Nigel Garrard Rob Blackwell Managing Director Commercial Director 13 October 2005 1 October 2005 Agenda Heal He Heal He He He Heal Heal althy althy althy althy Active Active Ac Ac Ac Active Ac Active Liv Living Living Liv Liv Liv Living Living Nigel Garrard � Overview of business � Fruit supply, working capital and seasonality � Key business drivers � Outlook for growth Rob Blackwell � Customer service focus � Product and packaging innovation � Channel/distribution expansion SP SPC A SPC A SP C Ardm C Ardm dmon dmon ona - ona - Heal Healthy, Ac Heal Healthy, Ac , Active, L , Active, L tive, Livin tive, Livin ving ving 2 2 1
SPC Ardmona – The History Heal Heal He He althy althy He Heal He Heal althy althy Ac Ac Active Active Active Ac Ac Active Liv Living Liv Living Living Liv Living Liv SPC • Established 1918 as a co-operative • “Public float” of SPC Limited in 1993 • Capital restructuring in April 2001 • 6,400 shareholders, 34% grower controlled Ardmona • Established 1921 as a co-operative • Grower owned public unlisted company • Approx 400 member shareholders Merged in January 2002 as SPC Ardmona SP SP SPC A SPC A C Ardm C Ardm dmon dmon ona - ona - Heal Healthy, Ac Heal Healthy, Ac , Active, L , Active, L tive, Livin tive, Livin ving ving 3 3 International Expansion He Heal He Heal Heal Heal He He althy althy althy althy Active Active Ac Active Ac Ac Ac Active Liv Living Liv Living Living Liv Living Liv • Established plant in Spain in 2004 to sell “Fridge Pack” into UK • Avoids duty into UK, closer to market, etc • Our equipment and IP into JV partner’s factory leverages return on reduced capex and helps avoid risk of operating in foreign country • Similar platform to tropical fruit based operation in Thailand (established 1999) • After slow start, now operating well from both a manufacturing and sales perspective SPC A SP SPC A SP C Ardm C Ardm dmon dmon ona - ona - Heal Heal Healthy, Ac Healthy, Ac , Active, L , Active, L tive, Livin tive, Livin ving ving 4 4 2
Domestic Expansion Heal Heal He He althy althy Heal He He Heal althy althy Ac Active Active Ac Active Active Ac Ac Living Liv Liv Living Liv Living Liv Living • Henry Jones IXL business acquired in 2004 • Manufacturing base is at Kyabram, 30km from Shepparton • Market leader in fruit spreads with IXL, Allowrie and Glen Ewin brands as well as positions in snacks under IXL. • Taylor’s gourmet sauces and marinades SPCA business has a track record of sustainable growth over 10+ years SP SPC A SP SPC A C Ardm C Ardm dmon dmon ona - ona - Heal Healthy, Ac Heal Healthy, Ac , Active, L , Active, L tive, Livin tive, Livin ving ving 5 5 Sales Revenue Mix He Heal He Heal He Heal He Heal althy althy althy althy Ac Ac Active Active Active Ac Ac Active Liv Living Living Liv Liv Living Living Liv Other 3.2% Food Export Service Industrial 23.1% 12.3% 3.4% Private Label 8% Retail Branded 50% SP SP SPC A SPC A C Ardm C Ardm dmon dmon ona - ona - Heal Healthy, Ac Heal Healthy, Ac , