Skellerup Annual Shareholders Meeting 2018

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Skellerup Holdings Limited
Annual Shareholders Meeting 24 October 2018
Chair’s Address
Good afternoon and welcome to this year’s Annual Meeting.
[SLIDE 3]
This has been a record year for Skellerup. Our revenue was $240.4 million, a 14% increase on last
year, and Net Profit after tax of $27.3 million, a 23% increase on the previous year. David will discuss
this and our business model that underpins these results shortly. Needless to say, the Board is very
pleased with this performance.
[SLIDE 4]
Skellerup is a world leader in the design and development of polymer products. Many of you here
today will use our products without being aware that a Skellerup component is a key element
enabling that products performance.
We make clever components which perform critical functions in a range of products across the
Industrial and Agri sectors. More than half of the products we design and manufacture must meet
high food safety and potable water requirements.
Some of our products allow water to be safely transported from the reservoir to your tap or shower.
We also make critical components in dishwashers, fridges and even electric cars, to name a few.
Our products also continue to be a key feature on dairy farms around the world. We make world-
leading milking liners and related consumable food grade products that are critical in transporting
milk from the cowshed to the vat and protecting the health of dairy cows.
And then there are our Red Band gumboots, which turned 60 years of age this year. What many
people don’t realise is that New Zealand’s most trusted farm boot is just one item in our footwear
range. We also make specialty boots for the forestry, electricity and firefighting industries.
Our expertise across this range of products covers design through manufacture. This means our
teams including product experts and engineers, conceptualise the design and the tooling required
for manufacture. Our chemists use their in-depth knowledge and expertise working with polymer
materials and our operating teams and partners then go on to produce our consistently, high quality
products.
We have a strong local presence in key markets, supported by technical and application experts – a
significant amount of design and product development is done here in New Zealand. Today Skellerup
is a global business, performing well across a range of geographies and markets.
[SLIDE 5]
Throughout the past year, your Board has met with many of the people that work for you - our
shareholders. As a Group, the Board visited our team in China which was celebrating its 15
th

anniversary. We met our people who work there, toured the facility and also met local authorities to
understand changes in the business environment.

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[SLIDE 6]
We also visited our Wigram facility in Christchurch, the hub of our Agri Division to discuss markets,
product development, operational performance and improvement. Directors have individually or in
smaller groups met with our people in Australia, the US, the UK, Italy and NZ over the past 12
months. Engaging with people throughout the organisation provides the Board with the assurance
we need that our business strategies are sound, risks are being well managed and that our people
are focussed on a healthy and safe workplace.
Skellerup is very much an international business. To reflect this, your Board has a broad range of
skills and varied experience with John, Alan and David Cushing joining within the last 3 and half
years, alongside David and myself with longer tenure. We augment our collective expertise by
engaging third parties to present on international and specialist topics from time to time. In the
future, we may expand the Board to ensure we continue to provide Skellerup with the expertise
required.
The value of diversity is a frequent topic for debate in all forms of media today. Often the topic is
narrowly defined to gender. We see it wider than this. As an international business we benefit from
diversity of thought, culture and backgrounds. This is invaluable to Skellerup.
We are proud to have a highly experienced and technical team. We continue to recognise and
reward our people based on performance. We are successful in attracting and retaining our high
calibre employees. We are pleased to not only meet but, in many cases, well exceed minimum wage
requirements in all of the markets we operate in.
[SLIDE 7]
Skellerup is in a strong financial position. Our balance sheet provides us with ongoing opportunities
for prudent investments in our people and technologies. A recent example was announced in July
this year, when we acquired a 35% stake in liquid silicone rubber (LSR) specialist, Sim Lim Technic.
This investment will enable us to meet growing global demand for LSR products for existing and new
customers.
The strength of our financial position and cash flow has also allowed us to increase our dividend
payment again. This year’s total dividend pay-out was 11.0 cents per share, a 16% increase on the
prior year.
On behalf of the board I want to recognise the contribution of the entire Skellerup team. Their
dedication and hard work are evident in these results. As announced earlier today the Board has
approved a long-term incentive plan under which share options will initially be issued to David Mair
our CEO and Graham Leaming our CFO. We look forward to a continued excellent contribution from
both David, Graham and the entire team.
We are looking forward to continuing this success in FY19, as we deliver outstanding products and
solutions for our customers and generate very good returns for our shareholders.
Thank you.
[SLIDE 8]

