Methven IR Report by Paul Oliver

INTERIM REPorT

2010

RE // GRAPHIC TEXTURES

GE OR TEXTURAL FINISH (I.E. EMBOSS / FOIL) THE VECTOR ILLUSTRATIONS CAN ALSO BE USED AS A PHOTOGRAPHIC FRAME.

VECTOR

COnTENTs

mETHvEN LIMITED RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2010

05 Performance Summary 07 Directors’ Report 14 Financial Statements

PERFORmANCE SUmMARY NPAT up 8.3% from $4.2m to $4.5m before one off UK costs (guidance was â&#x20AC;&#x153;in lineâ&#x20AC;?) Net Debt up 6.4% from $18.3m to $19.5m (guidance was 15-20% up) EBITDA up 3.4% from $8.5m to $8.8m before one off UK costs Operating Revenue down 7.7% from $68.1m to $62.8m Strong Australian result; static NZ performance; break even UK result Partially imputed interim dividend of 5.5 cps to be paid on 31 December 2010( in line with guidance)

Interim Profit and Debt Levels Better than Guidance

METHVEN LIMITED

For the six months ended 30 September 2010

dIRECTORSâ&#x20AC;&#x2122; REPORT Methven Group achieved all half year targets despite mixed trading conditions, delivering a lift in interim profit and sound cashflow, resulting in a much better net debt position than indicated in the July 2010 market guidance.

Group interim NPAT, which was expected to be flat, was up 8.3% from $4.2 million to $4.5 million before one off UK costs of $264,000 and up 2% on prior year after the one off costs. Net Debt had been forecast to increase by 15-20% on the prior half year but was up only 6.4% from $18.3 million to $19.5 million. The result was based on Operating Revenue of $62.8 million, down 7.7% from $68.1 million and EBITDA of $8.8 million before one off UK costs, up 3.4% on prior half year earnings of $8.5 million. There continued to be mixed trading conditions in our three key markets with the UK being the most depressed. The New Zealand economy remained stagnant at historically low levels, showing few signs of recovery. Australian conditions, while easing, still remained the bright spot of our core markets.

DIVIDEND AND CASH FLOWS Given the interim results and demonstrated abilities to maintain good cash flows and the relatively low level of borrowings, the Directors have recommended a partially imputed interim dividend of 5.5 cps to be paid on 31 December 2010. The cents per share amount to be paid is the same as the June 2010 final dividend and is in line with guidance. As previously flagged to shareholders, with the ongoing expansion of the business offshore, dividends are likely to be only partially imputed from this dividend forward. This interim dividend will be [83%] imputed.

METHVEN LIMITED

For the six months ended 30 September 2010

MARKET REVIEW AUSTRALIA – strong profit growth reflects success of long term investment strategy

UNITED KINGDOM – break even position in depressed economy

AUSTRALIA Unaudited Unaudited AU $000 30 Sept 2010 30 Sept 2009 �� Operating Revenue 20,441 18,562 �� EBITDA 2,327 741 �� EBITDA % of revenue 11.4% 4.0% ��

UNITED KINGDOM Unaudited Unaudited GB £000 30 Sept 2010 30 Sept 2009 �� Operating Revenue 7,092 10,083 �� EBITDA (92) 808 �� EBITDA % of revenue -1.3% 8.0% ��

Operating Revenue up 10.1% from A$18.6 million to A$20.4 million

Showerware sales up 14% with Satinjet sales up 7%

Operating Revenue down 29.7% from £10.1 million to £7.1 million

EBITDA up 214% from A$0.7 million to A$2.3million

Tapware sales up 51% as a result of differentiated design

EBITDA before one off UK costs down 90% from £0.8 million to £0.1 million

Margins overall continue to improve

Nefa valve sales down 25% in commodity category

EBITDA after one off UK costs down 111% from £0.8 million to a loss of £0.1 million

Reduced sales reflect full effect of loss of the Wickes account as expected and continuing recessionary conditions Repositioning of UK business well underway New UK CEO, Steve Lee, appointed 1 November 2010

