Bega Cheese Limited · ASX:BGA
Bega Cheese — Shareholder Meeting (October 2013)
45 slides from Bega Cheese's shareholder meeting presentation, Oct 22, 2013
Slide 1: Annual General Meeting
For personal use only ANNUAL GENERAL MEETING BEGA CHEESE LIMITED
Slide 2: 2013 Annual General Meeting - Executive Chairman
For personal use only 2013 Annual General Meeting Executive Chairman Barry Irvin AM BEGA CHEESE LIMITED 2013 ANNUAL GENERAL MEETING| PAGE 1
Slide 3: Agenda
AGENDA • 2013 Annual Report For personal use only • Executive Chairman’s Report • Chief Executive Officer’s Report • Questions • Approval of Remuneration Report • Election of Directors • Constitutional changes BEGA CHEESE LIMITED 2013 ANNUAL GENERAL MEETING| PAGE 2
Slide 4: Welcome
WELCOME Shareholders For personal use only • • Suppliers • Pricewaterhouse Coopers • Addisons Lawyers • Kidder Williams • Bega Cheese Staff • Apologies BEGA CHEESE LIMITED 2013 ANNUAL GENERAL MEETING| PAGE 3
Slide 5: 2013 Annual Report - Executive Chairman's Report
For personal use only 2013 Annual Report Executive Chairman’s Report Barry Irvin AM BEGA CHEESE LIMITED 2013 ANNUAL GENERAL MEETING| PAGE 4
Slide 6: A Year of Achievement
A YEAR OF ACHIEVEMENT Improved financial performance For personal use only • • Strengthened customer relationships • Infrastructure investment • Challenging year on farm • Improved outlook • Corporate activity BEGA CHEESE LIMITED 2013 ANNUAL GENERAL MEETING| PAGE 5
Slide 7: FY2013 Results Highlights
FY2013 RESULTS HIGHLIGHTS For personal use only • Revenue to $1,010m • EBITDA $64.3m • PAT $25.4m • Net debt $86.7m • Total FY2013 dividend 7.5 cps • Strong revenue growth in all business areas, particularly contract pack and nutritionals • Prior year included one-off expenses associated with listin
Slide 8: Customer Relationships
CUSTOMER RELATIONSHIPS For personal use only BEGA CHEESE LIMITED 2013 ANNUAL GENERAL MEETING| PAGE 7
Slide 9: Balance Sheet Extract
BALANCE SHEET EXTRACT For personal use only FY2013 FY2012 $m $m Trade and other receivables 104.3 95.8 Inventories 163.3 162.7 Investments 39.0 30.9 Property, plant & equipment 210.9 204.6 Total Assets 551.5 516.0 Trade and other payables 144.9 130.5 Borrowings 110.9 114.8 Total Liabilities 289.5 26
Slide 10: Milk Intake
MILK INTAKE For personal use only FY2013 FY2012 million litres million litres Bega 191 182 Coburg 107 100 Tatura 343 401 Contract 54 42 Total 695 725 • Milk pool well balanced to meet production requirements • Difficult dairy farming circumstances BEGA CHEESE LIMITED 2013 ANNUAL GENERAL MEETING| PAG
Slide 11: High Quality Value Added Product Range
HIGH QUALITY VALUE ADDED PRODUCT RANGE Cheddar and Processed Cheese For personal use only • • Mozzarella • Cream cheese • Nutritional Powders • Milk Protein Concentrate BEGA CHEESE LIMITED 2013 ANNUAL GENERAL MEETING| PAGE 10
Slide 12: Infrastructure
INFRASTRUCTURE Map of facilities Capital expenditure $27.8m For personal use only • • Investment in capacities • Integrated infrastructure • Process improvement • Risk management capability Bega Tatura Strathmerton Coburg BEGA CHEESE LIMITED 2013 ANNUAL GENERAL MEETING| PAGE 11
Slide 13: Strategic Priorities
STRATEGIC PRIORITIES Infant formula/nutritionals blending and canning capacities For personal use only • • Manufacturing improvement/integration plan • High value whey processing • Ongoing development of international FMCG business • Customer service/value creation • Improved milk supplier returns B
Slide 14: Outlook
OUTLOOK Improved and stable global dairy commodity prices For personal use only • • Improved currency relativity • Business improvement/integration initiatives adding value • Improved farm gate milk prices • Global supply/currency/trade relativities continue to create a volatile environment BEGA CHE
Slide 15: For personal use only
For personal use only BEGA CHEESE LIMITED 2013 ANNUAL GENERAL MEETING| PAGE 14
