Accountants Australia New Zealand,
Netball Northern Zone (incorporated
Society), New Netball Team Limited,
Northcote Rd 1 Holdings Limited, Public
Trust, Pulse Gp Limited and West
Auckland Trust Services Limited.
19

20 CAVALIER CORPORATION ANNUAL REPORT 2018
Financial Statements
For the year ended 30 June 2018
21 Directors’ Responsibility Statement
22 Independent Auditor’s Report
27 Income Statement
28 Statement of Comprehensive Income
29 Statement of Changes in Equity
31 Statement of Financial Position
32 Statement of Cash Flows
Notes to the Financial Statements
34 1. Company information
34 2. General information relating to
preparation of financial statements
3. Financial performance
37 3a. Segment performance
39 3b. Earnings per share
40 3c. Revenue
40 3d. Other income and gains
40 3e. Administration expenses
41 3f. Personnel expenses
41 3g. Net finance costs
41 3h. Income tax
4. Funding
44 4a. Capital management
45 4b. Share capital, dividends and reserves
46 4c. Loans and borrowings
5. Assets employed
47 5a. Property, plant and equipment
49 5b. Capital commitments
50 5c. Goodwill
6. Working capital
50 6a. Cash and cash equivalents
51 6b. Trade receivables, other
receivables and prepayments
51 6c. Inventories
52 6d. Trade creditors and accruals
52 7. Risks and financial instruments
8. Others
61 8a. Equity-accounted investees
64 8b. Provisions
66 8c. Employee benefits
66 8d. Operating leases
67 8e. Contingencies
67 8f. Related parties
69 8g. Group entities
69 8h. Event after balance date
70 8i. Standards, interpretations and
amendments to standards
72 Trend Statement
76 Disclosure of Non-GAAP Financial Information

21
DIRECTORS’ RESPONSIBILITIES
The Directors are responsible for the preparation of the Group financial statements. The Directors discharge this
responsibility by ensuring that the financial statements comply with Generally Accepted Accounting Practice and give
a true and fair view of the financial position of the Group as at balance date and of its operations and cash flows for
the year ended on that date.
ACCOUNTING POLICIES
The Directors consider that the accounting policies used in the preparation of the Group financial statements are
appropriate, consistently applied, and supported by reasonable judgements and estimates. All relevant financial reporting
and accounting standards have also been complied with.
ACCOUNTING RECORDS
The Directors believe that proper accounting records, which enable, with reasonable accuracy, the determination of
the financial position of the Group and facilitate the compliance of the financial statements with the Financial Markets
Conduct Act 2013, have been kept.
SAFEGUARDING OF ASSETS AND INTERNAL CONTROLS
The Directors consider that they have taken adequate steps to safeguard the assets of the Group and to prevent and
detect fraud and other irregularities. Internal control procedures are also considered to be sufficient to provide a
reasonable assurance as to the integrity and reliability of the financial statements.
FINANCIAL STATEMENTS
The Directors present, on pages 27 to 71, the Group financial statements for the year ended 30 June 2018.
These financial statements were authorised for issue by the Directors on 21 August 2018 and, as required by
section 461(1)(b) of the Financial Markets Conduct Act 2013, are dated and signed as at that date.
For and on behalf of Cavalier Corporation Limited
A W Clarke
Chairman of the Board of Directors
S E F Haydon
Chairman of the Audit Committee
Directors’ Responsibility Statement

22 CAVALIER CORPORATION ANNUAL REPORT 2018
TO THE SHAREHOLDERS OF CAVALIER CORPORATION LIMITED
Report on the consolidated financial statements
OPINION
In our opinion, the accompanying consolidated financial
statements of Cavalier Corporation Limited (‘the Company’)
and its subsidiaries (‘the Group’) on pages 27 to 71:
i. present fairly in all material respects the Group’s
financial position as at 30 June 2018 and its financial
performance and cash flows for the year ended on that
date; and
ii. comply with New Zealand Equivalents to International
Financial Reporting Standards and International
Financial Reporting Standards.
We have audited the accompanying consolidated financial
statements which comprise:
— the consolidated statement of financial position as at
30 June 2018;
— the consolidated income statement, statements of
comprehensive income, changes in equity and cash
flows for the year then ended; and
— notes, including a summary of significant accounting
policies and other explanatory information.
BASIS FOR OPINION
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (‘ISAs (NZ)’). We believe
that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We are independent of the Group in accordance with Professional and Ethical Standard 1 (Revised) Code of Ethics for
Assurance Practitioners issued by the New Zealand Auditing and Assurance Standards Board and the International Ethics
Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code), and we have fulfilled our
other ethical responsibilities in accordance with these requirements and the IESBA Code.
Our responsibilities under ISAs (NZ) are further described in the auditor’s responsibilities for the audit of the consolidated
financial statements section of our report.
Our firm has also provided other services to the Group in relation to transfer pricing and income tax return review and
scrutineering at the Company’s Annual Meeting of shareholders. Subject to certain restrictions, partners and employees
of our firm may also deal with the Group on normal terms within the ordinary course of trading activities of the business
of the Group. These matters have not impaired our independence as auditor of the Group. The firm has no other
relationship with, or interest in, the Group.
MATERIALITY
The scope of our audit was influenced by our application of materiality. Materiality helped us to determine the nature,
timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and on the
consolidated financial statements as a whole. The materiality for the consolidated financial statements as a whole was
set at $350,000.
Independent Auditor’s Report

23
Independent Auditor’s Report (continued)
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
consolidated financial statements in the current period. We summarise below those matters and our key audit procedures
to address those matters in order that the shareholders as a body may better understand the process by which we arrived
at our audit opinion. Our procedures were undertaken in the context of and solely for the purpose of our statutory audit
opinion on the consolidated financial statements as a whole and we do not express discrete opinions on separate
elements of the consolidated financial statements.
The key audit matterHow the matter was addressed in our audit
Forecasting liquidity and covenant compliance
Refer to Notes 2 and 4c to the Financial Statements.
On 29 June 2018 the Group extended the term of its loan
facility, and modified loan repayment terms and financial
covenants requirements that are measured on a quarterly
basis over the term of the facility. The Group complied
with the terms of its loan facility during the financial year.
Management have forecast the Group’s financial
performance, cash flows and financial position to
support the Directors’ assessment and conclusion that
the Group will be able to comply with its loan covenants
and loan repayment obligations for a period of at least
one year from the issuance of these financial statements.
In performing this assessment, assumptions are made in
respect of future economic and market conditions, such as
forecast sales volumes, expected sales price fluctuations,
production efficiencies, forecast USD and AUD exchange
rate movements, and forecast wool prices, with
consideration of the Group’s hedged positions.
In the event that management’s forecasts are not achieved
and loan covenants are not complied with, the Group may
be required to renegotiate its loan facility to enable it to
continue its operations.
We have focused on this area because there is judgment
about the future performance of the Group and its
ability to meet its loan repayment obligations and loan
covenant requirements.
We evaluated management’s forecasts and the Group’s
ability to comply with its loan facility terms by performing
the following procedures:
– Reviewed terms of the Group’s revised facility
agreement dated 29 June 2018.
– Evaluated the Group’s forecasting processes and the
accuracy of previous forecasts by comparing actual
performance against forecasts in prior periods.
– Reviewed the Group’s forecast financial performance,
cash flows and financial position, challenged key
assumptions against historical production and market
data, reviewed hedging agreements and wool contracts,
and considered internal and external factors impacting
the business.
– Reviewed key inputs and assessed their consistency
with Director-approved forecasts.
– Obtained and reviewed management’s projected loan
covenant calculations at relevant measurement dates
taking into account definitions in the facility agreement.
– Performed a sensitivity analysis of the Group’s forecasts.
– Read an independent review of the Group’s FY2019
cash flow budget and its underlying assumptions.
– Assessed the adequacy of related disclosures in the
financial statements against the requirements of the
accounting standards.
Based on our analysis of management’s forecasting models
and the underlying assumptions, the forecasts are
particularly dependent on the Group’s ability to achieve
sales volumes and planned production efficiencies.
We did not identify material matters that were
inconsistent with the Directors’ conclusion that the
financial statements should be prepared on a going
concern basis.

