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Cavalier toasts founder

Duncan Bridgeman

Friday 7th November 2003

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Departing Cavalier Corporation chairman Tony Timpson received a standing ovation in Auckland this week as shareholders reflected on another top year for the carpet manufacturer. Timpson (70) steps down as chairman in April next year ­ more than 20 years after founding what is now a New Zealand success story.

Over the past three years the company has out-performed the NZX gross index almost seven-fold, with returns for shareholders of 46% a year since 2000. Those fortunes will be particularly gratifying for Timpson, and co-founder Grant Biel, whose holdings are now worth $47 million and $50 million respectively.

Cavalier, which listed on the stock exchange in 1984 before taking over the Bremworth carpet operations of UEB Industries in 1988, expects another strong year with signs market share is growing. The company was on track to deliver another year of double-digit growth as it profited from favourable exchange rates, managing director Alan James said at the company's annual meeting this week.

The company is targeting earnings before interest and tax (ebit) of $33.4 million for the current fiscal year, a 10% improvement on last year.

A weaker Kiwi dollar against the Australian dollar and appreciations by both currencies against the US dollar worked in the company's favour, James said. "Provided there is not a substantial downturn in the carpet business, either here or in Australia, before the end of the year, we see no reason why we can't deliver that full year ebit ."

Cavalier posted an $18.3 million profit after tax for the June year, 39% up on the previous year's result. James said Sydney-based Ontera, which contributed $28.3 million to the total operating revenue last year, was being upgraded with the company spending about $1 million on plant and equipment in the current year.

Ontera earnings in the first quarter were up about 15% on last year, he said.

The company's carpet flagship, Cavalier Bremworth, is also extending its capacity with Wanganui Yarn expected to achieve 25% more capacity once new equipment from the UK arrives next year.

Cavalier's wool business has had a slow start to this financial year, following steady profit over the past three years under tough trading conditions.

James said the company was "reasonably optimistic" of bettering last year's $3.8 million profit.

The company's other subsidiary, Microbial Techn-
ologies, was also making progress with initial trials of a scab mite remedy for the UK market yielding positive results.

Asked by one shareholder when the company expected to get some returns from the investment after spending $4 million on the venture, James said the project was on the home stretch.

Senior executives will get a total of 1.93 million share rights under a plan approved in November 2000.

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