BREVILLE GROUP LIMITED — Investor Presentation 2018

Aug 15, 2018

==> picture [114 x 27] intentionally omitted <==

16 August 2018

Manager, Company Announcements, Australian Securities Exchange Limited, 20 Bridge Street, Sydney NSW 2000

Year Ended 30 June 2018 Investor Presentation

Attached is a copy of the Breville Group Limited Investor Presentation for the Year Ended 30 June 2018.

Yours faithfully

==> picture [78 x 45] intentionally omitted <==

Sasha Kitto Company Secretary Breville Group Limited Telephone: (02) 9384 8100

==> picture [149 x 79] intentionally omitted <==

==> picture [186 x 13] intentionally omitted <==

Breville Group Limited YEAR END RESULTS FY18 INVESTOR PRESENTATION

==> picture [525 x 253] intentionally omitted <==

August 2018

==> picture [720 x 42] intentionally omitted <==

Group Summary Result

AUDm FY18 FY17 % Chng	AUDm FY18 FY17 % Chng	AUDm FY18 FY17 % Chng	AUDm FY18 FY17 % Chng	AUDm FY18 FY17 % Chng	AUDm FY18 FY17 % Chng	AUDm FY18 FY17 % Chng	Key points • Group revenue 8.7% higher in constant currency • EBIT vs. EBITDA growth rate differential reflecting continued investment in R&D • EBIT growth trend continues, increasing 10.0% (FY17: 7.2%) • NPAT impacted by increased finance costs and one off tax adjustments including US federal corporate tax rate change • Final dividend of 16.5 cps, 60% franked, annual dividend growth of 8.2% • Net cash balance increased to $58.0m given higher profitability and cash conversion • Spend on marketing and R&D increased to 10.5% of revenue
Revenue 652.3 605.7 7.7%
EBITDA 100.2 89.8 11.6%
EBIT 86.9 79.0					10.0%
EBIT margin (%) 13.3% 13.0%
NPAT 58.5 53.8 8.7%
Basic EPS(cents) 45.0 41.4 8.7%
ROE1 (%) 21.6% 21.3%
Dividends per share (cents) 33.0 30.5 8.2%
• Interim	16.5		15.5
• Final	16.5		15.0
Franked (%) 60.0% 60.0%
Net cash($m) 58.0 41.3
Mkt/R&D % Revenue 10.5% 9.5%

Minor differences may arise due to rounding

1 ROE is calculated based on NPAT for the 12 months ended 30 June 2018 (FY17: 12 months ended 30 June 2017) divided by the average of shareholders’ equity at the beginning and the end of the financial year

==> picture [720 x 42] intentionally omitted <==

----- Start of picture text -----

2
----- End of picture text -----

Segment Results

AUDm	REVENUE	REVENUE	REVENUE	EBIT	EBIT MARGIN (%)
	FY18 FY17 % Chng			FY18 FY17 % Chng	FY18 FY17
Global Product	526.9 469.6 12.2%			73.3 72.4 1.2%	13.9% 15.4%
% Change CC*		13.4%
Distribution	125.5 136.2 (7.8%)			13.6 6.6 106.1%	10.8% 4.9%
TOTAL	652.3 605.7 7.7%			86.9 79.0 10.0%	13.3% 13.0%

Minor differences may arise due to rounding *CC – Constant Currency

Key points

• Global Product segment continued its growth pattern with revenue increasing 13.4% in constant currency

• Distribution segment revenue declined (7.8%) with EBIT growing 106.1%, reflecting the turnaround in segment profitability

• Global Product segment represented 84.3% of Group EBIT for FY18 (FY17: 91.6%)

• As stated during 1HFY18 announcement, the reduction in the EBIT margin % for the Global Product segment is NOT a result of a change in underlying segment performance. It is the result of the business model migration: utilising Distribution segment’s greater EBIT performance to increase spending on marketing, R&D, and European expansion in the Global Product segment. For the Global Product segment, FY18 gross margin % is consistent with FY17 performance.