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Skellerup Holdings Limited
Annual Shareholders Meeting 24 October 2018
CEO’s Address
Thank you, Liz.
[SLIDE 9]
We are pleased to have delivered a record performance in FY18. As Liz mentioned our revenue
increased by 14%, and our Net Profit After Tax increased by 23%. These are good increases and a
reflection of our continued focus on a sound business model.
[SLIDE 10]
Our business model is based on three pillars:
1. The first pillar is to build and maintain strong and deep customer relationships.
We get close to our customers, forming relationships where we are an integral part of their
product innovation teams. A key focus is on Original Equipment Manufacturers (OEMs). Our
product innovation is done alongside these customers ensuring we have an established
market at the outset. This also prevents competitors from gaining a foothold.
2. The second pillar is our focus on critical components that are often only a small part of a
more complex system.
This also creates barriers to entry for our competitors. Our customers are well aware of the
risk of failure and prefer to work with a trusted team that they know can deliver to the right
standard, every time.
3. The final pillar references how we apply our knowledge and skills to new applications. We
also continue to take our expertise to international markets where we see substantial growth
opportunities.
This has been a cornerstone of our approach, and is reflected in the growth achieved in both
our Industrial and Agri divisions in FY18.
We look forward to continuing this momentum next year. While we are alert to the changing global
environment and in particular the impacts this is having on trade, we have the expertise and
flexibility in our business to manage and mitigate negative impacts that may occur. Most
importantly, we have strong and enduring relationships with our customers and partners.
Our Industrial division
[SLIDE 11]
Turning first to our Industrial Division, we delivered a very good result, with Earnings Before Interest
and Tax up 21 percent to $20.8 million for the full year. This was on revenue of $151.5 million –
which was a 15% increase on last year. We are proud of this improvement but remain focussed on
good growth opportunities within our grasp.

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[SLIDE 12]
We continue to work closely with our customers and are pleased to have one of the highest
customer retention rates in the industry. The majority of our customers are OEM businesses and
these are good customers to have. The work is often hard won, but once won, it is enduring.
Our Gulf business in the US was awarded the prestigious ‘Partner of the Year’ award from Moen, the
leading tapware brand in North America for the second time in 3 years. This recognises the hard
work of our team, both in the United States and here in New Zealand, and reflects our approach of
staying close to our customers to exceed their expectations.
Our Agri division
[SLIDE 13]
Our Agri Division also delivered an excellent result with EBIT up 15% on last year to a record $22.8
million.
This result is on the back of continued steady growth, particularly focused on global markets.
Our team have been able to focus on the business fundamentals this year, following the completion
of the new development and manufacturing facility at Wigram in 2016, and the subsequent sale and
disposal of the Woolston site.
[SLIDE 14]
Our Agri team develop innovative, market leading components for the dairy industry. Our dairy
rubber ware, milk filters and animal hygiene products play a critical role in maintaining milk quality
and animal health. Markets were strong with increased global demand for milk protein, in particular,
from the growing Asian middle class. This is an underlying long-term trend and theme we expect to
continue.
Our Agri division also develops specialist footwear. As Liz mentioned, this year our iconic Red Band
gumboot turns 60. We are proud to continue to be the brand of choice for the New Zealand farming
community.
What some investors don’t realise is that the red band gumboot is just one product in our range of
highly specialised boots. We design and develop boots for the fire, forestry, mining, nuclear and
electricity sectors.
This year our firefighting boots were selected by the United Kingdom’s South East Consortium’s five-
year supply programme. This means more than 30% of the UK’s fire fighters, including those in
London, are wearing Skellerup boots.
All of our footwear continues to be designed in New Zealand and is produced in our specialist factory
in Jiangsu, China.
[SLIDE 15]
Skellerup is an iconic New Zealand brand, but we are also a world leader in polymer design and
development. Today, we design products in NZ, Australia, UK and Italy and derive approximately
80% of revenue from international markets.
We have specialists working across the world allowing us to share technical capabilities and
innovation.
We continue to invest in our team to make sure they have the right skills and resources to deliver for
the customers and the markets we serve. This is an important point in the current global
environment where there is an ongoing battle for talent. We are proud of the high calibre of our
team and are committed to them, ensuring they are supported, motivated and rewarded.

