2019 Annual Report

The natural
choice.
Annual Report 2019

Alan Clarke
Chairman
This Annual Report is dated 27 September 2019 and
is signed on behalf of the Board of Directors by:
2 Our Strategic Vision
4 FY19 Year in Review
7 Chairman and Chief Executive Officer’s Report
12 Feature Stories
> Our future is with wool
> Our future lies in great design
> Our future will be created with our people
> Our future will benefit future generations
20 Board of Directors
22 Management Team
24 Five Year Performance Trends
25 Trend Statement
26 Financial Statements
78 Disclosure of Non-GAAP Financial Information
84 Governance and Other Disclosures
101 Shareholder Information
102 Corporate Directory
Paul Alston
Chief Executive Officer

Cavalier Bremworth has a
long-standing history of
producing world-leading wool
carpets. It’s what we’re known
for. Premium quality carpet

made from New Zealand wool,
right here in New Zealand.
And this is where our
focus will remain, creating
and marketing a valuable
natural product that is both
sustainable and desirable,

here and around the world.
It’s good for our business
and it’s good for you.

OUR STRATEGIC VISION
Creating a world
of difference.
We are focussed on creating ‘A World
of Difference’ in everything we do. This
means we don’t just sell carpets and
rugs; our efforts have been borne from
the desire to make a genuine difference,
for our shareholders, our customers, our
people, our suppliers, our communities
and our environment. Not only through
what we do, but how we do it.
2 CAVALIER CORPORATION ANNUAL REPORT 2019

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CREATING
A WORLD OF
DIFFERENCE
3

FY19 YEAR IN REVIEW
The results for FY19 were below our expectations, as the
positive performance in the first half was offset by a decline
in trading conditions in the second half of the year.
The reduction in revenue reflects a continuing soft
market and challenging trading conditions. While sales of
low margin synthetic carpets are declining, premium wool
carpet sales are increasing as consumers become more
aware of the environmental benefits and beauty of wool.
Pleasingly, demand for Cavalier’s top end Bremworth
Collection wool carpets continues to grow despite the
challenging market conditions, and while volumes are
small, these high quality, higher margin carpets provide
a significant contribution to group profits. New Zealand
revenue came under pressure from the decline in low
margin synthetic carpets which affected volumes and
margin. Separately, wool prices have continued to be
impacted by decreased Chinese demand for strong
wool, adversely affecting sales and margins for Cavalier’s
wool buying business, Elco Direct.
We are known for our design innovation and Cavalier’s
new rug offer is growing in popularity. A variety of new
carpets have been developed, with some being launched
in FY19 and a number being finalised for roll out in the next
few months. We have over 1,000 retailer partners across
Australia and New Zealand and increased investment has
been put into rolling out our successful World of Difference
instore display stands across the trade customer network,
providing a unique retail experience.
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 has resulted in a more customer focused
and agile sales team with growth opportunities identified.
In September 2018, we sold our 27.5% shareholding
in the wool scouring business, Cavalier Wool Holdings
Limited (CWH), and the associated property, releasing
$13.4 million of cash in the process. The sale proceeds
were used to significantly reduce debt and strengthen
the balance sheet, enabling us to explore opportunities
in our core business of manufacturing and marketing
high end wool carpet solutions.
FINANCIAL RESULTS
For FY19, revenue was down 9% to $135.2m and net loss
after tax (NLAT) was $(16.8)m.
The result included a $11.9m non-cash loss on the sale
of Cavalier’s interest in the wool scouring business and
associated property as reported at the half year, as well
as $6.8m in after tax impairments of goodwill and fixed
assets. These write downs are non-cash and do not
impact the underlying profitability of the Company.
Excluding these, Cavalier’s normalised EBITDA was
$7.1m and net profit after tax (NPAT) was $1.9m.
Recent valuations assess the worth of Cavalier’s land
and buildings at more than $30m and the Company
had less than $18m in net bank debt at balance date.
The Board is confident in Cavalier’s financial sustainability
and we have the support of our banking partner.
For further information on Cavalier’s FY19 results,
please view the FY19 Investor Presentation and Results
Announcement on the website at cavcorp.co.nz
The results for the year ended 30 June 2019 reflect the changing
market dynamics, with sales of low margin synthetic carpets declining
and an increase in high end wool carpet sales. We continued to move
along the pathway we had set for ourselves in the previous year,
strengthening our focus on wool, driving manufacturing and channel
efficiencies and growing sales in key markets.
4 CAVALIER CORPORATION ANNUAL REPORT 2019

FY19 YEAR IN REVIEW
OPERATING ENVIRONMENT
Softening market and challenging
trading conditions. Low margin
synthetic carpet sales declining;
high quality wool carpets increasing
in demand. Continuing pressure
on strong wool prices.
TRANSFORMATIONAL SHIFT AHEAD
Building on Cavalier Bremworth’s
50 years of history, innovation and
in-depth knowledge of the carpet
sector, to transform into a design-
led wool focused company that is
fit for the next 50 years.
FY20 OUTLOOK
Cavalier is well positioned to capture
demand from consumers seeking a
natural, more sustainable, healthier
alternative without compromising
quality or style. Market conditions
remain challenging. Continue to
drive manufacturing efficiencies
and grow key markets.
REVENUE
Impacted by challenging market conditions
throughout the year. Drop in wool prices
adversely affecting sales for Cavalier’s wool
buying business, Elco Direct.
$135.2m
Stronger performance in 1H19 and lower
costs, offset by reduced carpet sales and
wool buying margins, compared with FY18.
$7.1m
EBITDA (normalised)
Includes $11.9m non-cash loss on sale of interest
in CWH and property held by CWSA, as well as
non-cash after tax impairments of goodwill and
fixed assets of $6.8m.
$16.8m
NLAT
In line with guidance. The Company continues
to trade profitably, with lower FY19 profit due
to the reduced revenue.
$1.9m
NPAT (normalised)
Significant reduction in debt with proceeds
from sale of CWH used to offset debt.
$17.8m
NET DEBT
Normalised is a non-GAAP measure of financial performance and therefore falls within the Financial Markets Authority’s guidance note on “Disclosing non-GAAP
financial information”. Normalised results are not audited and exclude items that are not expected to occur on a regular basis either by virtue of quantum or
nature. Full commentary on the disclosure of non-GAAP financial information and a reconciliation from the non-GAAP financial information to the most directly
comparable GAAP financial information, including that for the previous period, can be found on pages 78 and 79.
5

FY19 YEAR IN REVIEW
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10
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40
50
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FY17FY18FY19
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Inventory turnover
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Return (normalised NPAT)
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39
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FY17FY18FY19
Inventory turnover
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0.0
0.5
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2.5
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2.18
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FY17FY18FY19
Return (normalised NPAT)
on assets %
(1)
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FY17FY18FY19
Gearing %
59
41
32
0
5
10
15
20
25
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FY17FY18FY19
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19
2424
30
32
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38
40
FY17FY18FY19
Days sales in receivables
39
37
32
145
150
155
160
165
170
175
FY17FY18FY19
Inventory turnover
146
154
170
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
FY17FY18FY19
Current ratio
2.18
2.11
2.87
-2
0
2
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6
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10
FY17FY18FY19
Return (normalised NPAT)
on assets %
(1)
3
2
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10
20
30
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FY17FY18FY19
Gearing %
59
41
32
0
5
10
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FY17FY18FY19
Gross profit %
19
2424
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32
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40
FY17FY18FY19
Days sales in receivables
39
37
32
145
150
155
160
165
170
175
FY17FY18FY19
Inventory turnover
146
154
170
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
FY17FY18FY19
Current ratio
2.18
2.11
2.87
-2
0
2
4
6
8
10
FY17FY18FY19
Return (normalised NPAT)
on assets %
(1)
3
2
PercentagePercentagePercentage
DaysDays
0
10
20
30
40
50
60
70
FY17FY18FY19
Gearing %
59
41
32
0
5
10
15
20
25
30
FY17FY18FY19
Gross profit %
19
2424
30
32
34
36
38
40
FY17FY18FY19
Days sales in receivables
39
37
32
145
150
155
160
165
170
175
FY17FY18FY19
Inventory turnover
146
154
170
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
FY17FY18FY19
Current ratio
2.18
2.11
2.87
-2
0
2
4
6
8
10
FY17FY18FY19
Return (normalised NPAT)
on assets %
(1)
3
2
PercentagePercentagePercentage
DaysDays
Normalised is a non-GAAP measure of financial performance and therefore falls within the Financial Markets Authority’s guidance note on “Disclosing non-GAAP
financial information”. Normalised results are not audited and exclude items that are not expected to occur on a regular basis either by virtue of quantum or
nature. Full commentary on the disclosure of non-GAAP financial information and a reconciliation from the non-GAAP financial information to the most directly
comparable GAAP financial information, including that for the previous period, can be found on pages 78 and 79.
6 CAVALIER CORPORATION ANNUAL REPORT 2019

Alan Clarke
Chairman
Paul Alston
Chief Executive Officer
It’s our
heritage...
and our future.
CHAIRMAN & CHIEF EXECUTIVE OFFICER’S REPORT
7

This year we wanted to
focus our commentary
on our vision for our
Company and what the
future holds for us.
You can read about our
progress and performance
in FY19 on pages 4 to 6.
A TRANSFORMATIONAL SHIFT INTO
A DESIGN-LED BUSINESS
Cavalier is at a defining moment in its history as we build
on our heritage and revitalise the demand for wool carpets
as a natural, more sustainable, healthier alternative to
synthetic fibres.
We believe this will provide value not just for our people and
our business, but also the New Zealand wool sector and of
course, consumers, who will benefit from the addition of a
beautiful, natural wool carpet in their home.
For the past 50 years, Cavalier has been considered a world
leader in the manufacture of beautifully crafted carpets
made from New Zealand wool. Then in the last decade,
we saw a groundswell in demand for synthetic fibre carpets,
as manufacturers poured millions of dollars into marketing
and promoting synthetics to consumers.
In response to customer demand, we expanded our range
to include synthetic yarn carpets, whilst retaining our values
of quality and craftsmanship. This required investment
into new manufacturing capabilities, training and marketing
to create a presence in the highly competitive synthetic
carpet sector.
However, we continued to hold firm to our belief that natural
wool was the optimal choice for carpet design, innovation
and overall performance. New product innovation continued
with the ongoing launch of new ranges and styles of wool
carpets and rugs to suit every home.
Now, more than a decade after cheaper synthetic carpets
began to grow in popularity, we are seeing their demand
decline as performance and longevity issues become
apparent. Increased competition is also reducing margins,
making it much more difficult to compete at this end of the
market. Non-wool carpets, even at the higher end, continue
to be a commodity with little yarn innovation, and it is our
belief that only the big players who can produce massive
volumes of these carpets will win at this game.
CHAIRMAN & CHIEF EXECUTIVE OFFICER’S REPORT
8 CAVALIER CORPORATION ANNUAL REPORT 2019