24 CAVALIER CORPORATION ANNUAL REPORT 2018
Independent Auditor’s Report (continued)
Impairment of non-current assets
Refer to Notes 5a and 5c to the Financial Statements.
As at 30 June 2018 the carrying amount of property,
plant and equipment (‘PP&E’) and goodwill relating to
the Carpets cash generating unit (‘CGU’) was $33,712,000
and $2,362,000, respectively.
The Group’s market capitalisation of $42,581,000 is
significantly below the carrying value of its net assets
of $72,222,000 as at 30 June 2018. This disparity is an
indicator of potential impairment of PP&E and goodwill
allocated to the Carpets CGU.
Management performs an impairment assessment of
PP&E where there are indicators of impairment, and
annually performs an impairment test of goodwill. Based
on this assessment, management determined there is no
impairment of goodwill or PP&E as at the balance date.
As disclosed in Note 5a and 5c, the Group uses a
Discounted Cash Flow (DCF) model to determine the
recoverable amount of the Carpets CGU to which the
goodwill and PP&E have been allocated. In performing
this assessment, assumptions are made in respect of
future economic and market conditions, such as forecast
sales volumes, expected sales fluctuations, budgeted
production efficiencies, forecast USD and AUD
exchange rate movements, and forecast wool prices,
with consideration of the Group’s hedged positions.
Additionally, management determined a terminal growth
rate and discount rate which reflect an assessment of the
time value of money and the risks specific to the business.
We focused on the impairment of goodwill and PP&E
allocated to the Carpets CGU, due to the magnitude
of these balances and judgement involved in assessing
their recoverability.
Our testing of impairment of goodwill and PP&E included
the following procedures:
– Evaluated management’s identification of CGU’s and
the corresponding allocation of goodwill and PP&E.
– Evaluated the methodologies, data and assumptions
used in the discounted cash flow model and in doing
this, we involved our valuation specialists.
– Challenged management’s cash flow assumptions,
including projected sales volumes, sales margin, wool
price and foreign exchange rates against historical
performance and forecast market information.
– Performed sensitivity analyses on the key assumptions
used in the impairment model.
– Evaluated disclosure of impairment and related key
assumptions in the financial statements of the Group.
We did not identify material exceptions from procedures
performed, and found the judgements and assumptions
used in the assessment of impairment of non-current
assets to be balanced.

25
Impairment of equity-accounted investees
Refer to Note 8a to the Financial Statements.
The Group holds a 27.5% investment in Cavalier
Wool Holdings Limited (‘CWH’), a national wool
scouring operation.
Continued uncertainty around the industry’s future
market structure and market conditions indicate a risk of
impairment, and the Group has used a DCF value-in-use
model to determine the recoverable amount of the Group’s
equity-accounted investment in CWH as at 30 June 2018.
In performing this assessment, the Group has made
assumptions around the expected future structure of the
industry, projected processing volumes, future scouring
tariff rates and lanolin prices. Additionally, a terminal
growth rate and discount rate were applied reflecting
an assessment of the time value of money and the risks
specific to the business.
We focused on the impairment of CWH due to the
magnitude of the Group’s investment, and the judgement
involved in assessing its recoverability.
Our testing of the valuation of the Group’s investment in
CWH included the following procedures:
– Evaluated the impairment testing performed by the
Group, assessing methodologies, data and assumptions
used in the discounted cash flow model. We involved
our valuation specialists in this evaluation process.
– Challenged management’s cash flow assumptions in
the impairment model, including projected processing
volumes, scouring tariff rates and lanolin prices against
historical actuals and forecast market information.
– Performed sensitivity analyses on the key assumptions
used in the impairment model.
We did not identify material exceptions from procedures
performed, and found the judgements and assumptions
used in the assessment of impairment of the Group’s
investment in CWH to be balanced.
Valuation of inventory
Refer to Note 6c to the financial statements.
The Group has significant inventory balances consisting
of both raw materials and finished goods relating primarily
to the production of carpets. The inventory is valued at
the lower of cost and net realisable value. Assessing the
net realisable value of inventory is complex and requires
judgement in regard to the identification and categorisation
of inventory as obsolete, slow moving and at risk of being
sold below cost. Estimates are then involved in determining
the amount of provision required against the cost of such
inventory items. Consequently, we focused on the
valuation of inventory as part of our audit.
We evaluated the valuation of inventory by performing the
following audit procedures:
– Observed the condition of inventory as part of our
physical inventory count procedures.
– Assessed the Group’s methodology for identifying
slow moving and obsolete inventories, taking into
consideration the nature of the inventory and the
Group’s inventory rationalisation plans.
– Obtained management’s calculation of net realisable
value for slow moving and obsolete inventories and
compared it to historical sales and margin reports.
We also assessed and challenged key assumptions for
reasonableness and corroborated with explanations
provided by sales and inventory managers.
– Reviewed and tested underlying sales and inventory
cost reports.
We did not identify material exceptions from procedures
performed, and found the judgements and assumptions to
be balanced and consistent with our understanding of the
nature and intended use of the inventory.
OTHER INFORMATION
The Directors, on behalf of the Group, are responsible for the other information included in the entity’s Annual Financial
Statements and Annual Report. Other information includes Trend Statement and Disclosure of non-GAAP Financial
Information and the other information included in the Annual Report. Our opinion on the consolidated financial
statements does not cover any other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial
statements or our knowledge obtained in the audit or otherwise appears materially misstated. If, based on the work we
have performed, we conclude that there is a material misstatement of this other information, we are required to report
that fact. We have received the Trend Statement and Disclosure of non-GAAP Financial Information and have nothing to
report in regards to it. The Annual Report is expected to be made available to us after the date of this Independent
Auditor’s Report and we will report the matters identified, if any, to the Directors.
Independent Auditor’s Report (continued)

26 CAVALIER CORPORATION ANNUAL REPORT 2018
USE OF THIS INDEPENDENT AUDITOR’S REPORT
This independent Auditor’s Report is made solely to the shareholders as a body. Our audit work has been undertaken so
that we might state to the shareholders those matters we are required to state to them in the independent Auditor’s
Report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than the shareholders as a body for our audit work, this independent Auditor’s Report, or any of the
opinions we have formed
RESPONSIBILITIES OF THE DIRECTORS FOR THE CONSOLIDATED FINANCIAL STATEMENTS
The Directors, on behalf of the Company, are responsible for:
— the preparation and fair presentation of the consolidated financial statements in accordance with generally accepted
accounting practice in New Zealand (being New Zealand Equivalents to International Financial Reporting Standards)
and International Financial Reporting Standards;
— implementing necessary internal control to enable the preparation of a consolidated set of financial statements that is
fairly presented and free from material misstatement, whether due to fraud or error; and
— assessing the ability to continue as a going concern. This includes disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless they either intend to liquidate or to cease operations,
or have no realistic alternative but to do so.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS
Our objective is:
— to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material
misstatement, whether due to fraud or error; and
— to issue an independent auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
ISAs NZ will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these
consolidated financial statements.
A further description of our responsibilities for the audit of these consolidated financial statements is located at the
External Reporting Board (XRB) website at:
http://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-1/
This description forms part of our independent Auditor’s Report.
The engagement partner on the audit resulting in this independent Auditor’s Report is Aaron Woolsey.
For and on behalf of
KPMG
Auckland
21 August 2018
Independent Auditor’s Report (continued)

27
Note
2018
$000
2017
$000
Revenue3c148,120156,120
Cost of sales(111,917)(126,243)
Gross profit36,20329,877
Other income and gains3d7721
Distribution expenses(23,016)(24,656)
Administration expenses3e(6,737)(5,921)
Restructuring costs189(6,309)
Impairment of fixed assets5a(90)–
Reversal of impairment of fixed assets5a1371,505
Results from operating activities6,763(5,483)
Net finance costs3g(2,798)(2,936)
Share of profit of equity-accounted investees (net of income tax)8a1,29159
Gain on merger and dilution of equity-accounted investee–3,929
Profit/(Loss) before income tax5,256(4,431)
Income tax (expense)/benefit3h(1,175)2,307
Profit/(Loss) after tax for the period$4,081$(2,124)
Basic and diluted earnings per share (cents)3b5.9(3.1)
This statement is to be read in conjunction with the notes on pages 34 to 71.
Income Statement
For the year ended 30 June 2018

28 CAVALIER CORPORATION ANNUAL REPORT 2018
Note
2018
$000
2017
$000
Profit/(Loss) after tax for the period4,081(2,124)
Other comprehensive income that may be reclassified subsequently
to profit or loss
Effective portion of changes in fair value of cash flow hedges785799
Net change in fair value of cash flow hedges transferred to profit or loss(300)104
Income tax on changes in fair value of cash flow hedges3h(136)(253)
Share of fair value of cash flow hedges (net of tax) of equity-accounted investee8a(97)(3)
Foreign currency translation differences for foreign operations(1)6
251653
Other comprehensive income not reclassified subsequently to profit or loss––
Other comprehensive income for the period, net of income tax251653
Total comprehensive income for the period$4,332$(1,471)
This statement is to be read in conjunction with the notes on pages 34 to 71.
Statement of Comprehensive Income
For the year ended 30 June 2018

29
Statement of Changes in Equity
For the year ended 30 June 2018
Note
Share
Capital
$000
Cash Flow
Hedging
Reserve
$000
Foreign
Currency
Translation
Reserve
$000
Retained
Earnings
$000
Total
Equity
$000
Total equity at 1 July 2017$21,846$(322)$(1,419)$47,785$67,890
Total comprehensive income for the period
Profit after tax–––4,0814,081
Other comprehensive income that may be
reclassified subsequently to profit or loss
Changes in fair value of cash flow hedges
(net of tax)–349––349
Share of fair value of cash flow hedges
(net of tax) of equity-accounted investee8a–(97)––(97)
Foreign currency translation differences
for foreign operations––(1)–(1)
–252(1)–251
Other comprehensive income not reclassified
subsequently to profit or loss–––––
Total other comprehensive income–252(1)–251
Total comprehensive income for the period–252(1)4,0814,332
Transactions with owners, recorded directly
in equity–––––
Total equity at 30 June 2018$21,846$(70)$(1,420)$51,866$72,222
This statement is to be read in conjunction with the notes on pages 34 to 71.

