Announcement PDF CAPITAL RAISING PRESENTATION Authorised by the Board on Tuesday, 30 April 2024 and released to ASX on Wednesday, 1 May 2024 1 IMPORTANT NOTICE AND DISCLAIMER NOT FOR RELEASE TO U.S. WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES IMPORTANT: You must read the following before continuing This presentation is dated 30th of April 2024 and has been prepared by Pure Foods Tasmania Limited (ASX:PFT or Company) in connection with PFT proposed equity raising of new ordinary shares in PFT (New Shares). The raising comprises an offer of New Shares to eligible shareholders under a rights issue in accordance with ASIC Corporations under section 708AA as modified by ASIC Corporations (non-Traditional Rights Issues) Instrument 2016/84. The Presentation provides a general overview of the Company and its strategy, which is current as at the date of this presentation. By receiving this presentation, you are agreeing to the following restrictions and limitations. Summary Information This presentation does not purport to be all-inclusive or to contain all the information that you or any other party may require to evaluate the prospects of the Company. This presentation has been prepared with due care but no representation or warranty, express or implied, is made with respect to the accuracy, reliability or completeness of the information contained in this presentation. Statements in this presentation are made only as of the date of this presentation unless otherwise stated and the information in this presentation remains subject to change without notice. PFT is not responsible for updating, nor undertakes to update, this presentation. The information in this presentation should be read in conjunction with PFT's other periodic and continuous disclosure announcements lodged with the Australian Securities Exchange (ASX), which are available at www.asx.com.au. To the fullest extent permitted by law, the Company and advisers make no representation or warranty (express or implied) as to the currency, accuracy, reliability, reasonableness or completeness of the information in this presentation and expressly disclaim all responsibility and liability for any loss or damage arising in respect of your reliance on the information contained in this presentation (including your reliance on the accuracy, completeness or reliability of that information), or any errors in or omissions from this presentation, including any liability arising from negligence. Forward-looking Statements This presentation contains "forward-looking information" that is based on the Company's expectations, estimates and projections as of the date on which the statements were made. This forward-looking information includes, among other things, the Company’s business strategy, plan, development, objectives, performance, outlook, growth, cash flow, projections, targets and expectations, and prospects of the Company. Generally, this forward-looking information can be identified by the use of forward-looking terminology such as 'outlook', 'anticipate', 'project', 'target', 'likely',' believe', 'estimate', 'expect', 'intend', 'may', 'would', 'could', 'should', 'scheduled', 'will', 'plan', 'forecast', 'evolve' and similar expressions. Persons reading this presentation are cautioned that such statements are only predictions, and that the Company's actual future results or performance may be materially different. Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the Company's actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information. Forward-looking information is developed based on assumptions about such risks, uncertainties and other factors set out herein, including but not limited to general business, economic, competitive, political and social uncertainties; changes in the Company as plans continue to be refined; seasonal and environmental conditions and supply chain security. This list is not exhaustive of the factors that may affect our forward-looking information. These and other factors should be considered carefully, and readers should not place undue reliance on such forward-looking information. The Company disclaims any intent or obligations to or revise any forward-looking statements whether as a result of new information, estimates, or options, future events or results or otherwise, unless required to do so by law. 2 IMPORTANT NOTICE AND DISCLAIMER (cont) No representation or warranty is given, and nothing in this presentation or any other information made available by the Company, or any other party should be relied upon as a promise or representation, as to the future condition of the respective businesses and operations of the Company. Past Performance Past performance information given in this presentation is given for illustrative purposes only and should not be relied upon as (and is not) an indication of future performance. Financial Data Unless otherwise