Bubs Australia Ltd. · ASX:BUB
Bubs Australia — Merger or Acquisition (November 2017)
36 slides from Bubs Australia's merger presentation, Nov 3, 2017
Slide 1: Investor Briefing
For personal use only INVESTOR BRIEFING • Transformative Acquisition of vertically integrated supply chain assets • Exclusive Australian milk supply agreement 1st November 2017
Slide 2: Disclaimer
DISCLAIMER For personal use only This presentation and any materials provided (materials) have been prepared by Bubs Australia Limited (Bubs) and contains general information about Bubs activities. By accepting the Materials and attending the Bubs’ presentation, you agree to be bound by the below te
Slide 3: Executive Summary
EXECUTIVE SUMMARY For personal use only Acquisition of NuLac Foods, Australia’s leading producer of goat milk products: 100% ownership of NuLac Foods’ brands, including Caprilac Gaining ownership in the CNCA certified processing plant (excludes infant formula) Exclusive long-term milk supply agreeme
Slide 4: The acquisition of NuLac Foods is compelling
The acquisition of NuLac Foods, Australia’s leading producer of goat milk products is compelling For personal use only Exclusive supply Protection chain integration against future regulatory change Quality assets Operational and brands to control and balance milk synergies supply 3
Slide 5: Exclusive Supply Chain Integration
EXCLUSIVE SUPPLY CHAIN INTEGRATION For personal use only The transaction guarantees sustainable supply of locally sourced quality fresh goat milk for Bubs® and NuLac products The transaction secures exclusive goats milk supply from Australia’s Farm Gate largest herd of milking goats 6,500 and an add
Slide 6: Quality Assets & Brands
QUALITY ASSETS & BRANDS For personal use only Bubs Australia acquires 100% of Nulac Foods brands and intellectual property, and 49.9% in their dairy facility CapriLac is the market leading brand of goats milk products, including a range of goats milk yoghurts, milk and milk powder all made using mil
Slide 7: Operational Synergies
OPERATIONAL SYNERGIES For personal use only The businesses are uniquely complementary and there are numerous accretive opportunities to grow both revenue and branded product extensions Immediate lift in revenue earnings on completion NuLac’s extensive experience in goat dairy farming and milk proces
Slide 8: Regulatory Change Risk Mitigation
REGULATORY CHANGE RISK MITIGATION For personal use only Secures a critical influence over key ingredient supply and ability to meet changing market needs and projected regulatory measures Protects against future regulatory change, e.g. ownership of key ingredient supply via call option to acquire Au
Slide 9: Post Acquisition Structure
POST ACQUISITION STRUCTURE For personal use only Bubs Australia Limited (ASX:BUB) NuLac Foods Pty Ltd Exclusive Goat Milk Cambria Management 100% Supply Agreement Company Pty Ltd, with Australian and New Cambria Unit Trust Zealand farms for 5 years (Australian processing initial term & 5 year renewa
Slide 10: Milestones
MILESTONES (ASX:BUB) For personal use only “We are seeing early signs of revenue growth, as a direct result of the strategic foundations that have been laid to date ” Nicholas Simms, Chief Executive Officer 9
Slide 11: Bubs Financial Overview
BUBS FINANCIAL OVERVIEW For personal use only Bubs® quarterly revenue growth CAGR continues to grow at +20% since Q1 F17 reflecting continued growing demand and revenue momentum GROSS SALES KEY DRIVERS Gross sales for 1Q was $1.724 million, up 109% on A$4.528m A$4.347m same period last year and +22%
Slide 12: Trading Update
TRADING UPDATE For personal use only Bubs continues to deliver strong progress in the implementation of its four pillars for growth strategy F18 1Q gross sales $1.724m +109% vs prior year & +22% on the previous quarter. F18 1Q revenue $1.475m +101% vs prior year & +25% on the previous quarter Optimi
Slide 13: Capital Raise & Placement Offer
CAPITAL RAISE & PLACEMENT OFFER For personal use only OFFER TERMS Capital Raise Total of $20.0m to be raised through a Capital Raising comprising a fixed price Placement and Share Purchase Plan Overview Placement $15.0m to be raised from a Placement to new and existing institutional, professional &
Slide 14: Capital Raise Timetable
CAPITAL RAISE TIMETABLE For personal use only TIMETABLE Trading Halt Pre Open Wednesday 1st November 2017 Books Close & Bids Due 3:00pm Wednesday 1st November 2017 Allocations to be advised by Joint Allocations to be advised 4:00pm Wednesday 1st November 2017 Lead Managers Signed Commitment Letters
Slide 15: NuLac Foods and Bubs Australia
NuLac Foods and Bubs Australia Founders, John Gommans & Kristy Carr For personal use only 14
Slide 16: Appendix: Nulac & Uphamgo
For personal use only APPENDIX 1 Nulac & Uphamgo 15
Slide 17: Material Contracts
MATERIAL CONTRACTS For personal use only Long term supply chain agreements Milk Supply Agreement: Supply agreement between Bubs and farms in Australia and New Zealand Initial term of 5 years, with automatic renewal for further 5 year terms unless either party notifies otherwise. Bubs consent require
Slide 18: Key NuLac Personnel
KEY NULAC PERSONNEL For personal use only John Gommans: John comes from a dairy farming family. On graduating from Massey University in 1980, and having decided to be a farmer, his father bought a large under- developed farm which John and his partner Penny Gander managed, eventually turning it into