==> picture [720 x 42] intentionally omitted <==

----- Start of picture text -----

3
----- End of picture text -----

Segment Results cont’d

	Segment Results cont’d	Segment Results cont’d	Segment Results cont’d	Segment Results cont’d
AUDm	GLOBAL PRODUCT SEGMENT REVENUE
	FY18 FY17 % Chng $A	% Chng CC*
North America	303.6 265.1 14.5%	16.3%
			16.3%
Australia and New Zealand (ANZ)	123.9 114.1 8.6%		9.1%
Rest of World	99.4 90.4 9.9%		10.7%
TOTAL	526.9 469.6 12.2%	13.4%	13.4%

*CC – Constant Currency

Key points The Global Product segment delivered solid revenue growth across all Regions in constant currency:

• North America continued its solid growth trajectory

• ANZ grew 9.1% in a somewhat challenged retail environment. Australia delivered double digit growth, and New Zealand softened off the back of a strong FY17

• ROW absorbed the impact of the Germany / Austria transition and still managed to post double digit constant currency growth for the year

==> picture [720 x 42] intentionally omitted <==

----- Start of picture text -----

4
----- End of picture text -----

Financial Position at 30 June

AUDm	FY18	FY17
Inventory	99.7	116.6
Receivables	104.4	106.4
Trade and other payables	(84.6)	(94.8)
Working Capital	119.5	128.2
Fixed assets	11.4	10.7
Intangibles	112.6	100.1
Other (liabilities)/assets (net)	(18.3)	(20.7)
NET ASSETS EMPLOYED	225.2	218.3
(Cash) (net)	(58.0)	(41.3)
Shareholders’ equity	283.2	259.6
CAPITAL EMPLOYED	225.2	218.3

Minor differences may arise due to rounding

Key points

• Inventory declined $16.9m as the Nespresso[®] inventory bubble in FY17 flattened out, the adjusted holiday ramp up pattern and the sales & operations process continued to drive efficiencies

• Receivables were driven by fourth quarter timing and mix

• Trade payables were $10.2m lower due to adjustments in the sales & operations process as well as the holiday ramp up pattern

• Intangibles continued to increase due to (net) investments in R&D ($4.2m) and IT systems ($0.4m), as well as the Aquaport[®] acquisition ($8.1m)

• Cash generated from operating activities increased to $88.7m from $62.7m in FY17

==> picture [720 x 42] intentionally omitted <==

----- Start of picture text -----

5
----- End of picture text -----

Growth Acceleration Framework

==> picture [665 x 239] intentionally omitted <==

----- Start of picture text -----

More Larger
Product Market
Acceleration
Program
Trajectory
Scalable, Acceleration Platform Historical
Trajectory
Growth-oriented Business Model
Time
EBIT
----- End of picture text -----

==> picture [720 x 42] intentionally omitted <==

----- Start of picture text -----

6
----- End of picture text -----

From Product Development to Commercialisation

“Customer Segment Thinking”

Range Product Range

==> picture [45 x 50] intentionally omitted <==

==> picture [126 x 121] intentionally omitted <==

----- Start of picture text -----

Product
----- End of picture text -----

“Food Thinking”

==> picture [720 x 42] intentionally omitted <==

----- Start of picture text -----

7
----- End of picture text -----

Coordinated Range

==> picture [434 x 226] intentionally omitted <==

Common Design Language

==> picture [433 x 226] intentionally omitted <==

Common Colour Pallet

==> picture [720 x 42] intentionally omitted <==

----- Start of picture text -----

8
----- End of picture text -----

Pulling Innovation Through the Range

ThermoJet[TM] Heating System Achieves optimal extraction temperature in 3 Seconds

==> picture [151 x 174] intentionally omitted <==

Barista Express[TM] Pro

Bambino[TM ] Plus

==> picture [153 x 177] intentionally omitted <==

Barista Touch[TM ]

==> picture [115 x 147] intentionally omitted <==

Creatista[®] Pro

==> picture [118 x 155] intentionally omitted <==

Creatista[®] Uno

==> picture [720 x 42] intentionally omitted <==

----- Start of picture text -----

9
----- End of picture text -----

Extending Innovation to New Customer Segments

==> picture [219 x 250] intentionally omitted <==

Barista Express[TM] Pro

Bambino[TM] Plus

==> picture [42 x 222] intentionally omitted <==

• Delivers the 4 elements of cafe quality coffee

• 3 second heat up time: ThermoJet[TM] heating system

• Improved grinder performance and control

• Intuitive icon-driven LCD display

• Wider work area for ease of use

• Common design language with rest of range

• 1[st] compact espresso machine to meet the 4 elements of cafe quality coffee*

• 3 second heat up time: ThermoJet[TM] heating system

• Auto-milk technology: can choose milk temperature and level of froth

• Common design language with rest of range

* IFA press conference. Bambino Plus vs. commercial coffee machine (https://www.youtube.com/watch?v=MQxOGuV4GP4&feature=youtu.be, beginning at 10:26)

==> picture [720 x 42] intentionally omitted <==

----- Start of picture text -----

10
----- End of picture text -----

Pulling Innovation Through the Range (cont.)

