Annual Meeting Transcript

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Company: Kathmandu Holdings Limited
Conference Title: Annual Shareholders Meeting 2021
Date: Tuesday 23 November
Conference Time: 1:00pm NZDT

1. WELCOME:

Chairman: Good morning everyone. My name is David Kirk and I am pleased to
welcome you as Chairman of Kathmandu Holdings Limited to our 2021
Annual Shareholders Meeting.
The Board decided to convene this year’s Annual Meeting as a virtual-
only meeting given the ongoing uncertainties caused by COVID-19 and
the restrictions on travel and gatherings that we have all experienced
during 2021.
I extend a warm welcome to all shareholders joining us online today
through our virtual meeting platform provided by our share registrar,
Link Market Services.
I declare that a quorum of shareholders is present and the meeting has
been duly convened. I am also pleased to officially open online voting.
2. INTRODUCTION:
Chairman: Before we start the formal business, I would like to introduce my fellow
Directors to you.
• Philip Bowman;
• John Harvey;
• Abby Foote;
• Brent Scrimshaw;
• Andrea Martens;
• and Michael Daly, our Group CEO and Managing Director

I also welcome Leo Foliaki and Inky Lee from PricewaterhouseCoopers,
Chris Kinraid, our Group Chief Financial Officer, and Frances Blundell,
Company Secretary.

3. MEETING PROCEDURES:
Chairman: In terms of the format of today’s meeting, I will start by making some
brief comments about the 2021 financial year for Kathmandu Holdings.

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I will then hand over to Michael, who will provide more details on the
achievements and challenges we have experienced during the past
year, including a summary of the Group’s financial performance and
future strategy.
We will then move to the formal business of the meeting. There are
four resolutions to be considered by shareholders today and these are
set out in the Notice of Meeting. An opportunity will be given to
shareholders to ask questions about, or make comments on, the items
of business on the agenda for today’s meeting.
All voting on the resolutions to be put to today’s Meeting will be
conducted by way of a poll.
To vote, you will need to click “Get Voting Card” within the online
meeting platform. You will be asked to validate your registration by
entering your Shareholder or Proxy Number, which can be found on
your proxy form. Once your registration is validated, you will receive
an electronic voting card which will enable you to cast your votes on
each of the resolutions that we will consider today. You can cast your
votes on the resolutions at any time during the meeting today.
Please mark your voting card in the way you wish to vote by clicking
“FOR”, “AGAINST” or "ABSTAIN" on the voting card. Once you have
made your selection please click “Submit Vote” on the bottom of the
card to lodge your vote.
If you have any issues with registration or voting, please refer to the
Link Market Services virtual meeting online portal guide that can be
accessed through the virtual meeting weblink or call the helpline on
0800 200 220.
There will also be an opportunity, after the resolutions set out in the
Notice of Meeting have been considered, for shareholders to ask any
questions of a more general nature.
To ask a question online, you will need to validate your registration.
Please use the question function, and your question will be conveyed
to the meeting. If you need further information about how to ask a
question, please refer to the virtual meeting online portal guide or call
the help line on 0800 200 220. I would encourage you to send through
your questions as soon as you can. Questions may be moderated or
combined with other questions where they relate to the same topic.

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4. PROXIES:
Chairman:

Valid proxies have been received from 311 of shareholders holding
approximately 58% of issued shares. More than 95% of the proxies
directed are in favour of all resolutions.

5. MINUTES
Chairman: The minutes of the 2020 Annual Meeting held last year have been
reviewed and approved by the Board and signed by me as a true and
correct record of the meeting.
6. ANNUAL REPORT
Chairman:

I also note that the Company’s Annual Report is available to all
shareholders through the Company’s investor website. Any
shareholder who has not received a copy of the Annual Report in
the post, but would like to request a physical copy, can do so by
contacting the Company Secretary or our share registrar, Link
Market Services. We will address any questions from shareholders
on the Annual Report or Financial Statements under General
Business later in the meeting.
7. CHAIRMAN’S
ADDRESS
Chairman:

The first item on today’s agenda is for me, as Chairman, to make
some comments on the 2021 financial year.
The Group ended the 2021 financial year in a strong financial
position, while continuing to navigate the impacts of the COVID
pandemic.
Following the acquisition of Rip Curl in 2019, the Group has three
iconic brands, and our results for the 2021 financial year show the
benefit of the Group’s diversified channels to market, geographies,
and product categories.
We are excited by the growth prospects of all our brands, and are
investing in digital infrastructure, our store network, and continued
brand development to maximise opportunities as we look to a post-
COVID world.
The Group moved quickly at the onset of the COVID pandemic to
raise capital to strengthen the balance sheet, reduce costs and
adjust operating structures, all of which has left us well-positioned
for the recovery in travel and the opening of economies that is
happening now.