Slide 19: CNCA Certified Australian Facility
CNCA CERTIFIED AUSTRALIAN FACILITY For personal use only Keysborough, Victoria based facility, CNCA dairy certified (excluding infant formula) Facility Production Capability: 900 tonnes of spray dried powder per annum Capacities are based on the current infrastructure and represent mutually exclusiv
Slide 20: NuLac Key Customers
NULAC KEY CUSTOMERS For personal use only Nulac Foods’ top five customers in F17 included Australian supermarkets, international wholesalers including key daigou traders Customers Portion of F17 Revenue Woolworths 19.5% Coles 12.2% Sixth Avenue Group 6.8% Blossoms BH Wholesale & Distribution 5.6% D
Slide 21: NuLac Foods Financial Overview
NULAC FOODS FINANCIAL OVERVIEW For personal use only Quarterly revenue of Nulac Foods REVENUE KEY DRIVERS Gross sales for Q1 was $4.443 million A$16.727m Up 24% on same period last year and 19% on the previous quarter. A$4.443m F17 F18 Q1 Q2 Q3 Q4 * Unaudited management accounts 20
Slide 22: Revenue by Products
REVENUE BY PRODUCTS For personal use only Quarterly revenue by product group of Nulac Foods PRODUCT GROUP REVENUE A$4.760m A$4.656m A$4.443m A$3.740m A$3.571m Q1F17 Q2F17 Q3F17 Q4F17 Q1F18 Goat Milk Powder Goat Milk Goat Yoghurt Flavoured Milk Coconut Yoghurt Other * Unaudited management accounts 21
Slide 23: Target Income Statement
TARGET INCOME STATEMENT For personal use only Combined statement of profit or loss for Nulac Foods Pty Ltd and UphamGo Australia Pty Ltd Year ended 30 June 2017 Audited* $'000 Revenue 16,727.1 Cost of sales (12,507.7) Gross profit 4,219.5 Factory operating costs (994.6) Employee costs (1,213.3) Admi
Slide 24: Target EBITDA Normalisation
TARGET EBITDA NORMALISATION For personal use only Normalised EBITDA removing one off expenses relating to the FY17 audited accounts F17 EBITDA KEY NORMALISATIONS A$0.533m A$1.430m Reclassification of expensed capital expenditure items Abnormal marketing activity relating to new product launches One-
Slide 25: Target Balance Sheet
TARGET BALANCE SHEET For personal use only As at 30 June 2017 Audited $'000 Combined statement of ASSETS Current Assets Cash and cash equivalents 143.6 financial position for Nulac Trade and other receivables Inventories 1,175.6 3,282.5 Foods Pty Ltd and UphamGo Total Current Assets 4,601.7 Australi
Slide 26: Appendix: China Market for Infant Formula
For personal use only APPENDIX 2 China Market for Infant Formula 25
Slide 27: China IMF Key Sales Channels
CHINA IMF KEY SALES CHANNELS For personal use only Mother & Baby stores & B2C eCommerce value share of the infant formula category sales in China continue to grow, driven by sales in second, third & fourth tier cities Value Share % by Channel Value Share % by City Tiers for total IMF category in Chi
Slide 28: Goat Formula in Rapid Growth
GOAT FORMULA IN RAPID GROWTH For personal use only Despite the goat milk formula segment representing only 5% share of the market; it experiences significantly less competition, greater growth & premium average pricing ¥10.0bn (A$1.9bn) +43% ¥7.0bn (A$1.3bn) ¥5.2bn (A$975m) +35% ¥4.0bn ¥3.2bn (A$750
Slide 29: Appendix: Bubs Q1 Performance
For personal use only APPENDIX 3 Bubs Q1 Performance (Management Discussion) 28
Slide 30: Progress on Strategic Journey
PROGRESS ON STRATEGIC JOURNEY For personal use only Bubs continues to deliver progress in the implementation of its four pillars for growth strategy Increased Brand Awareness Innovation Enhanced Domestic Market Penetration & Impact & Product Development Asian Focus Improving availability of Bubs® Bu
Slide 31: Financial Overview
FINANCIAL OVERVIEW For personal use only Bubs® quarterly revenue growth CAGR continues to grow at +20% since Q1 F17 reflecting continued growing demand and revenue momentum GROSS SALES KEY DRIVERS Gross sales for 1Q was $1.724 million, up 109% on A$4.528m A$4.347m same period last year and +22% on t
Slide 32: Revenue by Region
REVENUE BY REGION For personal use only Domestic sales domestically grew 106% in the quarter versus the same period last year, whilst sales to China grew 274% for the same period GEOGRAPHIC REVENUE KEY DRIVERS Domestic accounted for 75% of gross sales of 1Q A$1.724m 20% of gross sales were generated
Slide 33: Revenue by Products
REVENUE BY PRODUCTS For personal use only Bubs Advanced Plus Goat infant formula experienced strong increase in demand resulting in a 270% increase in gross sales during 1Q versus the same period last year PRODUCT GROUP REVENUE KEY DRIVERS Sales of Bubs Advanced+ Goat Infant A$1.724m formula +270% v
Slide 34: CNCA Update
CNCA UPDATE For personal use only CNCA discussions on track for lodgment by end of Q2 Upon completion of the transaction, Bubs will be the only goat infant milk formula brand sold in Australia with an integrated supply chain An additional 5 Australian plants were recently CNCA approved, increasing t
Slide 35: Appendix: Risks
For personal use only 34 APPENDIX 4 Risks
Slide 36: Risk
RISK For personal use only General Risks Regulatory changes to taxes, laws or accounting practice General market conditions may adversely affect the Company’s value. Force majeure, beyond the Company’s control, could impact the Company and its projects. Risks specific to Bubs Bubs operates in the in
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