stated, all cashflows are in Australian dollars, are undiscounted and are in real terms (not subject to inflation/escalation factors), and all Company references starting with "FY" refer to the financial year for the Company, ending 30 June. Not An Offer This presentation is for information purposes only and is not a prospectus, disclosure document, product disclosure statement or other offering document under Australian law or any other law (and will not be lodged with the Australian Securities and Investments Commission (ASIC)). This presentation is not and should not be considered an offer or an invitation to subscribe for or acquire securities or any other financial products. The rights issue will only be made available to eligible securityholders and will be conducted in accordance with section 708AA of the Corporations Act. Not Financial Product Advice This presentation is not an offer or an invitation to acquire New Shares of the Company, does not constitute investment or financial product advice (nor tax, accounting or legal advice) or any recommendation to acquire New Shares in the United States or in any other jurisdiction where it would be illegal. This presentation has been prepared without taking into account the specific objectives, financial situation or needs of individual investors. Before making an investment decision, prospective investors should consider the appropriateness of the information having regard to their own objectives, financial situation and needs and seek appropriate advice, including financial, legal and taxation advice appropriate to their jurisdiction and circumstances. PFT is not licensed to provide financial product advice in respect of its securities. Cooling off rights do not apply to the acquisition of New Shares. Foreign Selling Restrictions This presentation has been prepared for publication in Australia and may not be released to US wire services or distributed in the United States. This presentation does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United States or any other jurisdiction. Any securities described in this presentation have not been, and will not be, registered under the US Securities Act of 1933 ("US Securities Act") and may not be offered or sold in the United States except in transactions exempt from, or not subject to, the registration requirements of the US Securities Act and applicable US state securities laws. The distribution of this presentation in the United States and elsewhere outside Australia may be restricted by law. Persons who come into possession of this presentation should observe any such restrictions as any non- compliance could contravene applicable securities laws. Please refer to the section of this presentation headed "Foreign Selling Restrictions" for more information. By accessing this presentation, you represent and warrant that you are entitled to receive such presentation in accordance with these restrictions and agree to be bound by the limitations contemplated by them. 3 IMPORTANT NOTICE AND DISCLAIMER (cont) Investment risk and other risks An investment in New Shares is subject to investment and other known and unknown risks, some of which are beyond the control of PFT and its Directors, including possible loss of income and principal invested. PFT does not guarantee any particular rate of return or the performance of PFT nor does it guarantee any particular tax treatment. Investors should have regard to the "Key Risks" section of this presentation when making their investment decision. These risks, together with other general risks applicable to all investments in listed securities not specifically referred to, may affect the value of shares in PFT (including New Shares) in the future. There is no guarantee that the New Shares will make a return on the capital invested or that there will be an increase in the value of the New Shares in the future. Disclaimer No party other than PFT has authorised, permitted or caused the issue, submission, despatch or provision of this presentation or makes or purports to make any statement in this presentation. While the information in this presentation has been prepared in good faith, no representation or warranty, express or implied, is made as to the fairness, currency, accuracy, reliability or completeness of information in this presentation or any constituent or associated presentation, information or material, or the accuracy, likelihood of achievement or reasonableness of any forecasts, prospects or returns contained in, implied by, the information in this presentation or any part of it, or that this presentation contains all material information about PFT, the Offer or that a prospective investor or purchaser may require in evaluating a possible investment in PFT or acquisition of New Shares. 