Ann: ADDRESS: KMD: KMD Chairman's address to

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• Summary: ADDRESS: KMD: KMD Chairman's address to AGM 20 November
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					KMD
20/11/2013 11:11
ADDRESS

REL: 1111 HRS Kathmandu Holdings Limited

ADDRESS: KMD: KMD Chairman's address to AGM 20 November

KATHMANDU HOLDINGS LTD 20 NOVEMBER 2013

CHAIRMAN'S ADDRESS TO ANNUAL GENERAL MEETING

Firstly please note that a copy of this address is available on the Company's
website, at www.kathmanduholdings.com.

I am pleased to report a record sales and earnings result for Kathmandu
Holdings Limited in the 2012/2013 year. Kathmandu's continued leadership of
the outdoor, travel and adventure categories in New Zealand and Australia was
reflected in solid same store sales growth in both markets, and a 26.6%
uplift in Group profits for the year to a record $44.2 million. This result
was viewed positively by investor markets in both countries, particularly in
comparison to the listed retail sector, and our share price has been
significantly re-rated since the result was announced in late September.

Before talking further about our performance, I want to note as I did in our
Annual Report the very tragic loss earlier this year of James Strong our
founding Chairman. Kathmandu's success as an already substantial but still
growing trans-Tasman retailer, owes much to the leadership and guidance James
provided us over our first 3 years as a listed company. In May we were very
pleased to announce the James Strong Memorial Project in his honour,
providing additional education funding to benefit children in the Solu Khimbu
region, one of the most remote regions of Nepal. It is fitting in our view
that we have been able to remember James in this way, in association with the
Australian Himalayan Foundation, recognizing the source of our heritage as an
outdoor brand. James was a true lover of the outdoors, and a passionate
adventurer. He is sadly missed.

I will comment on the makeup of your Board later in my address. I turn now to
our financial performance in the 2012 -2013 year.
Kathmandu's Group sales increased in the year by $37 million to $384 million.
This reflected relatively consistent same store sales performance across the
whole year, supported by a number of good quality new stores opened and
effective management of operating expenses throughout the twelve months. This
growth, supported by steady gross margins and improved operating leverage
resulted in a $6.4 million or 11% increase in earnings before interest and
tax. Favourable exchange rate translation benefits resulting in a reduced tax
charge, specifically in Australia, further enhanced the growth in earnings at
the net profit after tax level to $44.2m or an increase of 26.6%. It remains
inherent to the assessment of Kathmandu's trading performance that earnings
are strongly weighted to our second half year result, and in 2012-2013 we did
well to achieve sales targets during autumn and winter seasons that were less
favourable to us than in the prior year. Peter Halkett will comment further
on our trading result, but I am pleased to be able to report a 22.1 cents
earnings per share result and the consequent 20% lift in our total dividend
payout rate for the full year.

Strategic planning and growth opportunities

Kathmandu has focused to date primarily on the 5 key growth strategies
outlined at the time of our IPO in 2009, specifically:

o Continuing our new store rollout in Australia and New Zealand;
o Improvement of our existing store network;
o Enhancing the Kathmandu product offering;
o Growing our Summit Club membership, and
o Developing and growing our online and digital channel capabilities.

We have continued to achieve significant progress against these strategies in
the past year, and Peter's presentation goes into further detail on our
progress in these areas following my address. The primary short to medium
term focus for your Board is the continuing successful execution in a
challenging retail and economic environment, of profitable growth in the
Australian market. We are achieving this through on-going new store rollout
coupled with further enhancement and investment in our online and digital
capabilities. This does not mean we are neglecting our New Zealand base, far
from it. We have had excellent same store sales growth in this market in the
past 3 years, and even though there are limited store rollout opportunities
here, we are confident that our brand strength coupled with continuing
investment in product design and the resulting depth and variety of range
offered will sustain same store sales growth in this market.

In the medium and longer term your Board sees the potential for the Kathmandu
brand to grow internationally, and the work done to realign our UK business
and develop our online sales channels in this part of the world are important
steps in this strategy. We will continue to allocate a substantial portion of
our investment to enhancements in this area. This is being done in tandem
with building up our team expertise needed to ensure we maximize the
potential that the online channel provides a vertical retail brand such as
Kathmandu. It is a fairly unique and exciting opportunity for us.

Board composition

We were very fortunate to have Christine Cross join the Board in December
2012. Christine's experience in the international retail and consumer goods
sector, with particular emphasis on the online space has been extremely
helpful to the Board as we assess and invest to support our future growth
plans in this area.
Following James Strong's death we advised that we would utilise an external
Search Firm to assist in identifying a replacement director and potential
chairman to fill the vacancy. I am pleased to announce today that David Kirk
will be appointed as a Director of Kathmandu following the AGM and our
intention is for David to be appointed Chairman in early 2014. David, who is
here today, will be well known to investors on both sides of the Tasman for
his achievements in business following his successful sporting career. He is
currently Chairman of TradeMe Group and Hoyts Group. David is the co-founder
and Managing Partner of Bailador Investment Management, sits on the Board of
Bailador portfolio companies and a director of Forsyth Barr Group. He also
has a number of not for profit directorships. David's experience in online
and digital technology will be invaluable to Kathmandu. We look forward to
welcoming David to the board.

Kathmandu Team

We have achieved a lot since we listed 4 years ago and it is appropriate to
thank the entire dedicated Kathmandu team who have made this possible. The
board has set, and will continue to set, challenging growth targets and our
team, led by Peter Halkett who is ably supported by Mark Todd, have responded
outstandingly. I take this opportunity to record the board's appreciation of
these efforts.

Looking forward and economic outlook

The Kathmandu management team has numerous exciting opportunities available
that have the potential to deliver future profitable growth for the business
over and above our store rollout, and your Board is focused on our need to
fully assess, prioritise and support these as appropriate. It is clear that
successful execution of our strategies in the 4 years since our IPO has
differentiated Kathmandu from our competitors, in that we have absolute
control of our brand and our strong balance sheet enables us to invest for
growth in the current environment. We intend to continue to build on that
competitive advantage.
Economic prospects both globally and in Australia continue to be very
uncertain. New Zealand appears to be well placed to weather the next two to
three years, and we have reasonable confidence in our prospects in this
market, but, Australian retail conditions have not been favourable to most
discretionary retail categories throughout 2013. Kathmandu is well placed to
deal with this environment, but we are not immune from economic uncertainty.
On the positive side, we believe this is also a time to take the opportunity
to invest to grow our business, and we are confident Kathmandu's strong
market position will continue to be enhanced, even if there are tougher times
ahead for our category. On behalf of your Board, I thank you for your support
as investors and you can be confident we will continue to invest for
profitable growth in the future.

I will now ask our CEO, Peter Halkett, to address you.

John Harvey
Chairman
End CA:00244054 For:KMD    Type:ADDRESS    Time:2013-11-20 11:11:21