Consumers are also becoming more conscious of the
environmental impact of petrochemical based products
including synthetic textiles.
Wool is the natural alternative. It is biodegradable,
100% sustainable and renewable, suitable for recycling,
removes carbon from the atmosphere and doesn’t release
microplastic pollution like synthetics. Not only that, wool is
fire retardant, naturally resistant to stains, non-allergenic,
offers a more luxurious look and feel and, as it’s made from
natural fibres, it’s cooler in summer but warmer in winter.
Demand for high end wool carpets is growing and sales of
our premium Bremworth Collection are continuing to grow.
Our expertise in wool manufacturing and design spans half
a century and our reputation for quality and innovation
is well founded. We remain one of the few companies
worldwide with the skill and expertise to create beautiful
felted wool carpets, providing that unique, chunky look
that many consumers desire.
We have been increasing our focus on wool over the
past year and, going forward, this will accelerate as we
transform into a design-led, wool focused business. We have
enlisted the support of The New Zealand Merino Company
(NZM), whose sales and marketing expertise helped create
the hugely successful and valuable merino wool industry in
New Zealand. As well as providing a wool supply channel,
the collaboration will see NZM assisting as we identify and
implement a change strategy to position Cavalier for the
next 50 years.
This transformation will mean some organisational changes
to our business. The work we have undertaken in previous
years to consolidate our manufacturing operations will be
of benefit as we move to this next stage in our evolution and
increase our wool carpet production. Further rationalisation
and changes will be required and there will be some short-
term costs, however, we see this as an essential investment
in our long term future.
The quality and craftsmanship of our wool carpets is
undeniable and is recognised by customers around the
world. We will revitalise the demand for wool carpets as a
natural, more sustainable, healthier alternative to synthetic
fibres and further deliver to our World of Difference vision.
More resources will be put into the marketing and promotion
of our wool carpets, and along with this, we’ll be introducing
a new brand architecture that leverages the reputation and
trust of the Cavalier name.
We’ll be retaining the exclusivity of distribution for our high
end Bremworth Collection range of the very finest wool
carpets. The new Cavalier Bremworth Aspire Collection
will also feature wool carpets with a point of difference,
while maintaining a limited distribution. Finally, the Cavalier
Bremworth Lifestyle collection will offer the widest variety
of carpet styles at a more affordable price level and will be
accessible from a larger number of retailers. This provides
a greater opportunity for us to expand our distribution
network, particularly in Australia.
New product development and innovation remains core to
our business. From next year, we will be looking to introduce
new products into the Lifestyle Collection every few months,
with higher end carpets introduced at regular intervals into
the Aspire and Bremworth Collection ranges.
Over 90% of New Zealand’s wool clip is strong wool, from
which carpets and other products are made. The price of
strong wool has been in decline for the past three years
due to reduced Chinese demand, pushing many sheep
farmers to focus on other opportunities. It is our hope that
by connecting consumers with Cavalier’s wool product and
growing sales for our wool carpets, demand for strong wool
will strengthen, along with prices, and benefit wool growers
across New Zealand. We are excited about our future.
9

CHAIRMAN & CHIEF EXECUTIVE OFFICER’S REPORT
WHAT DOES OUR FUTURE LOOK LIKE?
Creating a World of Difference is more than
just a marketing tagline, it has become a
mantra for our business and our people. It’s
about making a difference for our customers,
our people, our shareholders and, at the end
of the day, for discerning homeowners and
commercial outfitters around the world.
Our aspirations for the Cavalier of the
future, are to be recognised as:
> A world leader in beautiful wool carpets,
made from New Zealand wool
> A pioneer in design and craftsmanship
> Delivering uncompromising quality
> Exceeding our customers’ expectations
> Committed to operational and
manufacturing excellence
> Creating a company culture that harnesses
the pride, passion and expertise of
our people
> Providing benefit to the New Zealand
primary sector
> Protecting our environment for
future generations
“ Rather than trying to provide
the solution for all consumer
demands across all types
of carpets, we will focus on
what we know and do best –
high quality wool carpets.”
THE OUTLOOK FOR FY20
“Rather than being all things to all people,
we will focus on what we know and do best –
high quality wool carpets.”
We are moving at pace to develop and implement our new
business model and strategy, which we believe are essential
to ensure the future of our business. The costs associated
with this will be realised in FY20. In parallel, we will be
reducing inventory levels, particularly of discontinued
or end of line stock. We will use the proceeds to further
reduce debt levels.
We will continue to promote the Cavalier brand and will
be rolling out our new brand architecture, which will
provide consumers with more access to Cavalier wool
carpets. This month, we have a number of new product
launches, of carpets crafted using unique techniques and
colours. Textured loops are driving demand in the top end
Bremworth Collection and we will soon be making a similar
option available in our mid-range carpets.
Digital marketing will remain our primary marketing
channel in FY20. In the last year, we have seen a 41%
increase in Instagram followers, and we have a strong
Facebook following. The Cavalier Bremworth website
receives on average 18,000+ unique users per month
in New Zealand and, in Australia, unique monthly site
users climbed 166% over the last year to 16,000. Growing
numbers of people are requesting our carpet samples
through these online channels. We will continue to
enhance the online user journey to make the Cavalier
Bremworth experience a seamless and enjoyable one from
online viewing through to sampling and purchase.
10 CAVALIER CORPORATION ANNUAL REPORT 2019

Earlier in 2019, we developed new advertising that focuses
on our unique New Zealand wool story. Filmed in beautiful
locations including Queenstown’s Dart River, a Hawke’s Bay
farm and of course, one of our factories, the advertising
brings attention to the people, the artistry and the superior
benefits of our wool carpets. We’ll be utilising our new
advertising through our website, Facebook, Instagram
and Google.
Another key focus will be on expanding our distribution
networks, particularly in Australia, by leveraging our new
Cavalier Bremworth Lifestyle collection. We have also
received funding from NZTE to assist in building sales
of our wool carpets in the USA.
Market conditions remain challenging and, while lower end
synthetic carpet sales continue to decline, we expect our
increased focus on our high quality wool carpets to drive
sales in this higher margin category.
In FY19, approximately 50% of our sales volume was wool
carpets, however, they contributed considerably more than
this to company profitability. Our transformation into a
wool focused, design-led business will not only be good for
the environment and our customers, it will also be good for
business and for our shareholders.
We look forward to updating shareholders on our progress
at our Annual Meeting in November.
Alan Clarke
Chairman
Paul Alston
Chief Executive Officer
11

FEATURE STORY
> Sustainable and 100% renewable
> Healthier alternative
> Optimal carpet performance
> Design innovation and craftsmanship
> Increasing consumer demand for
natural and sustainable products
Our future
is with wool.
12 CAVALIER CORPORATION ANNUAL REPORT 2019

SHANE EADES, GM ELCO DIRECT
As General Manager of Cavalier’s wool
buying business, Elco Direct, Shane
Eades started his career with much
of his day spent in shearing sheds, his
hands deep in soft bales of wool, and
talking to farmers.
He now works mostly at the other end of the supply chain,
negotiating the sale of wool lots to customers both in

New Zealand and across the globe. However, he still loves
to get out and about, chatting to farmers, some of whom
he has known for decades.
Elco Direct is New Zealand’s largest private buyer of
wool with 65,000 bales of strong wool bought every
year and then processed into saleable lots by a team of
23 employees. Covering the Central North Island, Elco
Direct has built trusted relationships with sheep farmers
throughout the region.
The business provides a guaranteed supply of strong
wool for Cavalier (between 20% to 30% of requirements),
ensuring that the grade of the wool meets Cavalier’s strict
quality requirements.
Shane has seen significant changes in the wool industry
since he started working for Elco Direct 25 years ago

as a branch manager in Raetihi. While demand for softer
lamb’s
wool and merino for clothing is growing, strong wool
prices have dropped dramatically in the past three years,
primarily due to the introduction of synthetic fibres in
textiles. He sees some farmers moving to sheep that are for
meat only, or that only need shearing once a year. Land use
is also changing, with the push towards planting trees.
But for those who move away from strong wool, there
will be others who remain and will benefit from the more
restricted supply, which should help drive an increase in
future wool prices.
He says Cavalier’s focus on wool carpets is a great thing,
not just for the Company but for the New Zealand wool
industry as a whole. With the majority of Elco’s wool
supply going offshore, he knows the value that his overseas
customers place on the New Zealand story – our clean
green image, the quality of our wool, and the natural
benefits it offers. It’s these attributes that are encapsulated
in Cavalier’s quality wool carpets and rugs and will be the
focus for the Company going forward.
13

FEATURE STORY
ZEPHYR AND STONE, INTERIOR DESIGNER
A multi-faceted interior design
business in Australia, Zephyr and Stone
are as well known for their clever
design solutions as they are for their
aspirational and informative online
content. A brand that is synonymous
with great design, products and
designs must be both functional and
aesthetically beautiful to get their tick.
WHAT IS THE ROLE OF WOOL CARPET AND RUGS IN
INTERIOR DESIGN?
Wool carpets and rugs add texture, pattern and colour

to interiors, and without these crucial elements, spaces
can feel cool, flat and unbalanced. Being a natural fibre,
wool also adds a sense of luxury and warmth; giving
designers scope to manipulate the feel and create the
desired atmosphere within a space.
WHY SHOULD HOME OWNERS CONSIDER

WOOL CARPETS?
There are so many factors to consider when choosing
carpet or rugs for homes, with practicality and aesthetics
being high on the list. When it comes to wool, we find

it’s a good all rounder. It’s stain resistant, hypoallergenic,
and fire resistant – all being high priorities for homes.
It’s available in a broad range of colours, heathered

yarns and varied patterns to suit different home styles.
The other big consideration for home owners is longevity
and wear. This is where we believe wool carpets really
outperform compared to many synthetic options. Wool
wears well and has a long lifespan due to its ability to
spring back, meaning it will keep looking fabulous for
years to come. Finally, the fact it’s 100% sustainable,
biodegradable, and requires a fraction of the energy for
production compared to many synthetic options, makes
wool the environmentally friendly choice too.
WHAT DO YOU LIKE ABOUT CAVALIER BREMWORTH
CARPETS AND RUGS?
For us, specifying Cavalier Bremworth is an easy choice.
Having installed the carpets and rugs in numerous
projects, as well as our own homes, we’ve always been
impressed with the quality and durability, and love the
feeling of luxury it adds underfoot.
Working with Cavalier Bremworth is also easy and
enjoyable. We work with the same team and are supported
by individuals who are familiar with our style and always
available to answer questions. We’re regularly updated
when new ranges and colours are released and feel the
Cavalier Bremworth brand is responsive to the market and
trends, ensuring a diverse range that is broad and current.
The wide price points also means we can find an option
for every budget, and a style to suit all tastes. Being made
in New Zealand using quality New Zealand wool also adds
to their appeal, and we feel confident specifying them for
our clients.
Our future lies
in great design.
14 CAVALIER CORPORATION ANNUAL REPORT 2019

WHAT TRENDS ARE YOU SEEING IN THE MARKET?
The move towards warmer hues, natural finishes and colour
palettes is definitely on the rise in interiors. This is evident
in flooring choices, with warmer, earthy and textural options
gaining popularity. Timber floors are shifting from pale oaks
towards warmer brown tones, and tiles that mimic natural
stone are here to stay.
We believe the ethos of quality over quantity is gaining
ground too, as individuals more consciously consider

the cost on the environment of cheaper, short term
options, and are instead making purchasing choices based
on longevity and sustainability. This should see a rise in
popularity of products that will stand the test of time,
including wool carpets and quality floor coverings.
“ For us, specifying
Cavalier Bremworth is
an easy choice. Having
installed the carpets
and rugs in numerous
projects, as well as our
own homes, we’ve always
been impressed with the
quality and durability,
and love the feeling of
luxury it adds underfoot.”
15

FEATURE STORY
Our people have always been and
remain an essential part of our story.
As we have grown, our workforce has
changed to reflect our increasingly
diversified and multicultural
communities.