4 CAPITAL RAISING PFT is undertaking an equity raise via a rights issue to raise approximately $2.2 million at the Offer Price of $0.04 (‘Entitlement Offer’) assuming all rights taken up. PFT current ordinary shares on issue is 110,294,712 and there are an additional 10,166,670 Options with 6,666,670 options having an exercise price of $0.10 and 3,500,000 options having an issue price of $0.059. Assuming the Options are exercised, the shares on issue would be 120,461,382. The Entitlement Offer would add 55,147,356 New Shares assuming all shareholders take up their pro rata entitlement in the Entitlement Offer or shortfall taken up. The Company has received firm commitments from several shareholders of $500,000 including the three Directors. Today’s raising will allow PFT to continue growth in organic sales, improve operating efficiencies and capacity, secure key assets and exploit new product expansion opportunities. It will also provide funding for due diligence in relation to potential acquisitions and associated costs. 5 FOR PERSONAL USE ONLY 1. Pure Foods Tasmania Overview 6 PURE FOODS TASMANIA OVERVIEW PFT was formed in 2015 with the aim to enhance and promote Tasmania’s food businesses. PFT’s strategy is to develop new products within its existing brands and in the plant-based food market, to acquire complementary brands and businesses and to increase its market penetration and distribution for its suite of brands and products globally. Since establishment, PFT has become a Tasmanian hub of premium foods. The Company has developed a number of its own brands both organically and through acquisition. PFT has created a broad distribution network, domestically and via export, with strategic partnerships. 7 PURE FOODS TASMANIA STRATEGY PFT’s business strategy has had several iterations including a strong growth focus which entailed: • developing and launching new products; and • acquisitions, which included Daly, Lauds and Cashew Creamery. The current focus, however, is more aligned with tight capital management. We continue to review products and businesses with a focus on ensuring capital is deployed optimally and prospects support ongoing investments and resources. The recent decision to sell Lauds Plant Based Foods was taken with the resolve that the capital and resources could be better deployed in other parts of the business. The Company has reduced SKU’s that are unprofitable whilst it investigates further automation. We have continued to cut costs with an emphasis on margin accretion and cash retention. Notably, the Company’s wages bill has been reduced by over $52,000 per month and currently is 30% below the peak cost in December last year. 8 PURE FOODS TASMANIA STRATEGY contd. PFT has also had productive discussions with our major customers, and they remain very supportive. The Company has long identified that it must increase revenue several fold to remain viable and that strategy has never wavered, and continues to consult with and review potential acquisition/merger targets. There are several businesses that have been identified which are both transformative and complementary to the current business mix and offer a national footprint that could substantially increase revenue. Discussions with one opportunity is advanced and the Company has completed its initial due diligence. 9 FINANCIAL COMMENTARY Q3 FY24 Pure Food Tasmania’s YTD performance is reflective of the initiatives the Company introduced at the beginning of this calendar year and referenced in our 1H24 results. Recapping: • The Group’s focus in 1H FY24 was on supporting unprecedented demand for its high-quality products, specifically with its Daly frozen ready to eat meal tray range, launched into Woolworths; • Revenue in that period, however, was disappointing in the wake of record demand for the range of newly released products; • This was due to a number of factors including constraints on capacity utilisation and misalignment and lack of flexibility of plant and equipment to meet the quantum and pace of orders received from our major customers; • The substantial increase in production manufacturing costs, labour and freight experienced in that period, was directly attributable to the Group’s unsuccessful attempt to meet these orders and continued product sealing issues experienced with our Multivac machine within Tasmanian Pate. From late December and ongoing, and as noted earlier, the focus has been on: • Dropping SKU’s that were unprofitable or the Company lacked capacity to meet demand; • Reducing labour costs; • Experimenting with different sealing materials for the Multivac machine to redress sealing issues; and • Reviewing the prospects of each business in the light of scale, flexibility and potential ROI if capital is deployed. 