NEW ZEALAND – flat result in poor market NEW ZEALAND Unaudited Unaudited NZ $000 30 Sept 2010 30 Sept 2009 �� Operating Revenue 21,876 22,464 �� EBITDA excluding non-operating fx 5,456 5,455 �� EBITDA % of revenue 24.9% 24.3% ��

Total Operating Revenue down 2.6% from $22.5 million to $21.9 million Domestic Revenue up 3.2% from $19.7 million to $20.3 million EBITDA same as prior half year as cost reductions offset revenue loss

No signs of market recovery despite year on year lift in permits - combined permits up 15.6%; new build permits up 27.5% and renovation permits up 7.9% Kiri Low Flow Shower won Gold in the Sustainable Product category at the NZ Best Design Awards 2010

Kiri Low Flow Shower won Gold in the Sustainable Product category at the NZ Best Design Awards 2010

METHVEN LIMITED

For the six months ended 30 September 2010

STRATEGIC FOCUS Our main priorities are to: Push hard into the UK market and establish Methven premium ranges and brand Accelerate hotel sales in Europe and Asia Develop new world leading showerware and tapware solutions and experiences Grow tapware market share in Australia and defend showerware business Repositioning the UK business to become a high value, premium, Methven branded operation is an absolute focus. At the same time, there are growth opportunities for the Deva brand through offering new value products and utilising Group buying synergies.

Methven is confident it has a compelling and unique offer, delivering improved guest satisfaction and water and energy savings for the hotel through retrofitting bathrooms with luxury Satinjet showerware and Jemflo technology that moderates temperature fluctuations.

The former Chairman and Chief Executive of Bristan, the largest UK tapware supplier and previous head of the UK Bathroom Manufacturers Association, Steve Lee, has been recruited as Methven UK CEO. Taking up the role in November 2010, he will be assisted in the UK transition by Group Chief Operating Officer, Matthew Crichton, who had oversight of the successful transformation of Methven Australia from its former low value model to incorporate premium, proprietary shower and tapware products such as Satinjet showers.

As part of Methvenâ&#x20AC;&#x2122;s design-led ethos, new proprietary showerware and tapware are in development and will be unveiled at the premier, international, plumbing trade show to be held in Frankfurt in March 2011. These innovations are key to our differentiation strategy that achieves higher sustainable margins, consumer appeal and new market and niche opportunities.

The global hotel initiative is a long term investment strategy for the company. While Australia hotel sales continue to track well, results will take time to show through from the new markets in Europe and Asia. Building customer relationships and recruiting local expertise are the priority.

The half year results reflect successful growth in tapware market share in Australia. It is still relatively small but there is significant opportunity for ongoing growth in tapware and also showerware with the introduction of new Satinjet designs.

METHVEN LIMITED 11

For the six months ended 30 September 2010

Methven has again demonstrated earnings resilience in recessionary times.

OUTLOOK Based on latest information, we are forecasting a full year NPAT slightly ahead of the prior year. Previous guidance had been for a reasonable lift in profitability. Year end Net Debt is also expected to be slightly up on prior year. We had previously indicated Net Debt would be in line. New Zealand market conditions, and to a lesser extent Australia, are not expected to improve to the degree that we had thought in July 2010. In addition the UK is now forecast to end the year close to break-even as we implement the turnaround strategies that will create sustainable profitability. Methven has again demonstrated earnings resilience in recessionary times. Success in turning around our UK operations will reduce the drag on earnings and set the course for strong growth in Group profitability.

Phil Lough Chairman

Rick Fala Group CEO

METHVEN LIMITED

For the six months ended 30 September 2010

CONsOLIDATED INcOME sTATEMENT FOR THE HALF YEAR ENDED 30 SEPTEMBER 2010

6 MTHS ENDED 6 MTHS ENDED 12 MTHS ENDED 30 SEPT 10 30 SEPT 09 31 MAR 10 NZ $000 Notes UNAUDITED UNAUDITED AUDITED �� Sales revenue

62,815

68,064

129,822

fINAnCIAL STATEmENTS

Cost of sales (36,272) (43,836) (80,030) �� Gross profit 26,543 24,228 49,792

FOR THE HALF YEAR ENDED 30 SEPTEMBER 2010

Other income

Expenses The Directors have pleasure in presenting the interim financial statements of Methven Limited, set out on pages xx to xx, for the half year ended 30 September 2010. The Directors authorised these financial statements for issue on 29 November 2010.