Slide 16: 2013 Annual Report - Chief Executive Officer's Report
For personal use only 2013 Annual Report Chief Executive officer’s Report Aidan Coleman BEGA CHEESE LIMITED 2013 ANNUAL GENERAL MEETING| PAGE 15
Slide 17: Group Business Performance
GROUP BUSINESS PERFORMANCE For personal use only 2013 2012 % $m $m Sales Revenue 1,010 933 8.3 EBITDA 64 57 13.2 EBIT 43 36 21.3 NPBT 35.3 27.1 30.5 Tax (9.9) (6.7) NPAT 25.4 20.4 24.6 BEGA CHEESE LIMITED 2013 ANNUAL GENERAL MEETING| PAGE 16
Slide 18: Bega Brand
BEGA BRAND For personal use only BEGA CHEESE LIMITED 2013 ANNUAL GENERAL MEETING| PAGE 17
Slide 19: Infant Formula
INFANT FORMULA For personal use only BEGA CHEESE LIMITED 2013 ANNUAL GENERAL MEETING| PAGE 18
Slide 20: Export Products
EXPORT PRODUCTS For personal use only BEGA CHEESE LIMITED 2013 ANNUAL GENERAL MEETING| PAGE 19
Slide 21: Bega Brand
BEGA BRAND For personal use only BEGA CHEESE LIMITED 2013 ANNUAL GENERAL MEETING| PAGE 20
Slide 22: Production
PRODUCTION For personal use only 250,000 200,000 150,000 100,000 50,000 0 FY2012 FY2013 Core Manufacture FMCG Nutritional • Total production 210,052 tonnes increase of 3% BEGA CHEESE LIMITED 2013 ANNUAL GENERAL MEETING| PAGE 21
Slide 23: Cash Flow Extract
CASH FLOW EXTRACT FY2013 FY2012 For personal use only $m $m Receipts from customers 1,041.0 945.6 Payments to suppliers (966.9) (944.4) Interest and other costs of financing paid (8.1) (8.8) Income tax paid (4.0) (3.0) Operating activities 62.0 (10.6) Investing activities (29.3) (30.1) Financing act
Slide 24: Strategic Focus Areas
STRATEGIC FOCUS AREAS For personal use only BEGA CHEESE LIMITED 2013 ANNUAL GENERAL MEETING| PAGE 23
Slide 25: Formalities and Voting
For personal use only Formalities and Voting Executive Chairman Barry Irvin AM BEGA CHEESE LIMITED 2013 ANNUAL GENERAL MEETING| PAGE 24
Slide 26: Remuneration Report
REMUNERATION REPORT Pages 16 – 26 of Annual Report For personal use only • • Board, Executive and key management personnel • Market data and external advisors • No change to Director’s fees Resolution • Adopt remuneration report for the year ended 20 June2013 BEGA CHEESE LIMITED 2013 ANNUAL GENERAL
Slide 27: Remuneration Report - Proxies
REMUNERATION REPORT Proxies For personal use only • Total votes – 29,056,464 (19.13%) • For – 25,263,645 (86.95%) • Open – 3,557,056 (12.24%) • Against – 235,763 (0.81%) BEGA CHEESE LIMITED 2013 ANNUAL GENERAL MEETING| PAGE 26
Slide 28: Election of Directors
ELECTION OF DIRECTORS • Max Roberts For personal use only • Richard Platts BEGA CHEESE LIMITED 2013 ANNUAL GENERAL MEETING| PAGE 27
Slide 29: Election of Directors - Max Roberts
ELECTION OF DIRECTORS Max Roberts For personal use only • Total Votes – 28,629,783 (18.85%) • For – 24,578,357 (85.85%) • Open – 3,109,747 (10.86%) • Against – 941,679 (3.29%) BEGA CHEESE LIMITED 2013 ANNUAL GENERAL MEETING| PAGE 28
Slide 30: Election of Directors - Richard Platts
ELECTION OF DIRECTORS Richard Platts For personal use only • Total Votes – 28,629,783 (18.85%) • For – 24,555,865 (85.77%) • Open – 3,129,385 (10.93%) • Against – 944,533 (3.30%) BEGA CHEESE LIMITED 2013 ANNUAL GENERAL MEETING| PAGE 29
Slide 31: Constitutional Changes / WCB Offer
CONSTITUTIONAL CHANGES / WCB OFFER • Constitution currently sets 10% max cap on shareholdings For personal use only • WCB shareholder who accepts the Bega Cheese offer may be issued with shares as consideration beyond 10% • Special resolution will allow share issues under a takeover bid or scheme of
Slide 32: Reasons for the Offer
REASONS FOR THE OFFER • The history of Bega Cheese 18% of WCB For personal use only • Shared history, culture and ambition • Next logical step in dairy industry consolidation • Major cheddar and processed cheese production facilities • Substantial cutting, packaging and processing operation • Scale
Slide 33: WCB Offer
