FFI HOLDINGS LIMITED — AGM Information 2017

Nov 14, 2017

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Annual General Meeting 2017 Chairman’s Presentation

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FFI Holdings Ltd - 2017 AGM

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• Highlights FY2017

• Review of Financial Performance

• Dividends

• Manufacturing Capabilities

• Business Acquisition – Orchard Icing

• Products and Markets

• Review of Food Operations

• Review of Property Investments

• Capital Employed

• Growth Strategy

Food Operations Property Investments

• Conclusion

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FFI Holdings Ltd - 2017 AGM

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FY 2017 – Solid growth and sound results
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• Net profit after tax up 5.2% to $2.2 million

• Sales up 7.4% to $33.2 million

• Rental income up 15.1% to $0.98 million

• Ordinary dividends up 5.3% to 20.0 cps (fully franked)

• Strong balance sheet:

• Equity attributable to members up 5.2% to $33.6 million

• Debt to equity gearing – 6.2% (Net Debt - $2.1 million)

• Acquired the business of Orchard Icing on 22 May 2017

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FFI Holdings Ltd - 2017 AGM

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Key financial metrics
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Year	ended 30 June	2017 $’000	2016 $’000	% change
Sales		33,184	30,902	Up 7%
Earnings before tax:
	- food operations	2,968	2,930	Up 1%
	- property income	981	852	Up 15%
	- interest expense	(156)	(151)	Up 3%
	- unallocated items	(687)	(677)	Up 1%
Total	earnings before tax	3,106	2,954	Up 5%
Summary of equity:
	- invested in food operations	17,665	17,130
	- invested in land investments	18,018	17,719
	- net cash (debt)	(2,092)	(2,910)
Total	equity attributable to members	33,591	31,939	Up 5%
Return on equity invested in food
operations - pre tax		16.8%	17.1%

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FFI Holdings Ltd - 2017 AGM

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FY 2017 – Steady improvements in results
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• Dramatic increase in the cost of major raw materials in the second

• half (costs expected to decrease in FY18)

• Solid sales growth and productivity improvements

• Employee labour costs and overhead expenses were well contained

• Rental income from investment properties up 15%

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FFI Holdings Ltd - 2017 AGM

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Maximising long term shareholder return is a key FFI objective
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• Final ordinary dividend of 10.0 cps fully franked - full year ordinary dividends of 20.0 cps fully franked (2016:19.0 cps)

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80
20.0 cps fully franked (2016:19.0 cps)
• 70
Total dividends paid $2.08 million
(2016: $1.90 million) – up 10%
60
•
A disciplined and conservative approach
50
to capital management
40
•
Dividend reinvestment plan well
supported – 72% participation for final 30
dividend
20
•
Maintains solid dividend record over 10
years 10
•
High level of importance placed on 0
maintaining dividend growth
Interim Final Special
FFI Holdings Ltd - 2017 AGM
Cents per Share
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
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A diverse range of manufacturing & packing capabilities
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• –

• Wet cooking process bakery jams and fillings

• –

• Chocolate panning nuts, fruits, candy

• –

• Sugar panning non pareils, candy coating of chocolate drops

• –

• Extrusion choc vermicelli, rainbow sprinkles

• –

• Chocolate manufacture buttons, chips, flake, batons, blocks

• –

• Candy manufacture/inclusions fudge and candy brittles

• –

• Blending and packing Prepact home cooking products

• –

• Tradition Smallgoods sausages and bacon

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FFI Holdings Ltd - 2017 AGM

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Growth through new food business
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• The acquisition of the Orchard Icing business successfully completed

• The business is well established, specialising in the manufacture of

• “ready to roll” icing

• Business is being restructured and merged with the cake decorations product division – “Nemar Cake Toppings”

• Significant expansion of our manufacturing and product range

• Ideal fit for our company with many synergies with existing operation

• Many opportunities to expand the business

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FFI Holdings Ltd - 2017 AGM

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Diversity across all sales channels
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Chocolate Products of Australia

chocolate- cake toppings – confectionery – fudge – candy inclusions and decorations

Orchard Icing

“Ready to roll” icing and decorations

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Fresh Foods Industries – Bakery Products bakers jams – fruit fillings