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The Group ended the 2021 financial year with a net cash position of
$37.0 million, providing significant funding headroom with a total
bank facility of approximately $300 million.
Following the suspension of dividends last year, the directors
declared a final dividend of 3 NZ cents per share. With the 2 cents
per share interim dividend, this will make a total pay out for the
2021 financial year of 5 NZ cents per share.
Moving on to people, the Board appointed a new Group Chief
Executive Officer during the year.
Former Group CEO Xavier Simonet resigned after five and a half
years with the company. Xavier led the Group through an important
period of growth and diversification, including the acquisitions of
the Oboz and Rip Curl brands.
After an extensive international search, the Board appointed
Michael Daly as the new Group CEO. Michael has led Rip Curl for
eight years with a relentless focus on brand, product, people and
the bottom line. We are confident he will bring the same focus and
energy to the wider Group.
Under the leadership of Michael, our refreshed Group strategy
ensures we are focused on the things that matter most as we move
forward:
• building global brands focused on active outdoor
activities,
• investing in digital platforms to provide consumers with a
truly world class unified commerce experience,
• leveraging the operational excellence of our brands, and
• leadership in ESG.

Michael will talk more about these strategic imperatives in his
address.
The Board would like to thank Michael and his teams for their
outstanding resilience and flexibility navigating the ongoing impacts
of COVID.
I would also like to thank my Board colleagues for their continuing
commitment to making Kathmandu Holdings successful. It has been
a very busy year and I thank you all for your support in navigating
our way through it.

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Finally, thank you shareholders for your continued investment in
Kathmandu Holdings Limited.

I will now ask our Group CEO, Michael Daly, to address you.

8. GROUP CEO ADDRESS
Group CEO:

Thank you, David. Good Morning everyone, and thank you for joining us at
today’s Annual Meeting.

Beginning on slide five, we aspire to be a leading owner of global brands,
appealing to an active, outdoor consumer. This slide outlines the strengths
and collective competitive advantages of our three brands.

Rip Curl is among the top three global surf brands, Kathmandu is the leading
outdoor brand in Australasia, and Oboz is a fast-growing North American hike
footwear brand.

We are highly engaged with our loyal and active consumer base, achieving a
net promoter score that exceeds 70. We have 2.1 million active Summit Club
members and 44,000 Rip Curl Search GPS watch users.

One of our key strengths is the development of purpose-built technical
products. Research and development drives our innovation, and we are
focused on using sustainable materials.

A leader in sustainability and ESG. Kathmandu was an early B-Corp adopter,
and we are working towards extending B-Corp accreditation across all of our
brands. This year, we also committed to the largest syndicated sustainability
linked loan in New Zealand.

Most importantly, we have built a diversified business with global reach. We
are employing a multi-channel approach to appeal to a wide range of
customer buying preferences and having both a winter and summer focus.
We now appeal to customers across seasons and across the globe.

Turning to slide six, I would like to discuss in more detail the Group's 2021
financial year highlights. The Group benefited from a full 12 months of Rip
Curl ownership in the 2021 financial year, compared to nine months of
ownership last year.

Total Group sales were $922.8 million, up 15.1% on the prior year. Pleasingly
our underlying EBITDA was up 35.9% to $113.3 million, underpinned by a
gross margin improvement of 40 basis points.

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Underlying net profit after tax for the financial year was $66.3 million and we
delivered strong underlying operating cash flow of $93.3 million.

As David mentioned, we ended the period with a strong net cash balance of
$37 million.

Moving to slide seven, I want to touch on some of the key operational
highlights during the year.

Rip Curl delivered strong direct to consumer sales, with same store sales
growth of 19.2% including online sales growth of 31.3%. Online growth was
underpinned by changing consumer preferences brought about by the COVID
lockdown periods.

We successfully relaunched Kathmandu's new brand platform in May,
reminding people that being outside changes us and that as human beings,
we are hardwired to be outside. The relaunch was very well received and
pleasingly Kathmandu achieved an exceptionally high net promoter score of
76.

Oboz successfully launched their online store in April, and the wholesale
business is well positioned with double-digit growth in forward orders.

Looking at slide eight, sustainability is at the core of each of our brands, and I
would like to highlight some notable achievements.

In conjunction with our key stakeholders, we completed a Group ESG
materiality assessment which has helped us identify the key areas of focus for
development of our ESG strategy. This year, we also committed to the largest
sustainability linked loan in New Zealand at the time of its signing.

During 2021, Rip Curl launched a wetsuit take-back program with TerraCycle.
The business also sources its sustainable cotton in line with the Better Cotton
Initiative. These are important sustainability initiatives for the Rip Curl brand.

The Kathmandu brand meets the highest standards of environmental and
social performance as certified by its B-Corp status. The Kathmandu brand has
offset its operational carbon footprint to obtain certified carbon neutrality.