Our team is made up of people from a multitude of
cultures, ages and gender across our New Zealand and
Australian operations. What they all have in common
is their passion and pride for Cavalier and their desire
to ensure Cavalier’s future success. We believe deeply
in equality of opportunity. In line with this, we provide
training and career development opportunities and
are investing more in communication and engagement
initiatives across our organisation.
We are proud of our people and their expertise and
knowledge are highly valued and a key ingredient
in our success.
Ian McKenzie
Our future will
be created with
our people.
16 CAVALIER CORPORATION ANNUAL REPORT 2019

MELE LEAAEMANU, SUPERVISOR
More than 14 years ago and straight out of school,
Mele Leaaemanu accepted her first job at Cavalier
in the winding department. Now she’s a Production
Supervisor, responsible for the day to day control of
the Day shift. She’s worked across most areas in the
Auckland factory including maintenance, winding,
product development and tufting.
She says there are countless reasons why she loves
working at Cavalier, but the family orientated work
culture would have to be the best. In addition,
watching staff hold themselves and others accountable
for their actions in the hopes of creating a safe work
environment is amazing.
Mele is currently being sponsored by Cavalier to
participate in a 12 month Leadership & Development
programme. She says she’s learning new leadership
skills and the course is helping her understand
the importance of communication. “With open
communication, staff feel more included, more secure
and happy to participate. That all helps build a work
environment where everyone feels like family.”
An advocate for Cavalier carpets, Mele says that
“they are the best”.
“ Being involved in each
step as the carpet is made,
from start to finish, makes
me feel so proud because
I know we are all creating
something special for
customers to put in their
homes and be happy with.”
Mele Leaaemanu
IAN MCKENZIE, FELTER
Cavalier continues to lead the way in felted yarn
technology, a process that locks woollen fibres
together, creating stronger, chunkier textured carpets
with intricate designs.
Felting is a relatively new manufacturing capability for
Cavalier and long-time employee, Ian McKenzie, was
eager to find out as much as possible about the process
when it was first introduced to the Whanganui plant.
“I wanted to understand the how and why of felting so
I asked lots of questions to help me understand what’s
important and what we can do to make Cavalier’s felted
yarns the best they can be.”
Ian started working for Cavalier 33 years ago and,
“having done just about every job there is”, his
background in yarn making is considerable. Now
described by his colleagues as a ‘felting guru’, Ian
is a process operator and works on the day shift,
processing the wool, quality checking and testing,
maintaining equipment and performing other
numerous tasks to keep the felting machines running.
He also makes the tubes that the wool yarn is fed
through, an essential part of the felting process with
up to 100 new tubes required each week.
The Whanganui plant runs 24 hours a day, five days
a week. Ian takes pride in his work and says he loves
seeing how their work is incorporated into new carpets
and rugs. Naturally, Ian has Cavalier carpets in his own
home and says they look as good now as they did when
they were first laid 10 years ago.
17

FEATURE STORY
Cavalier is a business that grew out of
the friendship and partnership of two
men, Grant Biel, who remains a director
on the Board today, and Tony Timpson.
Together, they set up a carpet factory
in a small tin shed in Wiri in Auckland
in the 1970s before creating the iconic
Cavalier Bremworth brand in 1987.
Even back then social responsibility was important, with
a focus on staff, shareholders and suppliers. Cavalier was
one of the first companies in New Zealand to pay women
at equal rates to men and to allow women to work on
the nightshift – something that was frowned upon at
the time. Women continue to play an important role and
contribute greatly to the Company. Add to this the natural
environmental benefits of wool and Cavalier was already
well positioned as a sustainable business, well before the
term became part of the business lexicon.
Today, Cavalier’s people, shareholders, suppliers and its
focus on natural wool carpets remain at the core of the
business’s philosophy.
Wool is a miracle fibre and offers many environmental
and performance benefits – its 100% renewable and
biodegradable; wool fibres naturally help to regulate
humidity which means homes feel fresh and dry; it acts
as a form of thermal insulation; is non-allergenic, fire
resistant, naturally resistant to stains and easy to clean.
Responsible procurement including farming practices,
animal welfare and our relationships with farmers are
important to us, as are the protection of resources such

as water and carbon emissions.
Our future will
benefit future
generations.
18 CAVALIER CORPORATION ANNUAL REPORT 2019

The farming of wool can help restore and enhance the land
with grazing of sheep helping to improve soil quality and
the ability of the land to absorb and retain water. Sheep are
usually grazed on land that is unsuitable for food crops and
therefore do not displace the planting of food crops.
Wool is a short-term store of natural, renewable carbon,
with up to 50% of the weight of wool being pure carbon.
While the carbon is stored in wool and thus isolated, there
is less carbon in the atmosphere.
On the flip side, we recognise that our manufacturing and
processing can come at a cost to the environment and are
continually looking at ways to reduce the impact.
Cavalier Bremworth was the first to gain an internationally
recognised eco-label across the wool range in 2000.
In 2006, we were awarded Environmental Choice
NZ accreditation, shortly followed by the equivalent
certification in Australia from Good Environmental Choice
Australia (GECA).
“ Responsible procurement
including farming
practices, animal welfare
and our relationships with
farmers are important to
us, as are the protection
of resources such as water
and carbon emissions.”
Today, our Cavalier Bremworth carpets carry an
independent environmental grading from the Australian
Carpet Classification Scheme - ACCS ECS which
demonstrates our commitment to environmental best
practice standards for our carpet production.
While our social and environmental responsibilities

have always been a part of our ethos, this year we are
starting the journey towards a more formal measuring
and monitoring of key areas within our business. We

will update shareholders on these at the end of FY20.
19

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 was appointed Deputy Chairman
of the Board in April 2019 and
Chairman of the Board’s Audit
Committee in October 2018.
George is also a member of the
Board’s 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 Apollo
Foods Limited, Insightful Mobility
Limited, Mix Limited, Netlogix Group
Holdings Limited, The Business
Leaders Health and Safety Forum and
the Work Related Health Advisory
Board, as well as a director of Tegel
Group Holdings Limited, Rubicon
Limited and Competenz.
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 business
and held the position of executive
Director from July 1984 to
September 1995.
His other directorships include
Auckland Air Charter Limited,
Heli Harvest Limited, Rural
Aviation (1963) 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 27 years.
He has held responsibilities as CEO
and Managing Director over that
time, formulating and implementing
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.
20 CAVALIER CORPORATION ANNUAL REPORT 2019

21
J M (John) Rae
B.Com., LLB, CMInstD
John Rae is an independent Director
and joined the Cavalier Board in
July 2015.
He is 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, Oha Honey GP
Limited, Smart Environmental Limited
and Thos Corson Holdings Limited.
He is also a director of Corson Grain
Limited, the Eastland Group of
companies, 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) and West Auckland Trust
Services Limited.
21

Management
Team.
Paul Alston
Chief Executive Officer
Paul is an experienced senior executive who joined
Cavalier in 2013 as CFO, before taking on the CEO role
in 2015. He has oversight of all strategy and operations
of Cavalier group. Paul has both New Zealand and
international experience having worked for investment
banks in London and Europe, as well as ENZA and
Turners & Growers in New Zealand. He has significant
experience in transformational change within
organisations. Paul is a Chartered Accountant and
holds a Bachelor of Business Studies.
Victor Tan
Chief Financial Officer and Company Secretary
Victor is a long standing member of the Cavalier team,
having joined in 1984 just after the Company listed on the
NZSE. He worked in various finance roles within the Group
before being appointed CFO and Company Secretary in
2004. Following a three year hiatus from the CFO role, he
was reappointed in December 2017. Victor is a Chartered
Accountant and a Fellow of the Institute of Chartered
Secretaries and Administrators (FCIS).
Shane Eades
GM Elco Direct
Shane started his career in the wool industry, before
joining the business which became Elco Direct, in 1994.
He has worked across the industry as a branch manager,
wool buyer and within a wool scouring business. He
moved to his current position with Elco Direct in 2017
and has responsibility for negotiating the sale of wool lots
to customers both in New Zealand and across the globe.
Shane has strong, long standing relationships with wool
growers and remains involved in all aspects of the business.
He holds qualifications in Wool and Wool Technology.
Dean Chandler
GM Sales New Zealand
Dean joined Cavalier in 2004, working for the Norman
Ellison Carpets business for nine years before moving to a
role with Cavalier Bremworth. As GM Sales New Zealand,
Dean is responsible for leading the strategic direction
within major channel partners, managing the development
of a high performing sales team and training. He has
over 20 years’ experience in the flooring market, across
residential and commercial segments as well as retail, and
has built strong relationships with Cavalier’s key channels.
Dean holds a BCA in Commercial Law and Management.
Linda Arbuckle
Group Financial Controller
Linda joined the Cavalier family in 2004, as an accountant
with Norman Ellison Carpets. In 2012, she moved to her
current role as Group Financial Controller for Cavalier and
is now responsible for the New Zealand and Australian
finance divisions. Linda is a Chartered Accountant and
has more than 20 years’ experience in accounting for
manufacturing companies.
Craig Wallis
GM Manufacturing
Craig joined Cavalier in October 2015 as GM
Manufacturing. His career has been mostly spent in
large scale manufacturing companies across varied
industries as well as in logistics. Craig’s role involves
responsibility for Cavalier’s three manufacturing sites, as
well as the Distribution, Planning/Procurement, Samples
Manufacturing and Customer Services functions. His
strengths lie in continuous improvement, culture change
and developing teams and people. Craig has qualifications
in Engineering and Production.
22 CAVALIER CORPORATION ANNUAL REPORT 2019

Trevor Jones
Group Information Technology Manager
Trevor joined Cavalier in 2013, bringing with him extensive
experience in developing and implementing manufacturing
companies’ digital strategies. He previously held similar
roles with other iconic New Zealand and international
companies and specialises in Enterprise Systems, project
management and industry 4.0. Trevor holds a Bachelor
of Commerce IT Hons and has undertaken other post-
graduate qualifications.
Rochelle Flint
GM Marketing and International Operations
Rochelle joined Cavalier in 2013 and has over 17 years’
experience in the flooring industry in a diverse range
of roles from sales, key account management and
marketing through to product development. She has
also spent considerable time in the Australian market.
She was appointed to her current role in April this year
and has responsibility for Group product development
and marketing as well as overseeing all of Cavalier’s
international markets, including Australia. Rochelle holds
a Bachelor of Business Marketing & Management.
Dr Kirstine Hulse
GM Health and Safety
Kirstine joined Cavalier in July 2019 and has over 15
years’ experience in a diverse range of roles in high
risk industries. She has particular expertise in process
optimisation and integration of health & safety,
environmental and product quality into everyday
operations, as well as adopting digital innovation into
health and safety. Kirstine is responsible for the strategic
direction of health & safety for Cavalier. She holds a
Bachelor of Chemical & Materials Engineering (Hons)
and a Doctor of Philosophy in process engineering
from the University of Auckland.
23