30 CAVALIER CORPORATION ANNUAL REPORT 2018
Note
Share
Capital
$000
Cash Flow
Hedging
Reserve
$000
Foreign
Currency
Translation
Reserve
$000
Retained
Earnings
$000
Total
Equity
$000
Total equity at 1 July 2016$21,846$(969)$(1,425)$49,909$69,361
Total comprehensive income for the period
Loss after tax–––(2,124)(2,124)
Other comprehensive income that may be
reclassified subsequently to profit or loss
Changes in fair value of cash flow hedges
(net of tax)–650––650
Share of fair value of cash flow hedges
(net of tax) of equity-accounted investee8a–(3)––(3)
Foreign currency translation differences for
foreign operations––6–6
–6476–653
Other comprehensive income not reclassified
subsequently to profit or loss–––––
Total other comprehensive income–6476–653
Total comprehensive income for the period–6476(2,124)(1,471)
Transactions with owners, recorded directly
in equity–––––
Total equity at 30 June 2017$21,846 $(322)$(1,419)$47,785$67,890
This statement is to be read in conjunction with the notes on pages 34 to 71.
Statement of Changes in Equity (continued)
For the year ended 30 June 2018

31
Statement of Financial Position
As at 30 June 2018
Note
2018
$000
2017
$000
ASSETS
Property, plant and equipment5a35,14237,123
Goodwill5c2,3622,362
Investment in equity-accounted investees8a24,54423,490
Deferred tax asset3h4,9715,532
Total non-current assets67,01968,507
Cash and cash equivalents6a2,1111,255
Trade receivables, other receivables and prepayments6b15,58217,261
Inventories6c47,32150,635
Derivative financial instruments7971898
Income tax receivable–301
Total current assets65,98570,350
Total assets$133,004$138,857
EQUITY
Share capital4b21,84621,846
Cash flow hedging reserve4b(70)(322)
Foreign currency translation reserve4b(1,420)(1,419)
Retained earnings51,86647,785
Total equity72,22267,890
LIABILITIES
Loans and borrowings4c27,50035,000
Employee benefits8c9111,097
Deferred income–18
Provisions8b1,1182,613
Total non-current liabilities29,52938,728
Loans and borrowings4c4,0006,500
Trade creditors and accruals6d19,49018,855
Provisions8b2,2141,693
Employee entitlements4,0763,832
Deferred income4767
Derivative financial instruments75931,292
Income tax payable833–
Total current liabilities31,25332,239
Total liabilities60,78270,967
Total equity and liabilities$133,004$138,857
This statement is to be read in conjunction with the notes on pages 34 to 71.

32 CAVALIER CORPORATION ANNUAL REPORT 2018
Statement of Cash Flows
For the year ended 30 June 2018
Note
2018
$000
2017
$000
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from customers149,448159,855
Cash paid to suppliers and employees(135,587)(159,518)
13,861337
Dividends received11
Other receipts44
GST (paid)/refunded665(73)
Interest paid(2,773)(2,912)
Income tax (paid)/refunded385(2,730)
Net cash flow from operating activities12,143(5,373)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property, plant and equipment16190
Acquisition of property, plant and equipment5a(1,622)(2,123)
Dividends received from equity-accounted investee8a1403,670
Net cash flow from investing activities(1,321)1,637
CASH FLOWS FROM FINANCING ACTIVITIES
Movements in bank borrowings4c(10,000)3,800
Net cash flow from financing activities(10,000)3,800
Net increase in cash and cash equivalents82264
Cash and cash equivalents at beginning of the period1,2551,200
Effect of exchange rate changes on cash34(9)
Cash and cash equivalents at end of the period$2,111$1,255
This statement is to be read in conjunction with the notes on pages 34 to 71.

33
Statement of Cash Flows (continued)
For the year ended 30 June 2018
RECONCILIATION OF PROFIT/LOSS WITH NET CASH FLOW FROM OPERATING ACTIVITIES
2018
$000
2017
$000
Profit/(Loss) after tax for the period4,081(2,124)
Add/(Deduct) non-cash items:
Depreciation3,5613,251
Impairment of fixed assets90–
Reversal of impairment of fixed assets(137)(1,505)
Share of profit of equity-accounted investees(1,291)(3,988)
Deferred tax benefit425(2,289)
Employee benefits58(140)
Deferred income(38)(66)
Provisions(974)(2,894)
Net gain on sale of property, plant and equipment(72)(16)
Net (gain)/loss on foreign currency balance(34)12
Changes in working capital items:
Trade and other receivables1,6794,466
Inventories3,3147,099
Income tax payable/receivable1,134(2,747)
Trade creditors and accruals635(4,465)
Derivative financial instruments(288)33
Net cash flow from operating activities$12,143$(5,373)
This statement is to be read in conjunction with the notes on pages 34 to 71.

34 CAVALIER CORPORATION ANNUAL REPORT 2018
Notes to the Financial Statements
For the year ended 30 June 2018
1. COMPANY INFORMATION
Cavalier Corporation Limited (“Cavalier” or “Company”) is a limited liability company that is domiciled and
incorporated in New Zealand.
The financial statements presented are for Cavalier and its subsidiaries (“Group”) and the Group’s investment
in equity-accounted investees as at, and for the year ended, 30 June 2018.
The Company is registered under the Companies Act 1993 and is an FMC reporting entity for the purposes of
the Financial Reporting Act 2013 and the Financial Markets Conduct Act 2013. The financial statements have been
prepared in accordance with these Acts.
The principal activities of the Group comprise wool acquisition, and carpet manufacturing and sales.
All Group subsidiaries are wholly-owned.
The Group also has a 27.5% interest in commission woolscourer, Cavalier Wool Holdings Limited, and a 50% interest
in property-owning entity, CWS Assets Limited.
2. GENERAL INFORMATION RELATING TO PREPARATION OF FINANCIAL STATEMENTS
Statement of compliance
The financial statements comply with New Zealand equivalents to International Financial Reporting Standards
(NZ IFRS), other applicable New Zealand accounting standards and authoritative notices as appropriate for Tier 1
For-Profit entities. The financial statements also comply with International Financial Reporting Standards (IFRS).
Basis of preparation
The financial statements have been prepared in accordance with New Zealand Generally Accepted Accounting
Practice (NZ GAAP) as appropriate for Tier 1 For-Profit entities.
They have been prepared on the historical cost basis, except for derivative financial instruments which are measured
at fair value as disclosed at note 7 (Risks and financial instruments) to the financial statements.
The financial statements are presented in New Zealand dollars ($), which is the Company’s functional currency.
All entities in the Group have New Zealand dollars as its functional currency. Unless otherwise indicated, all financial
information presented in New Zealand dollars has been rounded to the nearest thousand.
The income statement and statements of comprehensive income, changes in equity and cash flows are stated
exclusive of GST. All items in the statement of financial position are stated exclusive of GST, with the exception of
trade receivables and trade payables, which include GST invoiced.
Going concern
The Group prepares its financial statements on a going concern basis and expects to be able to realise its assets and
meet its financial obligations in the normal course of business.
The Group’s ability to comply with the Bank’s financial covenants, as discussed at note 4c (Loans and borrowings) to
the financial statements, and generate sufficient cash flows from operations to satisfy its funding and other financial
obligations for a period of at least 12 months following balance date is important to determining the appropriateness
of the going concern basis of accounting.

