Annual Meeting Presentation and Chairman’s address

ANNUAL
MEETING
November 2019

Agenda: Annual Meeting 2019
»Item 1: Chairman’s address
»Item 2: CEO address
»Item 3: Financial Statements
»Item 4: Election of Directors
»Item 5: Auditors’ Remuneration
»Item 6: General business
2

Chairman’s address
3

CEO address
4

Chief Executive Officer’s Address
»Kathmandu FY19 results:
»Financial highlights
»Operational highlights
»Strategy
»Rip Curl acquisition:
»Investment highlights
»Vision for the combined group
»Progress update
5

»Sales up 9.7% to $545.6m
»Same Store Sales growth +0.6%
(Australia +2.7%, New Zealand -3.9%)
»Operating expenses reduced by 2.5% as
a percentage of sales
Trading
Earnings
»Another year of record profit
»EBIT up 12.7% to $84.3m
»NPAT up 13.6% to $57.6m
Online
»Online sales $48.4m, now comprising 10.1% of direct
to consumer sales
»Online sales growth +9.2%at constant exchange rates
»Online traffic +17.1%
North America
»Strong Oboz sales and profit growth
»Oboz FY19 sales growth +30.0%, EBIT
growth +38.6% (proforma basis)
»North America FY19 sales $64.0m and EBIT $9.6m
Kathmandu FY19
Financial highlights
6

»Launched our first global brand campaign
‘World Ready’
»12% YOY increase in social media and digital
reach
Brand
Customers
»81% of customers are ‘fans’ (TruRating). Fans
spend at least 10% more than other customers
»Summit Club members spend 29% more per trans-
action. 2.2 million active members, up 12.4% YOY
Omni-Channel
»The 6th most searched apparel and accessories
website in Australia (June & July 2019, Hitwise)
»Performing ahead of other sports category retailers
in Australia’s leading shopping centres
»Invested $10.3m in store network including 12 major
store refurbishments, and 4 new stores
International
»Oboz growth in key accounts and core styles,
while also diversifying customer and product mix
»Kathmandu North America initial wholesale orders
secured for 45 doors and 5 online sites
Sustainability
»B Corpcertified, the highest verified standards of
social and environmental performance
»Scored an ‘A’ in the ethical fashion report two
years running
Kathmandu FY19
Operational highlights
7

Kathmandu strategy:
a clear plan to drive sustainable and profitable growth
»Supercharge Summit Club
»Grow Summer
»Elevate key metro markets
»Enhancedstore optimisation
»Extend leadership in key
product categories
»Accelerate growth in high
potential categories
»Scale the Women’s opportunity
»Make it easy for customers
»Leverage digital to enhance
brand and product
»Maximise mobile
»Build the brand to ignite
demand in North America
»Build strategic wholesale
partnerships
»Accelerate the North America
direct to consumer business
»Explore other international
market opportunities
Become a Global Business
Enhance the Customer
Experience through Digital
Win with Distinctive Product
Grow Core Markets:
Australia and New Zealand
Inspire and Enable the Team
Sustainability Leadership: Best for the World
8

9
Sustainability Leadership: Best for the World

Rip Curl acquisition: investment highlights
1
Creates a NZ$1.0bn
(1)
global outdoor and action sports company anchored by two iconic Australasian brands
2
Rip Curl is a leader in the global surf industry with products that are complementary to Kathmandu from a technical and seasonalperspective
3
Rip Curl provides a platform for Kathmandu's expansion into new core target markets to establish a deeper and more meaningfulglobal presence
4
Diversifies Kathmandu by reducing reliance on the Australian and New Zealand markets
6
Synergy benefits expected to be achieved over time through leveraging each other’s expertise and realising scale benefits
7
FY20 pro forma EPS accretion in excess of 10%
(2)
with potential for further upside as synergies are identified post acquisition
5
Significant opportunities to drive top line growth and profit across geographies and commercial channels
10
(1)Represents pro forma normalised combined FY19 revenue. Kathmandu revenue represents statutory revenue for the financial yearending 31 July 2019. Rip Curl revenue represents pro forma normalised revenue for the financial year ending 30 June 2019
(2)EPS accretion has been calculated by comparing Kathmandu’s budgeted standalone FY20 EPS (calculated assuming that the acquisition does not occur, and adjusted for the impact of the pro-rata accelerated entitlement offer) against the Combined Group pro forma FY20
EPS excluding any synergies and one-off transaction costs. The Combined Group pro forma FY20 EPS is based on: (i) Kathmandu’s standalone budgeted FY20 EBIT; (ii) Rip Curl’s standalone budgeted FY20 EBIT; (iii) estimated incremental amortisation costs associated with
the expected purchase price allocations arising from the transaction (noting that, on completion, a formal purchase price allocation exercise will be completed which may give rise to a change in this expense); (iv) the assumed transaction debt funding structure and associated
interest costs; and (v) Kathmandu’s pro forma number of shares outstanding post transaction (accounting for both new shares issued under the pro-rata accelerated entitlement offer, and new shares issued to the vendors in the Vendor Placement).