> Completion of
organisational review
> Sale of loss-making
carpet tile operation
> Sale of Australian
property
> Consolidation of
manufacturing
operations and
reorganised the
business
> Repositioned Cavalier
Bremworth brand
> Completion of
restructuring:
more costly and
time consuming
than expected and
impacted results
> Notable drop in
wool price
> Turnaround year
with more efficient
structure
> New strategic focus
on high end carpets
> Recovery from impact
of restructuring
> Strengthen focus on
high quality, higher
margin wool carpets
> Sale of wool
scouring business
and restructure of
Australian operations
> Tightening market
conditions
0
50
100
150
200
250
FY15FY16FY17FY18FY19
Revenue
$ millions
0
2
4
6
8
10
12
14
FY15FY16FY17FY18FY19
Normalised EBITDA
$ millions
-4
-2
0
2
4
6
8
FY15FY16FY17FY18FY19
Normalised NPAT/NLAT
$ millions
215.7
190.4
156.1
148.1
135.2
8.5
12.3
2.6
10.0
7.1
1.2
6.3
-1.9
4.0
1.9
0
50
100
150
200
250
FY15FY16FY17FY18FY19
Revenue
$ millions
0
2
4
6
8
10
12
14
FY15FY16FY17FY18FY19
Normalised EBITDA
$ millions
-4
-2
0
2
4
6
8
FY15FY16FY17FY18FY19
Normalised NPAT/NLAT
$ millions
215.7
190.4
156.1
148.1
135.2
8.5
12.3
2.6
10.0
7.1
1.2
6.3
-1.9
4.0
1.9
0
50
100
150
200
250
FY15FY16FY17FY18FY19
Revenue
$ millions
0
2
4
6
8
10
12
14
FY15FY16FY17FY18FY19
Normalised EBITDA
$ millions
-4
-2
0
2
4
6
8
FY15FY16FY17FY18FY19
Normalised NPAT/NLAT
$ millions
215.7
190.4
156.1
148.1
135.2
8.5
12.3
2.6
10.0
7.1
1.2
6.3
-1.9
4.0
1.9
FY15FY16FY17FY18FY19
FIVE YEAR PERFORMANCE TRENDS
The past five years have seen the Company transforming
as we responded to changing market conditions and
consumer demands. Cavalier is now stronger, more
efficient and better aligned to our markets. We have set
our strategic direction with a clear focus on wool, building
on our heritage and our proven expertise. While there is
still more to do, we are optimistic and excited about what
the future holds for our Company.
Normalised is a non-GAAP measure of financial performance and therefore falls within the Financial Markets Authority’s guidance note on “Disclosing non-GAAP
financial information”. Normalised results are not audited and exclude items that are not expected to occur on a regular basis either by virtue of quantum or
nature. Full commentary on the disclosure of non-GAAP financial information and a reconciliation from the non-GAAP financial information to the most directly
comparable GAAP financial information, including that for the previous period, can be found on pages 78 and 79.
24 CAVALIER CORPORATION ANNUAL REPORT 2019

TREND STATEMENT – (UNAUDITED)
2019
$000
2018
$000
2017
$000
2016
$000
2015
$000
2014
$000
2013
$000
Financial Performance
Operating revenue$135,234$148,120$156,120$190,371$215,728$200,642$201,739
EBITDA (normalised)7,0769,9982,57212,2758,517
14,60912,142
EBIT (normalised)3,5976,437(679)8,9232,6558,7605,814
Profit/(Loss) before

income tax (normalised)2,4515,058(2,818)8,2197417,3207,087
Profit/(Loss) after tax
(normalised)1,8793,974(1,856)6,3131,1955,7906,624
Abnormal costs (after tax)
(18,659)107(268)(3,198)(26,910)–(3,594)
(Loss)/Profit after tax
attributable to shareholders
of the Company (GAAP)(16,780)4,081(2,124)3,115(25,715)5,7903,030
Ordinary dividends paid–––––(4,785)–
Financial Position
Shareholders’ equity54,98972,22267,89069,36166,18492,95993,918
Loans and borrowings20,50031,50041,50037,70056,76761,22059,216
Fixed assets30,16435,14237,123
36,82047,91063,90068,932
Goodwill and other
intangibles–2,3622,3622,3622,3627,7947,794
Cash at bank2,72
42,1111,2551,2002,8342,3755,932
Return on average
shareholders’ equity
(normalised)3.0%5.7%(2.7)%9.3%1.5%6.2%7.2%
Basic earnings per ordinary
share (normalised)2.7c5.8c(2.7)c9.2c1.7c8.5c9.7c
Net tangible asset backing
per ordinary share$0.72$0.94$0.87$0.92$0.91$1.19$1.22
Normalised is a non-GAAP measure of financial performance and therefore falls within the Financial Markets Authority’s guidance note on “Disclosing non-GAAP
financial information”. Normalised results are not audited and exclude items that are not expected to occur on a regular basis either by virtue of quantum or
nature. Full commentary on the disclosure of non-GAAP financial information and a reconciliation from the non-GAAP financial information to the most directly
comparable GAAP financial information, including that for the previous period, can be found on pages 78 and 79.
25

26 CAVALIER CORPORATION ANNUAL REPORT 2019
Financial Statements
For the year ended 30 June 2019
27 Directors’ Responsibility Statement
28 Independent Auditor’s Report
33 Income Statement
34 Statement of Comprehensive Income
35 Statement of Changes in Equity
37 Statement of Financial Position
38 Statement of Cash Flows
Notes to the Financial Statements
40 1. Company information
40 2. General information relating to
preparation of financial statements
3. Financial performance
45 3a. Segment performance
47 3b. Earnings per share
48 3c. Revenue
48 3d. Other income and gains
48 3e. Administration expenses
49 3f. Personnel expenses
49 3g. Net finance costs
49 3h. Income tax
4. Funding
52 4a. Capital management
53 4b. Share capital, dividends and reserves
54 4c. Loans and borrowings
5. Assets employed
55 5a. Property, plant and equipment
58 5b. Capital commitments
58 5c. Goodwill
6. Working capital
58 6a. Cash and cash equivalents
59 6b. Trade receivables, other
receivables and prepayments
59 6c. Inventories
60 6d. Trade payables and accruals
60 7. Risks and financial instruments
8. Others
70 8a. Equity-accounted investees
72 8b. Provisions
73 8c. Employee benefits
74 8d. Operating leases
74 8e. Contingencies
75 8f. Related parties
76 8g. Group entities
77 8h. Event after balance date
77 8i. Standards, interpretations and
amendments to standards

27
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 followed.
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 33 to 77, the Group financial statements for the year ended 30 June 2019.
These financial statements were authorised for issue by the Directors on 26 August 2019 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
T H G Adams
Chairman of the Audit Committee
DIRECTORS’ RESPONSIBILITY STATEMENT

28 CAVALIER CORPORATION ANNUAL REPORT 2019
TO THE SHAREHOLDERS OF CAVALIER CORPORATION LIMITED
Report on the audit of 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 33 to 77:
i. present fairly in all material respects the Group’s
financial position as at 30 June 2019 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 2019;
— the consolidated income statement, statements of
other 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.
MATERIAL UNCERTAINTY RELATED TO GOING CONCERN
We draw attention to the Going concern section in Note 2 of the consolidated financial statements, which indicates
there is a material uncertainty concerning the Group’s ability to achieve financial forecasts and generate sufficient
cash flows to ensure the Group will be able to comply with its financial covenants over the term of the facility
agreement and maintain the Group’s ongoing liquidity.
We evaluated management’s forecasts, projected compliance with its debt obligations and ability to maintain liquidity
by performing the following procedures:
— Reviewed terms of the Group’s revised facility agreement dated 28 June 2019.
— 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.
INDEPENDENT AUDITOR’S REPORT

29
INDEPENDENT AUDITOR’S REPORT (continued)
— 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.
— Considered other possible outcomes in relation to the key assumptions and using these performed a sensitivity
analysis of the Group’s forecast.
— Assessed the adequacy of related disclosures in the financial statements against the requirements of the financial
reporting standards.
As stated in Note 2, these events or conditions, along with other matters as set forth in Note 2, indicate that a material
uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern. Our opinion is
not modified in respect of this matter.
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.

30 CAVALIER CORPORATION ANNUAL REPORT 2019
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. Except for the matter described in the material uncertainty
related to going concern, 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
Impairment of non-current assets
Refer to Notes 5a and 5c to the Financial Statements.
As at 30 June 2019, prior to any adjustment for impairment,
the carrying amount of property, plant and equipment
(‘PP&E’) and goodwill relating to the Carpets cash
generating unit (‘CGU’) was $34,630,000 and $2,362,000,
respectively.
The Group’s market capitalisation of $21,977,000 was
significantly below the carrying value of its net assets
of $61,764,000 (pre-impairment) as at 30 June 2019.
This disparity was an indicator of 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
that non-current assets allocated to the Carpets CGU
were impaired by $8,491,000. As a result, management
have fully impaired the carrying value of goodwill, and
impaired plant and equipment by $6,129,000. Property
has not been impaired as its fair value as determined by
an independent valuer exceeds its carrying value.
As disclosed in Note 5a and 5c, in assessing whether
the non-current assets allocated to the Carpets CGU
of the Group are impaired, the Group uses a Discounted
Cash Flow (‘DCF’) model. 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.
> We cross referenced the outcome of the DCF
impairment model against the Group’s market
capitalisation and breakup value of net assets.
> 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.
Our procedures used a variety of judgements and
assumptions which indicated a range of possible
outcomes. The impairment charged was within that range.

