Slide 1: Freedom Foods Group FY 2018 Financial Results
Freedom Foods Group FY 2018 Financial Results Company Presentation Rory J F Macleod, Managing Director & CEO September 2018
Slide 2: Important Information
Important Information This presentation is provided for information purposes only. The information contained in this presentation is not intended to be relied upon as advice to investors and does not take into account the investment objectives, financial situation or needs of any particular investor
Slide 3: 3 Key Pillars to our Strategy
3 Key Pillars to our Strategy We have been focused on leveraging our strengths Capability Innovation Markets 2 3
Slide 4: Summary FY 2018
Summary FY 2018 • Annual net sales increases 34.5% to $353 million, in line with revised guidance (issued July 2018) • Operating EBDITA rises 49.3% to $39.2 million, operating • EBDITA margins increased to 11.1% from 10.0% • Operating net profit increases 96.9% to $19.4 million, statutory net profit
Slide 5: Summary FY 2018
Summary FY 2018 • Increased financial performance with substantial improvements in sales revenue, earnings and cash generation. • Increased investment in innovation, brand and market development assisted in growth in each of the key business divisions and markets. • The result reflects a positive op
Slide 6: Summary FY 2018
Summary FY 2018 • Continued transformation now driving growth through iconic brands including Freedom Foods and Australia’s Own in key markets of Australia, SE Asia and China: • Launch of over 70 new product formats • Strong growth in new brands including MilkLab in the food service beverage categor
Slide 7: Underlying Earnings
Underlying Earnings Underlying vs Statutory 12 Months to 30th June (A$ million) FY18 FY17 Movement Operating EBDITA(1) 39.2 26.2 + 13.0 Gain on sale of Ingleburn 3.3 – + 3.3 Other costs not representing underlying performance(2) (9.7) (2.4) - 7.3 Employee Share Option Expense (non cash) (1.3) (0.4)
Slide 8: Sales Performance
Sales Performance FY 2018 FY 2018 SALES BY SALES CHANNEL $353 MILLION Export NET SALES BY BUSINESS GROUP 15% Industrial Seafood 7% Nutritionals Retail 4% Contract 4% 11% Grocery (Australia) Food Service 59% 8% Dairy Cereal & Beverages Snacks 40% 29% GROWTH RATES FY 18 % VS FY 17 Export Retail Grocer
Slide 9: Sales Performance
Sales Performance SALES (BASE VS INNOVATION) Branded Sales vs Other Base New Product Development Segments 70% 12% 21% 60% 60% 53% 50% 40% 30% 27% 88% 25% 79% 20% 20% 16% 10% Brands Contract Private Label FY 2017 FY 2018 FY 2017 FY 2018 Source: FFGL Management Accounts 9
Slide 10: Sales and Earnings Enablers
Sales and Earnings Enablers Optimise New Business Streams Operational Leverage Scale Geography Growth Brand Growth Category Growth Build New Channels 2017 2018 2019 2020 • Harvesting benefits of building capacity in brands, innovation and operational capability • Building sales through expanded shar
Slide 11: Business Segments and Markets
Business Segments and Markets 11
Slide 12: Plant Based
PLANT = /\= —" BASED 4 ( ee =
Slide 13: Asian Market
Asian Market ewes O of Provenance Plant-based \- WE ARE POSITIONED \ IN ON TREND GROWTH _ New Taste MARKETS Sensations ® Food as Medicine ow Out-of-home Source & Protein
Slide 14: Key Markets
Key Markets China North America SE Asia Middle East Aust / NZ 14
Slide 15: Expanding our Key Channels to Market
Expanding our Key Channels to Market 15
Slide 16: Building Capabilities into Markets
Building Capabilities into Markets Our China Team China Point of Sale 16
Slide 17: Investing in our Capabilities
Investing in our Capabilities 17
Slide 18: Investment
Investment 132 125.8 72.6 63.1 49.6 39.4 19.9 19.1 8.4 7.2 10.2 5.2 2.2 2.46 5.1 2.8 1 1.8 0.315 0.189 0.129 1.1 0.8 2.1 0.5 2011 2006 2007 2008 2009 2010 2012 2013 2014 2015 2016 2017 2018 capex inv Acq 18
Slide 19: Largest producer of branded and private label UHT milk
• Largest producer of branded and private label UHT milk in Australia • Complementary production sites in Shepparton and Ingleburn • Servicing Australia, NZ, China, SE Asia and Middle East 19
Slide 20: Ingleburn (Plant & Dairy)
Ingleburn (Plant & Dairy) • FY 2018, the Group relocated its Plant- Based Beverage operations from Taren Point to the new state-of-the-art UHT facility at Ingleburn in South West Sydney. • The first stage installed UHT filling capacity at Ingleburn of approximately 80 million litres per annum. • New
Slide 21: Shepparton (Dairy)