10 FINANCIAL HIGHLIGHTS Q4 FY24 (unaudited) Pure Food Tasmania’s YTD FY 24 gross revenue was $6.9 million at the end of March which is on par with the pcp: • Tasmanian Pate sales were $3 million up to the end of March YTD and remains the largest contributor to revenue. This growth has been assisted by Homestead Pate, which was launched in FY22. In April we secured price increases across all sales channels for Tas Pate and Daly salads; • PFT continues to work though commissioning of the Multivac sealing machine. While PFT has introduced a workaround solution the performance of the machine is far from optimal. PFT is in discussions with Multivac in relation to the unsatisfactory performance and the additional costs and production delays incurred; • Daly Potato Co maintained its strong sales momentum: $2.7 million and up 30% YTD in FY24 vs FY23. This growth was driven by Daly frozen range, however as noted earlier and in previous press releases, this growth cannot be sustained as we currently do not have the capacity to maintain production at an attractive margin unless we continue to use high cost (and inefficient) labour; • Significantly, the Company meeting the backlog of Day frozen orders in Jan/Feb 24 required many overtime hours which adversely affected our cash position; • That said, Woolworths has extended the distribution of our Bacon & Dijon 400gm salads into Queensland and this is the first time Daly salads have been ranged in Queensland (with approx. 180 stores). 11 FINANCIAL HIGHLIGHTS Q4 FY24 (unaudited) contd. • Woodbridge Smokehouse revenue was $800k down from $1.2 million pcp. The reduction in revenue was by design as we pulled back from non-profitable export markets, as the price of HOG (raw fish) increased by 45% in Q3. Historically HOG prices reduce in the back end of Q4; • PFT has increased Woodbridge prices to reflect the higher HOG prices, and this has unfortunately adversely affected domestic market sales; • The Cashew Creamery plant-based ice cream has had a slower Q3 than pcp. Our firm view, however, is that this Brand has substantial potential to become the market leader in plant-based ice cream. It is unique and one of the only few products using cashews as its base ingredient. In March 24, PFT launched new varieties of 1lt Tubs. These have been very well accepted and are now distributed into IGA stores nationally; • PFT has also developed a range of new ice cream products for a major national retail customer which the Company will present in Q4 FY24. This initiative will support revenue growth for Cashew Creamery as the Company moves towards FY 25. Pure Foods Tasmania’s strong customer base continues to increase with a further 38% increase in active customers in FY24. 12 DALY POTATO CO UPDATE NEW “HEAT & EAT” FROZEN DALY BAKE RANGE • Re Launching August 2024; • "Heat & Eat” frozen vegetable range – capturing a new market; • Consumers are demanding convenience, but currently there is no offering for the top tier premium consumers; • Packaging in box will make product stand out in current freezer market of bags; • Conveniently heated in the oven, microwave or air fryer. 13 “The Cashew Creamery is a first of its kind for the Australian market due to its base ingredient of cashews. The vegan ice cream market is dominated by coconut-based products and cashew-based ice creams offer an alternative and superior taste product.” Michael Cooper, Managing Director 14 New 1 Litre Tub Range "Our relationship with IGA stores has seen PFT secure an additional 1,500 outlets across Australia for our Woodbridge Smokehouse business." Michael Cooper, Managing Director 16 PFT'S CUSTOMER BASE CONTINUES TO GROW ACROSS ALL CHANNELS PERIOD DISTRIBUTION POINTS Q1 FY 21 650 Q3 FY 22 1,000 Q3 FY 23 2,100 Q3 FY 24 3,500 17 FOR PERSONAL USE ONLY 2. Capital Raising Funds Usage 18 USAGE OF FUNDS The Entitlement Offer will allow PFT to continue growth via acquisition and organic sales, improve operating efficiencies and capacity, and exploit new product expansion opportunities. It will also provide funding for ongoing due diligence costs associated with potential acquisition targets. 1. Accelerating Growth • • • Support further acquisitions Support continued organic growth in base business Drive marketing initiatives to advance new and existing products. • • • Investment in automation for margin and capacity in Tasmanian Pate & Daly Potato Co. Develop scalable brands - continue focus on profitable products aligning with current production capacity Ongoing Factory consolidation across three facilities to improve efficiencies. • • • Invest in new sales channels New product development across Tas Pate and Daly Potato New by-product for Woodbridge Smokehouse to improve yield. 2. Driving Production Efficiencies 3. Product Expansion Opportunities 19 USAGE OF FUNDS – GROWTH INITIATIVES 1. Accelerating Growth • Support DD for acquisitions (~$0.20m – FY24 /FY25). The Company has completed its initial DD on one target and discussions with our advisers are ongoing; • Marketing/branding (~$0.20m – FY24/FY25); • Working capital and new product development (~$0.50m – FY23/FY24). 