31
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. During the year there was a
deterioration in the Group’s inventory turnover ratio.
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 ongoing 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.
> Performed a detailed inventory turnover analysis and
considered whether any excess quantities of inventory
are on hand.
> Reviewed and tested underlying sales and inventory
cost reports.
We used the information from the above procedures to
calculate our own provision for inventory obsolescence.
The provision recorded was materially consistent with
our own calculation.
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 the 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.
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.
INDEPENDENT AUDITOR’S REPORT (continued)

32 CAVALIER CORPORATION ANNUAL REPORT 2019
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
26 August 2019
INDEPENDENT AUDITOR’S REPORT (continued)

33
Note
2019
$000
2018
$000
Revenue3c135,234148,120
Cost of sales(102,378)(111,917)
Gross profit32,85636,203
Other income and gains3d4177
Distribution expenses(22,486)(23,016)
Administration expenses3e(6,814)(6,737)
Restructuring costs–189
Impairment of fixed assets5a(6,129)(90)
Impairment of goodwill5c(2,362)–
Reversal of impairment of fixed assets5a–137
Results from operating activities(4,894)6,763
Net finance costs3g(1,790)(2,798)
Share of profit after tax of equity-accounted investees8a6441,291
Loss on sale of interest in, and property held by, equity-accounted investees8a(11,884)–
(Loss)/Profit before income tax(17,924)5,256
Income tax benefit/(expense)3h1,144(1,175)
(Loss)/Profit after tax for the year$(16,780)$4,081
Basic and diluted (loss)/earnings per share (cents)3b(24.4)5.9
This statement is to be read in conjunction with the notes on pages 40 to 77.
INCOME STATEMENT
For the year ended 30 June 2019

34 CAVALIER CORPORATION ANNUAL REPORT 2019
Note
2019
$000
2018
$000
(Loss)/Profit after tax for the year(16,780)4,081
Other comprehensive income that may be reclassified subsequently
to profit or loss
Effective portion of changes in fair value of cash flow hedges229785
Net change in fair value of cash flow hedges transferred to profit or loss(536)(300)
Income tax on changes in fair value of cash flow hedges3h86(136)
Share of fair value of cash flow hedges (net of income tax) of
equity-accounted investee8a72(97)
Foreign currency translation differences for foreign operations–(1)
(149)251
Other comprehensive income not reclassified subsequently to profit or loss––
Other comprehensive income for the year, net of income tax(149)251
Total comprehensive income for the year$(16,929)$4,332
This statement is to be read in conjunction with the notes on pages 40 to 77.
STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 June 2019

35
STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2019
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 2018$21,846$(70)$(1,420)$51,866$72,222
Change in accounting policy2–––(304)(304)
Total equity at 1 July 2018 after adjusting
for impact of change in accounting policy21,846(70)(1,420)51,562$71,918
Total comprehensive income for the year–––(16,780)(16,780)
Loss after tax
Other comprehensive income that may be
reclassified subsequently to profit or loss
Changes in fair value of cash flow hedges
(net of income tax)–(221)––(221)
Share of fair value of cash flow hedges (net of
income tax) of equity-accounted investee8a–72––72
–(149)––(149)
Other comprehensive income not reclassified
subsequently to profit or loss–––––
Total other comprehensive income–(149)––(149)
Total comprehensive income for the year–(149)–(16,780)(16,929)
Transactions with owners, recorded directly
in equity–––––
Total equity at 30 June 2019$21,846$(219)$(1,420)$34,782$54,989
This statement is to be read in conjunction with the notes on pages 40 to 77.

36 CAVALIER CORPORATION ANNUAL REPORT 2019
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 year
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 income tax)–349––349
Share of fair value of cash flow hedges (net of
income 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 year–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 40 to 77.
STATEMENT OF CHANGES IN EQUITY (continued)
For the year ended 30 June 2019

37
STATEMENT OF FINANCIAL POSITION
As at 30 June 2019
Note
2019
$000
2018
$000
ASSETS
Property, plant and equipment5a30,16435,142
Goodwill5c–2,362
Investment in equity-accounted investees8a–24,544
Deferred tax asset3h5,4564,971
Total non-current assets35,62067,019
Cash and cash equivalents6a2,7242,111
Trade receivables, other receivables and prepayments6b12,34415,582
Inventories6c47,67847,321
Derivative financial instruments7653971
Income tax receivable315–
Total current assets63,71465,985
Total assets$99,334$133,004
EQUITY
Share capital4b21,84621,846
Cash flow hedging reserve4b(219)(70)
Foreign currency translation reserve4b(1,420)(1,420)
Retained earnings34,78251,866
Total equity54,98972,222
LIABILITIES
Loans and borrowings4c20,50027,500
Employee benefits8c903911
Provisions8b7151,118
Total non-current liabilities22,11829,529
Loans and borrowings4c–4,000
Trade payables and accruals6d17,01419,490
Provisions8b6992,214
Employee entitlements3,8564,076
Deferred income947
Derivative financial instruments7649593
Income tax payable–833
Total current liabilities22,22731,253
Total liabilities44,34560,782
Total equity and liabilities$99,334$133,004
This statement is to be read in conjunction with the notes on pages 40 to 77.

38 CAVALIER CORPORATION ANNUAL REPORT 2019
STATEMENT OF CASH FLOWS
For the year ended 30 June 2019
Note
2019
$000
2018
$000
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from customers135,700149,448
Cash paid to suppliers and employees(130,611)(135,587)
5,08913,861
Dividends received21
Other receipts44
GST refunded14665
Interest paid(1,918)(2,773)
Income tax (paid)/refunded(285)385
Net cash flow from operating activities2,90612,143
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property, plant and equipment110161
Acquisition of property, plant and equipment5a(4,705)(1,622)
Proceeds from sale of interest in, and property held by,
equity-accounted investees8a10,593–
Dividends received from equity-accounted investees8a2,783140
Net cash flow from investing activities8,781(1,321)
CASH FLOWS FROM FINANCING ACTIVITIES
Movements in bank borrowings4c(11,000)(10,000)
Net cash flow from financing activities(11,000)(10,000)
Net increase in cash and cash equivalents687822
Cash and cash equivalents at beginning of the year2,1111,255
Effect of exchange rate changes on cash(74)34
Cash and cash equivalents at end of the year$2,724$2,111
This statement is to be read in conjunction with the notes on pages 40 to 77.

39
STATEMENT OF CASH FLOWS (continued)
For the year ended 30 June 2019
RECONCILIATION OF PROFIT/LOSS WITH NET CASH FLOW FROM OPERATING ACTIVITIES
2019
$000
2018
$000
(Loss)/Profit after tax for the year(16,780)4,081
Add/(Deduct) non-cash items:
Depreciation3,4793,561
Impairment of fixed assets6,12990
Impairment of goodwill2,362–
Reversal of impairment of fixed assets–(137)
Share of profit of equity-accounted investees(644)(1,291)
Loss on sale of interest in, and property held by, equity-accounted investees11,884–
Deferred tax benefit(399)425
Employee benefits(228)58
Deferred income(37)(38)
Provisions(1,918)(974)
Net gain on sale of property, plant and equipment(35)(72)
Net (gain)/loss on foreign currency balance74(34)
Changes in working capital items:
Trade and other receivables5111,679
Inventories1,5313,314
Income tax payable/receivable(1,030)1,134
Trade payables and accruals(2,060)635
Derivative financial instruments67(288)
Net cash flow from operating activities$2,906$12,143
This statement is to be read in conjunction with the notes on pages 40 to 77.

40 CAVALIER CORPORATION ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2019
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 2019.
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 sales and manufacturing.
All Group subsidiaries are wholly-owned.
The Group had a 27.5% interest in commission woolscourer, Cavalier Wool Holdings Limited (“CWH”). It also
has a 50% interest in property-owning entity, CWS Assets Limited (“CWSA”). The Group sold its interest in CWH,
and CWSA sold the property that it held, on 30 September 2018.
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, except for 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.
During the year ended 30 June 2019, the Group encountered challenging trading conditions and had difficulties
achieving its forecast sales and profitability targets, resulting in the Group renegotiating its EBITDA and
inventory bank covenants in December 2018 to better reflect the conditions prevailing at the time. The Group
further renegotiated its banking covenants on 28 June 2019 as part of the extension of its funding facilities to
1 September 2020.
For the year to June 2019, the Group made a loss after tax of $16,780,000 which included a non-cash loss on the
disposal of its 27.5% interest in, and property held by, equity-accounted investees of $11,884,000 and impairment
of goodwill and plant and equipment of $6,775,000 after tax. Carpet sales revenue decreased by 9%, on carpet sales
volume 12% lower, during the year.

41
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 30 June 2019
The June 2019 extension of the funding facilities established covenants, with compliance dependent on the Group
achieving an increase in carpet sales volumes and margins compared with the previous year.
The Group’s ability to comply with the Bank’s financial covenants, as disclosed 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 the issuance of the Group’s financial statements
is important to determining the appropriateness of the going concern basis of accounting.
Management forecasts the Group’s financial performance, cash flows and financial position as part of its
management and monitoring of the Group’s operations, including ensuring that the Group will be able to comply
with its financial covenants and debt repayment obligations over the term of the facility. In preparing these
financial forecasts, the following assumptions have been made:
(i) an increase in carpet sales volumes and woollen carpet pricing of 9% and 4% respectively, in comparison with
the financial year ended 30 June 2019;
(ii) NZD:AUD rate of 0.9300, after considering hedged positions;
(iii) operating performance of the Group’s manufacturing plants consistent with that for the financial year ended
30 June 2019;
(iv) wool price, scoured and delivered, of $4.08/kg; and
(v) a 2% reduction in inventory.
The Board of Directors (“Board”) notes that these financial forecasts are particularly sensitive to changes in sales
volumes and margins. Keeping all other assumptions constant, the Group would likely breach its financial covenants
if the Group was unable to achieve an increase in sales volumes of 4% or, alternatively, an increase in sales price
compared with the financial year ended 30 June 2019.
A decrease in sales volumes by 7% and failing to achieve a sales price increase would likely result in the Group
ceasing to generate positive cash flows from operations.
As a consequence, the Board believes there is material uncertainty concerning the Group’s ability to achieve its financial
forecasts which may cast significant doubt on the Group’s ability to comply with the Bank’s financial covenants and
continue as a going concern.
Should the Group not achieve its financial forecasts and meet its debt obligations, the Group may not be able
to continue as a going concern and realise the value in its assets and discharge its liabilities in the normal course
of business.
The Board has implemented a number of initiatives to address this uncertainty including:
(i) plans to grow carpet sales by focusing on in-store presence, supply chain improvements and on-going
product development and range refreshment;
(ii) initiatives to reduce the cost base; and
(iii) appointment of a sub-committee of the Board to oversee the implementation of the strategy to grow
carpet sales.
Additionally, the Board notes, after taking into consideration the 7 August 2019 valuation of the Group’s Auckland
property that was carried out by CBRE, that the fair value of the property on commercial sale and leaseback terms
would be sufficient to settle the Group’s debt facility should the need arise.
The Board considers the Group to be a going concern and believes that the Group will be able to meet its contractual
obligations as further disclosed at note 4c (Loans and borrowings) and note 7 (Risks and financial instruments and risks)
to the financial statements.
2. GENERAL INFORMATION RELATING TO PREPARATION OF FINANCIAL STATEMENTS
(continued)
Going concern (continued)

42 CAVALIER CORPORATION ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 30 June 2019
Significant accounting policies, estimates and judgements
The preparation of financial statements requires management to make judgements, estimations 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 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 2019
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 and changes in accounting policies
There have been no changes in the accounting policies adopted in the preparation of the financial statements except
as a consequence of the Group’s adoption of NZ IFRS 9 Financial Instruments (NZ IFRS 9) and NZ IFRS 15 Revenue
from Contracts with Customers (NZ IFRS 15) during the year.
Impact of the adoption of NZ IFRS 9
Effective 1 July 2018, the Group applied NZ IFRS 9 for its accounting of financial instruments, which included the
adoption of the expected loss model, as opposed to the incurred loss model under the old standard, for the
assessment of trade and other receivables for impairment. Under the new standard, the Group assesses impairment
of trade and other receivables on a forward-looking basis, taking into account not only past events and current
conditions, but also forecast of future economic conditions.
It has been determined that the impact of the new standard on the assessment of trade and other receivables for
impairment is minimal.
2. GENERAL INFORMATION RELATING TO PREPARATION OF FINANCIAL STATEMENTS
(continued)