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Prepact

home cooking needs – blending and packing

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Tradition Smallgoods

sausages – bacon – ham – manufactured meat products

Servicing all market channels food service – wholesale – private label – retail – industrial

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FFI Holdings Ltd - 2017 AGM

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Continuing focus on business fundamentals
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• Strong focus on product quality and OH&S

• Sales initiatives commencing to deliver results

• Growth across all market channels driven by new products and innovation

• Plant and equipment upgrades continuing to improve reliability and efficiency

• Steady profitability despite challenging market conditions

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FFI Holdings Ltd - 2017 AGM

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Property investment – an important driver of shareholder value
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• Investment property value June 2017 $22.3m - deferred tax $ 4.3m

• • equity invested $18.0m

• Only 27,000 m2 (approx.) income producing, with 32,000 m2 (approx.) vacant

• New access road (Verde Drive) now completed with 22,000 m2 (approx.) ready for immediate development

• New “Proposed Cockburn Central Structure Plan” likely to result in compulsory resumption of up to 10,500 m2

• Land to be resumed currently used for access ways, car parks, future expansion and investment

• Full compensation expected from any financial loss from resumption

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FFI Holdings Ltd - 2017 AGM

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Strategically located near Cockburn Central
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FFI
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FFI Holdings Ltd - 2017 AGM

FFI Holdings Ltd - 2017 AGM 13

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NTA per share of $3.15
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Food Operations
Equity = $17.7m
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FFI Holdings Ltd
Equity = $33.6m
Debt = $ 2.1m
Capital = $35.7m
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Property Investments
Equity = $18.0m
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Fresh Food
Industries Pty Ltd
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Tradition
Smallgoods Pty Ltd
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Development and
Lease
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Hold for Longer
Term Growth
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Organic growth / business acquisitions to build shareholder value
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• Continue to focus on niche markets

• Organic growth driven from new products across all market channels

• Integration and expansion of the new Orchard Icing business

• Preference for “bolt on” acquisitions -low risk / high return strategy

• Re-investing in all business divisions to:

• maintain manufacturing efficiencies

• develop new products and processes

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FFI Holdings Ltd - 2017 AGM

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The key priority is to maximize long term capital value
and increase cash flow from this valuable asset
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FFI has a three tiered growth strategy depending on the position and potential development value of the land:

• Hold fully developed and leased property for rental income and long term capital gain

• Pursue opportunities for further development and lease income

• Hold land for long term value increases from structural changes, road access etc. and/or further subdivision

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FFI Holdings Ltd - 2017 AGM

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Key achievements and highlights
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• Solid sales and profit growth achieved for FY17

• Successful acquisition of Orchard Icing business

• Continuing expansion of manufacturing capabilities

• Growth in rental income and property investments that will contribute to future group profitability

• Strong financial position with low debt, quality assets and strong cash flow

• Highly disciplined and targeted approach to growth focused on both organic growth and acquisition opportunities to deliver maximum long term shareholder returns

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Your Board and management look to the future with
confidence and enthusiasm
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FFI Holdings Ltd - 2017 AGM

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• This presentation was prepared by FFI Holdings Ltd. The information herein is current as at 15 November 2017.

• This presentation is not an offer or invitation for subscription or purchase of securities or a recommendation with respect to any security. Information in this presentation should not be considered advice and does not take into account the investment objectives, financial situation and particular needs of an investor. Before making an investment in FFI Holdings Ltd any investor should consider whether such an investment is appropriate to their needs, objectives and circumstances and consult with an investment adviser if necessary. Past performance is not a reliable indication of future performance.

• FFI Holdings Ltd has prepared this presentation based on information available to it. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions contained in this presentation. To the maximum extent permitted by law, none of FFI Holdings Ltd, its directors, employees or agents, nor any person accepts any liability, including, without limitation, any liability arising from fault or negligence on the part of any of them or any other person, for any loss arising from the use of this presentation or its contents or otherwise arising in connection with it.

• This presentation may contain forward looking statements that are subject to a range of risk factors and uncertainties. Whilst the statements are considered to be based on reasonable assumptions, the statements themselves and the assumption upon which they are based may be affected by a range of circumstances which could cause actual results to differ significantly from the results expressed or implied in these forward looking statements.

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FFI Holdings Ltd - 2017 AGM