WINGARA AG LTD — Capital/Financing Update 2021

Aug 31, 2021

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Company update and equity raising David Christie (Chair), James Whiteside (CEO) and Jae Tan (CFO) 1 September 2021

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Significant transformation over the past 6 months

Wingara Group

JC Tanloden

• Experienced Independent Chair and Board appointed

• Robust corporate governance and oversight instilled across the business

• Consistent achievement of record quarterly production levels

• 24/7 operation and increased productivity

• New experienced leadership team

  • More work is nonetheless required to improve plant reliability and uptime

• James Whiteside appointed CEO

• Jae Tan appointed CFO

• Zane Banson (previously CFO) appointed CCO

• Annualised corporate cost savings of $1m pa implemented in Q4 FY21

• Positive operating cash flow achieved in Q1 FY22

• Strategic review of Austco Polar completed

• Stronger connection to growers and customers with removal of trading intermediaries

• Installation of additional hay press at JC Tanloden as announced to the market on 6 August 2021 has the potential to lift production by an additional 30,000MT per annum

• JC Tanloden is now poised to take advantage of current strong market conditions and another step change in plant performance

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Substantial growth opportunity

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Group underlying EBITDA compared to historical results
8.00
YoY +103%
7.00
6.00
5.00
4.00 YoY +41%
3.00
2.00
1.00
-
FY20 reported FY21 reported FY21 Underlying FY22 Underlying FY22 exit rate
guidance annualised
Group Range
EBITDA
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• 65% reduction in EBITDA driven by (i) one-off costs including unfavourable procurement, bad debts, corporate restructure and capital write-offs; and (ii) March-20 COVID impact driving higher logistic costs and weaker USD

* Projections and estimates are based on information known and available on the date of this presentation and may vary due to factors such as changes in commodity prices and market conditions, effects of the coronavirus pandemic, foreign exchange fluctuations and general economic conditions. Refer to slide 14 for further details.

• FY22 will be a story of two halves. Significant amount of work has been done in H1 to create a success platform for H2, including, but not limited to:

• Completion of new management team, business review and a newly established strategy

• Significant work on machine uptime has increased production capacity

• Securing additional hay press

• FY22 Underlying EBITDA expected to be in the range of $2.85 to $3.50m , underpinned by the following assumptions:

• A minimum capital raise of $5.0m

• JC Tanloden annual production of up to 120,000MT achieved

• Austco Polar remains with Wingara with operations consistent with FY21

• Investment will unlock next level of production taking annualised production potential up to 150,000MT with an annualised EBITDA potential of $5m to $7m .

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JC Tanloden well placed for growth

JC Tanloden is well placed to drive production increases to grow share in its existing markets and to participate in new market development in Asia. Industry consolidation is inevitable and businesses with momentum and access to capital will be well placed

Global market

Australian market

• Global fodder market is 9 million tonnes and growing.

• Largest market is Japan (2mt), though China rapidly approaching. Middle East (Saudi and UAE) also growing rapidly.

• Largest supplier is the US (60%), with Australia and US having freight advantages for North Asia.

• Middle East supplied from more sources (Europe and subcontinent) and accessible for Australian producers only from WA.

• Most global production relies on irrigation. Australia is an exception. This is a key competitive advantage.

Structure

• 16 significant players, the largest with 40% market share. JC Tanloden has 8%

• Many are small, and undiversified: export fodder is typically their primary activity.

• 5 have operations in more than one state (WA, SA & Vic), 9 operate in one state only. All are privately owned (except JC Tanloden)

• • No independent market indicators or pricing reporting

Conduct

• Relationship based: sourcing relies on strong grower relationships and strong understanding of domestic market (which sets export cost price). Selling relies on strong relationships with end users. There are few intermediaries

• Execution capability is critical: export logistics, price risk management

• Producers have competed vigorously but cooperate on export market development (AEXCO) and R&D (Agrifutures)

Performance

• Industry profitability has been strong, buoyed by steady demand growth and resulting in over capacity

• Changes in access to China is a major disruptor and will lead to industry restructuring and is driving attempts to grow markets by increasing share of rations, new markets such as Indonesia, Malaysia and the Middle East

Strictly private & confidential

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Funds raised in August 2020 increased JC Tanloden’s production capacity

Intended use of funds	$m	Actual use of funds	$m
New infrastructure to add 10,000MT of additional storage capacity	1.00	Investment redirected to improving machine availability, supporting higher turnover cycles	0.85
Purchase of additional hay inventory to deliver up to 25,000MT more output in 2021	3.70	Additional hay inventory purchased, albeit at lower quality and higher price. Achieved YoY output increase of c23,600MT	3.70
Cost of offer and working capital	0.30	Cost of offer and working capital	0.45
Total	5.00	Total	5.00

• Increase in JC Tanloden’s production output was within the expected range at the time of the August 2020 capital raise. Funds were redirected to production facilities, rather than storage, to achieve the growth