43
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 30 June 2019
2. GENERAL INFORMATION RELATING TO PREPARATION OF FINANCIAL STATEMENTS
(continued)
New and amended accounting standards adopted (continued)
Impact of the adoption of NZ IFRS 9 (continued)
From 1 July 2018, the Group classifies its financial assets and financial liabilities in the following measurement
categories: those to be measured subsequently at fair value (either through other comprehensive income (‘OCI”),
or through profit or loss), and those to be measured at amortised cost.
The classification and measurement of financial instruments have resulted in trade and other receivables and cash
and cash equivalents being reclassified as amortised cost (previously loans and receivables) in note 7 (Risks and
Financial Instruments) to the financial statements. Derivative financial instruments that are in cash flow hedge
relationships are measured at fair value through other comprehensive income where the hedges are effective.
Derivative financial instruments that are not in a cash flow hedge relationship or where the hedges are ineffective
are measured at fair value through profit or loss. All other financial instruments (including cash, trade and other
receivables, trade payables and bank borrowings) are measured at amortised cost.
The Group elected to apply the cumulative effect method, with no restatement of comparative period amounts, in
applying NZ IFRS 9. The cumulative effect of applying the new standard is minimal, with no adjustment to the
opening balance of retained earnings recognised in the Statement of Changes in Equity required as a consequence.
Impact of the adoption of NZ IFRS 15
Effective 1 July 2018, the Group also applied NZ IFRS 15 for its accounting of revenue from contracts with customers.
Based on the five-step assessment performed by the Group pursuant to NZ IFRS 15, the impact of the new standard
is minimal. All of the revenue earned by the Group is derived from the satisfaction of a single performance obligation
for each contract, which can be for the sale of carpet, carpet yarn or wool. This revenue has historically been
recognised at the time there is the transfer of the risks and rewards of ownership of the products sold to the
customer. It has been determined that revenue is now recognised when the customer obtains control of the
products sold, typically on the earlier of payment or delivery.
It has also been determined that there are:
• no material changes to the accounting for rebates, discounts or any other variable consideration under
NZ IFRS 15; and
• no financing components within the Group’s sales arrangements.
The new accounting policy on revenue is disclosed in note 3c (Revenue) to the financial statements.
The Group also elected to apply the cumulative effect method, with no restatement of comparative period amounts,
in applying NZ IFRS 15. The cumulative effect of applying the new standard is dealt with as an adjustment to the
opening balance of retained earnings recognised in the Statement of Changes in Equity.
The Group’s revenue recognition policy remains largely the same with the exception that revenue is now recognised
when the customer obtains control of the products sold, typically on the earlier of payment or delivery.
The adoption of NZ IFRS 15 has impacted the timing of when some revenue is recognised, resulting in the following
adjustments to opening retained earnings.
$000
Retained earnings as at 1 July 2018 before NZ IFRS 15 adjustments51,866
Change in revenue(2,371)
Change in cost of sales1,949
Change in income tax expense118
Retained earnings as at 1 July 2018 after NZ IFRS 15 adjustments$51,562

44 CAVALIER CORPORATION ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 30 June 2019
2. GENERAL INFORMATION RELATING TO PREPARATION OF FINANCIAL STATEMENTS
(continued)
New and amended accounting standards adopted (continued)
Impact of the adoption of NZ IFRS 15 (continued)
The table below shows the effect of the adoption of NZ IFRS 15 on 1 July 2018 on the Condensed Consolidated
Statement of Financial Position:
As previously
reported
$000
NZ IFRS 15
reclassifications
$000
Restated
$000
Assets
Trade receivables, other receivables and prepayments15,582(2,727)12,855
Inventories47,3211,88949,210
Total impact on assets$62,903$(838)$62,065
Liabilities
Trade payables and accruals19,490(416)19,074
Income tax payable833(118)715
Total impact on liabilities$20,323$(534)$19,789
Retained earnings$51,866$(304)$51,562

45
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 30 June 2019
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 sales and manufacturing; 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 year 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.
2019
$000
2018
$000
Revenue
New Zealand78,31684,482
Australia52,64057,878
Rest of the world4,2785,760
$135,234$148,120
As at
30 June 2019
$000
As at
30 June 2018
$000
Non-current assets
New Zealand34,95566,522
Australia665497
$35,620$67,019
Major customers
None of the Group’s external customers contributed revenues in excess of 10% of the Group’s total revenues.

46 CAVALIER CORPORATION ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 30 June 2019
3. FINANCIAL PERFORMANCE (continued)
3a. Segment performance (continued)
CarpetsWool AcquisitionTotal
2019
$000
2018
$000
2019
$000
2018
$000
2019
$000
2018
$000
External revenue113,059123,72422,17524,396135,234148,120
Inter-segment revenue––3,2773,0693,2773,069
Total revenue$113,059$123,724$25,452$27,465138,511151,189
Elimination of inter-segment revenue(3,277)(3,069)
Consolidated revenue$135,234$148,120
Segment result before depreciation,
restructuring related expenses and
impairment7,72110,3189281,4118,64911,729
Depreciation(3,339)(3,445)(140)(116)(3,479)(3,561)
Segment result before restructuring
and impairment4,3826,8737881,2955,1708,168
Restructuring costs–189–––189
Impairment of fixed assets(6,129)(90)––(6,129)(90)
Impairment of goodwill(2,362)–(2,362)
Reversal of impairment of
fixed assets–137–––137
Segment result after restructuring
and impairment(4,109)7,1097881,295(3,321)8,404
Elimination of inter-segment profits(30)(66)
Unallocated corporate costs(1,543)(1,575)
Results from operating activities(4,894)6,763
Net finance costs(1,790)(2,798)
Share of profit after tax of
equity-accounted investees6441,291
Loss on sale of interest in, and
property held by, equity-accounted
investees(11,884)–
(Loss)/Profit before income tax(17,924)5,256
Income tax benefit/(expense)1,144(1,175)
(Loss)/Profit after tax for the year$(16,780)$4,081

47
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 30 June 2019
3. FINANCIAL PERFORMANCE (continued)
3a. Segment performance (continued)
CarpetsWool AcquisitionTotal
2019
$000
2018
$000
2019
$000
2018
$000
2019
$000
2018
$000
Reportable segment assets96,300104,6653,0343,79599,334108,460
Investment in equity-accounted
investees–24,544
Total assets$99,334$133,004
Capital expenditure4,3281,392377230$4,705$1,622
Reportable segment liabilities21,49626,1222,3493,16023,84529,282
Unallocated liabilities20,50031,500
Total liabilities$44,345$60,782
Employee numbers
Operations4354412427459468
Unallocated35
Total employee numbers462473
3b. Earnings per share
Basic and diluted (loss)/earnings per share (EPS)
20192018
(Loss)/Profit after tax attributable to shareholders of the Company ($000)(16,780)4,081
Weighted average number of ordinary shares outstanding68,679,09868,679,098
Basic and diluted EPS (cents)(24.4)5.9

48 CAVALIER CORPORATION ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 30 June 2019
3. FINANCIAL PERFORMANCE (continued)
3c. Revenue
2019
$000
2018
$000
Sales of goods
Carpet111,412121,682
Wool22,17524,396
Carpet yarn8761,933
134,463148,011
Provision of installation services771109
Total revenue$135,234$148,120
Sale of goods
Revenue is recognised when or as performance obligations are satisfied by transferring control of the products
sold to the customer at the transaction price specified in the contract. Control typically transfers to the customer
on the earlier of payment for, or delivery of, the product. The transaction price includes all amounts which the
Group expects to be entitled to, net of goods and services tax and other indirect taxes, expected rebates and
discounts. Where applicable, rebates and/or discounts are included within the consideration using an estimation
typically based on the most likely method and are only recognised to the extent that it is highly probable that a
significant reversal will not occur.
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
2019
$000
2018
$000
Rentals received44
Dividends received21
Net gain on sale of property, plant and equipment3572
Total other income and gains$41$77
3e. Administration expenses
The following items of expenditure are included in administration expenses:
2019
$000
2018
$000
Donations$15$25
Fees paid and payable to KPMG for:
Audit of financial statements168179
Tax services3023
Other services65
Total fees paid and payable to KPMG$204$207
Tax services were in respect of transfer pricing and review of income tax returns, and other services were in respect
of scrutineering work at the Annual Meeting of shareholders.

49
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 30 June 2019
3. FINANCIAL PERFORMANCE (continued)
3f. Personnel expenses
2019
$000
2018
$000
Directors’ fees387345
Wages, salaries, bonuses and holiday pay32,69433,227
Employee termination benefits552322
Employee benefits2,6922,901
Decrease in liability for retiring allowances and long service leave(8)(101)
Total personnel expenses$36,317$36,694
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
2019
$000
2018
$000
Interest income236
Interest expense(1,792)(2,834)
Net finance costs$(1,790)$(2,798)
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
2019
$000
2018
$000
Income tax (benefit)/expense in the income statement
Current tax (benefit)/expense
Current year(646)491
Adjustment for prior years(99)259
(745)750
Deferred tax (benefit)/expense
Origination and reversal of temporary differences(492)681
Adjustment for prior years93(256)
(399)425
Income tax (benefit)/expense$(1,144)$1,175
Reconciliation of effective tax rate
(Loss)/Profit after tax for the year(16,780)4,081
Income tax (benefit)/expense(1,144)1,175
(Loss)/Profit excluding income tax$(17,924)$5,256

50 CAVALIER CORPORATION ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 30 June 2019
3. FINANCIAL PERFORMANCE (continued)
3h. Income tax (continued)
2019
$000
2018
$000
Income tax using the Company’s domestic tax rate of 28% (2018: 28%)(5,019)1,472
Share of profit after tax of equity-accounted investees(180)(361)
Loss on sale of interest in, and property held by, equity-accounted investees3,328–
Impairment of goodwill661–
Non-deductible expenses3643
Effect of tax rate difference in foreign jurisdiction3529
Underprovided in prior years(6)3
Other1(11)
Income tax (benefit)/expense$(1,144)$1,175
Income tax recognised directly in equity
Derivative financial instruments(86)136
Income tax on income and expense recognised directly in equity$(86)$136
Imputation credits
Imputation credits available to shareholders of the Company$9,232$8,748
Deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
AssetsLiabilitiesNet
2019
$000
2018
$000
2019
$000
2018
$000
2019
$000
2018
$000
Property, plant and equipment––(1,130)(2,744)(1,130)(2,744)
Derivatives––––––
Inventories644589––644589
Employee benefits1,1241,232––1,1241,232
Provisions1,1932,092––1,1932,092
Tax loss carry-forwards3,6253,802––3,6253,802
Net tax assets/(liabilities)$6,586$7,715$(1,130)$(2,744)$5,456$4,971
Deferred tax assets have not been recognised in respect of temporary differences arising from tax losses totalling
$24,150,000 (2018: $24,149,000) 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.

