Murray River Organics Pty — FY2017 Earnings Presentation
37 slides from Murray River Organics Pty's earnings presentation, Aug 28, 2017
Slide 1: FY17 Results presentation & capital raising
FY17 Results presentation & capital raising 28 August 2017 1
Slide 2: Expectations not met; issues now addressed; well-placed for FY18 and beyond
Expectations not met; issues now addressed; well-placed for FY18 and beyond Issue Current status Lower revenue than • Cold and wet weather in Spring impacted yields forecast • Improved yield progress-monitoring processes throughout the season • Stricter cutting and harvest procedures, • Improved dry
Slide 3: FY17 results narrowly below the revised guidance given in May 2017
FY17 results narrowly below the revised guidance given in May 2017 Statutory FY17 results Pro forma FY17 results1 Balance sheet • Revenue of $48.5m • Revenue of $62.6m • Net assets increased by • EBITDA of $(0.6)m • EBITDA of $6.4m $36.4m over FY17 to $66.3m ($0.76 per share) • NPAT of $(6.0)m • NPA
Slide 4: A number of significant achievements since IPO
A number of significant achievements since IPO • Dandenong Facility commissioned and now fully operational – organically certified, six-packaging-rooms, accredited to high food safety standards • Full integration of the businesses, customers, suppliers, brands of Food Source International and Austra
Slide 5: FY17 financial results
FY17 financial results 5
Slide 6: Abnormally poor growing conditions impacted revenue and earnings
Abnormally poor growing conditions impacted revenue and earnings FY17 • Revenue significantly impacted by cold and $m Pro forma results* wet weather in Spring Revenue 62.6 – $10 million being attributed to the delay Fair value gain 14.7 in harvest and slower than anticipated EBITDA 6.4 uptake in sal
Slide 7: Platform in place for further diversification of revenue streams
Platform in place for further diversification of revenue streams FY17 sales by region (%) FY17 sales by channel (%) 1% 0% 2% 4% 13% 27% 93% 60% Asia Aust/NZ Europe US Other Food service Retail Industrial 7
Slide 8: Significant investments for future profitability
Significant investments for future profitability $m 30 Jun 17 30 Jun 16 • Increase in current assets driven by inventories and agricultural produce Cash and cash equivalents 2.7 2.2 • Increase in Property, plant & equipment Inventories 27.1 10.9 driven by: Agricultural produce 4.4 0.6 – Property acq
Slide 9: Debt facilities well matched to asset base
Debt facilities well matched to asset base • 4 separate debt components that are well matched to strong asset base: Debt vs Assets - Statutory 50.0 – Debt secured against land assets: $15.1m1 – 45.5 45.0 land asset valued at $45.5m2 40.0 – Equipment finance: $4.3m – equipment 35.0 valued at $14.6m 3
Slide 10: Investing to drive future profit
Investing to drive future profit $m 30 Jun 17 30 Jun 16 • Operating cash outflow of $11.3m reflects: Receipts from customers 45.6 9.3 – Increased inventory levels Payments to (53.4) (13.2) suppliers/employees – Delayed sales as a result of delayed harvest Net operating cash flows (11.3) (3.7) – Lowe
Slide 11: FY17 was a year of significant investment
FY17 was a year of significant investment Capex item Budgeted cost ($m) Actual cost ($m) Variance ($m) Fifth Street Vineyard acquisition 10.4 10.4 - Australian Organic Holdings acquisition 12.4 12.0 0.4 (incl inventory) Food Source International acquisition (incl 5.6 5.6 - inventory) Conversion & de
Slide 12: Operational overview
Operational overview 12
Slide 13: Since IPO in Dec 2016 enormous progress has been made
Since IPO in Dec 2016 enormous progress has been made • Established an organically certified consumer packaged goods facility in Dandenong, Victoria, which is now fully operational – 4,219 sqm six-packaging-room facility – Provides ability to competitively service large and fast growing global custo
Slide 14: The largest vertically integrated certified organic dried vine fruit producer in the world
The largest vertically integrated certified organic dried vine fruit producer in the world • Acquisition and integration of the Fifth Street vineyard and the Nangiloc property • Company now owns or controls and operates a large portfolio of 12,253 acres of productive, maturing and development farmla
Slide 15: Completion by mid-September
Completion by mid-September • Investment of $5.4m on consolidation and improvement of Sunraysia processing facility in Mourquong • Improvements include: – New processing equipment, additional metal detection units, laser sorter, elevated walk ways and cat walks installed – Equipped with an innovativ
Slide 16: Customer numbers growing; building world class customer processes
Customer numbers growing; building world class customer processes • Winning new, high quality customers • Engagement with existing customers continues to grow • Driving for global diversification of customer base • Over 25% of cluster inventory has been allocated to specific customers • Building a “
Slide 17: Well positioned for efficiencies to flow in FY18 onwards
Well positioned for efficiencies to flow in FY18 onwards • Cost synergies will be driven by – Reduction in packaging costs by insourcing all packing – Elimination of warehouse rent in Sydney – Reduction in input costs – Strengthened distribution relationships – New / improved procurement opportuniti
Slide 18: Co-founder Jamie Nemtsas stepping down; key appointments made
Co-founder Jamie Nemtsas stepping down; key appointments made • Co-founder of MRG, Jamie Nemtsas, relinquished his COO and Executive Director roles – Felt that the foundations are in place for the business to grow sustainably over the long term – Remains a significant shareholder • Board sincerely t