Phil Lough Chairman 29 NOVEMBER 2010

Rick Fala Managing Director and Group CEO

Research, design and engineering

(1,420)

(1,014)

(1,890)

Sales, distribution, marketing & brand development

(13,587)

(12,585)

(28,415)

Administration and other expenses

(4,862)

(4,111)

(7,451)

Finance costs (582) (539) (1,029) �� Profit before income tax 6,111 5,999 11,027 (1,801) (3,207) Income tax expense (1,829) �� Net profit attributable to shareholders of the parent 3 4,282 4,198 7,820 �� Earnings per share for profit attributable to the shareholders of the parent: Basic earnings per share (cents)

6.4

6.3

11.7

Diluted earnings per share (cents)

6.4

6.3

11.7

Financial CONTENTS 15

Consolidated Income Statement

Consolidated Statement of Comprehensive Income

Consolidated Balance Sheet

Consolidated Statement of Changes in Equity

Consolidated Cash Flow Statement

Notes to the Financial Statements

METHVEN LIMITED

The above consolidated income statement should be read in conjunction with the accompanying notes.

METHVEN LIMITED

For the six months ended 30 September 2010

CONSOLIDaTED STaTEMENT OF COMPREHENSIVE INCOME

CONSOLIdATEd BALANCE SHEET AS AT 30 SEPTEMBER 2010

FOR THE HALF YEAR ENDED 30 SEPTEMBER 2010 6 MTHS ENDED 6 MTHS ENDED 12 MTHS ENDED 30 SEPT 10 30 SEPT 09 31 MAR 10 NZ $000 UNAUDITED UNAUDITED AUDITED �� Profit for the half year 4,282 4,198 7,820 ��

AS AT AS AT AS AT 30 SEPT 10 30 SEPT 09 31 MAR 10 NZ $000 Notes UNAUDITED UNAUDITED AUDITED �� Assets Current assets Cash and cash equivalents

Movement in foreign currency translation reserve

557

(3,526)

(4,110)

Trade receivables

Movement in cashflow hedge reserve

(879)

(2,259)

(1,610)

Inventories

Derivative financial instruments

Income tax receivable

Deferred tax on hedge reserve

258

674

492

Movement in share-based payments reserve - 37 36 �� Other comprehensive income for the period net of tax (64) (5,074) (5,192) �� Total comprehensive income for the period attributable to the shareholders of the parent 4,218 (876) 2,628 ��

4,968

4,403

4,032

27,392

25,097

24,024

24,429

26,248

24,113

308

197

767

Prepayments and other assets 1,311 1,135 1,085 �� Total current assets 58,491 57,688 53,451 Non-current assets Property, plant and equipment

7,481

7,994

Deferred tax assets

1,567

785

1,381

39,072

40,764

38,306

Intangible assets

7,535

Derivative financial instruments - - 285 �� Total non-current assets 48,120 49,543 47,507 �� Total assets 106,611 107,231 100,958 �� Liabilities Current liabilities Trade creditors Interest bearing liabilities

12,095

16,068

11,555

22,745

21,478

Derivative financial instruments

1,031

997

373

Income tax payable

1,010

1,642

409

Provisions

336

412

377

Other creditors and accruals

9,391

6,781

8,763

Employee accruals 2,667 2,776 2,800 �� Total current liabilities 26,564 51,421 45,755 Non-current liabilities 4

24,448

Derivative financial instruments

223

177

Deferred tax liabilities

1,188

2,159

1,505

Interest bearing liabilities

Non-current employee accruals 324 119 212 �� Total non-current liabilities 26,183 2,340 1,894 �� Total liabilities 52,747 53,761 47,649 �� 53,864 53,470 53,309 Net assets �� Equity Share capital

Reserves

46,986 (5,710)

46,986 (5,373)

46,986 (5,626)

Retained earnings 12,588 11,857 11,949 �� Total equity 53,864 53,470 53,309 �� Net tangible assets per security (cents) 22.21 19.08 22.52 16

METHVEN LIMITED

For the six months ended 30 September 2010

The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

The above consolidated balance sheet should be read in conjunction with the accompanying notes.

