Cavalier Unveils All-Wool and Natural Fibres Strategy

MARKET RELEASE
23 July 2020
Cavalier Unveils All-Wool and Natural Fibres Strategy

• Cavalier to transform to an all-wool and natural fibres business.
• Funding options are currently being evaluated and will be communicated to shareholders.
• Financial benefits of the transformation strategy and return to profitable growth expected from
FY23 onwards, following an initial 12 to 24 months of investment, with full benefits expected
from FY25 onwards.
• Trading in June 2020 was stronger than anticipated, particularly in wool sales, following a year
on year reduction in sales volumes in March, April and May due to the impact of COVID-19. Bank
debt and inventory levels are at historical lows.
• An Investor Presentation has been provided with this announcement and an Investor Call will be
held on Friday 24 July at 3.00pm when management will discuss the new strategy.

New Zealand wool and carpet company, Cavalier Corporation Limited (NZX: CAV) has today unveiled
a new transformational strategy that firmly positions the company with an all-wool and natural
fibres business model.

Cavalier has always believed that wool is the best fibre for carpet and it is considered a global leader
in the design and manufacturer of high quality, beautiful woollen flooring and woollen yarn.

Cavalier’s vision is to become a leader in designing and creating desirable, sustainable, safe and high
performing natural interior solutions. The company will be building on its expertise to grow the
business, create desirable products for customers using natural materials and add value for
shareholders. While the focus will initially be on woollen carpets and rugs, Cavalier will also be
seeking out other adjacencies and partnerships where it can leverage its design and manufacturing
capabilities and the value of the Cavalier Bremworth brand to create new product categories.

With support from independent advisers and industry experts, Cavalier has undertaken an in-depth
review of its business and opportunities. The company has identified a valuable and growing trend
from consumers seeking high quality, natural and sustainable products in their homes and believes it
is strongly positioned to meet this demand.

As a believer in and supporter of natural fibres, Cavalier is beginning a journey to create a better
place in the world, designing products that are desirable, sustainable, high performing and safe for
customers. In line with this, over the next nine to twelve months, the company will be transitioning
away from the manufacture and supply of synthetic fibre carpets, which it believes has negative
impacts on people’s health and the planet, with existing synthetic stocks to be sold down.

Cavalier’s growth will be driven by four strategic pathways:
• Grow the wool flooring market
• Grow Cavalier’s share of the market
• Expand Cavalier’s presence
• Innovation and Future Thinking

Chair of Cavalier, George Adams, said: “The world is changing and we believe the time is right for
Cavalier to transform – to build on our heritage, better meet the changing needs of our customers
and reduce our impact on the planet. As a result, we are confident we will deliver better returns on
investment for our shareholders. While this transformation will take investment and time, Cavalier
has the infrastructure, capabilities and expertise to effectively manage the change.

“This is an exciting time for Cavalier and this transformation creates a new future and a better place
in the world for our company. Everything we do will be underpinned by our three core values – the
creation of high performance, beautifully designed products; a passion for natural materials; and a
commitment to create value for all our stakeholders. We believe this repositioning of Cavalier to a
purpose-led organisation, building on our heritage of beautifully designed woollen flooring, is the
optimal pathway for future growth.”

The financial benefits of the change are expected to be seen with a return to profitable growth from
FY23 onwards, following an initial 12 to 24 months of investment as the business is reset and the
new strategy is executed and as the economy recovers from COVID-19. The full benefits are
expected to be realised from FY25 onwards as Cavalier’s strategy bears fruit.

The company is evaluating a range of opportunities to fund the transformation and has taken
extensive external independent advice. This includes the potential sale and leaseback of some or all
of Cavalier’s land and buildings. The company would require shareholder approval to allow it to
proceed with the sale and leaseback of Cavalier’s properties if it confirms that this is the most
appropriate funding option for the new strategy.

Trading Update

As previously advised, March and April trading was impacted as expected by COVID-19 restrictions,
particularly in New Zealand. This trend continued into May, however, sales in June in New Zealand
were stronger than expected, and ahead of June in the prior year, with wool margins strong. There
was less impact in Australia than anticipated although monthly sales were down compared to the
prior year.

The company continues to monitor and manage the COVID-19 situation in Australia. Trading in
Australia was better than expected in June, however, sales for the first half of July have tracked
down in response to the recent lockdowns. Pleasingly, margins remain strong.

Cost control measures, prudent cashflow management and working capital disciplines continue.
Bank debt has been reduced to historical lows and was $14.5 million as at 30 June 2020, with stock
levels decreased to around $35 million, a significant reduction on the same time last year.

Investor Call and Strategy Presentation

Cavalier will hold a Zoom investor call, hosted by Chairman George Adams and CEO Paul Alston, on
Friday 24 July 2020, commencing at NZT 3.00pm. See over the page for details.