51
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 30 June 2019
3. FINANCIAL PERFORMANCE (continued)
3h. Income tax (continued)
Deferred tax assets and liabilities (continued)
Movement in temporary differences during the year:
Balance
30 June 2018
$000
Recognised in
profit or loss
$000
Recognised
in equity
$000
Balance
30 June 2019
$000
Property, plant and equipment(2,744)1,614–(1,130)
Derivatives–(86)86–
Inventories58955–644
Employee benefits1,232(108)–1,124
Provisions2,092(899)–1,193
Tax loss carry-forwards3,802(177)–3,625
Total$4,971$399$86$5,456
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
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. Deferred tax assets are 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.

52 CAVALIER CORPORATION ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 30 June 2019
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 year.
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:
2019
$000
2018
$000
Total loans and borrowings, including current portion20,50031,500
Less cash and cash equivalents(2,724)(2,111)
Net debt17,77629,389
Total equity54,98972,222
Total capital employed$72,765$101,611
Leverage24.4%28.9%

53
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 30 June 2019
4. FUNDING (continued)
4b. Share capital, dividends and reserves
Share capital
20192018
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 (2018: Nil).
The Board has not declared a final dividend in respect of the current year ended 30 June 2019 (2018: 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 year 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.

54 CAVALIER CORPORATION ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 30 June 2019
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 $23,400,000 at balance date,
with $20,500,000 utilised at that date.
The Group also had overdraft facilities totalling $1,598,000 at balance date. These facilities are repayable on
demand and none of these were utilised at that date.
The Group had financial covenants with the Bank that required the Group to meet, amongst other things, certain
EBITDA, revenue, inventory and equity ratio targets during the year. The Group was not in breach of these financial
covenants throughout the year ended 30 June 2019 as it was able to renegotiate these with the Bank in advance
where required to better reflect operating conditions and financial performance as the year progressed.
Details of the Group’s loans and borrowings at 30 June are as follows:
Nominal
interest rate
2019
%
Face
value
2019
$000
Carrying
amount
2019
$000
Nominal
interest rate
2018
%
Face
value
2018
$000
Carrying
amount
2018
$000
Non-current20,50020,50027,50027,500
Current––4,0004,000
Total secured bank loans7.0$20,500$20,5007.3$31,500$31,500
The Group had no other borrowings at balance date (2018: 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 September 2020 prior to balance date.
In extending the funding facilities, the Group also renegotiated its financial covenants with the Bank, with the
equity and interest cover ratios, as well as EBITDA, revenue and inventory targets, reset to reflect the Group’s
latest financial forecasts.

55
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 30 June 2019
5. ASSETS EMPLOYED
This section covers non-current assets, being property, plant and equipment, other assets 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 201823,73472,60314,601119111,057
Additions4346942,6219564,705
Disposals(9)(4,511)(1,109)–(5,629)
Transfers–6256(118)–
Balance at 30 June 2019$24,159$68,848$16,169$957$110,133
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
Depreciation and impairment losses
Balance at 1 July 20182,40361,44412,068–75,915
Depreciation for the year2572,568654–3,479
Impairment losses provided–4,3691,760–6,129
Disposals(9)(4,443)(1,102)–(5,554)
Balance at 30 June 2019$2,651$63,938$13,380–$79,969
Balance at 1 July 20172,17559,80312,10822674,312
Depreciation for the year2282,645688–3,561
Impairment losses reversed–(137)––(137)
Impairment losses provided–90––90
Disposals–(957)(728)(226)(1,911)
Balance at 30 June 2018$2,403$61,444$12,068–$75,915
Carrying amounts
At 30 June 2019$21,508$4,910$2,789$957$30,164
At 30 June 2018$21,331$11,159$2,533$119$35,142
Other assets comprise fixtures and fittings (including leasehold improvements and display stands), computer
equipment, motor vehicles and office equipment.

56 CAVALIER CORPORATION ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 30 June 2019
5. ASSETS EMPLOYED (continued)
5a. Property, plant and equipment (continued)
Impairment loss
Impairment loss in respect of plant and equipment and other assets of $6,129,000 was recognised for the year
(2018: $90,000).
No prior year impairment losses relating to specific items of fixed assets were reversed during the year
(2018: $137,000).
Due to identification of indicators of impairment – more particularly, the $39,787,000 shortfall in the Group’s market
capitalisation when compared with the carrying value of its net assets (before impairment of goodwill, plant and
equipment and other assets) at balance date, the deterioration in profitability and the ongoing reduction in carpet
sales volumes – the Group conducted an impairment test of the carrying value of the assets (more particularly,
goodwill, property, plant and equipment and other assets) that is allocated to the carpet sales and manufacturing
cash-generating unit (“Carpet CGU”) as at 30 June 2019.
The carrying value of these assets was tested for impairment by determining the recoverable amount of the Carpet
CGU and assessing the extent to which the carrying value of these assets exceeds the recoverable amount, with an
impairment loss recognised to the extent of that excess.
The recoverable amount of the Carpet CGU was determined by discounting Carpet CGU cash flow projections for
the next five years, taking into consideration historic data and forecast economic conditions and based on the
following significant assumptions:
• Carpet sales volumes down 5% on 2019 in 2020, before increasing by 6% per annum from 2021 to 2023 and
returning sales volumes to the levels achieved in 2018;
• Carpet sales prices to increase by average of 2% in respect of wool products in 2020 and then remaining
unchanged thereafter;
• Wool price, scoured and delivered, of $4.02/kg throughout the period;
• NZD:AUD exchange rates of around 0.9300 throughout the period;
• Improvement in operating performance of the Group’s manufacturing plants and reduction in operating costs;
• Post-tax discount rate of 12.8% (2018: 11.1%);
• Long term growth rate of 1.5% (2018: 2.0%).
Management believes that the key assumptions used, and estimates made, represent the most realistic assessment
of the recoverable amount of the assets, including goodwill, allocated to the Carpet CGU.
Based on this assessment – which indicated impairment losses totalling $8,491,000 (being the extent to which the
carrying value of assets allocated to the Carpet CGU exceeded its recoverable amount at balance date) – the Board
approved the $6,129,000 impairment of plant and equipment and other assets in addition to the $2,362,000
impairment of goodwill as disclosed at note 5c (Goodwill) to the financial statements.

57
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 30 June 2019
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.
Impairment
The carrying amount of property, plant and equipment and other assets is tested for impairment whenever there
are indicators of 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
property, plant and equipment and other assets is allocated exceeds its recoverable amount.
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 post-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.

58 CAVALIER CORPORATION ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 30 June 2019
5. ASSETS EMPLOYED (continued)
5a. Property, plant and equipment (continued)
The assessment of the recoverable amount of the Carpet CGU requires judgements, estimations and assumptions
regarding the various inputs underlying the five-year cash flow projections of the Carpet CGU as well as the
discount rate used to determine the net present values of those future cash flows.
5b. Capital commitments
The Group had outstanding commitments for the purchase of plant and equipment of $361,000 at balance date
(2018: $397,000).
5c. Goodwill
As disclosed at note 5a (Property, plant and equipment) to the financial statements, the Group conducted an
impairment test of the carrying value of the assets – including goodwill – that is allocated to the carpet sales and
manufacturing cash-generating unit (“Carpet CGU”) as at 30 June 2019.
Based on the results and management’s assessment of the recoverable amount of the assets allocated to the Carpet
CGU as disclosed at note 5a (Property, plant and equipment) to the financial statements, the Board has approved the
impairment of the $2,362,000 of goodwill at balance date, consistent with the challenging operating conditions and
the ongoing reduction in carpet sales volumes.
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 post-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.
Refer to note 5a (Property, plant and equipment) to the financial statements for details.

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 payables and accruals).
6a. Cash and cash equivalents
Cash and cash equivalents at balance date comprise cash on hand.
Cash and cash equivalents comprise cash on hand, deposits held at call with financial institutions and bank
overdrafts used for cash management purposes.

59
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 30 June 2019
6. WORKING CAPITAL (continued)
6b. Trade receivables, other receivables and prepayments
2019
$000
2018
$000
Trade receivables due from trade customers11,80815,184
Other receivables7854
Prepayments458344
$12,344$15,582
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 using the expected loss model, taking into account the historical loss
experienced in portfolios with a similar number of days overdue as well as current conditions and forecast of future
economic conditions.
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
2019
$000
2018
$000
Raw materials and consumables16,65317,896
Work in progress1,6391,664
Finished goods29,38627,761
$47,678$47,321
Carrying amount of inventories subject to retention of title clauses$2,004$2,351
In 2019, the net realisable value provision in respect of inventories increased by $269,000 (2018: decreased by $766,000).
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 and 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.

60 CAVALIER CORPORATION ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 30 June 2019
6. WORKING CAPITAL (continued)
6d. Trade payables and accruals
2019
$000
2018
$000
Trade payables15,10217,671
Accruals1,9121,819
$17,014$19,490
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.

61
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 30 June 2019
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 63, 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 transactional foreign currency risk to the extent that there is a mismatch between the
currencies in which sales, purchases, receivables and payables are denominated and the Group’s functional currency
which is New Zealand dollar ($).
The Group enters into foreign currency contracts within policy parameters to manage the risk associated with
forecast sales and purchases. The Group’s policy allows management to hedge up to 12 months forecast sales and
purchases without prior approval of the Board having first been obtained.
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.
The Group applies a hedge ratio of 1:1. The method used to assess hedge effectiveness is Critical Match Terms
whereby the hedging instrument and the hedged item are matched to the key terms. In the hedge relationship,
the main cause of ineffectiveness includes a change in the critical terms, for example, the timing of the transaction.
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.

62 CAVALIER CORPORATION ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 30 June 2019
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:
2019
$000
2018
$000
New Zealand6,1218,897
Australia5,3225,247
Other regions4431,094
Trade and other receivables$11,886$15,238
The status of trade and other receivables at the reporting date is as follows:
Current
0 – 30 days
past due
31 – 120 days
past due
More than 120
days past dueTotal
2019
Expected loss rate0%0%0%9%
Gross carrying amount – trade and other
receivables9,8731,57431313911,899
Loss allowance–––(13)(13)
2018
Expected loss rate0%0%0%11%
Gross carrying amount – trade and other
receivables13,87581320339015,281
Loss allowance–––(43)(43)
In summary, trade and other receivables are determined to be impaired as follows:
2019
$000
2018
$000
Trade and other receivables – gross11,89915,281
Individual impairment provisions(13)(43)
Trade and other receivables – net$11,886$15,238
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 Group adopts the expected loss model in assessing its trade and other receivables for impairment. In doing so,
it determines impairment on a forward-looking basis, taking into account not only past events and current
conditions, but also forecast of future economic conditions. Bad debts are written off when they are considered
to have become uncollectable.
The details of movements in the impairment provision are as follows:
2019
$000
2018
$000
Balance at 1 July(43)(34)
Impaired trade receivables written off––
Changes in impairment provision30(9)
Balance at 30 June$(13)$(43)
Changes in the impairment provision are included in distribution expenses in the income statement.