Slide 19: Outlook
Outlook 19
Slide 20: Well positioned to supply the growing market
Well positioned to supply the growing market MRG controls 12,253 acres of high quality farmland Future growth from maturing acreage Largest dried vine fruit producer in Australia Largest producer of Organic dried vine fruit globally Net Assets1 of $0.76 per share and Net Tangible Assets1 of $0.64 pe
Slide 21: Significant capex program has been completed; platform in place to drive profit
Significant capex program has been completed; platform in place to drive profit • Significant future growth secured through significant FY17 investments into MRG’s asset base • Of the 12,253 acres of farmland held, 4,760 acres are planted or planned to be planted • A further 5,144 acres of vacant la
Slide 22: Maximising profit; maximising growth and efficiencies in a growing market
Maximising profit; maximising growth and efficiencies in a growing market Growth focus • Ongoing development and expansion of existing producing assets and vineyards • Expanding and deepening customer relationships, driving product innovation and servicing new markets and geographies Operational foc
Slide 23: Foundations in place to drive profit and build significant shareholder value
Foundations in place to drive profit and build significant shareholder value • FY17 was a milestone year for MRG • Significant investment in assets and processes to strongly position MRG for the long term • Poor harvest conditions impacted FY17 revenue and earnings • Operational delays have been res
Slide 24: Capital raise
Capital raise 24
Slide 25: Strengthened balance sheet by reducing debt and more working capital flexibility
Strengthened balance sheet by reducing debt and more working capital flexibility Key Offer Details Total Number of New Shares offered under the Prospectus 40.4 million Total Offer proceeds $12.1 million Number of New Shares offered under the Placement 16.6 million Number of New Shares offered under
Slide 26: Key Offer Details
Key Offer Details Prospectus lodgment date Monday, 28 August 2017 Announcement of the Placement Results Wednesday, 30 August 2017 Record Date for the Entitlement Offer 7.00pm (Melbourne time) Monday, 4 September 2017 Settlement Date for the Placement Monday, 4 September 2017 Allotment of New Shares
Slide 27: Sources and Uses of funds
Sources $m % Use of funds $m % Proceeds from the Entitlement Offer $7.1 58.7% Reduction of debt $6.5 53.7% Proceeds from the Placement $5.0 41.3% Working capital $4.8 39.7% Payment for transaction costs $0.8 6.6% associated with the Entitlement Offer and the Placement Total $12.1 100% Total $12.1 10
Slide 28: Pro forma balance sheet post capital raising
Capital Post Capital $m 30 Jun 17 Raising Raise Adjustments Cash and cash equivalents 2.7 4.8 7.5 Inventories 27.1 27.1 Agricultural produce 4.4 4.4 Total current assets 49.4 54.2 Property, plant & equipment 82.2 82.7 Intangible assets 10.7 10.7 Total non-current assets 94.7 94.7 TOTAL ASSETS 144.1
Slide 29: Debt facilities well matched to asset base
Debt facilities well matched to asset base • 4 separate debt components that are well matched to strong asset base: Debt vs Assets - Proforma Post Raise – Debt secured against land asset: $15.8m 50.0 45.5 45.0 (includes Nangiloc) – land asset valued at 40.0 $45.5m 35.0 – Equipment finance: $4.3m – e
Slide 30: Net debt and gearing post capital raise
Post Capital $m 30 Jun 17 Raise Net debt 47.8 43.7 Gearing including finance lease (net debt/equity) 72% 56% Net debt (excluding finance lease) 28.6 24.5 Gearing excluding finance lease (net debt/equity) 43% 32% 30
Slide 31: Key risks: Topic Summary
Topic Summary Yields and climate There are a number of factors that may affect the yield of viticultural crop, and yields may vary from vine to vine and harvest to harvest, which may impact Murray River Organics' performance. In particular, as an agricultural producer, climate change or prolonged pe
Slide 32: Key risks: Topic Summary
Topic Summary Reduced ability to The Group's ability to ensure continued supply of organic ingredients not grown by the Group from third parties at competitive prices access raw is dependent on many factors beyond the Group's control, including (amongst other factors) the number and size of those fa
Slide 33: Key risks: Topic Summary
Topic Summary Product liability There is a risk that illness or injury to customers may result from inadvertent mislabelling, tampering by unauthorised third parties or product contamination or spoilage. Under certain circumstances, Murray River Organics may be required to recall or withdraw product
Slide 34: Appendix
Appendix. 34
Slide 35: Statutory to pro forma earnings reconciliation
Proforma Adjustments 30 Jun ’17 30 Jun ’17 $m Statutory FSI Fifth Street IPO one- Stamp Performance Nangiloc Proforma AO Acquisition Acquisition Acquisition off’s duty rights acquisition Revenue 48.5 9.2 4.9 - - 62.6 Other Income 1.4 (0.2) - - - 1.2 Fair value of agricultural produce 13.2 - - 1.2 -
Slide 36: Important notice and disclaimer
This presentation (Presentation) has been prepared by Murray River Organics Group Limited (ACN 614 651 473) (Company). The information in this Presentation contains summary information about the Company, the FY2017 results of the Company and the placement of new Company shares (New Shares) to certai
Slide 37: Address Contact
Address Contact 32 Crompton Way, Company Website Dandenong South VIC 3175 www.murrayriverorganics.com.au Phone: +61 3 8792 8500 37
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