35
Notes to the Financial Statements (continued)
For the year ended 30 June 2018
In this regard, reliance is placed on the forecasts of the Group’s financial performance, cash flows and financial
position that are prepared by management as part of its monitoring of the Group’s operations and the Group’s ability
to comply with, among other things, the Bank’s financial covenants and debt repayment obligations over the term of
its Bank facility.
In preparing these financial forecasts, assumptions are made in respect of:
(i) future economic and market conditions, competitor activity and, as a consequence, sales volumes and margins;
(ii) the performance of the Group’s manufacturing plants;
(iii) its inventory rationalisation and debt reduction programmes;
(iv) the NZD:AUD and NZD:USD exchange rates, after taking into account hedged positions;
(v) wool prices and other raw material costs; and
(vi) other cost-reduction initiatives.
The Board of Directors (“Board”) notes that these financial forecasts are sensitive to changes in some of the
assumptions underlying the forecasts – including sales volumes and margins, manufacturing performances and
a number of external factors over which the Group has limited control over, such as exchange rates and raw
material input costs.
However, the Board notes the progress that has been made since August 2017 when it authorised the issue of
the Group’s annual financial statements for the year ended 30 June 2017.
For the year ended 30 June 2018, the Group generated a profit after tax of $4.1 million and positive cash flow from
operations of $12.1 million. Additionally, the Group has reduced inventory and net bank loans and borrowings by
$3.3 million and $10.8 million respectively. As a consequence, the Group is now in a stronger financial position.
The Board also notes the actions that have been taken to manage the Group’s exposure to foreign currency movements
and wool price fluctuations by using hedging instruments and entering into wool contracts.
A number of other initiatives and disciplines have also been put in place to further reduce costs, inventory and bank
loans and borrowings, thereby further strengthening the Group’s financial position and providing it with additional
protection against erosion in forecast earnings and cash flows should economic and market conditions not turn out
as expected.
The Board considers the Group to be a going concern and believes that the Group will generate sufficient operating
cash flows to be able to meet its contractual obligations as these become due.
2. GENERAL INFORMATION RELATING TO PREPARATION OF FINANCIAL STATEMENTS
(continued)
Going concern (continued)

36 CAVALIER CORPORATION ANNUAL REPORT 2018
Notes to the Financial Statements (continued)
For the year ended 30 June 2018
Significant accounting policies, estimates and judgements
There have been no changes to accounting policies.
The preparation of financial statements requires management to make judgements, estimates and assumptions
(based on historical experience and other factors management believes to be reasonable) that affect the application
of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ
from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised and in any future periods affected.
Accounting policies are identified throughout the notes to the financial statements.
Information about judgements, estimations and assumptions that have a significant effect on the amounts
recognised in the financial statements are disclosed in the following notes:
• Note 2 – going concern
• Note 3h – measurement and recoverability of tax losses
• Note 5a – recoverability of property, plant and equipment
• Note 5c – recoverability of goodwill
• Note 6c – inventory provisioning
• Note 8a – recoverability of equity-accounted investees
• Note 8b – measurement of provisions
• Note 8c – measurement of employee benefits
Accounting policies and judgements, estimations and assumptions are identified using the following coloured boxes:
Accounting policiesJudgements, estimations and assumptions
Basis of consolidation
The financial statements incorporate the assets and liabilities of all subsidiaries of the Group as at 30 June 2018
and the results of all subsidiaries for the year then ended. Subsidiaries are all entities over which the Company has
control. The Company controls an entity when the Company is exposed to, or has rights to, variable returns from
its involvement with the entity and has the ability to affect those returns through its power over the entity.
Intra-group balances and transactions, and any unrealised gains arising from intra-group transactions, are
eliminated in preparing the financial statements. Unrealised losses are also eliminated unless the underlying
intra-group transaction provides evidence that the asset transferred is impaired.
Unrealised gains arising from transactions with equity-accounted investees are eliminated against the investment
to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised
gains, but only to the extent that there is no evidence of impairment.
New and amended accounting standards adopted
No new accounting standards and amendments to existing standards were adopted by the Group during the year.
2. GENERAL INFORMATION RELATING TO PREPARATION OF FINANCIAL STATEMENTS
(continued)

37
Notes to the Financial Statements (continued)
For the year ended 30 June 2018
3. FINANCIAL PERFORMANCE
This section deals with the financial performance of the Group and addresses, among other things, the financial
performance of the Group’s reportable segments and the key areas that impact on the Group’s profitability, including
operating revenue, other income, gains/losses on sale of property, plant and equipment, expenses and taxation.
3a. Segment performance
Reportable segments
The Group’s reportable and operating segments are:
• carpet manufacturing and sales; and
• wool acquisition.
An operating segment is a component of the Group:
• that engages in business activities from which it may earn revenues and incur expenses, including revenues and
expenses that relate to transactions with any of the Group’s other components;
• whose operating results are regularly reviewed by the Group’s chief operating decision maker – in this case, the
Chief Executive Officer – to make decisions about the resources to be allocated to the segment and to assess its
performance; and
• for which discrete financial information is available.
Inter-segment transactions
All inter-segmental transactions included in revenue and operating expenses for each segment are on an arm’s-length
basis. Inter-segmental sales during the period and intercompany profits on stocks at balance date are eliminated
on consolidation.
Geographical areas
In presenting information on the basis of geographical areas, revenue is based on the geographical location of
customers and non-current assets are based on the geographical location of those assets.
2018
$000
2017
$000
Revenue
New Zealand84,48288,759
Australia57,87860,224
Rest of the world5,7607,137
$148,120$156,120
As at
30 June 2018
$000
As at
30 June 2017
$000
Non-current assets
New Zealand66,52265,946
Australia4972,561
$67,019$68,507
Major customers
None of the Group’s external customers contributed revenues in excess of 10% of the Group’s total revenues.

38 CAVALIER CORPORATION ANNUAL REPORT 2018
Notes to the Financial Statements (continued)
For the year ended 30 June 2018
3. FINANCIAL PERFORMANCE (continued)
3a. Segment performance (continued)
CarpetsWool AcquisitionTotal
2018
$000
2017
$000
2018
$000
2017
$000
2018
$000
2017
$000
External revenue123,724131,60024,39624,520148,120156,120
Inter-segment revenue––3,0694,5013,0694,501
Total revenue$123,724$131,600$27,465$29,021151,189160,621
Elimination of inter-segment revenue(3,069)(4,501)
Consolidated revenue$148,120$156,120
Segment result before depreciation
and restructuring related expenses
and gains10,3183,4761,41153511,7294,011
Depreciation(3,445)(3,146)(116)(105)(3,561)(3,251)
Segment result before restructuring6,8733301,2954308,168760
Restructuring costs189(6,309)––189(6,309)
Impairment of fixed assets(90)–––(90)–
Reversal of impairment of
fixed assets1371,505––1371,505
Segment result after restructuring7,109(4,474)1,2954308,404(4,044)
Elimination of inter-segment profits(66)61
Unallocated corporate costs(1,575)(1,500)
Results from operating activities6,763(5,483)
Net finance costs(2,798)(2,936)
Share of profit of equity-accounted
investees (net of income tax)1,29159
Gain on merger and dilution of
equity-accounted investee–3,929
Profit/(Loss) before income tax5,256(4,431)
Income tax (expense)/benefit(1,175)2,307
Profit/(Loss) after tax for the period$4,081$(2,124)

39
Notes to the Financial Statements (continued)
For the year ended 30 June 2018
3. FINANCIAL PERFORMANCE (continued)
3a. Segment performance (continued)
CarpetsWool AcquisitionTotal
2018
$000
2017
$000
2018
$000
2017
$000
2018
$000
2017
$000
Reportable segment assets104,665113,1343,7952,233108,460115,367
Investment in equity-accounted
investees24,54423,490
Total assets$133,004$138,857
Capital expenditure1,3921,970230153$1,622$2,123
Reportable segment liabilities26,12228,1493,1601,31829,28229,467
Unallocated liabilities31,50041,500
Total liabilities$60,782$70,967
Employee numbers
Operations4414552724468479
Unallocated54
Total employee numbers473483
3b. Earnings per share
Basic and diluted earnings per share (EPS)
20182017
Profit/(Loss) after tax attributable to shareholders of the Company ($000)4,081(2,124)
Weighted average number of ordinary shares outstanding68,679,09868,679,098
Basic and diluted EPS (cents)5.9(3.1)

40 CAVALIER CORPORATION ANNUAL REPORT 2018
Notes to the Financial Statements (continued)
For the year ended 30 June 2018
3. FINANCIAL PERFORMANCE (continued)
3c. Revenue
2018
$000
2017
$000
Sales of goods
Carpet121,682129,001
Wool24,39624,520
Yarn1,9332,127
148,011155,648
Provision of installation services109472
Total revenue$148,120$156,120
Sale of goods
Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net
of returns, trade discounts and volume rebates. Revenue is recognised when the significant risks and rewards
of ownership have been transferred to the buyer, recovery of consideration is probable, the associated costs and
possible return of goods can be estimated reliably, and there is no continuing management involvement with
the goods.
Provision of services
Revenue from services rendered is recognised in profit or loss in proportion to the stage of completion of the
transaction at the reporting date. The stage of completion is determined by reference to the physical quantities of
materials processed.
3d. Other income and gains
2018
$000
2017
$000
Rentals received44
Dividends received11
Net gain on sale of property, plant and equipment7216
Total other income and gains$77$21
3e. Administration expenses
The following items of expenditure are included in administration expenses:
2018
$000
2017
$000
Donations$25$3
Fees paid and payable to KPMG for:
Audit and review of financial statements179285
Tax services2317
Other services55
Total fees paid and payable to KPMG$207$307
The fees for audit and review of financial statements include the annual audit of the financial statements and,
where relevant, review of the interim financial statements.
Tax services were in respect of transfer pricing and tax assignments and other services were in respect of
scrutineering work at the Annual Meeting of shareholders.