METHVEN LIMITED

As at 30 September 2010

CONsOLIDATED sTATEMENT OF CHANGEs IN EQUITY

CONsOLIDATED CASH FLOw STATEMEnT FOR THE HALF YEAR ENDED 30 SEPTEMBER 2010

FOR THE HALF YEAR ENDED 30 SEPTEMBER 2010 Share-based Currency Hedge payments Retained translation Total Share NZ $000 UNAUDITED capital reserve reserve earnings reserve equity �� Balance at 1 April 2009 46,986 869 180 11,321 (1,348) 58,008 �� Movement in foreign currency translation reserve - - - - (3,526) (3,526)

Movement in cashflow hedge reserve

Deferred tax on hedge reserve

(2,259) 674

Movement in share-based payments reserve

Profit for the half year - - - 4,198 - 4,198 �� Total comprehensive income - (1,585) 37 4,198 (3,526) (876) Dividends - - - (3,662) - (3,662) �� Balance at 30 September 2009 46,986 (716) 217 11,857 (4,874) 53,470 ��

6 MTHS ENDED 6 MTHS ENDED 12 MTHS ENDED 30 SEPT 10 30 SEPT 09 31 MAR 10 NZ $000 UNAUDITED UNAUDITED AUDITED �� Cash flows from operating activities Receipts from customers

59,795

66,841

130,090

Payments to suppliers

(41,142)

(42,141)

(82,008)

Payments to employees (12,893) (11,581) (25,800) �� 5,760 13,119 22,282 Interest received

Interest paid

19 (543)

20 (494)

20 (1,370)

Income taxes paid (1,585) (1,729) (4,491) �� Net cash inflow / (outflow) from operating activities 3,651 10,916 16,441 �� Cash flows from investing activities

Share-based Currency Hedge payments Retained translation reserve reserve earnings reserve

Share Total NZ $000 UNAUDITED capital equity �� Balance at 1 April 2010 46,986 (249) 81 11,949 (5,458) 53,309 �� Movement in foreign currency translation reserve - - - - 557 557 Movement in cashflow hedge reserve

(879)

Deferred tax on hedge reserve

258

Movement in share-based payments reserve

(20)

Payments for property, plant and equipment, patents and trademarks

Payments for option

(2,050) -

(993) -

(2,189) (285)

Proceeds from sale of property, plant and equipment 129 - 8 �� Net cash (outflow) / inflow from investing activities (1,921) (993) (2,466) �� Cash flows from financing activities Proceeds from / (repayment of) borrowings

2,756

(5,375)

(6,104)

Profit for the half year - - - 4,282 - 4,282 �� Total comprehensive income - (621) (20) 4,302 557 4,218

Dividends paid (3,663) (3,663) (7,327) �� Net cash (outflow) / inflow from financing activities (907) (9,038) (13,431) ��

Dividends - - - (3,663) - (3,663) �� Balance at 30 September 2010 46,986 (870) 61 12,588 (4,901) 53,864 ��

Net increase in cash and cash equivalents

823

885

544

Cash and cash equivalents at the beginning of the period

4,032

3,732

Share-based Currency Hedge payments Retained translation Total Share NZ $000 AUDITED capital reserve reserve earnings reserve equity �� Balance at 1 April 2009 46,986 869 180 11,321 (1,348) 58,008 �� Movement in foreign currency translation reserve - - - - (4,110) (4,110)

Movement in cashflow hedge reserve

(1,610)

Deferred tax on hedge reserve

492

Movement in share-based payments reserve

- - (99)

(1,610)

492

135

Foreign currency translation adjustment 113 (214) (244) �� Cash and cash equivalents at the end of the period 4,968 4,403 4,032 ��

Profit for the year - - - 7,820 - 7,820 �� Total comprehensive income - (1,118) (99) 7,955 (4,110) 2,628 Dividends - - - (7,327) - (7,327) �� Balance at 31 March 2010 46,986 (249) 81 11,949 (5,458) 53,309 ��

METHVEN LIMITED

For the six months ended 30 September 2010

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

The above consolidated cash flow statement should be read in conjunction with the accompanying notes.