Meeting Details:

Join Zoom meeting: https://us02web.zoom.us/j/81462160035
Meeting ID: 814 6216 0035

Instructions.
1. Please click on the Zoom meeting link above and enter the meeting ID if prompted.
2. If asked to provide the meeting ID it is displayed in the link details above
3. There is no password required to join this meeting
4. Note that both your video and your speakers will be muted by the host.
5. Questions can be submitted in writing by using the Chat facility. Questions will be
moderated and relayed to the host by the moderator.

Cavalier recommends that all attendees install the Zoom application to their device or PC
beforehand as this offers seamless interaction with the webcast, with better sound and image
quality.

ENDS

For further information please contact:

Paul Alston
Chief Executive Officer
palston@cavbrem.co.nz
+64 21 918 033
+64 9 277 1135
Jackie Ellis
Media and Investor Relations
Jackie@ellisandco.co.nz
+64 27 246 2505

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50+ YEARS OF
HERITAGE AND
EXPERTISE
Cavalier Bremworthis a loved and respected New
Zealand brand. Over decades, we have built a
reputation as a champion for quality New Zealand wool
carpets.
For the last 50+ years, we’ve been on a journey of
exploration and have built up significant knowledge
about the potential and performance of many
different fibresfrom diverse sources for use in flooring.
We are considered world leaders in the design and
manufacturer of woollencarpets, particularly high
quality, felted carpets and woollenyarn.
We believe wool carpet is the optimum offer for
customers. Not only is it the best fibrefor design,
innovation and performance on the floor, it’s also
100% natural, biodegradable and renewable.
50+ YEARS OF HERITAGE
AND EXPERTISE.
Strategy Presentation July 2020

FLOORING AND INTERIOR
TRENDS CONTINUE TO
EVOLVE.
For many years, wool carpet was the preferred
and only option for flooring.
In the last two decades, more flooring choices
have become available:
•Hard flooring became more accessible and a
more popular design choice.
•Synthetic carpets, made from plastic fibres,
were introduced to Australasia backed by
global manufacturers with large marketing
budgets.
Strategy Presentation July 2020

THE LONG-TERM
DANGERS POSED BY
PLASTICS ARE BECOMING
CLEAR.
Plastic is a global problem and manufacturers need to be
part of the solution.
The impact plastics have on human health is not yet fully
understood, but early studies suggest that microplastics
entering the body are a potential threat to human health.
The average kiwi home with synthetic carpet is similar to
having 22,000 plastic bags on the floor*.
The flooring industry is significantly contributing to
plastic production and it’s obvious to us that change is
needed.
Whilst recycling is a positive step towards repurposing
plastic that already exists, stopping it at source has to be
the best solution.
*by weight
Strategy Presentation July 2020

CONSCIOUS
CONSUMERISM IS
BECOMING MORE
MAINSTREAM.
Consumers are starting to reject plastic, particularly
single-use plastics, in favourof multi-use or more
sustainablealternatives.
Consumers are also becoming awarethat plastic
comes in many forms, including synthetic carpet,
upholstery, curtains, clothing andmore.
There is growing awareness and concern about
microplasticsinourhomes,inourfood chain and in the
environment.
Strategy Presentation July 2020

THE RISE OF LOHAS:
LIFESTYLE OF HEALTH
AND SUSTAINABILITY.
LOHAS consumers subscribe to lifestyles of health and
sustainability (LOHAS).
They epitomise conscious consumerism and are one of
the fastest growing consumer segments in the
developed world.
These consumers are seeking out products and
experiences that align with their emotional and
environmental priorities and are happy to pay to
support these.
They’re a wealthier demographic who focus on personal
health, wellbeing and ecological impact.
Strategy Presentation July 2020

Weareevolvingtobettermeettheneedsof a
changing world andchanging consumer behaviour.
We are committed to doing what’s right while
delivering the design and performance attributes our
customers careabout.
We have stopped ordering syntheticplastic yarn and
will transition out of synthetic fibrestock.Thismeans
wewillsignificantly reduce our contribution to the
worldwide plasticproblem.
NATURE IS WORTH
PRESERVING.
Strategy Presentation July 2020

Cavalier Bremworth has a long-standing history of
producing world leading wool carpets.
It’s what we’re known for. Premium qualitycarpet
madefromNewZealandwool, right here in New
Zealand.
And this is where our focus will remain, creating
and marketing valuable, natural interior products
that are bothsustainable anddesirable,hereand
aroundtheworld.It’s goodforourbusinessandit’s
goodforyou.
BUILDING ON OUR
HERITAGE
Strategy Presentation July 2020

A regional leader in beautiful
natural woollen carpets and
rugs. Building on ourheritage,
our design capabilities and
our manufacturing expertise,
and leveraging NewZealand’s
beautiful naturalresources.
Recognised globally for our
beautiful natural woollencarpets
andrugs.
Leveraging our expertise and
brand value to create new
opportunities for our business.
To become a global leader in
designing and creatingdesirable,
sustainable, safe and high
performing natural interior
solutions.