For Oboz, over 4 million trees have been planted since the company's
inception, with the company planting a tree for every pair of footwear sold.
Oboz has 95% environmentally preferred leather materials in its product
range.

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Moving to our Group strategy on slide nine, you can see a summary of the
four key components we are focussing on as a group.

We have been building a portfolio of global brands and aim to further expand
our global footprint as we invest in world class brands and customer
experiences.

We will elevate our digital capabilities by investing in Group digital platforms
to deliver a world class unified commerce experience.

We will also leverage and deliver operational excellence to all of our brands
across shared Group support functions.

Finally, we will continue to demonstrate leadership across environmental,
social and governance to drive long-term value for our shareholders.

Given the uncertainties associated with COVID, it is important for us to
maintain balance sheet flexibility, allowing for capital return options and the
capacity for future M&A.

I will now go into each of these strategic components in a little more detail.

Onto slide ten, a key part of our strategy focuses on building global brands.
Our goal is for Rip Curl to be the number one surf brand in Australasia and a
top three brand in North America and Europe. We will be building Rip Curl’s
North American presence and see the potential to double the North American
business across our own stores, online and wholesale channels.

Kathmandu is the leading outdoor brand in Australasia, with 2.1 million loyal
and engaged Summit Club members, which we aim to further leverage. There
is significant market opportunity to expand into Europe and North America,
and we aim to launch in both Canada and Europe during FY22. We have an
attractive new product pipeline, which includes an enhanced summer
product offering.

Oboz is undergoing the expansion of its product range into adjacent footwear
categories, and we aim to grow Oboz into a US$100 million business in the
medium-term with growth opportunities in the recently launched online store
and further expansion of the business in Canada and also Europe, in time.

Moving to slide 11, with the current COVID situation accelerating a move to
online sales, significant investments have been made to elevate our digital
capabilities.

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Our goal is to increase Group online sales to 25% of direct-to-consumer sales
in the medium-term by enhancing our digital capability.

With this goal in mind, a new Group online platform is being rolled out across
our brands. We also are making further enhancements to our omnichannel
foundations, including making point of sale upgrades to support unified
commerce and click and collect functions for contactless purchases. In time,
we aim to exceed our consumers’ minimum expectations in these areas.

We see loyalty as an important growth driver for our brands. We are investing
in our loyalty programs, including the launch of Rip Curl’s first loyalty
programme, and the relaunch of Kathmandu’s more advanced loyalty
programme in the coming year.

Finally, a key area of focus for us is to make sure we understand our
consumers better, through data insights and analysis. Pricing and promotions
are being enhanced based on data algorithms, and we have developed
personalised consumer contact to encourage digital purchases, and really
leverage the relationships with our consumers.

Moving on to slide 12. Whilst a lot of work has been done to bring our three
brands together, in reality there is still a lot of work to be done to leverage
the operational excellence of all of our brands.

We plan to accelerate cross-brand revenue growth opportunities where
appropriate, and aggressively pursue ongoing realisation of margin and cost
saving opportunities over time.

Investments will be made to optimise our supply chain, efficiently manage our
fixed cost base, collaborate on product innovation between brands and to
enhance core systems to unlock growth potential across loyalty programs and
online.

Overall, we have set a target to improve our underlying EBITDA margin to 15%
of sales in the medium-term.

Moving to slide 13, being a leader in ESG will drive long-term value for
shareholders.

Kathmandu has been an early mover in this space, and we are now working
to extend Kathmandu's B-Corp accreditation across all of our brands.

However, we want to go further than B-Corp accreditation. We have
completed a ESG materiality assessment in recent months across the Group,
talking to all our stakeholders about where we can do better, and where our

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areas of focus should be. The three focus areas resulting from that assessment
are shown on the slide.

We are highly engaged with our people and our communities, and our ESG
strategy starts with the wellbeing of our staff, the workers in our supply chain,
and the communities that we operate in.

In 2022, we will be setting Science Based Targets that align with the Paris
Climate Agreement, and holding ourselves accountable to those targets.
Finally, we are embracing the principles of circularity in everything we do,
from the design, development, and sourcing of our products, through to the
delivery of those products to our consumers, ultimately targeting a zero-
waste supply chain.

Principles of transparency and responsibility will continue to underpin
everything that we do as we manage our environmental and social impact
responsibly and ethically.

Moving to slide 14, here is the trading update that we released as part of our
Investor Day two weeks ago.

The first quarter was heavily impacted by COVID closures, which were longer
and deeper than the same period last year.

Same store sales for Rip Curl were -9.4% compared to last year overall
(including online), and for Kathmandu -17.6% below last year. However, when
we exclude stores forced to close because of COVID lockdowns, we have seen
positive growth. For Kathmandu +16.3% and for Rip Curl +1.6%, which has
consolidated +27% COVID-adjusted same store growth from the first quarter
last year for the Rip Curl Brand.