41
Notes to the Financial Statements (continued)
For the year ended 30 June 2018
3. FINANCIAL PERFORMANCE (continued)
3f. Personnel expenses
2018
$000
2017
$000
Directors’ fees345331
Wages, salaries, bonuses and holiday pay33,22737,819
Employee termination benefits322–
Employee benefits2,9013,009
Increase/(Decrease) in liability for retiring allowances and long service leave(101)(99)
Total personnel expenses$36,694$41,060
Personnel costs are included in cost of sales, distribution expenses and administration expenses in the income
statement (except for employee termination benefits relating to restructuring of the Group’s operations which are
classified under restructuring costs).
3g. Net finance costs
2018
$000
2017
$000
Interest income3628
Interest expense(2,834)(2,964)
Net finance costs$(2,798)$(2,936)
Net finance costs include interest expense on borrowings and interest income on funds invested.
All interest expense and income are recognised in profit or loss using the effective interest method.
3h. Income tax
2018
$000
2017
$000
Income tax expense/(benefit) in the income statement
Current tax expense/(benefit)
Current period491372
Adjustment for prior periods259(390)
750(18)
Deferred tax expense/(benefit)
Origination and reversal of temporary differences681(2,679)
Adjustment for prior periods(256)390
425(2,289)
Income tax expense/(benefit)$1,175$(2,307)
Reconciliation of effective tax rate
Profit/(Loss) after tax for the period4,081(2,124)
Income tax expense/(benefit)1,175(2,307)
Profit/(Loss) excluding income tax$5,256$(4,431)

42 CAVALIER CORPORATION ANNUAL REPORT 2018
Notes to the Financial Statements (continued)
For the year ended 30 June 2018
3. FINANCIAL PERFORMANCE (continued)
3h. Income tax (continued)
2018
$000
2017
$000
Income tax using the Company’s domestic tax rate of 28% (2017: 28%)1,472(1,241)
Share of profit after tax of equity-accounted investees(361)(17)
Gain on merger and dilution of equity-accounted investee–(1,100)
Non-deductible expenses4326
Effect of tax rate difference in foreign jurisdiction2926
Underprovided in prior periods3–
Other(11)(1)
Income tax expense/(benefit)$1,175$(2,307)
Income tax recognised directly in equity
Derivative financial instruments136253
Income tax on income and expense recognised directly in equity$136$253
Imputation credits
Imputation credits available to shareholders of the Company$8,748$9,391
Deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
AssetsLiabilitiesNet
2018
$000
2017
$000
2018
$000
2017
$000
2018
$000
2017
$000
Property, plant and equipment––(2,744)(3,004)(2,744)(3,004)
Derivatives––––––
Inventories589778––589778
Employee benefits1,2321,224––1,2321,224
Provisions2,0922,042––2,0922,042
Tax loss carry-forwards3,8024,492––3,8024,492
Net tax assets/(liabilities)$7,715$8,536$(2,744)$(3,004)$4,971$5,532
Deferred tax assets have not been recognised in respect of temporary differences arising from tax losses totalling
$24,149,000 (2017: $24,178,000) relating to an Australian subsidiary that currently does not have trading activity.
It is not probable that future taxable profit will be available against which the Group can use the benefits therefrom.

43
Notes to the Financial Statements (continued)
For the year ended 30 June 2018
3. FINANCIAL PERFORMANCE (continued)
3h. Income tax (continued)
Deferred tax assets and liabilities (continued)
Movement in temporary differences during the year:
Balance
30 June 2017
$000
Recognised in
profit or loss
$000
Recognised
in equity
$000
Balance
30 June 2018
$000
Property, plant and equipment(3,004)260–(2,744)
Derivatives–136(136)–
Inventories778(189)–589
Employee benefits1,2248–1,232
Provisions2,04250–2,092
Tax loss carry-forwards4,492(690)–3,802
Total$5,532$(425)$(136)$4,971
Balance
30 June 2016
$000
Recognised in
profit or loss
$000
Recognised
in equity
$000
Balance
30 June 2017
$000
Property, plant and equipment(2,323)(681)–(3,004)
Derivatives(2)255(253)–
Inventories1,148(370)–778
Employee benefits1,431(207)–1,224
Provisions3,242(1,200)–2,042
Tax loss carry-forwards–4,492–4,492
Total$3,496$2,289$(253)$5,532
Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit or loss except to
the extent that it relates to items recognised directly in other comprehensive income, in which case it is recognised
in other comprehensive income.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted at the reporting
date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for taxation purposes and is measured at the tax rates that
are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted
or substantively enacted by the reporting date.
Deferred tax assets are recognised for unused tax losses and deductible temporary differences to the extent that it
is probable that future taxable profits will be available against which they can be used. Future taxable profits are
determined based on business plans for individual subsidiaries in the Group. This is reviewed at each balance date
and adjusted to the extent that it is no longer probable that sufficient taxable profits will be available in the future
to utilise the deferred tax asset.

44 CAVALIER CORPORATION ANNUAL REPORT 2018
Notes to the Financial Statements (continued)
For the year ended 30 June 2018
4. FUNDING
This section looks at the Group’s two key sources of funding, how it manages its funding and other related matters.
4a. Capital management
The Group’s capital includes share capital, reserves and retained earnings.
The Group’s capital management policy is aimed at maintaining a strong capital base so as to maintain investor,
creditor and market confidence in the Group and to enable it to continue to fund the ongoing needs of the business
and to sustain its future development.
The impact of the level of capital on shareholders’ return is also recognised, as is the return to shareholders in
the form of dividends paid and growth in share price, and the Group works to maintain a balance between the
higher returns that might be possible with greater gearing and the advantages and security afforded by a sound
capital base.
The Group is not subject to any externally imposed capital requirements, except that one of the covenants with
its bank requires total equity, after deducting intangibles, to be maintained at a pre-determined percentage of total
tangible assets. There is satisfactory headroom in this covenant at balance date.
The allocation of capital between the Group’s specific business segment operations and activities is, to a large extent,
driven by the opportunities that exist within each of these segments and the optimisation of the return achieved on
the capital allocated. The process of allocating capital to specific business segment operations and activities is
determined by the Chief Executive Officer in consultation with the Board and is therefore undertaken independently
of those responsible for the operation.
The Group’s policies in respect of capital management and allocation are reviewed regularly by the Board.
There have been no material changes in the Group’s management of capital during the period.
Consistent with best practice, the Group monitors capital on the basis of the leverage. Leverage is calculated as
net debt divided by total capital employed. Net debt is determined as total loans and borrowings (including both
non-current and current as shown in the consolidated statement of financial position) plus bank overdraft less
cash and cash equivalents. Total capital employed is calculated as equity as shown in the consolidated statement
of financial position plus net debt financing assets in operation.
The Group’s leverage at balance date was as follows:
2018
$000
2017
$000
Total loans and borrowings, including current portion31,50041,500
Less cash and cash equivalents(2,111)(1,255)
Net debt29,38940,245
Total equity72,22267,890
Total capital employed$101,611$108,135
Leverage28.9%37.2%

45
Notes to the Financial Statements (continued)
For the year ended 30 June 2018
4. FUNDING (continued)
4b. Share capital, dividends and reserves
Share capital
20182017
Number of ordinary shares issued68,679,09868,679,098
All issued shares are fully paid up and have no par value.
The holders of ordinary shares are entitled to receive dividends as declared from time to time and one vote per share
at meetings of the Company. All shares rank equally with regard to the Company’s residual assets.
Dividends
No dividends were paid during the year (2017: Nil).
The Board has not declared a final dividend in respect of the current year ended 30 June 2018 (2017: Nil).
Cash flow hedging reserve
The Group uses derivative financial instruments to hedge its exposure to foreign exchange and interest rate risks
arising from operational, financing and investing activities. In accordance with its treasury policy, the Group does
not hold or issue derivative financial instruments for trading purposes. However, derivatives that do not qualify for
hedge accounting are accounted for as trading instruments.
Derivative financial instruments are recognised initially at fair value and transaction costs are expensed immediately.
Subsequent to initial recognition, derivative financial instruments are stated at fair value. The gain or loss on
re-measurement to fair value is recognised immediately in profit or loss.
Where derivatives qualify for hedge accounting, changes in the fair value of the derivative hedging instrument
designated as a cash flow hedge are recognised in other comprehensive income to the extent that the hedge is
effective. To the extent that the hedge is ineffective, changes in fair value are recognised in profit or loss.
If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or
exercised, then hedge accounting is discontinued prospectively. The cumulative gain or loss previously recognised
in other comprehensive income remains there until the forecast transaction occurs at which time the gain or loss is
transferred to profit or loss. When the hedge item is a non-financial asset, the amount recognised in the cash flow
hedging reserve is transferred to the carrying amount of the asset when it is recognised. In other cases, the amount
recognised in the cash flow hedging reserve is transferred to profit or loss in the same period that the hedged item
affects profit or loss.
The cash flow hedging reserve represents the effective portion of the cumulative net change in the fair value of cash
flow hedging instruments related to hedged transactions that have not yet occurred.
Foreign currency translation reserve
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition,
are translated to New Zealand dollars at exchange rates at the reporting date. The income and expenses of foreign
operations are translated to New Zealand dollars at exchange rates at the dates of the transactions.
The foreign currency translation reserve comprises all exchange rate differences arising from the translation of
the financial statements of foreign operations and the translation of liabilities designated as hedges against the
Company’s net investment in a foreign operation.