2. Driving Production Efficiencies • Tasmanian Pate – replace old generation filling equipment to increase capacity via (~$0.80m – FY24); • To support Daly Potato new product development, which involves a new packaging format (a first for Daly) and will open up new sales opportunities; launching Q4 FY24 . • 3. Debt reduction • Pay down AMAL short term debt facility (~ $0.50m) PFT allocation of funds will be subject to the level of participation of eligible shareholders in the Entitlement Offer and the allocation of any shortfall. 20 USAGE OF FUNDS – contd. 1. Accelerating Growth • Potato & Gravy – pivot and relaunch into chilled space: • Instore cooking of the Company’s “Hot Box” product became a challenge for retail staff to manage; • Retailers pushed waste/markdowns onto PFT which was not sustainable; • The pivot is to relocate to chilled section with ready to eat meals (heat at home); • It will be in the same unique packaging and can be heated at home; • Chilled shelf life is 28 days from production, so works well in supply chain which is critical. • PFT is confident this will improve customer experience which will provide a significant uplift in sales. 21 USAGE OF FUNDS – contd. 2. Driving Production Efficiencies • PFT will continue to look for revenue opportunities - the challenge is to maintain effective and efficient sustainable products that can be produced within PFT’s capability; • PFT has been partnering and working with key packaging and equipment suppliers to deliver on: • Increased capacity and automation at Daly Potato; • Increased capacity and automation at Tasmanian Pate along with improving quality and yields. • The outcome of these projects is to improve margins through automation, yields, quality and increase capacity. 22 FOR PERSONAL USE ONLY 3. Capital Raising Details 23 CAPITAL RAISING DETAILS Items Details Entitlement Offer A non-underwritten and non renounceable rights issue will be undertaken to allow eligible Australian and New Zealand shareholders to acquire New Shares at a ratio of 1 New Share for every 2 shares held Pricing The Entitlement Offer will be offered at $0.04 per share (‘Offer Price’), representing a 14.9% discount to the closing price of $0.047 per share on 29th April 2024. Ranking of New Shares New Shares issued under the Entitlement Offer will rank equally with existing fully paid ordinary shares in PFT 24 SOURCES AND USE OF FUNDS $M Rights Issue (assuming 100% participation*) $2.2 million Transaction Costs Legal Fees ASX Fees Automic Registry Fees $0.05 million Growth initiatives Accelerating Production Driving Production Efficiencies Product Expansion Opportunities $1.70 million *Assuming all shareholders take up their pro rata entitlement in the Entitlement Offer or all shortfall shares taken up. 25 Set out in the table is the Company’s (i) statement of financial position as at 31 December 2023 (audited); and (ii) pro forma statement of financial position as at 31 December 2023 (unaudited) giving effect to the Rights Issue as through the Right Issue 1 Pro forma Balance Sheet had occurred as at 31 December 2023 (Pro Forma Balance Sheet). $m 31 Dec 23 Adjustments2 2.20 Pro Forma Cash and cash equivalents 3.49 Other current assets 3.51 - 3.51 Total Current Assets 7.00 2.20 9.20 - 5.69 Total Non-current Assets 13.23 Total Assets 20.23 2.20 22.43 Total Current Liabilities 5.62 - 5.62 - 13.23 Total Non-current Liabilities 4.03 4.03 Total Liabilities 9.65 - 9.65 Net Assets 10.58 2.20 12.78 The Pro Forma Balance Sheet is presented in abbreviated form and does not contain all of the disclosures that are usually provided in the Company’s annual report (Annual Report) (which is prepared in accordance with the accounting standards) and cannot be expedited to provide as fill an understanding of the Company’s financial position as a statement of financial position in the Annual Report. The Pro Forma Balance Sheet is indicative only and is not intended to be a statement of the Company’s current financial position. The financial information “as at” 31 December 2023 is from PFT’s audited half yearly financial statements lodged with the ASX on 26th February 2024. The Pro Forma balance sheet has not been audited, has been prepared for illustrative purposes only and gives effect to the Rights Issue as if it had occurred on 31 December 2023. 