METHVEN LIMITED

For the six months ended 30 September 2010

NOtES TO ThE FINANcIAL STaTEMENTS FOR THE HALF YEAR ENDED 30 SEPTEMBER 2010 1 General information

Other

Methven Limited (the “Company” or the “Parent”) and its subsidiaries (together “Methven” or the “Group”) designs, manufactures and markets shower and tapware products and water control valves.

Comprises: • sales and marketing operations in the United States of America supplying shower and tapware, • China operation providing quality control and supply services in Asia for the Group.

The Company is a limited liability company incorporated and domiciled in New Zealand. The address of its registered office is 447 Rosebank Road, Avondale, Auckland. This condensed consolidated interim financial information was approved for issue by the Board of Directors on 29 November 2010.

2 Summary of significant accounting policies These financial statements for the half year ended 30 September 2010 have been prepared in accordance with generally accepted accounting practice in New Zealand, IAS 34 and NZ IAS 34 Interim Financial Reporting as applicable for profit oriented entities. The accounting policies that materially affect the measurement of the Income Statement, Statement of Comprehensive Income, Statement of Changes in Equity, Balance Sheet and the Cash Flow Statement have been applied on a basis consistent with those used in the audited financial statements for the year ended 31 March 2010 and the unaudited financial statements for the six months ended 30 September 2009. These interim financial statements do not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 31 March 2010.

3 Segment information (a) Description of segments The Group operates in one industry segment, being the design and supply of showerware, tapware and domestic water control valves. Inter-segment sales are on an arm’s length basis. Management has determined the operating segments based on the reports reviewed by the Group Board of Directors, Group Chief Executive Officer and Group Chief Financial Officer together for the purpose of allocating resources, assessing performance and making strategic decisions. New Zealand The home country of the parent entity is the base for new design and technology development, strategic and management support, sales and marketing of shower and tapware and domestic water valves in New Zealand and Pacific Islands. Products are both manufactured in New Zealand and outsourced from China. Australia

Sales & Marketing costs associated with the Homespa beauty range are now reported within their associated geographic regions and are no longer reported in the “other” segment. Once a reportable segment becomes material and enhances the evaluation of business activities in the Group, the segment will be reported separately.

HALF YEAR ENDED Inter- 30 SEPTEMBER 2010 Total segment New UNAUDITED continuing eliminations/ Zealand Australia UK Other operations unallocated Total NZ $000 �� Sales revenue from external customers 21,451 25,821 15,277 266 62,815 - 62,815 Inter-segmental revenue 425 25 - - 450 (450) - �� Total sales revenue 21,876 25,846 15,277 266 63,265 (450) 62,815 Earnings before interest, tax, depreciation, amortisation, non-operating foreign exchange gain/(loss)

5,456

2,942

(197)

(69)

8,270

Depreciation and amortisation expense

(902)

(353)

(454)

(25)

(1,734)

Other segmental items 70,458

27,773 52,084

615

Liabilities

19,001

19,261

32,558

210

71,030

United Kingdom

Acquisitions of property, plant and equipment and intangibles

1,642

387

2,090

For the six months ended 30 September 2010

Interest received/(paid) 37 (139) (461) - (563) - (563) �� Profit before income tax 4,689 2,450 (1,112) 44 6,071 40 6,111 �� Income tax expense (1,428) (740) 364 (11) (1,815) (14) (1,829) �� Profit for the half year 3,261 1,710 (748) 33 4,256 26 4,282 ��

Assets

20 METHVEN LIMITED

8,389

Non-operating foreign exchange 98 - - - 98 (79) 19 gain/(loss) �� Earnings before interest, 5,554 2,942 (197) 69 8,368 40 8,408 tax, depreciation and amortisation expense

Comprises sales and marketing operations in Australia supplying shower and tapware and domestic water control valves.

