SKL 5.85% $4.52 skellerup holdings limited ordinary shares

Ann: ADDRESS: SKL: Skellerup 2014 ASM

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    					SKL
    29/10/2014 17:02
    ADDRESS
    
    REL: 1702 HRS Skellerup Holdings Limited
    
    ADDRESS: SKL: Skellerup 2014 ASM
    
    Skellerup Holdings Limited held its Annual Shareholders Meeting today 29
    October 2014 at 2.30pm at Eden Park, Auckland. A copy of the Chairman's
    address is shown below and attached. A copy of the CEO's presentation is also
    attached.
    
    Skellerup Holdings Limited
    Annual Shareholders Meeting 29 October 2014
    Chairman's Address
    
    Once again a warm welcome to you all. When I sat down to think about what I
    might say to you this year I reflected back over what is almost 7 years as
    Chairman of Skellerup. This Company has come a long way, and the job is
    certainly not over yet as we continually seek to improve and build Skellerup,
    but the achievement that stands out most for me as I look back relates to a
    project that we are currently in the midst of. Called Project Viking in
    recognition of our Scandinavian founders, it is our not-so-insignificant $30
    million investment in a new world-class Dairy Rubberware Development and
    Manufacturing facility at the Wigram Business Park.
    
    It is a project born out of tragic circumstances in Christchurch. But it is
    one that I am particularly proud to be part of. This is not only a major
    commitment to Christchurch - but it is a measure of the quality of our people
    there and the potential that can stem from having a purpose built site. It
    will serve our Agri operating division and ensure that we remain at the
    cutting edge of what we do for both our customers here in New Zealand and
    also our many, and growing numbers of, international ones as well. Our
    leading chemists, engineers, technicians and manufacturing teams, I am sure,
    will thrive in this new environment - working closely to develop new and
    smart solutions.
    
    With the first sod expected to be turned in November, we are making excellent
    progress. And with the overall concept and design now agreed, our very
    experienced contractors Calder Stewart are expected to start actual
    construction of the 18,900 square metre facility next month. We are still
    targeting a completion date somewhere around December 2015 - barring no
    unforeseen circumstances of course.
    
    Thanks to Ngai Tahu people who are responsible for this high quality
    development of the Wigram Business Park. Also thanks to our Project Viking
    team, led by the extremely capable Sir Ron Carter. Let me assure you that
    detailed planning is already underway to ensure a smooth transfer of
    operations from Woolston to Wigram. Every piece of plant is being mapped to
    determine when it will be packed, shifted and re-commissioned so that we
    ensure our customers receive uninterrupted service.
    The new facility will have at its core a modern rubber mixing and transport
    system that is currently being partially assembled at the existing Woolston
    site. This will help us accelerate the commissioning after it is installed at
    Wigram.
    So as mentioned, this move will certainly be a major milestone event for
    Skellerup - remember it was 70 years ago that our Woolston operation was
    first established. Our new Wigram facility will enable a world-class
    operation delivering efficiency gains that will strengthen and underpin our
    business for the future.
    
    Now with that off my chest I had better talk to you about the financial year
    that we are here to discuss!  I am sure it will not have been lost on you,
    our very astute shareholders that our reported Net Profit after Tax
    (otherwise called NPAT) was an exceptional $41.1 million for the year ended
    June 30, 2014. That figure is indeed a record for us - but to represent it as
    one would be wrong.
    
    In fact our NPAT was positively impacted by a $20.4 million gain from the
    settlement of our Canterbury earthquakes insurance claim. Excluding this gain
    NPAT was $20.7 million - up 9% on the prior year. Revenue was $196.6 million,
    up 4% on the previous year. I would describe this as a 'credible performance
    but one that leaves room for improvement'.
    
    Of particular note in our 2014 annual result was the very pleasing
    performance of our Agri Division.  Earnings before interest and tax were
    $21.7 million on revenue of $80.2 million, up 11% on the previous year. The
    Agri Division benefited from a buoyant New Zealand dairy sector leading to
    increased sales of liners and tubing, together with increased sales from an
    expanded footwear range and initial contributions from acquisitions of two
    small businesses to augment our animal hygiene product offering. Our
    reputation, range and global scale in this sector means we are well placed to
    take advantage of the regulatory changes in Europe, that should drive growth
    as larger, more efficient dairy units replace smaller operations. In China,
    opportunities will grow as they increasingly look to strengthen food safety
    standards.
    
    Good progress was made in our Industrial Division in the year under review -
    however, improvements in returns accrued at a pace slower than we would like.
    That division reported EBIT of $13.5 million on revenue of $116.2 million.
    What did that translate into for you our shareholders? Strong cash flow and
    debt management coupled with confidence in the underlying business enabled us
    to increase the dividend pay-out for the year - from 8 cents per share to 8.5
    cents per share.
    For those of you who appreciate balance sheet strength - or put another way;
    being in a position where a bank would gladly lend you more money - our
    gearing level remains very conservative. Call me old fashioned but that is
    the way I like it. Truth be known as at 30 June we had cash reserves of $16.4
    million following full settlement of our insurance claim in Christchurch
    which means we are generating interest rather than paying it out. That will
    change as we progress Project Viking.
    
    Conclusion
    I am pleased to report your company remains in excellent health but this is
    not to say that there aren't headwinds that we face. The slump in dairy
    pay-out may have some impact on how farmers spend their money in the NZ
    market. As we have seen in the past, while farmers need to replace essential
    consumables such as dairy liners and tubing, some of this expenditure can be
    delayed for a short period. However strict food safety requirements ensure
    that this is a timing issue so we do not expect this impact to be
    significant. On a broader scale, food safety also opens opportunities for
    further innovations - which will only be enhanced once our new Wigram site is
    up and running. Skellerup has created improved, cost-effective products used
    in international potable water applications that we expect will generate
    considerable future revenue growth. Clean energy particularly through
    increasing global demand for natural gas, is another key factor that
    underpins our business. This demand supports our investment and expected
    sales growth for our Pumps business and expected sales growth for our valves
    and diaphragms that are used in applications such as LPG/CNG vehicle fuel
    systems.
    
    With these factors in view, your Board expects FY15 NPAT to be within a range
    of $21 million to $24.5 million.  I note the bottom end of this range is
    fractionally above the FY14 NPAT exclusive of the net gain we recorded on
    settlement of the Christchurch Earthquake claims. David Mair will comment
    further on this guidance in his presentation.
    
    Thank you also for being a fellow shareholder in Skellerup.  On that positive
    note, I thank you for your time and hand over to David.
    End CA:00256961 For:SKL    Type:ADDRESS    Time:2014-10-29 17:02:03
    				
 
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