Pleasingly our online channels have been strong, up +33.8% overall, with Rip
Curl up 11.2%, and Kathmandu up +58.4%.

As previously signalled, COVID has had a significant impact in the first quarter,
particularly in our New Zealand, New South Wales and Victorian markets.
Without any direct government subsidies being recognised in the first quarter
this year, operating profit is approximately $35 million lower than the first
quarter of last year.

However, we are now seeing positive momentum in the short period since
reopening in our key New South Wales, Victoria and Auckland market in New
Zealand.

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In terms of outlook, Rip Curl and Kathmandu are well prepared for the key
Black Friday and Christmas trading periods. Inventory remains sufficient to
meet expected demand overall.

Due to the uncertain COVID trading environment, we will not provide any
forward guidance, however, as mentioned previously, as markets reopen,
trading is expected to improve. There is growth opportunity, particularly in
the second half, as we hope to trade the full period compared to lockdowns
in June and July of last year.

A key priority is for our brands to increase investment in marketing,
sustainability, and loyalty to support our “Build Global Brands” strategy.
Whilst Rip Curl and Oboz wholesale orders remain significantly above pre-
COVID levels, supply chain continues to be a challenge globally, particularly
impacting the flow of products into our North American markets.

Oboz product deliveries will be impacted in the second quarter, as Vietnam
footwear factories slowly ramp up production following closures due to
COVID. Demand for Rip Curl wetsuits continues to exceed available supply.

Finally, freight, logistics, and raw material costs remain elevated as the
outlook for supply chain remains challenging. This will be managed where
possible through pricing and raw material substitution.

That is now the end of my presentation. Thank you for your attention. I will
hand back to David to run through the formal part of the meeting.

Chairman: Thank you Michael.

I would again like to express my thanks and those of my fellow Directors to
you and your team for the dedication and strength that you have all
demonstrated through the challenges of 2021.

9. ELECTION OF
DIRECTORS
Chairman:


Turning now to the third item on today’s agenda; the election of
Directors.

The NZX Listing Rules require that:
• a director must not hold office (without re-election) past the third
annual meeting following the director’s appointment, or 3 years,
whichever is longer; and

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• a director appointed by the board must not hold office (without re-
election) past the next annual meeting following the director’s
appointment.

So, pursuant to the NZX Listing Rules, myself, Michael Daly and Abby
Foote each retire at today’s meeting and offer ourselves for election by
shareholders.

I will now ask John Harvey to Chair the meeting for the purposes of
proposing the first resolution.

Acting Chairman:
Thank you David and good afternoon everyone.

The Board unanimously supports the re-election of David and the
election of Michael and Abby.

Information about each of David, Michael and Abby is contained in the
explanatory notes to the notice of today’s meeting.

Each of David, Michael and Abby will be asked to briefly address you as
we move through the resolutions.

To comply with the Listing Rules, it is necessary for each Director to be
appointed by separate resolution.


Acting Chairman:
RESOLUTION 1
I now move the following as an ordinary resolution:




Chairman:




That David Kirk, who retires at the Annual Meeting and is eligible for re-
election, be re-elected as a Director of the Company.

I now invite David to address the meeting.

Thank you John, I will be brief. I would just like to say to Shareholders I
am honoured and delighted to be the Chairman of the Board. I believe I
have the strong support of my fellow board members and I that we have
a very well balanced and capable board team to take the business
forward.

I remain very enthusiastic about Kathmandu and I feel we made a strong
transition from Xavier to Michael and we have reinforced and bedded in
a new strategy that is entirely appropriate for the expanded Group and
the full board is excited to support Michael and his teams in
implementing that. So, thank you for considering me for re-election.

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Acting Chairman:
Company Secretary:






Acting Chairman:

Company Secretary:


Chairman:




Thanks David.
Have we received any questions for discussion on the motion?

Yes, we have received some questions. The first question I will answer
also. The first question received from Stephen Mayne:

Did any of the main proxy advisers - ACSI, Ownership Matters, Glass Lewis
and ISS - recommend a vote against any of today's resolutions? Which of
the proxy advisers are covering us and has there been a material proxy
protest vote against any of today's resolutions? Will you disclose the proxy
votes before the debate on today's resolutions so shareholders can ask
questions if there have been any protest votes?

In response to that question the only proxy adviser that engaged with us
was the New Zealand Shareholders Association. We are not aware of any
material proxy protest votes against any of today’s resolutions and the
proxy votes received in relation to each resolution are included on the slide
deck for Shareholders to see as we move through each of the resolutions
today.

Thank you Frances, are there any further questions?

There are a couple more. So, the next question is a question directed by
Stephen Mayne to David:

ASX listed companies are required by law to have a non-binding vote on
the remuneration report each. Given that a large proportion of our register
is owned by Australian-based investors, can chair David Kirk pleased
comment on why we don't voluntarily embrace an annual vote on our
remuneration policies?