46 CAVALIER CORPORATION ANNUAL REPORT 2018
Notes to the Financial Statements (continued)
For the year ended 30 June 2018
4. FUNDING (continued)
4c. Loans and borrowings
This note provides information about the contractual terms of the Group’s interest-bearing loans and borrowings.
For more information about the Group’s exposure to interest rate risks, see note 7 (Risks and financial instruments)
to the financial statements.
The Group’s funding facilities are provided by Bank of New Zealand and National Australia Bank Limited (together,
“the Bank”).
The Group had total New Zealand dollar-denominated bank funding facilities of $36,400,000 at balance date, with
$31,500,000 utilised at that date.
The Group also had overdraft facilities totalling $1,619,100 at balance date. These facilities are repayable on demand
and none of these were utilised at that date.
During the year, the Group had financial covenants with the Bank that required the Group to meet, amongst other
matters, certain equity ratio, EBITDA, revenue and inventory targets. The Group complied with these financial
covenants throughout the year ended 30 June 2018.
Details of the Group’s loans and borrowings at 30 June are as follows:
Nominal
interest rate
2018
%
Face
value
2018
$0000
Carrying
amount
2018
$000
Nominal
interest rate
2017
%
Face
value
2017
$000
Carrying
amount
2017
$000
Non-current27,50027,50035,00035,000
Current4,0004,0006,5006,500
Total secured bank loans7.3$31,500$31,5006.0$41,500$41,500
The Group had no other borrowings at balance date (2017: Nil).
Certain companies in the Group have granted in favour of Bank of New Zealand, as security agent for the Bank,
a first-ranking composite general security deed and cross guarantee securing all obligations of the Group to
the Bank, including obligations for the payment and repayment of moneys due, owing or payable by the Group
to the Bank. The property-owning companies in the Group have also granted in favour of Bank of New Zealand
first-ranking mortgages in respect of land and buildings as security for all obligations of the Group to the Bank,
including obligations for the payment and repayment of moneys due, owing or payable by the Group to the Bank
(see note 5a (Property, plant and equipment) to the financial statements).
The Group extended its funding facilities with the Bank to 1 January 2020 prior to balance date. The extended
funding arrangement provides for a staged reduction of the $36,400,000 total funding facilities (excluding overdraft
facilities), with the first reduction taking place on 1 January 2019 and each quarter thereafter up until 1 July 2019.
This staged reduction is consistent with the forecast reduction in bank debt under the Group’s debt reduction
programme, while continuing to provide the Group with appropriate headroom within its funding facilities.
In extending the funding facilities, the Group also renegotiated its financial covenants with the Bank, with the equity
ratio, EBITDA, revenue and inventory targets reset to reflect the Group’s latest financial forecasts.
As explained at note 2 (under Going concern) to the financial statements, the Board considers the Group to be
a going concern and believes that it will be able to meet its contractual obligations under its funding facilities.

47
Notes to the Financial Statements (continued)
For the year ended 30 June 2018
5. ASSETS EMPLOYED
This section covers non-current assets, being property, plant and equipment and goodwill, that the Group employs
in the production and sale of carpet, and the acquisition and sale of wool, to generate revenues and profits.
5a. Property, plant and equipment
Land and
buildings
$000
Plant and
equipment
$000
Other
assets
$000
Under
construction
$000
Total
$000
Cost or deemed cost
Balance at 1 July 201723,54873,09614,377414111,435
Additions1624389051171,622
Disposals–(977)(797)(226)(2,000)
Transfers2446116(186)–
Balance at 30 June 2018$23,734$72,603$14,601$119$111,057
Balance at 1 July 201623,21973,12214,925829112,095
Additions2097411,0041692,123
Disposals–(1,075)(1,696)(12)(2,783)
Transfers120308144(572)–
Balance at 30 June 2017$23,548$73,096$14,377$414$111,435
Depreciation and impairment losses
Balance at 1 July 20172,17559,80312,10822674,312
Depreciation for the year2282,645688–3,561
Impairment losses provided/(reversed)–(47)––(47)
Disposals–(957)(728)(226)(1,911)
Balance at 30 June 2018$2,403$61,444$12,068–$75,915
Balance at 1 July 20161,96959,83513,18228975,275
Depreciation for the year2062,438607–3,251
Impairment losses reversed–(1,442)–(63)(1,505)
Disposals–(1,028)(1,681)–(2,709)
Balance at 30 June 2017$2,175$59,803$12,108$226$74,312
Carrying amounts
At 30 June 2018$21,331$11,159$2,533$119$35,142
At 30 June 2017$21,373$13,293$2,269$188$37,123
Other assets comprise fixtures and fittings (including leasehold improvements and display stands), computer
equipment, motor vehicles and office equipment.

48 CAVALIER CORPORATION ANNUAL REPORT 2018
Notes to the Financial Statements (continued)
For the year ended 30 June 2018
5. ASSETS EMPLOYED (continued)
5a. Property, plant and equipment (continued)
Impairment loss
Impairment losses in respect of plant and equipment of $90,000 were recognised during the year (2017: Nil).
Prior year impairment losses relating to specific items of fixed assets of $137,000 were reversed during the year
(2017: $1,505,000).
Due to identification of indicators of impairment – more particularly, the $29,641,000 shortfall in the Group’s market
capitalisation when compared with the carrying value of its net asset – the Group conducted an impairment test of
the carrying value of property, plant and equipment that is allocated to the carpet sales and manufacturing cash
generating unit (CGU) as at 30 June 2018. The recoverable amount of these assets were tested for impairment by
determining their value-in-use by discounting cash flow projections for the next five years, taking into consideration
historic data and forecast economic conditions.
The recoverable amount of these assets was determined based on the following significant assumptions:
• Carpet sales volume to remain unchanged in 2018 and 2019 and to increase by 5% in 2020 and in 2021;
• Carpet sales prices to remain largely unchanged over the five year period;
• Wool price of $4.00/kg clean in 2019 increasing to $4.74/kg clean in 2020 and $4.94/kg clean thereafter;
• NZD:AUD exchange rates ranging from 0.9240 to 0.8905 between 2019 and 2022 and 0.8968 thereafter;
• Post-tax discount rate of 11.1% (2017: 12.6%);
• Long term growth rate of 2% (2017: 2%).
Management believes that the key assumptions used and estimates made represent the most realistic assessment
of the recoverable amount of property, plant and equipment.
Based on this assessment, the recoverable amount of these assets exceeds their carrying amount at the reporting
date and management has concluded that no impairment is required to be recognised.
Given the headroom that existed between the recoverable and carrying amounts of property, plant and equipment,
the recoverability of these assets is not considered to be particularly sensitive to changes in the underlying
assumptions in the discounted cash flow model.

49
Notes to the Financial Statements (continued)
For the year ended 30 June 2018
5. ASSETS EMPLOYED (continued)
5a. Property, plant and equipment (continued)
Security
At balance date, the Group’s property, plant and equipment were subject to various registered charges in favour of
the Group’s bankers as security for the Group’s banking facilities and arrangements (see note 4c (Loans and borrowings)
to the financial statements).
Recognition and measurement
Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of self-constructed
assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset to
a working condition for its intended use, and the cost of dismantling and removing the items and restoring the site
on which they are located. Purchased software that is integral to the functionality of the related equipment is
capitalised as part of that equipment.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as
separate items (major components) of property, plant and equipment.
Under construction
Items being constructed for future use are held as part of property, plant and equipment under construction.
The carrying amounts of these represent the costs incurred at balance date and will be transferred to the
appropriate classification of property, plant and equipment on completion. Initial cost includes the purchase
consideration and those costs directly attributable in bringing the asset to the location and condition necessary
for its intended use. These costs include site preparation costs, installation costs, borrowing costs, unrecovered
operating costs incurred during planned commissioning and the costs of obtaining consents.
Costs cease to be capitalised when all the activities necessary to bring the asset to its location and condition for
its intended use are complete.
Depreciation
Depreciation is recognised in the income statement over the estimated useful lives of each part of an item of
property, plant and equipment. Land is not depreciated.
The principal rates used for the current and comparative periods are as follows:
• buildings 1.0 – 2.5% straight line
• plant and equipment 6.7 – 10.0% straight line
• other assets
– fixtures and fittings 10.0% straight line
– computer equipment 20.0 – 25.0% straight line
– motor vehicles and office equipment 20.0% diminishing value
Depreciation methods, useful lives and residual values are reassessed at each reporting date.
5b. Capital commitments
The Group had outstanding commitments for the purchase of plant and equipment of $397,000 at balance date
(2017: $188,000).

