Murray River Organics Pty — Investor Presentation (February 2019)
35 slides from Murray River Organics Pty's investor presentation, Feb 28, 2019
Slide 1: Investor Presentation
Investor Presentation 28 February 2019
Slide 2: Disclaimer
Disclaimer This presentation (Presentation) has been prepared by Murray River Organics Group Limited (ACN 614 651 473) (Company). Any references to "Murray River Organics" or "Group" in this Presentation refer to the Company and its controlled entities. The information in this Presentation contains
Slide 3: Contents
Contents o Company Overview o Market Overview o Key Achievements o Financial Performance o Transformation Program I 2018 Annual Report 2018 Annual Report 1
Slide 4: First Half Highlights
FIRST HALF HIGHLIGHTS Recapitalised balance sheet has reset MRO’s capital base to drive its turnaround and accelerate growth H1 FY19 H1 FY18 ∆ $30.2m in revenue despite capital raise disruption in the half year, with new sales team, reinvigorated customer sales channels and new branded SKU ranging R
Slide 5: Company Overview
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Slide 6: Business Model: Leveraging supply to grow a value added products business
BUSINESS MODEL Leveraging supply to grow a value added products business Sunraysia Organic & conventional Growers supply products sourced locally Sunraysia of dried vine fruit Mourquong & internationally Dandenong Value add Farming Processing Packaging, Dried Vine Fruit mixing, distribution Wholesal
Slide 7: Brand Portfolio
BRAND PORTFOLIO 100+ core product lines across bulk and retail channels MRO Brand Portfolio (Bulk): MRO Brand Portfolio (Retail): Certified organic food products and Dried vine fruit packed ingredients in re-sealable snack bags Conventional food products and Premium dry fruit mix processed ingredien
Slide 8: Customer and Export Growth
CUSTOMER AND EXPORT GROWTH Broad customer base in Australia with strong focus on growing exports 2018 Revenue Existing export destinations1 Asia Pacific - China - Vietnam - Hong Kong - Singapore - Japan Wholesale & industrial - South Korea 13% - New Domestic Zealand retail 71% Export 9% North Americ
Slide 9: Farming Operations
FARMING OPERATIONS Over $57M invested in farming properties (owned and leased) Owned Properties: Nangiloc • Organic certification obtained in January 2019 for development land • Conventional wine grape and citrus Yatpool • Organic dried vine fruit and wine grapes Merbein - 8 smaller farms • Organic
Slide 10: Farming Operations: significant capacity
FARMING OPERATIONS MRO’s farming assets have significant capacity Colignan 681 57 Nangiloc 96 2327 Gol Gol 95 15 Yatpool 198 128 Current maturity of dried vine fruit plantings Merbein 137 0 Mature 60% Fifth Street 79 31 Hectares planted Hectares available to be planted Not yet mature 40% 10
Slide 11: Market Overview
Market Overview 11
Slide 12: Channels to Market
CHANNELS TO MARKET $2.6bn addressable market for better-for-you products Proportion of addressable market Large retailers ~40-45% (~A$1.1b) Specialty Retail Large specialty chains1 10-15% (~A$0.3b) Independent Channels to grocers & market specialty chains1 E-commerce <5% (<A$0.1b) Exports 40-45% (~A
Slide 13: Addressable Market Size and Growth by Category
ADDRESSABLE MARKET SIZE AND GROWTH BY CATEGORY Market growing strongly for nuts, seeds, dried vine fruit and rice DRIVERS OF CATEGORY GROWTH Indicative future outlook1 Present Market Potential Uplift (2018F-23F) AUD AUD (Multiple of ’18 size) Drivers of future outlook Decreasing growth outlook Cocon
Slide 14: Global Raisin Market
GLOBAL RAISIN MARKET Raisin pricing on the rise Source: IEGVU Agri database (as at 24/2/19) 14
Slide 15: Dried Vine Fruit Market
DRIED VINE FRUIT MARKET Production increasing to meet future demand AUSTRALIAN DRIED VINE FRUIT PRODUCTION MARKET Domestic Production of Dried Grapes Domestic Plantation of • Domestic production of dried Kt Dried Vine Fruit1 grapes declined significantly Thousand Ha 80 8 from the early 90s 7.9 70 7.