Shepparton (Dairy) • The Group is progressing with a significant capacity upgrade to its Shepparton dairy facility, with a total investment of approximately $33 million to increase total dairy milk processing capacity to 500 million litres per annum. • The expanded processing capability will provide
Slide 22: Shepparton (Nutritionals)
Shepparton (Nutritionals) • Shepparton Nutritionals capability well progressed • 1st Stage commissioning due to commence from December 18 22
Slide 23: Accelerating our Growth
Accelerating our Growth Leveraging current and emerging trends in consumption Brands
Slide 24: Brands drive our Strategy
Brands drive our Strategy freed GROUP Making food better LIMITED AUSTRALIAS = <OWN freedom cxou» Sai MAKING FOOD BETTER
Slide 25: Increased Investment in our Brands
s Magazine ry 2018 Woolworths Fresh Magazine 25 uly 2018 Increased Investment in our Brands 11 1
Slide 26: Plant Based Beverages
Plant Based Beverages 26
Slide 27: Australia’s Own, Almond Breeze
Australia’s Own, Almond Breeze • Leading Plant category brand owner and producer, through Australia’s Own Organic range and Blue Diamond Almond Breeze range 27
Slide 28: MilkLab Food Service Growth
• Strong growth in the high margin food service channel with MilkLab • expanding the range of nut based beverage products under the MilkLab brand. • MilkLab. MilkLab has secured ranging in key coffee chains including Starbucks in Malaysia. • The MilkLab brand has the potential to be a leading global
Slide 29: Innovation in Plant Beverages
Innovation in Plant Beverages Consistent with its strategy to be a leading innovator in plant-based beverages, during the second half of FY 2018, the Group successfully launched the first pea protein milk in Australia, “Like Milk”, as well as 99% sugar free flavoured almond milks in 1 litre plastic
Slide 30: Dairy Beverages
Dairy Beverages 30
Slide 31: Dairy Litres – All Sites
Dairy Litres – All Sites 400 350 300 Million Litres 250 200 150 100 50 0 FY 2017 FY 2018 FY 2019 FY 2020 FY 2017 Plan 85 110 150 180 Accelerated Plan 85 145 250 350 • Growth from category demand, new product development and impacts of structural change in Australia • Category demand from Australia,
Slide 32: Australia’s Own Dairy
Australia’s Own Dairy • The launch was led by Australia’s Own branded A2 Protein Milk variants and also included from July 2018, UHT cooking cream in portion and 1 litre formats. • The Group intends to launch additional A2 Protein Milk products in 1 Litre and portion pack formats, including yoghurt
Slide 33: +60 Million Packs in 2018
• The AO Kids Milk product has continued its strong growth trajectory, with the product now the largest imported kid’s milk brand in China. • Installation of high speed 200ml capacity at its Shepparton operation to provide for volume demand forecast in excess of 60 million packs in calendar year 201
Slide 34: Nutritionals
Nutritionals 34
Slide 35: Dairy Milk Nutritionals
Dairy Milk Nutritionals Milk Proteins 35
Slide 36: Nutritionals product categories
Weight Management •Powders •Beverages Clinical Nutrition •Powders •Beverages Sports Nutrition •Powders •Beverages Functional Nutrition •Fortified •Value Added Infant & Growing Up •Infant Nutrition •Growing Up Dairy Everyday Dairy •Milk •Yoghurt •Cream 36
Slide 37: Valuing Adding Dairy Ingredients
Valuing Adding Dairy Ingredients Protein & Cream Fat 4.1% Standardise excess Fat 3.3% Protein 3.5% Protein 3.3% $.50 $1.50 High Value Ingredients Sports Nutrition Infant + Adult Nutrition On-the-go Sports Nutrition Packed Drinking Cream Yoghurt Protein Whey Protein Isolate $200 Lactoferrin & Whey Pr
Slide 38: HEY EY ey -
HEY EY ey - HPROTEIN RGTEIN » WaTURAL 20¢ aes a Bes Hen MURAL B00: . l sage | aus navouseo we revia | 231! ‘S70 cana Fomuuia ‘ ZERO: - = -~ be —=— = om 2826) ZERO =r oe ~~ 3 : ) — meen nam ean giogousTe ie %9 7BOgnet / 1.56 ©\ FOO of ) 2Ocenves HIGH BCL. DMASS PROT | NETE GROWN. + RECOVERY FORMULA N
Slide 39: Vital Strength – Performance Nutrition
Vital Strength – Performance Nutrition • The Vital Strength brand is recognised as a leader in high quality nutrition products, sold through retail grocery, pharmacy and fitness retailers in Australia. 39
Slide 40: Crankt Protein Brand
Crankt Protein Brand • The Crankt Protein range is sold through petrol and convenience, fitness retailers and retail grocery in Australia and New Zealand. • The Crankt brand provides for an everyday mainstream consumer proposition, aligned to the Freedom Foods Vital Strength brand which is positione
Slide 41: Australia’s Own Infant Nutrition