50 CAVALIER CORPORATION ANNUAL REPORT 2018
Notes to the Financial Statements (continued)
For the year ended 30 June 2018
5. ASSETS EMPLOYED (continued)
5c. Goodwill
Goodwill of $2,362,000 (2017: $2,362,000) which arose from the acquisition of Radford Yarn Technologies Limited
has been allocated to the carpet sales and manufacturing cash generating unit (CGU).
Management assessed this CGU for impairment of goodwill as at 30 June 2018 as discussed at note 5a (Property,
plant and equipment) to the financial statements.
Based on this assessment, management has concluded that no impairment is required to be recognised.
The carrying amount of goodwill is tested annually for impairment. An impairment loss is recognised if the carrying
amount of the cash-generating unit (being the smallest identifiable asset group that generates cash flows that are
largely independent from other assets and groups) to which the goodwill is allocated exceeds its recoverable amount.
Impairment loss of goodwill cannot be reversed in future periods.
The recoverable amount of a cash-generating unit is the greater of its value in use and its fair value less costs to sell.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the cash
generating unit.
Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount
of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of
units) on a pro rata basis.
6. WORKING CAPITAL
This section reviews the level of working capital the Group generates and utilises in its normal day-to-day operating
activities. The Group’s working capital includes short-terms assets (cash and cash equivalents, trade receivables,
other receivables and prepayments and inventories) and liabilities (trade creditors and accruals).
6a. Cash and cash equivalents
Cash and cash equivalents at balance date comprise cash on hand and deposits held at call.
Cash and cash equivalents comprise cash on hand, deposits held at call with financial institutions and bank
overdrafts used for cash management purposes.

51
Notes to the Financial Statements (continued)
For the year ended 30 June 2018
6. WORKING CAPITAL (continued)
6b. Trade receivables, other receivables and prepayments
2018
$000
2017
$000
Trade receivables due from trade customers15,18416,580
Other receivables54169
Prepayments344512
$15,582$17,261
The Group’s exposure to credit risk in respect of trade receivables and other receivables is minimal as none of the
Group’s external customers contributed revenues in excess of 10% of the Group’s total revenues and none of the
Group’s trade receivables and other receivables are significant individually.
Impairments losses on trade receivables and other receivables are assessed collectively and on a portfolio basis
based on the number of days overdue after taking into account the historical loss experienced in portfolios with
a similar number of days overdue.
Further management commentary on, and quantitative disclosure of, credit risk can be found in note 7 (Risks and
financial instruments) to the financial statements.
Trade receivables and other receivables are recognised initially at fair value and subsequently adjusted for
impairment losses.
6c. Inventories
2018
$000
2017
$000
Raw materials and consumables17,89619,648
Work in progress1,6642,403
Finished goods27,76128,584
$47,321$50,635
Carrying amount of inventories subject to retention of title clauses$2,351$530
In 2018, the net realisable value provision in respect of inventories decreased by $766,000 (2017: decreased by $1,790,000).
Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on the first-in
first-out principle, and includes expenditure incurred in acquiring the inventories and bringing them to their
existing location and condition. In the case of manufactured inventories and work in progress, cost includes an
appropriate share of production overheads based on normal operating capacity. Net realisable value is the estimated
selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.
Inventory provisions are recognised for oddments, obsolete, aged and discontinued inventories to arrive at their
likely net realisable value. In recognising the provision for inventories, judgement is applied by considering
a range of factors including inventory rationalisation plans, consumer demand and current trends, available
distribution channels and historical sales and margin data for obsolete, aged and discontinued inventory.

52 CAVALIER CORPORATION ANNUAL REPORT 2018
Notes to the Financial Statements (continued)
For the year ended 30 June 2018
6. WORKING CAPITAL (continued)
6d. Trade creditors and accruals
2018
$000
2017
$000
Trade payables due to external parties17,67116,583
Accrued expenses1,8192,272
$19,490$18,855
7. RISKS AND FINANCIAL INSTRUMENTS
This section identifies the risks faced by the Group, explains the impact of these risks on its financial position,
performance and cash flows, outlines the Group’s approach to financial risk management and highlights the financial
instruments used to manage risks.
Management commentary
Exposure to credit, liquidity, foreign currency and interest rate risks arises in the normal course of the
Group’s businesses.
The Group enters into derivative financial instruments in the ordinary course of business to manage foreign
currency and interest rate risks in accordance with the treasury policy approved by the Board. A financial risk
management committee, composed of senior management and operating under the Board-approved treasury
policy, ensures that procedures for derivative instrument utilisation, control and valuation, risk analysis,
counterparty credit approval, and ongoing monitoring and reporting are adhered to.
The Group manages commodity price risks through negotiated supply contracts and forward physical contracts.
However, because these contracts are, generally, in respect of raw material and utility purchases for own use,
they are not accounted for as financial instruments.
Credit risk
Management has a credit policy in place under which each new customer is individually analysed for credit
worthiness and assigned a purchase limit before the standard payment and delivery terms and conditions are
offered. Because of the Group’s customer base, there is no need for the Group to rely on external ratings. In most
cases, bankers’ references, trade credit insurance approvals and/or credit references from other suppliers are
considered adequate. Purchase limits are reviewed on a regular basis.
In order to determine which customers are classified as having payment difficulties, the Group applies a mix
of duration and frequency of default. The Group does not generally require collateral in respect of trade and
other receivables.
The Group’s exposure to credit risk is mainly influenced by its customer base. As such, it is concentrated to
the default risk of its industry. However, geographically, there is no credit risk concentration, with the Group’s
customers spread throughout New Zealand and Australia. Credit risk exposure with respect to debtors is limited
by stringent credit controls, by the utilisation of irrevocable letters of credit and trade credit insurances wherever
required, and by the large number of customers within the Group’s customer base.
The Group does not invest in securities, but accepts that surplus cash and cash equivalents may arise from time
to time during the course of its management of cash. In these instances, it requires these surplus cash and cash
equivalents to be deposited on call and only with counterparties approved by the Board as having the required
credit ratings.
Foreign currency forward exchange contracts and interest rate swaps have been entered into with counterparties
approved by the Board as having the required credit ratings. The Group’s exposure to credit risk from these financial
instruments is limited because it does not expect the non-performances of the obligations contained therein due to
the high credit ratings of the financial institutions concerned. The Group does not require any collateral or security
to support these financial instruments.

53
Notes to the Financial Statements (continued)
For the year ended 30 June 2018
7. RISKS AND FINANCIAL INSTRUMENTS (continued)
Management commentary (continued)
Liquidity risk
Liquidity risk represents the Group’s ability to meet its contractual obligations. The Group evaluates its liquidity
requirements on an ongoing basis. In general, the Group generates sufficient cash flows from its operating activities
to meet its obligations arising from its financial liabilities and has credit lines in place to cover potential shortfalls.
It also seeks to ensure that there is sufficient capacity within its overall funding facilities to enable it to draw on for
one-off capital projects.
The Group’s contractual cash flows and liquidity risk profile are set out in detail on page 55, with the Group’s
ability to meet its contractual obligations, particularly with respect to the repayment of bank loans, being
conditional upon the Group’s ability to meet its financial forecasts as disclosed at note 2 (under Going concern)
to the financial statements.
Foreign currency risk
The Group is exposed to foreign currency risk on sales and purchases that are denominated in a currency other
than the Company’s functional currency, which is the New Zealand dollar ($). The New Zealand dollar is also the
presentation currency of the Group.
Foreign currency-denominated transactions are primarily in Australian dollars (“AUD”), U.S. dollars (“USD”) and the
Euro (“EUR”). It is the Group’s policy to hedge foreign currency risks on material trade-related transactions as they
arise. At any point in time, the Group also hedges a certain proportion of its estimated foreign currency exposure in
respect of forecasted sales and purchases.
The Group’s policy allows management to hedge up to 12 months forecast sales and purchases without the prior
approval of the Board having first been obtained subject to compliance with the hedging limits within the policy.
The Group uses forward exchange contracts to hedge its foreign currency risk. Virtually all of the forward exchange
contracts have maturities of less than one year at balance date.
The Group does not engage in speculative transactions or hold derivative financial instruments for trading purposes
and requires that exposures to foreign currency risks, and details of all outstanding derivative instruments, are
reported to and reviewed by the Board on a monthly basis.
Interest rate risk
Interest rate risks are continually monitored having regard to the circumstances at any given time.
Interest rate swaps have been entered into to hedge a proportion of the Group’s exposure to interest rate
fluctuations by ensuring that there is an appropriate mix, after having regard to the circumstances prevailing at
the time, of fixed and floating rate exposure within the Group’s total loans and borrowings.
The Group’s policy allows management to hedge up to between 25% and 75% of the Group’s core loans and
borrowings without the prior approval of the Board having first been obtained.