Rip Curl acquisition: vision for the combined group
Shared support functions where operational value can be derived
(1)
Kathmandu, Rip Curl
and Obozto leverage
respective strengths and
build on each others’
competitive advantages
over time
Kathmandu, Rip Curl
and Obozto retain their
strong brand identities
and cultural values
Rip Curl, Kathmandu
and Obozto retain
operational ownership
of their respective
businesses
11

Summary
12
»Delivered another record sales and profit result in FY19
»Rapid sales and profit growth from Oboz
»Generating strong cash flow which allowed for final FY19 fully
imputed/franked dividend of NZ 12.0 cps and a record high full year
payoutof NZ 16.0 cps

Outlook
13
»Early FY20 Group trading is in line with expectations
»Rip Curl well positioned for summer trading period
»Integration of Rip Curl into the Kathmandu Group on track
»First half result remains highly dependent on the critical Christmas
trading period to come
»Kathmandu only gross margin is in line with previous guidance for the
first quarter at c.130 basis points (1.3%) below last year

14
Ordinary Business Items: 3 to 6

Item 3: Financial Statements
To receive the Annual Report of the Company for the year ended 31 July 2019, including the financial
statements and Auditor’s report
15

Item 4: Election of Directors
Resolution 1. Mr. Xavier Simonet
To consider and, if thought fit, to pass the following resolution as an ordinary resolution:
“That Mr. Xavier Simonet, who retires at the Annual Meeting and is eligible for re-election, be re-elected as a
Director of the Company.”
Resolution 2. Ms. Andrea Martens
To consider and, if thought fit, to pass the following resolution as an ordinary resolution:
“That Ms. Andrea Martens, who was appointed by the Board on 1 August 2019 and retires at the Annual Meeting, be elected as a
Director of the Company.”
Resolution 1Resolution 2
In favour220,064,920220,515,706
Against46,71075,999
Open/Undecided417,879420,549
The Board unanimously supports resolutions 1 and 2 and recommends that shareholders vote in favour
16

Item 5: Auditors’ Remuneration
Resolution 3. To consider and, if thought fit, to pass the following resolution as an ordinary resolution:
“To record that PricewaterhouseCoopers continue in office as the Company’s auditors and to authorise the Directors to fix the
remuneration of PricewaterhouseCoopers for the ensuing year.”
Proxies:
In respect of this item of business, the following proxies have been received:
Resolution 3
In favour220,449,233
Against165,401
Open/Undecided419,549
17
The Board unanimously supports resolution 3 and recommends that shareholders vote in favour

Item 6: General Business
To consider such other business of the Company as may be properly brought before the meeting in accordance with the
Company’s Constitution.
18

Other business
19

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KATHMANDU HOLDINGS LIMITED

ASX / NZX ANNOUNCEMENT

22 November 2019

KATHMANDU HOLDINGS LIMITED – CHAIRMAN’S ADDRESS TO ANNUAL MEETING

FY19 was another strong year for Kathmandu financially. Strong sales growth, particularly through online
channels and from Oboz, and well controlled operating expenses allowed the combined business to reach
record profits.

Our team are proud to have delivered four years of consecutive sales and profit growth, at the same time
as executing on the Company’s transformation from a leading Australasian retailer to a brand-led global
multi-channel business.

Post financial year end, we were excited to announce the completion of the acquisition of Rip Curl. We
would very much like to acknowledge the overwhelming support of our shareholders through the equity
raising process, and their approval of the acquisition at our Special Meeting held on the 18th of October.

Xavier will talk through the highlights of the acquisition in his presentation. I would like to take this
opportunity to welcome Rip Curl’s CEO, Michael Daly, and his team to the Kathmandu Group, and also
congratulate Reuben Casey for his promotion to CEO of the Kathmandu business following the acquisition.

Director Sandra McPhee retired from the board in September. Sandra brought significant non-executive
director experience and knowledge of a wide range of consumer facing sectors to the board. Her insight
and judgement have been extremely beneficial for the company. We thank Sandra very much for her
service and wish her all the best for her future endeavours.

Following an extensive international search, I am very pleased to welcome Andrea Martens to the Board.
Andrea brings first rate experience and knowledge of consumer brand strategies. Her appointment adds
important skills and experience to the board as we implement our global growth strategies across multiple
brands.

On behalf of my fellow directors, I would like to thank management and the wider team for their hard work
in delivering another great year, both financially and operationally. I would also like to thank all our
shareholders for their support over the past 12 months and into the future.

David Kirk
Chairman

ENDS