Comprises sales and marketing operations in the United Kingdom and the Middle East, supplying shower and tapware.

119

150,930 (44,319) (18,283) -

106,611 52,747 2,090

METHVEN LIMITED

For the six months ended 30 September 2010

3 Segment information continued HALF YEAR ENDED Inter- 30 SEPTEMBER 2009 Total segment UNAUDITED New continuing eliminations/ Zealand Australia UK Other operations unallocated Total NZ $000 �� Sales revenue from 20,007 23,173 24,861 23 68,064 - 68,064 external customers

YEAR ENDED Inter- Total 31 MARCH 2010 segment New UNAUDITED continuing eliminations/ Zealand Australia UK Other operations unallocated Total NZ $000 �� Sales revenue from 40,013 45,958 43,719 132 129,822 - 129,822 external customers

Inter-segmental revenue 2,457 - - - 2,457 (2,457) - �� Total sales revenue 22,464 23,173 24,861 23 70,521 (2,457) 68,064

Inter-segmental revenue 3,037 - - - 3,037 (3,037) �� Total sales revenue 43,050 45,958 43,719 132 132,859 (3,037) 129,822

Earnings before interest, tax, depreciation, amortisation, non-operating foreign exchange gain/(loss)

Earnings before interest, tax, depreciation, amortisation, impairment and non-operating foreign exchange gain/(loss)

5,455

925

1,991

(183)

8,554

(6)

8,560

Non-operating foreign exchange gain/(loss) (741) - - - (741) 668 (73) �� Earnings before interest, tax, 4,714 925 1,991 183 7,813 674 8,487 depreciation and amortisation Depreciation and amortisation

(903)

(431)

(591)

(43)

(1,968)

Interest received/(paid) 101 (146) (475) - (520) - (520) �� Profit before income tax 3,912 348 925 140 5,325 674 5,999 �� Income tax expense (1,206) (107) (258) (29) (1,600) (201) (1,801) �� Profit for the half year 2,706 241 667 111 3,725 473 4,198 �� Other segmental items Assets Liabilities Acquisitions of property, plant and equipment and intangibles

64,802

20,514 56,408

434

142,158 (34,927)

11,716

15,102

35,321

286

62,425

640

301

965

(8,664) -

107,231 53,761 965

For the six months ended 30 September 2010

2,957

3,555

(179)

16,512

186

16,698

Non-operating foreign exchange gain/(loss) (1,049) - - - (1,049) 1,013 (36) �� Earnings before interest, tax, 8,772 2,957 3,555 179 15,463 1,199 16,662 depreciation, amortisation & impairment Impairment of customer relations Impairment on property, plant & equipment Depreciation and amortisation

- (103) (1,801)

- - (821)

(688) - (1,128)

(688)

(103)

(3,835)

(85)

Interest received/(paid) 183 (285) (907) - (1,009) - (1,009) �� Profit before income tax 7,051 1,851 832 94 9,828 1,199 11,027 �� Income tax expense (2,230) (520) (96) (2) (2,848) (359) (3,207) �� Profit for the year 4,821 1,331 736 92 6,980 840 7,820 �� Other segmental items Assets