Thanks Frances, just to provide a little bit of background, our primary
listing is in the New Zealand – for Shareholders we are primarily listed on
the New Zealand Stock Exchange and the New Zealand Stock Exchange
doesn’t require a remuneration report the same way that the Australian
Stock Exchange does. We report absolutely according to the requirements
of the New Zealand Stock Exchange and that is not quite as comprehensive
when it comes to remuneration reporting as the ASX requirements but we
still think very open and clear. The Board has determined that it will
continue to discuss the difference – the differences between the two
approaches to remuneration reporting and will consider whether it makes
sense to voluntarily move somewhat closer to the Australian requirement.

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Acting Chairman:
Company Secretary:



Chairman:



Acting Chairman:
Company Secretary:
Acting Chairman:
Thank you David. Are there any more questions?

Yes, one further question also asked by Stephen Mayne:

Congratulations to David Kirk on just having his biggest ever pay day
through Bailador's exit from the Siteminder business which recently floated
and is today valued at $A1.8 billion. Could he comment on how focused
and motivated he remains as the non-executive chair of Kathmandu, when
he has far more skin in the game and exciting deals to pursue in his private
equity style Bailador business. Is he committed to serving a full 3 year term
as chair?
Yes, I can say Stephen if I am speaking directly to you as we would in an
Annual General Meeting where you would be there in person, I remain
absolutely committed to Kathmandu and will allocate plenty of my time
to doing everything I can to support the business and helping it succeed.
I think its an exciting time for the business and I am very focused on
helping it succeed.

Thank you David, Frances I think you said this was the last question?

Yes, no more questions on this resolution.

There being no further discussion, I will now put the motion.

Please cast your votes now for Resolution 1 if you have not already done
so. Please now select either “For”, “Against” or “Abstain” for Resolution
1 on the voting card.

Thank you.

I will now hand back to David to continue chairing the meeting.


RESOLUTION 2
Chairman:





Thanks very much John.

We now move to Resolution 2. I move the following as an ordinary
resolution:

That Michael Daly, who retires at the Annual Meeting and is eligible for
election, be elected as a Director of the Company.

I now invite Michael to address the meeting.

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Group CEO:







Chairman:
Company Secretary:






Chairman:

Company Secretary:







Group CEO:



Thanks David, look I’m very humbled to take on the role of the Group CEO
and Managing Director to lead these three iconic brands, extremely excited
by the opportunities that exist for each of the brands and looking forward
to playing my role in providing the leadership to steer the company through
what should be a very exciting period of growth. Certainly, very dedicated
and committed to my role and believe I have the strong support of the
Board and looking forward to working with them over the next three, five
and beyond years.

Thank you for the support and appreciate the commitment.

Thanks Michael. Have we received any questions for discussion on the
motion?

Yes we have. First question is asked by Stephen Mayne:
Australian law gives an exemption to CEOs from the director election
process. Given that New Zealand law doesn't provide such an exemption to
the CEO, we are voting on Michael Daly's election today. Could Michael and
the chair both comment on whether Kathmandu will follow the lead of ASX
listed Treasury Wine Estates and voluntarily embrace annual elections of
directors as is required in the US and UK, in order to provide greater board
accountability to shareholders.

I’ll answer the question. No, we have no intention of moving to annual
elections of directors and we don’t think it makes any material difference
to the accountability and the focus of directors.

We have one further question, also asked by Stephen Mayne:

It is unusual for a company to take over another business and then promote
the CEO of the target company to later become CEO of the whole empire.
Could Michael Daly comment on whether this arrangement was
contemplated when the Rip Curl acquisition was done in 2019 and could he
clarify how many Kathmandu shares he received as part of the sale and
whether he retained all of those shares? Also, what is the current status of
Michael’s relationship with Rip Curl founders Brian Singer and Doug
Warbrick?

Thanks for the question, a few components to that. When myself and Xavier
were originally working to bringing Rip Curl and Kathmandu together, no, it
was never contemplated to be honest that I would move into the Group
CEO role, it was never discussed. That said I am very ambitious and certainly
from my point of view a natural progression for my role knowing that I have
been the CEO at Rip Curl for over eight years and certainly looking for
continued professional progression myself and so moving from the CEO of

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Chairman:
Company Secretary:

Chairman:
Rip Curl to be the Group CEO was a logical next step and when that
opportunity arose with Xavier’s decision to resign and take another role it
created that opportunity. I am fortunate for that because it gave me the
potential to continue to work with the Rip Curl brand but also, I guess,
extend my experience across the Kathmandu and the Oboz brand.

With respect to any equity I received on the sale of Rip Curl, yes I have
maintained all of my equity and indeed have purchased additional shares
on top of the equity I received as part of the sale of Rip Curl and certainly
am a long term holder of the shares in Kathmandu and a long term believer.