Everything we make, or put
our brand to, will be
beautifully designed and,
high performing. We will
seek to use naturalmaterials
thatarebothsafeand
sustainable.
Wearecommittedtothe
useofnatural materials,
and ensuring we do more
“good”intheworldthan
harm.
We are privileged to be the
guardians for the Cavalier
business and it is our
responsibility toensure we
create value for all our
stakeholders –our people,
our communities, our
customers and suppliers and
ourshareholders.

Strategy Presentation July 2020

We design distinctive, elegant products that
celebrate the inherentbeautyofnatureina
waythatprofoundlyconnects with our
customer’sneeds.
In today’s throwaway society, we seek to conserve
resources andaimtousenatural,honest,long-
lastingmaterialsthatare good for you, your
community and the environment where possible.
We combine our generations of experience
with science& naturetocreatethehighest
performingproducts.Wenevercutcorners.
Weleavenothingtochancewhenitcomesto
yoursafety,sothat’swhyweaimtouseproven
naturalmaterialswhichenhancethewellbeing
ofyouandyourfamily.

We will connect with consumers and
inspire them to fall in love with natural
fibre interior products.
We will reignite and grow consumer
demand for beautiful wool and natural
fibre interior products.
We will lead a movement to promote the
“true worth” and performance and
sustainability benefits of wool and
natural fibres.
We will tell the truth in interesting ways
to counter misconceptions in the market
and to enable customers to make well
informed flooring choices.

Launchanexciting,highimpactand
creative advertising and marketing
campaign.
Introduce new products to the lifestyle range
makingwool carpetsaccessibleformore
consumers.
Welcomenewretailerstoourdistribution
network, particularly inAustralia.
Transitiontoanall-woolandnaturalfibres
business modelandcease manufacturing
synthetic carpetsby the end of 2020.
Streamlineouroperationsaroundournew
business model, and driveefficiencies.
Access funding to strengthen our capital
structureandfacilitateourtransformation toan
all-woolandnaturalfibresbusiness.
Continue to expand our retailer
network.
Buildon our marketing
programme.
Deliver a programme that
encourages retailers to promote
and sell Cavalier Bremworth wool
carpets.
Expand our connections with key
influencers and specifiers –
architects, interior designers,
propertydevelopers.
FY21 to FY23: Investment into
resetting the business, commencing
the new strategy and navigating the
economic recoverypost-COVID.
FY23: Return to profitable
growth.
FY25: Full benefits of
transformation strategy being
realised, withincreasing value and
profitability.
Continue to measure and drive our
sustainability goals
Audit environmental impact and set clear,
measurable sustainability goals.

Enquiries:
PaulAlston
E:palston@cavbrem.co.nz
M:092771135

This presentation has been prepared by Cavalier Corporation Limited (“CAV”). The information in this presentation is of a general
nature only. It is not a complete description of CAV.
This presentation is not a recommendation or offer of financial products for subscription, purchase or sale, or an invitation or
solicitation for such offers.
This presentation is not intended as investment, financial or other advice and must not be relied on by any prospective investor. It
does not take into account any particular prospective investor’s objectives, financial situation, circumstances or needs, and does not
purport to contain all the information that a prospective investor may require. Any person who is considering an investment in CAV
securities should obtain independent professional advice prior to making an investment decision, and should make any investment
decision having regard to that person’s own objectives, financial situation, circumstances and needs.
Past performance information contained in this presentation should not be relied upon (and is not) an indication of future
performance. This presentation may also contain forward looking statements with respect to the financial condition, results of
operations and business, and business strategy of CAV. Information about the future, by its nature, involves inherent risks and
uncertainties. Accordingly, nothing in this presentation is a promise or representation as to the future or a promise or
representation that a transaction or outcome referred to in this presentation will proceed or occur on the basis described in this
presentation. Statements or assumptions in this presentation as to future matters may prove to be incorrect.
A number of financial measures are used in this presentation and should not be considered in isolation from, or as a substitutefor,
the information provided in CAV’s financial statements available at www.cavcorp.co.nz.
CAV and its related companies and their respective directors, employees and representatives make no representation or warranty of
any nature (including as to accuracy or completeness) in respect of this presentation and will have
no liability (including for negligence) for any errors in or omissions from, or for any loss (whether foreseeable or not) arising in
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