65,507

23,293

51,735

568

Liabilities

13,607

16,314

31,561

310

61,792

1,715

430

2,209

Acquisitions of property, plant and equipment and intangibles

22 METHVEN LIMITED

9,821

141,103 (40,145) 100,958 (14,143) -

47,649 2,209

METHVEN LIMITED

For the six months ended 30 September 2010

3 Segment information continued

(b) Impairment Test for Goodwill

(b) Notes to and forming part of the segment information

The recoverable amount of the intangible assets attributable to goodwill is determined based on value in use calculations for each cash generating unit (CGU) that the intangible asset relates to. The Group considers the ongoing global economic recession and its impact on the UK economy as a trigger event requiring assessment of the recoverable amount to be undertaken specifically with regards to the UK cash generating unit. The calculations use cash flow projections based on management forecasts to March 2014. The forecasts are based on past performance adjusted for expectations of future events, including expectations of future market conditions. The key assumptions in these forecasts are forecast revenue and margin & overhead cost levels associated with key growth strategies. Cash flows beyond March 2014 are extrapolated using estimated growth rates of 3%. The growth rates have been derived with reference to externally sourced growth forecasts of GDP and CPI in the UK market. The discount rate of 8.5% used in the impairment test has been calculated with reference to externally sourced market information specific to the UK. This test did not indicate any impairment as at 30 September 2010. No impairment of goodwill has been recognised in any of the prior periods presented.

Revenue from the Group’s top 5 customers comprises 42% (September 2009: 39%, March 2010: 40%) of the total Group revenue. Revenue from the top 5 customers is spread across our three main segments of New Zealand, Australia & the United Kingdom.

4 Interest bearing liabilities The primary NZD, AUD & GBP denominated debt facilities were successfully renewed for a further term of three years on 1 July 2010. The covenants and security arrangements remain unchanged and management foresees no issues in achieving covenant compliance. The Group continues to operate comfortably within its facility limits.

5 Non-current assets – Intangible assets (a) Impairment Test for Customer Relations At balance date the Group has assessed the recoverable amount of intangible assets attributable to Customer Relations which were acquired through The Deva Tap Company Limited on 31 August 2007. The recoverable amount has been determined on a value in use basis and results in no impairment charge for the half year ($688,000 in the year ended 31 March 2010, $nil for the half year ended 30 September 2009). The Group considered a reassessment of the recoverable amount was required due to ongoing difficult economic conditions experienced in the UK and the knock on impact to demand for shower and tapware products. The recoverable amount uses cash flow projections based on management forecasts through to March 2014. The basis for using these forecasts is they reflect management’s experience of past performance adjusted for the expectations of future events, including expectations of future market conditions. Cash flows beyond March 2014 are extrapolated using estimated growth rates of 3% for the balance of the valuation model. The key assumptions in the forecasts are earnings growth through: • H igher sales volumes of showerware utilising value end DIY product and the benefits of Methven proprietary product, • P ull through sales strategy to hotel and other commercial institutions through the existing customer relationships. A discount rate used of 8.5% has been used in the impairment test of customer relationships. This assumption was calculated with reference to externally sourced market information specific to the United Kingdom. The customer relations value at balance date of $5.4m is amortised on a straight line basis with a remaining amortisation period of 6 years and 11 months.

Management does not expect a reasonably possible change in key assumptions that would reduce the recoverable amount of any cash generating unit below its carrying amount.

INTANGIBLE ASSETS 6 MTHS ENDED 6 MTHS ENDED 12 MTHS ENDED 30 SEPT 10 30 SEPT 09 31 MAR 10 NZ $000 UNAUDITED UNAUDITED AUDITED �� Customer relations

5,394

7,137

5,702

Goodwill

32,079

32,916

31,699

Patents and trademarks

604

433

607

Software 995 278 298 �� Closing net book amount 39,072 40,764 38,306 ��

6 Contingencies As at 30 September 2010 the Parent and the Group had no contingent liabilities or assets (30 September 2009: Nil and 31 March 2010: Nil).

7 Events occurring after the reporting period Subsequent to period end, the Board of Directors resolved to pay an interim dividend of 5.5 cents per share. The dividend will be paid on 31 December 2010 to all shareholders on the Company’s register at the close of business on 17 December 2010. There have been no other events occurring after balance date which would materially affect the accuracy of these financial statements.

24 METHVEN LIMITED

For the six months ended 30 September 2010

METHVEN LIMITED

For the six months ended 30 September 2010

8 Reconciliation of profit after income tax to net cash inflow from operating activities