63
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 30 June 2019
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
2019
Secured bank loans20,50021,44040340320,634––
Trade payables and
accruals17,01417,01417,014––––
Total non-derivative
liabilities$37,514$38,454$17,417$403$20,634––
Interest rate swaps$621$575$156$114$135$154$16
Forward exchange
contracts
Inflow(22,636)(21,343)(1,293)–––
Outflow21,97920,7381,241–––
$(625)$(657)$(605)$(52)–––
2018
Secured bank loans31,50033,2807,1193,04523,116––
Trade payables 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)––

64 CAVALIER CORPORATION ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 30 June 2019
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
2019
Trade receivables5,196178228
Trade payables(2,412)(4,131)(1)(7)
Net statement of financial position exposure before
hedging activity2,784(3,952)121
Estimated forecast sales for which hedging is in place9,992–––
Estimated forecast purchases for which hedging is in place–(5,804)––
Net cash flow exposure before hedging activity12,776(9,756)121
Forward exchange contracts
Notional amounts(12,776)9,756––
Net unhedged exposure––$1$21
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

65
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 30 June 2019
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
$000
2019
Financial assets and
liabilities
Cash and cash equivalents2,7242,724––––
Secured bank loans(20,500)(20,500)––––
(17,776)(17,776)––––
Related derivatives
Effect of interest rate swaps–10,000–(5,000)(2,500)(2,500)
Total$(17,776)$(7,776)–$(5,000)$(2,500)$(2,500)
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)

66 CAVALIER CORPORATION ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 30 June 2019
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.
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 2019 and 2018 after taking into account the forward exchange contracts that the Group had in place
at balance date to hedge these exposures.
The impact of a change in interest rates on the Group’s profit or loss and OCI is set out as follows:
Increase
1.0%
$000
Decrease
(1.0%)
$000
Increase
1.0%
$000
Decrease
(1.0%)
$000
P&LOCI
Interest rate impact - Net(93)93112(112)
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.
The Group had no forward starting swaps as at 30 June 2019 (2018: $5,000,000, 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.
Forecast transactions
The Group classifies the forward exchange contracts taken out to hedge forecast transactions as cash flow hedges.

67
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 30 June 2019
7. RISKS AND FINANCIAL INSTRUMENTS (continued)
The following relates to items designated as hedging instruments:
Notional
amount
$000
Line item in
statement
of financial
position
Changes in
the value of
the hedging
instrument
recognised
in OCI during
the year
$000
Balance
in CFHR
$000
Hedge
ratio
Average
rate of
hedging Maturity date
Carrying amount
Assets
$000
Liabilities
$000
2019
Foreign
currency risk
Forward
exchange
contracts
– sales and
receivablesAUD11,680541–
Derivative
financial
instruments
– assets
(40)2711:10.9142
100% of notional
amount expiring
within 12 months
of balance date
Forward
exchange
contracts
– inventory
purchasesUSD6,605112(28)
Derivative
financial
instruments
– assets and
liabilities
(231)441:10.6770
100% of notional
amount expiring
within 12 months
of balance date
Interest rate
risk
Interest rate
swapsNZD12,500–(621)
Derivative
financial
instruments
– liabilities
(36)(621)1:1
2.88% –
4.92%
$2.5 million of
notional amount
expiring within
6 months of
balance date.
Balance over the
next six years.
2018
Foreign
currency risk
Forward
exchange
contracts
– sales and
receivablesAUD28,200363(8)
Derivative
financial
instruments
– assets and
liabilities
(498)3111:10.9068
93% of notional
amount expiring
within 12 months
of balance
date. 7% within
18 months of
balance date.
Forward
exchange
contracts
– inventory
purchasesUSD6,583608–
Derivative
financial
instruments
– assets
7822751:10.7234
100% of notional
amount expiring
within 12 months
of balance date
Interest rate
risk
Interest rate
swapsNZD17,500–(585)
Derivative
financial
instruments
– liabilities
200(585)1:1
2.88% –
4.92%
$5.0 million of
notional amount
expiring within
6 months of
balance date.
Balance over the
next seven years.

68 CAVALIER CORPORATION ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 30 June 2019
7. RISKS AND FINANCIAL INSTRUMENTS (continued)
Classification and fair values
The following tables show the carrying amounts and fair values of financial assets and financial liabilities,
including their levels in the fair value hierarchy.
Hedging
instruments
$000
Amortised
cost
$000
Total
carrying
amount
S000
Fair
value
$000
Fair value
hierarchy
Level 2
$000
2019
Assets
Derivatives653–653653653
Trade and other receivables–11,88611,88611,886–
Cash and cash equivalents–2,7242,7242,724–
Total assets$653$14,610$15,263$15,263
Liabilities
Loans and borrowings–20,50020,50020,50020,500
Total non-current liabilities–20,50020,50020,500
Derivatives649–649649649
Trade and other payables–20,87020,87020,870–
Total current liabilities64920,87021,51921,510
Total liabilities$649$41,370$42,019$42,019
Hedging
instruments
$000
Loans and
receivables
$000
Other
amortised
cost
$000
Total
carrying
amount
S000
Fair
value
$000
Fair value
hierarchy
Level 2
$000
2018
Assets
Derivatives971––971971971
Trade and other receivables–15,238–15,23815,238–
Cash and cash equivalents–2,111–2,1112,111–
Total assets$971$17,349–$18,320$18,320
Liabilities
Loans and borrowings––27,50027,50027,50027,500
Total non-current liabilities––27,50027,50027,500
Loans and borrowings––4,0004,0004,0004,000
Derivatives593––593593593
Trade and other payables––23,56623,56623,566–
Total current liabilities593–27,56628,15928,159
Total liabilities$593–$55,066$55,659$55,659
There were no financial assets or liabilities with fair values categorised as Level 1 or Level 3 in the fair value hierarchy.

69
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 30 June 2019
7. RISKS AND FINANCIAL INSTRUMENTS (continued)
Classification and fair values (continued)
A financial instrument is recognised if the Group becomes a party to the contractual provisions of the instrument.
Financial assets are derecognised if the Group’s contractual rights to the cash flows from the financial assets expire
or if the Group transfers the rights to receive the contractual cash flows in a transaction in which substantially all
the risks and rewards of ownership of the financial assets are transferred. Financial liabilities are derecognised if
the Group’s obligations specified in the contract expire or are discharged or cancelled.
Derivatives, being forward exchange contracts and interest rate swaps, have been measured at fair value using
relevant valuation techniques which include net present value and discounted cash flow models and comparison
with similar instruments for which observable market prices exist. Assumptions and inputs used in valuation
techniques include risk-free and benchmark interest rates, credit spreads and other information used in estimating
discount rates and foreign currency exchange rates.
Non-derivative financial instruments comprise trade and other receivables, cash and cash equivalents, loans and
borrowings and trade and other payables. Non-derivative financial instruments are recognised initially at fair value,
inclusive of transaction costs, and are subsequently measured at amortised cost using the effective interest rate
method less any impairment losses.
The underlying interest rate margins of loans and borrowings, which were renegotiated in June 2019, approximate
current margins, and fair value approximates the present value of future principal and interest cash flows.
Determination of fair values
When measuring the fair value of an asset or a liability, the Group uses market observable data as far as possible.
Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation
techniques as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either
directly (that is, as prices) or indirectly (that is, derived from prices)
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs)
If the inputs used to measure the fair value of an asset or liability might be categorised in different levels of the fair
value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value
hierarchy as the lowest level input that is significant to the entire measurement.
The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting period during
which the change occurred.
Master netting or similar agreements
The Group enters into derivative transactions under International Swaps and Derivatives Association (ISDA) master
netting agreements. In general, under such agreements the amounts owed by each counterparty on a single day in
respect of all transactions outstanding are aggregated into a single net amount that is payable by one party to the
other. In certain circumstances – for example, when a credit event such as a default occurs, all outstanding
transactions under the agreement are terminated, the termination value is assessed and only a single net amount
is payable in settlement of all transactions.
The ISDA agreements do not meet the criteria for offsetting in the statement of financial position. This is because the
Group does not have any currently legally enforceable right to offset recognised amounts, because the right to offset is
enforceable only on the occurrences of future events such as a default on the bank loans or other credit events.

70 CAVALIER CORPORATION ANNUAL REPORT 2019
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 30 June 2019
7. RISKS AND FINANCIAL INSTRUMENTS (continued)
Master netting or similar agreements (continued)
The following table sets out the carrying amounts of recognised derivatives that are subject to master netting agreements:
20192018
Derivative
assets
$000
Derivative
liabilities
$000
Derivative
assets
$000
Derivative
liabilities
$000
Gross amounts in the statement of financial position653(649)971(593)
Amounts offset––––
Net amounts in the statement of financial position653(649)971(593)
Related amounts that are not offset based on ISDA(649)649(593)593
Net amounts$4–$378–
8. OTHERS
This section includes the remaining information relating to the Group financial statements which is required to be
disclosed to comply with financial reporting standards.
8a. Equity-accounted investees
The Group sold its interest in 27.5%-owned Cavalier Wool Holdings Limited (“CWH”) and the property held by
50%-owned CWS Assets Limited (“CWSA”) on 30 September 2018.
The details relating to the Group’s investments in CWH and CWSA are set out below:
2019
$000
2018
$000
Carrying value at 1 July24,54423,490
Share of comprehensive income7161,194
Dividends received(2,783)(140)
Proceeds of sale of interest in CWH and property in CWSA(10,593)–
Loss on sale of interest in CWH and property in CWSA(11,884)–
Carrying value at 30 June–$24,544

71
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 30 June 2019
8. OTHERS (continued)
8a. Equity-accounted investees (continued)
The following tables summarise the financial information of CWH and CWSA as included in their own financial
statements (unadjusted for the percentage ownership interest held) and the Group’s share of net assets, profit and
other comprehensive income of CWH and CWSA as at and to 30 June 2019:
2019
$000
2018
$000
CWHCWSACWHCWSA
Cash and cash equivalents––4,01350
Other current assets––7,617–
Non-current assets––110,5033,369
Total assets––122,1333,419
Current liabilities––5,83911
Non-current liabilities––36,122–
Total liabilities––41,96111
Net assets (100%)––$80,172$3,408
Revenue13,4317250,786288
Depreciation(998)(5)(3,398)(31)
Net interest expense(365)–(1,850)–
Other expenses(8,838)(1)(38,900)(1)
Profit before income tax3,230666,638256
Income tax expense(974)(18)(2,276)(72)
Profit after tax2,256484,362184
Changes in fair value of cash flow hedges
(net of income tax)––(354)–
Total comprehensive income (100%)$2,256$48$4,008$184
Percentage ownership interest27.5%50.0%27.5%50.0%
Share of net assets––22,0471,705
Initial transaction costs––792–
Carrying value of interest in
equity-accounted investees––$22,839$1,705
Group’s share of profit after tax620241,19992
Group’s share of changes in fair value of cash flow
hedges (net of income tax)72–(97)–
Group’s share of total comprehensive income of
equity-accounted investees$692$24$1,102$92