54 CAVALIER CORPORATION ANNUAL REPORT 2018
Notes to the Financial Statements (continued)
For the year ended 30 June 2018
7. RISKS AND FINANCIAL INSTRUMENTS (continued)
Quantitative disclosures
Credit risk
The carrying amount of financial assets represents the Group’s maximum credit exposure.
The Group has not renegotiated the terms of any financial assets which would result in the carrying amount no
longer being past due or avoid a possible past due status.
The Group’s maximum exposure to credit risk for trade and other receivables by geographic regions is as follows:
2018
$000
2017
$000
New Zealand8,8978,679
Australia5,2476,568
Other regions1,0941,502
Trade and other receivables$15,238$16,749
The status of trade and other receivables at the reporting date is as follows:
Gross
receivable
2018
$000
Impairment
provisions
2018
$000
Gross
receivable
2017
$000
Impairment
provisions
2017
$000
Not past due13,875–14,293–
Past due 0 – 30 days813–1,779–
Past due 31 – 120 days203–228–
Past due > 120 days390(43)483(34)
Total$15,281$(43)$16,783$(34)
In summary, trade and other receivables are determined to be impaired as follows:
2018
$000
2017
$000
Trade and other receivables – gross15,28116,783
Individual impairment provisions(43)(34)
Trade and other receivables – net$15,238$16,749
Individually impaired trade receivables relate to a small number of customers where the amounts involved are
immaterial. In the case of insolvency, the Group generally writes off the receivable in full unless there is clear
evidence that a receipt, whether directly or by way of a claim under the Group’s trade credit insurance policy,
is highly probable.
The details of movements in the impairment provision are as follows:
2018
$000
2017
$000
Balance at 1 July(34)(176)
Impaired trade receivables written off–61
Changes in impairment provision(9)81
Balance at 30 June$(43)$(34)
Changes in the impairment provision are included in distribution expenses in the income statement.

55
Notes to the Financial Statements (continued)
For the year ended 30 June 2018
7. RISKS AND FINANCIAL INSTRUMENTS (continued)
Quantitative disclosures (continued)
Liquidity risk
The following table sets out the contractual cash flows for all material financial liabilities (including projected
interest costs).
Statement
of financial
position
$000
Total
contractual
cash flows
$000
Timing of contractual cash flows
6 months
or less
$000
6 – 12
months
$000
1 – 2 years
$000
2 – 5 years
$000
Greater than
5 years
$000
2018
Secured bank loans31,50033,2807,1193,04523,116––
Trade creditors and
accruals19,49019,49019,490––––
Total non-derivative
liabilities$50,990$52,770$26,609$3,045$23,116––
Interest rate swaps$585$761$169$131$227$195$39
Forward exchange
contracts
Inflow(40,815)(27,920)(10,669)(2,226)––
Outflow39,85627,18710,4932,176––
$(963)$(959)$(733)$(176)$(50)––
2017
Secured bank loans41,50043,9138517,35135,711––
Trade creditors and
accruals18,85518,85518,855––––
Total non-derivative
liabilities$60,355$62,768$19,706$7,351$35,711––
Interest rate swaps$785$923$230$178$277$238–
Forward exchange
contracts
Inflow(57,623)(38,596)(19,027)–––
Outflow57,26738,51018,757–––
$(391)$(356)$(86)$(270)–––

56 CAVALIER CORPORATION ANNUAL REPORT 2018
Notes to the Financial Statements (continued)
For the year ended 30 June 2018
7. RISKS AND FINANCIAL INSTRUMENTS (continued)
Quantitative disclosures (continued)
Foreign currency risk
The Group’s exposure to foreign currency risk can be summarised as follows:
NZD equivalent of these foreign currencies:
AUD
$000
USD
$000
EUR
$000
Others
$000
2018
Trade receivables5,1907672445
Trade payables(2,466)(4,455)(1)(7)
Net statement of financial position exposure before
hedging activity2,724(3,688)2338
Estimated forecast sales for which hedging is in place28,374–––
Estimated forecast purchases for which hedging is in place–(5,412)––
Net cash flow exposure before hedging activity31,098(9,100)2338
Forward exchange contracts
Notional amounts(31,098)9,100––
Net unhedged exposure––$23$38
2017
Trade receivables6,21659365258
Trade payables(2,239)(5,843)(13)(24)
Net statement of financial position exposure before
hedging activity3,977(5,250)52234
Estimated forecast sales for which hedging is in place27,362–63–
Estimated forecast purchases for which hedging is in place–(12,179)––
Net cash flow exposure before hedging activity31,339(17,429)115234
Forward exchange contracts
Notional amounts(31,339)17,429––
Net unhedged exposure––$115$234

57
Notes to the Financial Statements (continued)
For the year ended 30 June 2018
7. RISKS AND FINANCIAL INSTRUMENTS (continued)
Quantitative disclosures (continued)
Interest rate risk – re-pricing analysis
At balance date, the interest rate profile of the Group’s interest-bearing financial instruments was as follows:
Total
$000
6 months
or less
$000
6 – 12 months
$000
1 – 2 years
$000
2 – 5 years
$000
Greater than
5 years
$000
2018
Financial assets and
liabilities
Cash and cash equivalents2,1112,111––––
Secured bank loans(31,500)(31,500)––––
(29,389)(29,389)––––
Related derivatives
Effect of interest rate swaps–12,500–(2,500)(7,500)(2,500)
Total$(29,389)$(16,889)–$(2,500)$(7,500)$(2,500)
2017
Financial assets and
liabilities
Cash and cash equivalents1,2551,255––––
Secured bank loans(41,500)(41,500)––––
(40,245)(40,245)––––
Related derivatives
Effect of interest rate swaps–12,500–(5,000)(7,500)–
Total$(40,245)$(27,745)–$(5,000)$(7,500)–

58 CAVALIER CORPORATION ANNUAL REPORT 2018
Notes to the Financial Statements (continued)
For the year ended 30 June 2018
7. RISKS AND FINANCIAL INSTRUMENTS (continued)
Sensitivity analysis
In managing interest rate and currency risks, the Group aims to reduce the impact of short-term fluctuations
on the Group’s earnings. Over the longer-term, however, changes in foreign exchange and interest rates will have
an impact on profit.
At 30 June 2018, it is estimated that a general increase of one percentage point in interest rates would decrease
the Group’s profit before income tax by approximately $152,000 per annum (2017: increase loss by $269,000).
Interest rate swaps have been included in this calculation.
It is estimated that a general increase of ten percentage points in the value of the New Zealand dollar against other
foreign currencies at balance date would have no impact on the Group’s profit or loss before income tax for the years
ended 30 June 2018 and 2017 after taking into account the forward exchange contracts that the Group had in place at
balance date to hedge these exposures.
Hedging
Interest rate hedges
The Group has a policy of ensuring that between 25% and 75% of its exposure to changes in interest rates on
borrowings is on a fixed rate basis. Interest rate swaps, denominated in New Zealand dollars, have been entered
into to achieve an appropriate mix of fixed and floating rate exposure within the Group’s policy.
At 30 June 2018, the Group had active interest rate swaps with a notional contract amount of $12,500,000
(2017: $17,500,000). $5,000,000 of these will mature within six months of balance date (2017: $5,000,000), with
the balance maturing over the next three years (2017: four years). The Group also had forward starting swaps as at
30 June 2018 of $5,000,000 (2017: Nil), effectively extending the swaps maturing within six months of balance date
out for a further four years, in respect of $2,500,000, and six years, in respect of the balance.
The Group has designated its interest rate swaps as cash flow hedges. These swaps have fixed swap rates ranging
from 2.88% to 4.92% (2017: 4.47% to 4.92%).
The net fair value of swaps at 30 June 2018 was a loss of $585,000 (2017: loss of $785,000).
Forecast transactions
The Group classifies the forward exchange contracts taken out to hedge forecast transactions as cash flow hedges.
These forecast transactions are expected to occur within 18 months of balance date (2017: 12 months). The net fair
value of forward exchange contracts used as hedges of forecast transactions at 30 June 2018 was a gain of $919,000
(2017: gain of $301,000).
Recognised assets and liabilities
The fair value of forward exchange contracts used as economic hedges of monetary assets and liabilities in foreign
currencies at 30 June 2018 was a gain of $44,000 (2017: gain of $90,000) recognised in fair value derivatives.