1 31 December 2023 Audited Balance Sheet; 2 Pre costs of the Offer TIMETABLE Event Date Entitlement Offer Announcement of Entitlement Offer Record date of determining eligibility for Entitlement Wednesday 1 May 2024 7pm Monday 6 May 2024 Despatch of Entitlement Booklet and Entitlement opens Tuesday 7 May 2024 Entitlement closes Tuesday 28 May 2024 Offer of shortfall of rights issue to certain institutional and professional shareholders Thursday 30 May 2024 Settlement of Entitlement Shares and lodgement of Appendix 2A for Entitlement Shares Friday 31 May 2024 Allotment of New Shares under the Entitlement Offer Monday 3 June 2024 27 FOR PERSONAL USE ONLY Key Risks 28 Key Risks Reduction in demand for existing product ranges There is a risk that a change in economic conditions could cause consumers to reduce their consumption of PFT products as they "trade down" to cheaper sources of food. Changes in consumer dietary preferences or sentiment towards Tasmanian foods could also result in lower demand for PFT products. Such lower demand could reduce the price at which the Company is able to sell its products, resulting in an adverse effect on the Company's financial performance. A high proportion of the Company's sales are also based in Australia at present. If the Australian economy suffers from a downturn, then it is likely that the Company's future sales could be adversely affected. Food safety and sanitation As with all food producers, the Company is exposed to the risk of product contamination and product recalls. There is also a risk that the product could cause a serious food poisoning incident as a result of an operational lapse in food safety or sanitation procedures or malicious tampering. The occurrence of a serious food poisoning incident could have significant consequences for the Company and may involve: • a loss of consumer trust in the Company that may result in reduced revenues; • an increase in expenditure on advertising to attempt to restore consumer trust in the brand; • the processing facilities of the Company being partially or wholly closed while the relevant food safety authorities satisfy themselves that the underlying issue has been resolved satisfactorily; and • payment to affected consumers of some form of compensation and to the relevant food authorities of some form of penalty or fine. There is also the risk that actions of the Company's wholesale customers or distributors could compromise the hygiene and safety of the Company products after they have left the Company's processing facility. Contamination caused by a wholesale customer or distributor may result in the closure of the Company facilities or require a fine/compensation to be paid by the Company, however, the potential for brand damage to the Company remains in any case. Environmental regulations and obtaining and maintaining licenses National and local environmental laws and regulations affect nearly all of the Company's operations. Whilst the Company endeavours to ensure that its operations and activities comply with applicable environmental laws, there is a risk that failure to comply with such laws could occur, which may result in penalties, damages and/or loss of permits or licences required by the Company to operate its processing facilities. In addition, the Company must renew the appropriate permits and licences required to operate its business. The Company is subject to regular inspections, examinations and audits by governmental authorities to renew the various licences and permits. The Company is also subject to periodic and spot inspections conducted by government authorities in order to maintain its operating licences. If serious or repeated findings of non-compliance did occur, there is a risk this would have a negative impact on the Company's ability to renew its licences and have a materially adverse impact on its business operations and financial performance, particularly if operations need to be halted whilst regulatory concerns are addressed. 29 Key Risks (continued) Risk that the Company's growth plans cannot be affected The Company has growth plans in order to expand production beyond the Company's current capacity. However, as with any growth plans, there are risks associated with the execution of these plans which may materially impact the Company's earnings, such as but not limited to meeting project timelines, unforeseen increases to costs, labour disputes, availability of capital and equipment and acquiring necessary government approvals. Energy and raw material prices Electricity and raw material prices are material operating expenses for the Company. There is a risk that there could be significant increases to energy and raw material prices. Such increases could significantly increase the Company's cost of operations and have a material adverse effect on the Company's financial performance. Further, any material disruptions in the supply of energy or raw materials to the Company, and the Company being unable to source alternative supplies on similar terms or at all, could have a material adverse effect on the Company's operations and financial performance. Operating risk The operations of the Company may be affected by various factors, including operational and technical difficulties encountered in food production, difficulties in commissioning and operating plant and equipment, mechanical failure or plant breakdown, adverse weather conditions, industrial and environmental accidents, industrial disputes and unexpected shortages or increases in the costs of consu