• Significant one-off costs were incurred to support business restructure following departure of previous CEO

• Includes impacts of adverse hay procurement, bad debts, corporate restructuring and written off capital spend

• Underlying cash generation of the business has been below expectations due to COVID-19 impact on logistics costs and Austco Polar volumes

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Growth capital to unlock JC Tanloden’s next step change in production

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•
In 2020 $5m was invested to
Incremental investment delivering annualised increase annualised
production growth
production capacity by 55%,
160000 in a COVID-19 impacted
economy. This was achieved
140000
•
Current production levels
120000 challenged without additional
Today
FY21-22: Further up to $10.2m
working capital
100000 investment to increase production
potential by up to c.70% • Work over the last 6-8 months
80000 around people restructure,
Aug-20
process improvement and
FY20-21: $5m investment increased
60000
asset care will allow a further
annualised production capacity by 55%
up to $10.2m of growth capital
40000
to further increase annualised
production potential by up to
20000
c.70%
FY19-20: baseline annual production
0
capacity
Time
Annualised production capacity (MT)
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JC Tanloden has significant scope to grow share in a fragmented market

• Australia’s hay exports YTD 20-21 season is 10% higher than the 5-year average

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•
Australia’s hay exports YTD 20-21 season is
Current share of global imports into our markets
Growth capital injection 10% higher than the 5-year average
(China, Japan, Korea, Taiwan)
for organic growth •
JC Tanloden’s share of the Australian export
1.4% market is 8.0%, and in the countries we
currently export to, JC Tanloden represents
15.8% 1.4%
Increase share of
•
Australian export Up to $10.2m growth capital injection to allow
+8pp
market (16%) for material organic growth to c.16% of the
Australian export market, and 2.4% of global
imports in our existing markets.
•
The UAE market, of which JC Tanloden is not
82.9%
Increase share of currently participating, is growing with Australia
global imports into our only representing 0.4% of total imports.
+1pp
existing markets
Wingara Australia World (2.4%)
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• Up to $10.2m growth capital injection to allow for material organic growth to c.16% of the Australian export market, and 2.4% of global imports in our existing markets.

• The UAE market, of which JC Tanloden is not currently participating, is growing with Australia only representing 0.4% of total imports.

Source: Jumbuk, UN Comtrade, internal company analysis

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Three phase growth strategy

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Build an agri-export
platform
Wingara will leverage its
Become a leading
export market and risk
Oaten Hay exporter in
management expertise
Australia
to facilitate trade of
Wingara will seek to primary produce into
Achieve participate in the fodder offshore markets
profitability industry consolidation that is
underway
NPAT growth
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Austco Polar strategic review finalised

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Austco Polar historical performance
4.00
3.00
2.00
1.00
EBITDA
NPAT
-
FY19 reported FY20 reported FY21 reported
(1.00)
(2.00)
(3.00)
In FY20 a sale and lease back arrangement was
entered into for the Laverton property. The
additional expense, coupled with the macro impacts
of COVID and reduced slaughter rates saw operating
performance drop.
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• Austco Polar was purchased in February 2018 for $18.5m ($15.1m for the property and $3.4m for the business)

• On 23 August 2019, Wingara entered into a sale and leaseback agreement for the Laverton site, receiving proceeds of $21m and booked a capital gain of $4.2m

• The leaseback arrangement introduced additional cost into the business, and with the downward macro trend of the meat industry, management commenced a strategic review of the business

• It was concluded that Austco Polar (i) did not provide the synergies previously envisaged; (ii) did not fit into our long-term strategy; (iii) capital is best deployed on JC Tanloden; and (iv) Wingara were not the natural owners for it

• Consequently, the decision has been made to free up capital by exiting the business

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* excludes profit from sale of Laverton

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FY22 strategic focus and outlook

01

Return to core: change in strategic focus to Hay exports

• Carry strong volume run-rates into FY22 with export market demand expected to continue to exceed supply

• Plan to increase production at JC Tanloden well advanced

• Improved Sales and Operations planning processes to drive margin improvement and improve plant reliability

• Market consolidation: continue to assess strategic acquisitions and expand geographical access

• Looking at new export market entries and the addition of other fodder products, new geographies

02 Strategic review for Austco Polar completed

• Challenging industry conditions not expected to abate in the near term

• Whilst retained in the business – focus on managing to break even to minimise cash burn

• The decision has been made to free up capital by exiting the business

03 Build trust and maximise shareholder returns

• Reset Company Culture and Values

• Full year effect of Q4 FY21 cost savings

• Implementation of Lean Program across all business segments; full review to minimise waste and improve cost effectiveness

  • Streamline operational processes

  • Optimise labour force

  • Reduce working capital requirements

  • Improve gross margins

• Sustenance capital to improve plant performance and continue to keep people safe

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Accelerated Non-renounceable Entitlement Offer (ANREO)

Wingara is seeking shareholder support to enable us to continue the growth momentum built up over the last 6 months, pursue our strategy and increase shareholder value.

