FY19 Market Update

MARKET RELEASE
22 August 2019
Cavalier Provides Market Update

• Confirms it is on track to achieve May 2019 guidance of normalised NPAT of $1.9m
1
.
• Less than $18m in net debt at the end of June 2019 and ongoing support of its banking partner.
• Most recent valuations assess the worth of Cavalier’s land and buildings at more than $30m.
• Accelerated the strategic review to develop and implement an innovative and transformative
business model focused around wool.
• Assessed the carrying value of goodwill, plant and equipment and decided that certain assets
should be impaired based on the likely future strategic direction of the company and the uncertain
market conditions impacting their underlying carrying value.
• Cavalier also notes that future cashflows are based on forecasts that are sensitive to changes in
volumes and margins and that compliance with obligations and future going concern are subject to
material uncertainty if those forecasts are not met.
• The Board is confident in the financial sustainability of the company, is implementing a number of
initiatives to address potential uncertainty and the company has sufficient assets to settle Group
debt should the need arise.

Cavalier Corporation Limited (NZX:CAV) has today provided further guidance on its expected results for the
12 months ended 30 June 2019 (FY19).

The company confirms that it is on track to achieve its May 2019 guidance of normalised Net Profit After
Tax (NPAT) of $1.9m.

As previously advised, the soft market and challenging trading conditions continued through the second
half of the year. In particular, sales of low margin synthetic carpet are declining while growth is being seen
in high end wool carpets. This is benefitting Cavalier whose expertise is in high quality wool carpets and
sales of its premium Cavalier Bremworth Collection are continuing to grow.

Cavalier is at an early stage in developing a new strategic direction that will result in a significant change to
the operations of the company. As part of this, the company is in discussions with a respected industry
participant regarding a collaboration that will build on Cavalier’s capabilities and make a transformative
change into a design-led, wool focused company. This has been contemplated for some time and details
will be communicated to the market in the near future.



1
Normalised Net Profit After Tax excludes the non-cash write down of $11.9m on Cavalier’s carrying value of its 27.5%
shareholding in Cavalier Wool Holdings (CWH) following its sales at the end of September 2018 and impairment of
goodwill and fixed assets of between $6.0m and $9.0m after tax.

After considering the implications of the strategic change and assessing the book value of non-current
assets based on future cashflows, Directors have made the decision to write-down or impair the value of
goodwill and various plant and equipment. The write down is non-cash and does not impact the underlying
profitability of the company.

Directors also note that that the Board considers the Group to be a going concern and believes it will be
able to meet its contractual obligations. This going concern relies on future forecasts which are sensitive to
sales volumes and margins and subject to material uncertainty if these forecasts are not met.

The Board is confident in Cavalier’s financial sustainability and the company has the support of its banking
partner. Recent valuations assess the worth of Cavalier’s land and buildings at more than $30m and the
company has less than $18m in net debt. The Board is implementing a number of initiatives to address
potential uncertainty and the company has sufficient assets to settle Group debt should the need arise.

Cavalier has a number of initiatives in place to support its wool focus, and is working closely with major
retail customers, particularly in Australia, to expand its distribution network and range. Driving efficiencies
is a focus and structural cost initiatives have been implemented in both Australia and New Zealand, with
the positive impact of the Australian change management programme earlier this year now being seen.
This resulted in a more customer focussed and agile sales team which has led to a number of new customer
wins in the commercial space, particularly with specifiers for large building projects.

Chairman of Cavalier, Alan Clarke, said: “Cavalier’s reputation for quality, brand recognition, new product
innovation and more than 50 years’ expertise in the wool flooring market are our strengths and the
company’s future. We have over 1,000 retailer partners across New Zealand and Australia who stock and
sell our carpets and we are growing our presence in North America.”

“Over the last six months we have accelerated our strategic review and widened our view of the
opportunities that exist for strong wools. Cavalier’s CEO, Paul Alston and long-standing Director, John Rae,
recently attended a Stanford University Primary Industry programme in the USA. This provided access to
some of the brightest strategic minds in business in both New Zealand and the Stanford business school
and considerable practical and intellectual resources. We are excited about the potential for our company
and will keep shareholders informed as we finalise our future strategic direction.”

Cavalier will provide further details on its FY19 results and FY20 progress to date in its results
announcement on 27 August 2019.

ENDS

For further information please contact:
Alan Clarke
Chairman of the Board
alan.clarke@outlook.co.nz
+64 21 368 818
Paul Alston
Chief Executive Officer
palston@cavbrem.co.nz
+64 21 918 033
+64 9 277 1135
Jackie Ellis
Media and Investor Relations
Jackie@ellisandco.co.nz
+64 27 246 2505