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We have a firm focus on ensuring health and safety is well embedded into our culture and day-to-
day operations. We have an on-going programme focused on delivering continuous improvements
to our systems and processes, and to educate our people to ensure we their safety. We are pleased
to have continued to reduce our injury rate over the past year. Our ultimate aim is of course zero
harm.
This focus on constant improvement also includes ensuring our manufacturing is as efficient and
effective as possible. We have initiatives underway across our global business to reduce
consumption of resources and more effectively manage our waste since these actions make good
business sense.
In closing, I would like to thank our diverse team of talented people around the world. Without their
expertise, enthusiasm and commitment, we would not be the innovative and successful company we
are today.
I would also like to thank the Board. They bring a wealth of expertise and experience and their input
is much appreciated.
Finally, I would like to thank you, our shareholders, for investing in Skellerup. During FY18, we
continued to focus on the fundamentals of the business. We have a sound business model. Trading
for Q1 of the current year generated EBIT in excess of 10% ahead of the comparable quarter in the
prior year. We expect an improvement in profitability in FY19 with increased earnings in our
Industrial Division offsetting the recent softening in international dairy markets and the uncertainty
surrounding international trade.

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Skellerup Annual Shareholders Meeting 2018
24 October 2018

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Chair’s Address
Liz Coutts | Chair

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Revenue & NPAT
180.0
190.0
200.0
210.0
220.0
230.0
240.0
250.0
FY15FY16FY17FY18
Revenue NZ$ Million
0.0
5.0
10.0
15.0
20.0
25.0
30.0
FY15FY16FY17FY18
NPAT NZ$ Million
•FY18 delivered record revenue up 14% and record NPAT up 23% over pcp.

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Skellerup

5
China

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Wigram

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Low Debt, Increasing Dividends
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
FY15FY16FY17FY18
Net Debt as % of Total Assets
0.0
2.0
4.0
6.0
8.0
10.0
12.0
FY15FY16FY17FY18
Gross Dividend –cents per share

8
CEO’s Address
David Mair | CEO & Executive Director

9
Revenue & NPAT
180.0
190.0
200.0
210.0
220.0
230.0
240.0
250.0
FY15FY16FY17FY18
Revenue NZ$ Million
0.0
5.0
10.0
15.0
20.0
25.0
30.0
FY15FY16FY17FY18
NPAT NZ$ Million
•FY18 delivered record revenue up 14% and record NPAT up 23% over pcp.

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Our approach
Strong & deep
customer
relationships
•Work closely with
customers.
•Part of OEM product
innovation teams.
Clever, critical
components
•Small but critical part of
total solution.
•Trusted to mitigate risk
of failure.
Apply know how to
new applications
•New Agri and Industrial
applications.
•Design to manufacture
–tooling, polymer,
process.

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Industrial Division
NZ$ MillionFY15FY16FY17FY18
Revenue123.0132.0131.2151.5
EBIT14.015.317.120.8
EBIT %11.411.613.113.7
Organic growth driving EBIT increase of 21% against pcp.
•Revenue measured in constant currency up 12%.
•Growth in water and flow control applications
‒Increased sales in ductile iron pipe gaskets, tapware and flow
control customers for Gulf US.
‒Lift in PVC pipe gaskets and valves sales in Australia.
•Sales growth in Vacuum Systems from product
development and the growing Oil and Gas market.
•Growth in Deks roofing products driven by strong
construction growth in Australia and US.
•Lift in sales into automotive applications.
0.0
5.0
10.0
15.0
20.0
25.0
FY15FY16FY17FY18
EBIT NZ$ Million

12
Industrial Division

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Agri Division
Organic growth driving EBIT increase of 15% against pcp.
•Revenue measured in constant currency up 11%.
•Strong dairy market.
‒Growth with OEM customers in Europe and NZ for liners
and tubing.
‒Skellerup branded product sales strong internationally and
domestically.
•Footwear sales strong.
‒Growth with both traditional rural retailers and
hardware/safety channels.
‒Delivered first round of technical Firefighting Extreme boots
for UK contract.
NZ$ MillionFY15FY16FY17FY18
Revenue80.579.679.289.0
EBIT22.118.819.822.8
EBIT %27.423.624.925.6
0.0
5.0
10.0
15.0
20.0
25.0
FY15FY16FY17FY18
EBIT NZ$ Million

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Agri Division

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Skellerup
What Skellerup means to our people

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Resolutions
Liz Coutts | Chair

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Questions
Liz Coutts | Chair

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Meeting Close
Liz Coutts | Chair