With respect to my relationship with the founders of Rip Curl, it was very
much a professional relationship while I worked at Rip Curl for a long period
of time and I was respected by them, it was always a professional
relationship and to that extent for the last two years I haven’t had much
contact with them other than when I have bumped into them around the
place, so just a professional relationship.

Are there any further questions?

No further questions.

There being no further questions, I will now put the motion.

Please cast your votes now for Resolution 2 if you have not already done so.

Thank you.



Chairman:




Abby Foote:





RESOLUTION 3
I now move the following as an ordinary resolution:

That Abby Foote, who retires at the Annual Meeting and is eligible for
election, be elected as a Director of the Company.

I now invite Abby to address the meeting.

Thanks very much David, and tēnā koutou welcome everyone and
thanks very much for joining us here today. As David said my name is
Abby Foote and I am delighted to be here today at my first meeting of
Kathmandu Holdings to seek your support to my appointment to the
Board.

As you will note from my bio, I am also a director of Sandford, Z Energy
and Freightways. I have been a full-time professional director for over
10 years, so although I have a background in law and finance with

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Chairman:
Company Secretary:


experience in large projects, M&A, and treasury amongst other things,
primarily I bring to this role deep and extensive governance
experience. I have served on a mixture of listed and crown owned
entities and I am an experienced board and committee chair.

That experience enables me to bring a strong contribution against
many areas. I have particular expertise in the areas of strategy, risk,
Health and Safety, and ESG and I am conscious of the need for Boards
and companies to stay abreast of the increasing expectations of a wider
range of stakeholders.

Kathmandu’s long-standing commitment to sustainability in the
interests of stakeholders is part of what has attracted me to the
company. Kathmandu Holdings has a stable of iconic brands. Like many
New Zealanders, the Kathmandu Brand is well represented in my
wardrobe and my garage.

One of the many changes we have seen as a result of the COVID
experience for the last two years is the value of our lifestyle choices,
and in particular the value we place on the access to the outdoors.

The Kathmandu Holdings brands have been impacted by store
lockdowns around the world, but they are well positioned to support
consumers around the world as they emerge from lockdown
restrictions and look to get outside and enjoy the outdoors.

I’m really excited to be joining the organisation at this time and I look
forward to creating more value for you, our shareholders. I would be
very grateful for your support for my election to the Board today. I am
happy to answer any questions.

Thank you.

Thanks Abby.

Have we received any questions for discussion on the motion?

We have received one question. This is from Stephen Mayne:

COVID and border closures has made it very difficult for geographically
diverse boards to meet in person. Could Abby comment on how
challenging this has been for her as a non-executive director and could
the chair outline where all our directors and key executives are based
and how the challenges of border closures and COVID has been
managed.

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Abby Foote:


Chairman:


Company Secretary:
Chairman:


Thanks Stephen for your question. Look, like many people around the
world, not just directors, we’ve all had to adapt to being able to
conduct business online. One of the advantages that I have had is that
as Christchurch has been relatively less locked down than other parts
of New Zealand, I’ve actually had access to the Christchurch office of
Kathmandu and that’s enabled me to meet a number of the executive
team and Kathmandu team on the ground and also tour some of the
Distribution Centre. So, I feel that that has given me a really good
insight into the Kathmandu operations and that I’ve been able to get
to know my fellow directors sufficiently at this point in time from my
online engagements with them.

Thanks Abby and I'll pick up the second part of the question.

The geographic spread of directors: there are two in Auckland, one in
Christchurch, two in Sydney, one in Melbourne and one on the South
Coast, down close to Torquay. We have managed the dispersion and
the inability to get together as well as we could, the majority of the
time through video conferencing. From time to time it has been
possible to get subsets of the board together in some parts of the
country. For instance there were three or four directors who were able
to get together in Christchurch last year while others were spread out
and we’ve actually found video conferencing has worked well for us, it
is important to be very well prepared for the meetings and have good
papers and for all of us to understand that we have to manage it a
slightly different way in terms of our interaction, giving a bit more
space and time for people to start and finish what they have to say. But
I have to say I think the board has continued to operate very effectively
not withstanding having been unable to get together.

Are there any other questions Frances?

No further questions on this resolution.

Thank you, please cast your votes now for Resolution 3 if you have not
already done so.

Thank you.

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10. AUDITORS
REMUNERATION
RESOLUTION 4

Chairman:






Company Secretary:







Chairman:

Leo Foliaki:





Chairman:

John Harvey:





The final resolution on the agenda today relates to fixing the
remuneration of the Company’s auditor for the 2022 Financial Year.

I therefore move:

That the Directors be authorised to fix the remuneration of the Company’s
auditor for the ensuing year.

Have we received any questions for discussion on the motion?