WCB OFFER • 1.2 Bega Cheese shares and $2 cash For personal use only • Valuing WCB at $385m Timetable • Offer announced 12 September • Offer open until 28 November • Offer conditions e.g. ACCC • Bega Cheese constitutional change BEGA CHEESE LIMITED 2013 ANNUAL GENERAL MEETING| PAGE 32
Slide 34: Outcome of Offer
OUTCOME OF OFFER 7 integrated manufacturing sites For personal use only • • 1,000 dairy farmers from southern NSW, VIC and SA • Revenues exceeding $1.5 billion • Milk intake 1.6 billion litres • 350,000 tonnes total annual dairy production • Market capitalisation circa $845 million BEGA CHEESE LIMIT
Slide 35: Outcome of Offer - Scenarios
OUTCOME OF OFFER SCENARIO 1 SCENARIO 2 SCENARIO 3 For personal use only Obtains a Relevant Obtains a Relevant Obtains a Relevant Interest in 100% Interest in 50.1% Interest in 30% BGA Shares issued to WCB 54.4 million 21.2 million 7.9 million shareholders Total BGA Shares on issue 206.2 million 173.
Slide 36: Outcome of Offer - Pro Forma
OUTCOME OF OFFER For personal use only 100% Ownership BGA WCB Net Adjustments FY13 Pro forma in millions FY13 FY13 Combined Group Revenue 1,010.1 495.9 (19.0) 1,486.9 EBITDA 64.3 25.4 6.5 96.2 Profit before tax 35.3 9.6 1.6 46.5 Profit after tax 25.4 7.5 0.8 33.8 Balance Sheet Current assets 291.8 1
Slide 37: What We Said at the Time of IPO
WHAT WE SAID AT THE TIME OF IPO • Structure and constitution would recognise the past For personal use only and prepare for the future • Value options important for farmer shareholders • Wealth release only one reason for structure change • Greater flexibility for capital needs of business was a sec
Slide 38: Current Position
CURRENT POSITION • Successful listing and capital raising For personal use only • Successful merger with TMI • Strong interest in Bega Cheese shares but no dominant shareholder (shareholder cap) • 6 out of 8 Directors are Supplier Directors • Majority of shareholders continue to be dairy farmers • I
Slide 39: Shareholder Cap/Supplier Representation
SHAREHOLDER CAP/SUPPLIER REPRESENTATION • Important features of the Bega Cheese constitution For personal use only • Supplier representation a permanent feature • Shareholder cap removed over time: currently 10% 2016 – 15% or removed by shareholder vote • 2021 – cap falls away Rationale for cap • Ti
Slide 40: Limitation of the Shareholder Cap
LIMITATION OF THE SHAREHOLDER CAP Identified in the WCB offer For personal use only • • Current offer is cash and shares • All offers must pass “same offer” test • Breach “same offer” test if a shareholder can’t accept offer • Theoretic possibility to breach cap • No current WCB or Bega Cheese share
Slide 41: Proposed Change in Shareholder Cap
PROPOSED CHANGE IN SHAREHOLDER CAP • Shareholders are being asked to approve a change in For personal use only the shareholder cap mechanism • New mechanism allows “same offer” test to be met • Cap will increase in the event of a takeover or scheme of arrangement if a breach would result • Change li
Slide 42: A Dairy Company for the Future
A DAIRY COMPANY FOR THE FUTURE For personal use only BEGA CHEESE LIMITED 2013 ANNUAL GENERAL MEETING| PAGE 41
Slide 43: Constitutional Change
CONSTITUTIONAL CHANGE “that the company’s constitution be modified by making For personal use only the alternation set out in the information memorandum accompanying this notice” Constitutional Change • Total votes – 29,186,184 (19.22%) • For – 24,929,216 (85.41%) • Open – 3,579,845 (12.27%) • Again
Slide 44: Thank You
THANK YOU For personal use only BEGA CHEESE LIMITED 2013 ANNUAL GENERAL MEETING| PAGE 43
Slide 45: Disclaimer
DISCLAIMER For personal use only Bega Cheese Limited advises that these presentation slides contain forward looking statements which may be subject to significant uncertainties outside of Bega Cheese and its related entities. No representation is made as to the accuracy or reliability of forward loo