Australia’s Own Infant Nutrition • The Group launched in July 2018 a new range of early stage nutrition products in Australia and within its existing distribution base in SE Asia. • Australia’s Own Diamond pro+ Premium range (Stage 1, 2 and 3) was launched exclusively in Coles Supermarkets across al
Slide 42: Cereal & Snacks
Cereal & Snacks 42
Slide 43: Making food better
Making food better
Slide 44: Health Food Section Leadership
• #1 within the Health Food Section of retail supermarkets in Australia • +40% market share (MAT Scan Data FY 2018) • Further innovation in value added cereals and snacks including products developed for on the go channels in food service launched in August 2017 44
Slide 45: Now vl
Vy, Now vl vnadla hoy Pr. Tdg2 | ANCIENT GRAINS é ig ANCIENT GRAINS a
Slide 46: Cereal Innovation Awards 2018
curs WHOLE GRAIN CHEESE OS GieerN ee | pres Innovation Awards 2018 2edOM, cxou» | FINALIST MAKING FOOD BETTER
Slide 47: Messy Monkeys
Messy Monkeys Messy Monkeys is the No 1 selling “new” brand in the health food section of supermarkets and is expanding through popcorn and extruded snacks variants. Expanded distribution across general merchandise stores is expected in the first half of FY 2019. 47
Slide 48: Mainstream Launch
Mainstream Launch In June 2018, the Group launched an expanded range of Freedom Foods branded cereals and snacks in the mainstream retail channels in Coles Supermarkets under the brands Heritage Mill and Brekky Heroes 48
Slide 49: Barleymax Cereal Range
A range of delicious cereals and bars that are uniquely formulated with the superior wholegrain BARLEYmaxTM. It contains more of the 3 fibre types needed to support good gut health Our Cereal range was awarded a healthy food guide finalist 49
Slide 50: Leading Brand on Tmall International
Leading Brand on Tmall International • The “Arnold’s Farm” brand is ranked Top 3 oat cereals on Tmall International with the cereal category holding significant growth potential • No. 2 selling cereal SKU on Tmall during Single’s Day sales • In offline distribution, the Arnolds Farm brand is now sol
Slide 51: More Branded Innovation in FY 2019
More Branded Innovation in FY 2019 51
Slide 52: Talent and Technology
Talent and Technology • During the period, we invested in talent and capability in sales and innovation across beverage, cereal and snacks capability as well as operations, finance, legal and compliance. • For our expanding capital projects initiatives, we increased our capability to manage and inst
Slide 53: Outlook
Outlook • The Group is increasingly well positioned to strategically build into a major global food and beverage business with scale in key food and beverage platforms from key markets and channels in Australia / New Zealand, China, SE Asia and North America. • As outlined in July 2018, the Group ex
Slide 54: FY 2018 Financials
FY 2018 Financials 54
Slide 55: Financial Summary
Financial Summary 12 Months to 30th June 2018 2018 2017 % Change $’000 $’000 Net Sales Revenue 352,987 262,481 + 34.5% EBDITA (Underlying Operating)(1) 39,180 26,240 + 49.5% EBDITA (Statutory) 31,501 23,375 + 34.8% Equity Associates Share of Profit(2) 480 480 - Pre Tax Profit (Operating) 22,297 12,2
Slide 56: Financial Performance – Business Unit
Financial Performance – Business Unit 12 months to 30th June 2018 (A$m) Cereal & Plant Based Dairy Specialty Nutritionals Others Total Snacks Beverages Beverages Seafood Net Sales Revenue 103.2 81.1 139.2 15.0 14.3 – 353.0 Trading EBDITA 14.0 18.7 16.9 1.4 3.6 – 54.7 Equity Associates(1) 0.5 0.5 Cor
Slide 57: Funds Employed
Funds Employed For the period ending… 30 June 2018 30 June 2017 Change ($’000) ($’000) Inventory 81,101 63,388 + 17,713 Trade & Other Receivables 62,849 65,920 - 3,071 Trade & Other Creditors (88,069) (65,629) - 22,440 Working Capital 55,881 63,679 - 7,798 PP&E 388,883 340,356 + 48,527 Investments 1
Slide 58: Cashflow
Cashflow 12 Months to 30th June 2018 FY18 FY17 Comments ($’000) ($’000) Cash from Operating Activities 37,017 10,780 Payment for business acquisition costs (44) (1,305) Payments for Restructuring (2,537) (119) Taren Point Closure Net Interest Paid (2,583) (2,594) Income Taxes Paid (7,477) (1,381) To
Slide 59: Cashflow - Movements
Cashflow - Movements • The Company held Cash of $98.1m, with Borrowings of $134m. Net debt was $36m, with a net debt to equity of 6.8% 195 • Cash flow from operations was $24m, an increase of $19m from the prior corresponding period. This includes a one-off working capital benefit of 98 $24.1m from
Slide 60: ‘oon beter tee GROUP
‘oon beter tee GROUP