Yes we have. The first question from Stephen Mayne:

The Australian Financial Review reported this month that Australia's
biggest auditor PwC has used dozens of unqualified workers, on lower
salaries and with less training and resources than their main office
counterpart, to complete audit work for large listed clients from an
unbranded office in Western Sydney's Parramatta. Could our PwC auditor
comment on whether this is true & whether any Kathmandu auditing was
done from this unbranded Parramatta office. Could ex PwC partner John
Harvey also comment on this situation?
Leo, would you like to pick that one up?

Sure David, thank you for the question. Obviously, the straightforward
answer is that predominantly most of the work for the Kathmandu Group
is done by the New Zealand office and we did not use any resources out
of the Parramatta office that was referred to. It is obviously a matter that
PWC Australian firm is looking into seriously and considering their
appropriateness of how that is handled going forward but for Kathmandu
those resources were not used as part of the Kathmandu Audit.
John, would you like to pick up the second part?

Yes, I’m happy to comment. I have been retired from PWC for over 12
years now. I have no ongoing involvement with the firm other than just
sort of through professional involvements such as a this one and therefore
I know no more about the allegations that have been made other than
what I have read in the Australian Financial Review. Thank you.

Thank you, are there any other questions.

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Chairman:

Company Secretary:






Chairman:




Company Secretary:
Chairman:



Yes, one further question from Stephen Mayne:

Given the interesting discussions across a range of topics today, including
the auditor pay issue, could the chair undertake to make an archived copy
of the webcast plus a full transcript available on the company's website.
Will the excellent past policy of lodging a full AGM transcript on the ASX
and NZX be continued this year. This doesn't happen in Australia and is
commendable transparency so well done for that.

Thank you Stephen, yes we are happy to continue to do what we have
traditionally done, including lodging the transcript. I’m not sure whether
the video will end up on the website, its just there is a lot going on on the
website but will certainly look into that, and we certainly have no
objection to doing it, we just want to make sure it’s the right thing for our
website.

Great no further questions on this resolution.

Please cast your votes now for Resolution 4 if you have not already done
so.

Thank you. Shareholders should ensure they have now submitted their
votes for all four of the resolutions set out in the Notice of today’s
Meeting. Voting will remain open until the conclusion of the meeting.

Once voting has closed, Link Market Services will tally the votes. The
results will be announced to NZX and ASX once counting has been
completed.

Thank you.

10. GENERAL BUSINESS
Chairman:



Company Secretary:

I would now like to give shareholders an opportunity to ask questions
concerning any matters addressed at this meeting or of a more general
nature concerning the Company.

Anybody who now wishes to ask any further questions, please ask your
questions using the “Ask a Question” button.

If we run short of time and are unable to answer your question online
today, we will endeavour to respond to you after the meeting.
Our first question comes from Bruce Parkes:

Page | 20

Chairman:
Group CEO:


Chairman:
Company Secretary:





Chairman:




Company Secretary:


Can you identify how much of your online growth is from new customers
rather than regular Summit Club members changing their shopping
channel?

Good question, a tough one to answer, but I will pass it to Michael to see
if he can give some indication.

Thanks David, look, I don’t have the exact numbers off the top of my head
for the last year, but certainly we have seen a good balance of both
returning shoppers and new shoppers quite frankly for all of our brands,
remembering that Oboz brand has only just launched its online presence
in the last couple of months so obviously all of its shoppers are new. Rip
Curl doesn’t have a loyalty program at the moment but we are rolling out
one in 2022 and that will give us greater ability to track whether
consumers are returning consumers or new consumers. We’ll take the
question offline and see what we can do to answer it by other means.

Are there any more questions?

Next question from Stephen Mayne:

Since we paid $A350 million for Rip Curl in late 2019, have the founders
Brian Singer and Doug Warbrick remained involved with the business
through a consultancy or any other formal or informal arrangement. Along
with the Rip Curl CEO, they were issued $32m worth of stock as part of the
transaction. Have they retained these shares or subsequently sold out?

I can answer Stephen, that there has been no formal or even informal
involvement with the founders, Brian Singer and Doug Warbrick. They
have been casual supporters and enthusiasts of what is happening with
the company but beyond that no other engagement. Michael confirmed
that he has retained all of his shareholding here in Rip Curl which
transferred to a shareholding in Kathmandu and I don’t have the answer
as to whether Brian Singer and Doug Warbrick have retained their shares
or not, its not something I’m familiar with.

Our next question is from Stephen Mayne:

We claimed $41.13 million in the Australian government's JobKeeper
scheme over the past two financial years, putting us in the top 15 for ASX
listed companies in terms of JobKeeper claims. Many other ASX listed
retailers such as Premier Investments, Super Retail Group and Harvey
Norman repaid some or all of their JobKeeper claims. Why didn't we that?