Capital raising via a non-underwritten ANREO:

Capital raising
Ordinary shares on issue	132,782,273
7:10 Entitlement Offer	92,947,591 entitlements to purchase ordinary share at 11cps 1:1 attaching option, expiring 31 December 2023, strike price of 17c
Total offer funds	$10,224,235

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Up to $10.2m entitlement offer to capitalise on immediate opportunities and set up for growth

Use of funds ($m)	Offer Funds ($m)	Value creation
Investment in current infrastructure	1.6	Improvement in plant uptime and reliability at JC Tanloden resulting in additional capacity of 20,000 – 25,000MT Resulting in 30 – 40% increase on FY21 production.
Purchase of additional hay inventory to match increased machinery uptime	6.9	Purchase of approximately 20,000 to 25,000MT of Oaten hay at new season pricing and funding of increased production costs, capitalising on margin expansions resulting from (i) excess domestic supply; and (ii) increased demand in the Chinese market.
Investment in the operations of an additional hay press	1.0	Additional annualised revenue of c.$3.0m from forecast 30,000MT of increased production (over and above current infrastructure).
Growth capital for inorganic growth	0.5	Due diligence for strategic inorganic opportunities including an acquisition of a complimentary asset in the next 9 – 12 months.
Costs of the Offer	0.2
Total	10.2

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Indicative timetable

Event	Date
Trading halt lifted	1 September 2021
Trading recommences on an ex-entitlement basis	1 September 2021
Record Datefor the Retail Entitlement Offer	5:00pm on 1 September 2021
Settlement of Institutional Entitlement Offer	3 September 2021
Quotation of Shares issued under the Institutional Entitlement Offer	6 September 2021
Prospectus despatched to Shareholders	6 September 2021
Retail Entitlement Offer opens	6 September 2001
Last day to extend Retail Entitlement Offer closing date	13 September 2021
Retail Entitlement Offer closes	15 September 2021
Announcement of results of Retail Entitlement Offer	20 September 2021
Settlement of the Retail Entitlement Offer	21 September 2021
Quotation of Shares issued under the Retail Entitlement Offer	22 September 2021
Expected despatch of holding statements for retail holders	28 September 2021

All dates and times are indicative only and subject to change. Unless otherwise specified, all times and dates refer to Australian Eastern Standard Time (AEST). The Company reserves the right to amend any or all of these dates and times subject to the Corporations Act 2001 (Cth), the ASX Listing Rules, and other applicable laws.

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Disclaimer

This presentation has been prepared by Wingara AG Limited ACN 009 087 469 (‘Wingara’) for professional investors. The information contained in this presentation is for information purposes only and does not constitute an offer to issue, or arrange to issue, securities or other financial products. The information contained in this presentation is not investment or financial product advice and is not intended to be used as the basis for making an investment decision. The presentation has been prepared without taking into account the investment objectives, financial situation or particular need of any particular person.

The issuer and seller of the securities is Wingara AG Limited ACN 009 087 469. A disclosure document for the offer is available on Wingara’s website at https://wingaraag.com.au/investors/. The offers of the securities will be made in, or accompanied by, a copy of the disclosure document. A person should consider the disclosure document in deciding whether to acquire the securities. Anyone who wants to acquire the securities will need to complete the application form that will be in or will accompany the disclosure document.

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 the presentation. To the maximum extent permitted by law, none of Wingara, its directors, employees or agents, nor any other person accepts any liability, including, without limitation, any liability arising out of fault. In particular, no representation or warranty, express or implied is given as to the accuracy, completeness or correctness, likelihood of achievement or reasonableness of any forecasts, prospects or returns contained in this presentation nor is any obligation assumed to update such information. Such forecasts, prospects or returns are by their nature subject to significant uncertainties and contingencies.

Forward looking statements relating to projections and estimates involve known and unknown risks, uncertainties and other factors that may cause the Company’s actual results, performance and achievements to differ materially from any future results, performance or achievements, expressed or implied by these forward-looking statements. Relevant factors may include, but are not limited to, commodity prices and market conditions, effects of the coronavirus pandemic, technical failures and delays, foreign exchange fluctuations and general economic conditions, increased costs, the risk and uncertainties associated with agriculture and the natural environment, political and social risks, changes to the regulatory framework within which the Company operates or may in the future operate, environmental conditions including unusual or extreme weather conditions, retention of personnel, industrial relations issues and litigation.

Before making an investment decision, you should consider, with or without the assistance of a financial adviser, whether an investment is appropriate in light of your particular investment needs, objectives and financial circumstances. Past performance is no guarantee of future performance.

The distribution of this document in jurisdictions outside Australia may be restricted by law. Any recipient of this document outside Australia must seek advice on and observe such restrictions.

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