Slide 16: Key Achievements
Farming Operations Key Achievements 16
Slide 17: Key Achievements - First 6 Months
KEY ACHIEVEMENTS - FIRST 6 MONTHS Major phase of transformation program completed…key foundations are in place People Capital Customer Farms Operations ✓ Re-set leadership ✓ Re-set the balance ✓ Leveraged core organic ✓ Reviewed capex plans ✓ Restructured structure and recruited sheet with $30.6m dr
Slide 18: Key Achievements - People
KEY ACHIEVEMENTS - PEOPLE Significant investment in safety and enhanced team capability ✓ Recruited new executive team with extensive agri-business, FMCG and turnaround experience. ✓ Recruited new sales & marketing team with extensive FMCG/Retail/Wholesale experience and capability ✓ Recruited strat
Slide 19: Key Achievements - Customer
KEY ACHIEVEMENTS - CUSTOMER Restarted growth in our branded portfolio after poor integration and management of Pacific Organics brand post acquisition ✓ Reset relationships and improved customer engagement with retail majors and specialty retailers leading to new listings and refreshed commercial ar
Slide 20: Key Achievements - International Customers
KEY ACHIEVEMENTS – INTERNATIONAL CUSTOMERS Launched ‘Taking Sunraysia to Asia” Program aimed at accelerated growth in Gobble, Premium Australian Clusters and Murray River Organics brands ✓ Re-set our focus on export as key growth platform after a significant breakdown in customer service and poor fa
Slide 21: Key Achievements - International Customers
KEY ACHIEVEMENTS – INTERNATIONAL CUSTOMERS Gobble and Premium Australian Clusters ranging in Organic Snacking Category across key markets ✓ China ✓ Japan ✓ Singapore & ✓ Vietnam • Costco Japan ranging our Premium • Gobble and Premium Australian Clusters Hong Kong • Gobble & Premium Australian Cluste
Slide 22: Key Achievements - Farms
KEY ACHIEVEMENTS - FARMS Project Yield, three-year farm turnaround program launch ✓ Significant farm remediation investment to strengthen vine health and improve yields over the next 2-3 years ✓ Completed $1.6 million irrigation infrastructure program for Colignan ✓ Launched our ‘Growing Together wi
Slide 23: Key Achievements - Farms: Colignan
KEY ACHIEVEMENTS - FARMS Project Yield, three-year farm turnaround program launch – Colignan Colignan Irrigation Upgrade Project - $1.6m CAPEX: ✓ Replaced three river pumps ✓ Commissioned transfer pumps ✓ Commissioned new filters ✓ Replaced dripper lines across 320 hectares of organic vines ✓ Instal
Slide 24: Key Achievements - Operations
KEY ACHIEVEMENTS - OPERATIONS Our Dandenong manufacturing has made significant operational improvements… we now have capacity and capability for sustained growth ✓ Completed the integration of the two acquisitions from 2017 and reset the business operating model to stabilize operations ✓ Restructure
Slide 25: Key Achievements - Operations
KEY ACHIEVEMENTS - OPERATIONS Improved manufacturing efficiency, safety and quality at our Mourquong Operations ✓ Refocus on OHS and GMP to improve operating standards and compliance ✓ Developed and implemented new quality and processing procedures organics to reduce claims & re-work ✓ Established S
Slide 26: Financial Performance
Financial Performance 26
Slide 27: Financial Performance
FINANCIAL PERFORMANCE Achieved a $3.5m EBITDA-S turnaround in the first half $’000 Dec-18 Dec-17 Change % Sales • New sales team reinvigorated major Net sales revenue 30,251 39,373 (9,122) -23.2% customers & new NPD pipeline Reported loss after tax (4,608) (22,193) 17,585 79.2% • Domestic sales impa
Slide 28: Financial Performance
FINANCIAL PERFORMANCE Reduced costs by $2.2m and improved gross material margin by $1.3m HY Performance • Focus on range rationalisation and improved pricing resulted in improved gross margins • Project Muscat cost savings program achieved key benefits in HY across; • Direct production costs • Wareh
Slide 29: Balance Sheet
BALANCE SHEET Restructured Balance Sheet with $30.6m equity and $63.9m debt facility New funding $'000 Dec-18 Jun-18 Change in place • Trade Receivables: Timing Trade and other receivables 8,734 6,729 2,005 of receipts from major retail Inventories 16,707 16,194 513 customers for Christmas stock bui
Slide 30: 3 Year NAB Facility
3 YEAR NAB FACILITY $63.9m debt facility will support three-year business turnaround plan 3 Year Multi-Option banking facility Expires: 30 November 2021 Key components: Summary of financing arrangements at December 18 • $34.0m term loan facility $’000 $'000 Debt Facilities Limit at reporting date: •
Slide 31: Cash Flows
CASH FLOWS Investment in working capital to deliver business turnaround plan $’000 Dec-18 Dec-17 Change EBITDA-S (1,299) (4,805) Dec/(Inc) in trade & other receivables (2,005) 140 • Trade Receivables: Increase with additional sales to major retail customers Inc (dec) in trade and other payables (3,7
Slide 32: Transformation Program
Transformation Program 32
Slide 33: Transformation Program
TRANSFORMATION PROGRAM Transformation program is well underway, with runs on the board Short term (6-12 months) Progress Medium term (3 years) Progress Metric 1 ◔ ✓ Reset operating cost base in Dandenong – Project Operations 2 • • Muscat $5m Improve efficiency and fulfillment Implement warehouse man
Slide 34: Summary: Momentum building
SUMMARY Momentum building • Growing a broad organic food business targeting Australian and export demand for “better for you products” • Reset of the capital base accelerating turnaround and growth • Global demand for organic dried fruit remains strong • Long term investment in place to grow supply
Slide 35: Contact details
Valentina Tripp Albert Zago Murray River Organics Murray River Organics 0414 550 337 0407 554 529 vtripp@murrayriverorganics.com.au albert@murrayriverorganics.com.au
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