Element IQ[ ®]

Puts the Right Amount of Heat in the Right Places

==> picture [129 x 79] intentionally omitted <==

==> picture [131 x 79] intentionally omitted <==

Smart Oven[TM] Air

Smart Oven[TM] Pro

Smart Oven[TM]

==> picture [131 x 90] intentionally omitted <==

==> picture [131 x 90] intentionally omitted <==

==> picture [121 x 69] intentionally omitted <==

Smart Oven[TM] Compact Smart Compact Convection Oven[TM]

Mini Smart Oven[TM]

==> picture [336 x 182] intentionally omitted <==

==> picture [201 x 14] intentionally omitted <==

----- Start of picture text -----

Smart Oven [TM] Pizzaiolo
----- End of picture text -----

==> picture [720 x 42] intentionally omitted <==

----- Start of picture text -----

11
----- End of picture text -----

The Smart Oven[TM] Pizzaiolo

Food Science: The secret to a perfect Neapolitan pizza is cooking it in less than 2 minutes*

==> picture [626 x 340] intentionally omitted <==

----- Start of picture text -----

400 °C
----- End of picture text -----

First electric domestic pizza oven capable of replicating commercial wood-fired oven performance

* In Search of Perfection, Pizza, Season 1: Episode 5 (https://vimeo.com/34433092)

==> picture [720 x 42] intentionally omitted <==

----- Start of picture text -----

12
----- End of picture text -----

First Breville “Brand Launch”

==> picture [212 x 62] intentionally omitted <==

----- Start of picture text -----

Seed
Apr - June
----- End of picture text -----

Tease Launch Accelerate Jul - Sep Oct Nov – Mar19

We stress tested the product with leading Pizzaiolos and Professional Chefs across New York, Chicago, Sydney, San Francisco, Portland and Los Angeles

Here are the (restaurant-worthy) results:

==> picture [129 x 93] intentionally omitted <==

==> picture [116 x 101] intentionally omitted <==

==> picture [311 x 168] intentionally omitted <==

==> picture [121 x 89] intentionally omitted <==

==> picture [129 x 76] intentionally omitted <==

==> picture [115 x 104] intentionally omitted <==

==> picture [128 x 120] intentionally omitted <==

==> picture [720 x 42] intentionally omitted <==

----- Start of picture text -----

13
----- End of picture text -----

First Breville “Brand Launch” (cont.)

==> picture [212 x 62] intentionally omitted <==

----- Start of picture text -----

Tease
Jul - Sep
----- End of picture text -----

Seed

Apr - June

• Launched Pizzaiolo microsite: www.smartovenpizzaiolo.breville.com/us

• Joint launch with Williams Sonoma[®]

• Williams Sonoma[®] Holiday press day

• Physical infrastructure (kitchens)

• Digital campaign targeting early adopters

• Seed social pizza communities

• Tease product at IFA for European media

==> picture [180 x 94] intentionally omitted <==

Launch Oct

Accelerate Nov – Mar19

==> picture [287 x 145] intentionally omitted <==

==> picture [129 x 225] intentionally omitted <==

==> picture [157 x 226] intentionally omitted <==

==> picture [720 x 42] intentionally omitted <==

----- Start of picture text -----

14
----- End of picture text -----

==> picture [198 x 89] intentionally omitted <==

Our Vision

Inspire consumers to make every food moment a perfect occasion – “Master Every Moment”

Our Mission

To make the process a pleasure and the end result perfect, every time – “Provide Mastery in a Box” Our Guiding Principles