Page | 21
Chairman:












Company Secretary:


Chairman:


Group CEO:





Whether it made sense or not to repay JobKeeper claims needs to be
considered in a broad context. We’ve always felt like the pandemic has
caused a great deal of pain to companies and the various stakeholders in
companies. Shareholders for instance suffered quite significantly in
Kathmandu because we had to take a large capital raising at a significant
discount. We also did not pay any dividends for a period, so shareholders
missed out on those dividends so that’s quite a significant pain that
shareholders have worn. And then moving to staff, staff received no
bonuses in the 2020 year and many staff received reductions in pay as well
during that period, so staff wore a fair share of pain as well. The
government JobKeeper in both countries was specifically targeted to keep
employees in employment. When all of our shops were closed, we had no
income coming in and had no ability to pay those people except by
drawing down on retained earnings which were shareholder’s funds,
much of which had been immediately raised.

We thought it was and still believe that it was a very good public policy for
a government to target keeping people in jobs for the time when stores
could be reopened and that’s exactly what we did with the money. Not a
dollar of that money went anywhere, but where it was expected to go in
maintaining people’s employment. We think that the economy has
benefited and Kathmandu has benefited from that public policy and we
think the overall pain of the pandemic has been fairly allocated between
shareholders, staff and taxpayers.

The next question from Sivaswamy Mohanakrishnan:

Does the Company have a 3 or 5 years target/plan to reach in respect of
sales, profit, share price, dividend etc? Can any numbers be given to
shareholders on this? How is this being implemented and tracked?

I’ll just comment, we won’t be giving long term forecasts but I’ll just ask
Michael to talk about longer term planning and how the company thinks
about longer term performance.

Thanks David, look certainly we had an investor day a couple of weeks ago
and the detailed presentation is available on our website so I certainly
encourage you to review that in more detail if you haven’t had the chance
to.

Within that document we do a few callouts of where we think there is
potential growth opportunities for each of our brands and we specifically
talk about the international expansion opportunity for Kathmandu and
mention the $100 million sales target in the next five years. Likewise, we
talk about the potential for Kathmandu to grow by recovering sales that

Page | 22









Company Secretary:





Chairman:




Company Secretary:


Chairman:




we’ve lost through the pandemic and through closed borders, we also give
some guidelines as far as Oboz immediate target to US$100 million sales.

We also have spoken today and previously in other meetings about a
minimum of EBIDTA target of 15% as a group. So really that is the extent
of which were comfortable in giving out some forward longer-term
guidance as far as where we’re headed and certainly encourage you look
through the details of that investor day presentation if you haven’t
already.

The next question from Stephen Mayne:

Kathmandu has more than 12,000 shareholders. What is going on with no
one in New Zealand bothering to register online and ask questions at the
AGM of this iconic company? Doesn't the New Zealand Shareholders
Association normally come along and ask questions at the AGMs of
prominent Kiwi public companies, so that they don't descend into a non-
event with no questions. Can the board at least line up some staff to ask
a few informed questions at next year's AGM.

Thank you Stephen and I obviously can’t speak for the New Zealand
Shareholders Association but we are delighted that you at least have filled
the gap to a pretty large extent and we do agree that this is a great
opportunity for shareholders to have the opportunity to ask questions and
to learn more about the company. So, we very much encourage them to
do that.

Question from Fiona Preston:

Gender and racial diversity are lacking on the Board and Leadership team.
Why has there been so little progress in this area to date and when can we
look forward to seeing meaningful change?

Fiona I am not sure that is true, I think we have a non-executive director
split on the board, now that Abby’s appointment has been re-elected
today of 40% female 60% male so that is adequate for most of the bodies
that are keeping a close eye on gender diversity on boards. Of our three
brands, Rip Curl, Kathmandu and Oboz, two of them are headed up by
women and generally speaking we have strong representation in all of the
Brands at the next level, I can’t say off the top of my head, Michael might
be able to say a bit more on just what the gender balance is at the next
level in the three brands, but Kathmandu generally speaking has had a
strong reputation for gender balance and diversity generally across the
company. Michael did you want to pick up on that at all?

Page | 23
Group CEO:


Company Secretary:

Yes, thanks David, look definitely, its something that we as a company
always want to be better at, something that as David mentioned that two
of the three brands being headed up by females. We are proud of our
achievements in this space of course we can continue to be better and
that’s certainly in what we intend to do. As David mentioned as you go
down through the ranks of managers through all of our brands it’s a key
area of focus for us to ensure that we have the diversity across not only
gender but ethnicity as much as we can. So certainly it’s a key focus for me
as the CEO and a key focus for all of our leaders across the business.


No further questions have been received.

11. CONCLUSION
Chairman: Thank you very much. Ladies and Gentlemen, that concludes today’s
meeting. I thank you for your continued support and attendance today
and I now declare the meeting closed.