1. Define the perfect result. Then let you personalise it.

2. Innovate to simplify. Better. Faster. Easier.

3. Design to delight. It is always a pleasure to use Breville|Sage as part of your recipe.

4. Inspire you to be extraordinary in the kitchen and to share with those who matter most.

15

Europe Update: Germany / Austria

• Launched April 1[st] as planned

• Team complete, supply chain automated

• Currently transacting through approximately 600 doors

• Premium in-store positioning, supported by demonstration

• Take over Creatista[®] range

January 1, 2019

==> picture [323 x 191] intentionally omitted <==

Saturn, Hamburg

==> picture [287 x 216] intentionally omitted <==

==> picture [720 x 42] intentionally omitted <==

----- Start of picture text -----

16
----- End of picture text -----

Europe Update: Beyond Germany / Austria

==> picture [166 x 281] intentionally omitted <==

----- Start of picture text -----

Sage
distributor
markets
BRG
Warehouse
----- End of picture text -----

==> picture [487 x 209] intentionally omitted <==

----- Start of picture text -----

•
Expect to enter
FY18 direct Sage Benelux/Switzerland
markets before end of FY19
• Will result in ≈ $1M
headwind for FY19
FY19 new
direct Sage
markets
----- End of picture text -----

Sage IFA Presence

Sage partners now being served by European warehouse (vs. Hong Kong)

Go Forward Marker: For FY18, Europe delivered $61.8M in Revenue

==> picture [720 x 42] intentionally omitted <==

----- Start of picture text -----

17
----- End of picture text -----

Acceleration Program Update

Organisation

• Continued to expand organisational capability: CFO, CTO, AU Sales, and NA Sales Ops

• Entire logistics system now leveraging 3PLs

Operations

• Germany/Austria transactions fully automated

• • Phasing in serialisation, expanding co-planning

• • Rolling out chat capability for customer service

Systems

• Upgrading eCommerce system: US, UK, Canada, and Australia are live

• Deploying retail sell-out system: ANZ is live

==> picture [720 x 42] intentionally omitted <==

----- Start of picture text -----

18
----- End of picture text -----

Acceleration Program Update (cont.)

Inventory

Inventory as % of cost of sales*	FY18	1H FY18	FY17
BRG	27.0%	30.9%	32.3%
BRG with 12 month COS**	24.7%	27.7%	29.3%

• Cost of sales comprises only the cost of inventory

• ** Excludes inventory and cost of sales from Nestle® Dolce Gusto®, Aquaport® and European warehouse

• Delivering continued improvement in inventory turns, now running at 4.0x

• ®

• North American Nespresso inventory no longer excluded in adjusted number

Distribution Segment Turn Around

Distribution Segment	FY18	FY17	FY16
Distribution Segment EBIT	$13.6m	$6.6m	$8.6m
EBIT Growth	106.1%	(22.5%)

• As a result of segment portfolio remixing and efficiency efforts, the Distribution segment delivered positive year/year EBIT performance

• 2HFY18 revenue of $53.3m is a clean half for all current revenue streams in the Distribution segment

==> picture [720 x 42] intentionally omitted <==

----- Start of picture text -----

19
----- End of picture text -----

Acceleration Pro ram Scorecard g

Acceleration Program Scorecard	FY15	FY16 FY17	FY18	FY18/FY15
BRG Revenue (AUDm)	527.0	576.6 605.7	652.3	23.8%
Global Segment	373.3	427.2 469.6	526.9	41.1%
Distribution Segment	153.7	149.4 136.2	125.5	(18.4%)
EBIT	69.6	73.7 79.0	86.9	24.9%
EBIT Yr/Yr Growth	(1.2%)	5.9% 7.2%	10.0%
Marketing / R&D as % Revenue	-	8.5% 9.5%	10.5%
Inventory	108.3	107.7 116.6	99.7	(7.9%)
Inventory as % of COS	34.7%	31.7% 32.3%	27.0%	(22.2%)
**ROE1 **	21.0%	21.0% 21.3%	21.6%
ROA1	13.4%	13.7% 13.7%	13.6%
Number of employees(yearly average)	450	434 432	445	(1.1%)
EBIT / Employee	$154,781	$170,020 $182,712	$195,375	26.3%

• Grew Global Product segment while turning around Distribution segment (EBIT$)

• Business model transformation occurring while simultaneously delivering EBIT growth

• FY18’s revenue is 23.8% larger than FY15, but inventory and employee headcount are down

• Return metrics stable, and efficiency metrics improving

• Total reported “non-recurring” expense adjustments affecting reported EBIT: $0

1 ROE is calculated based on NPAT for the 12 months ended 30 June for the financial year (FY15 – FY18) divided by the average of shareholders’ equity at the beginning and the end of the financial year. ROA is calculated based on NPAT for the 12 months ended 30 June for the financial year (FY15 – FY18) divided by the average of total assets at the beginning and the end of the financial year.

==> picture [720 x 42] intentionally omitted <==

----- Start of picture text -----

20
----- End of picture text -----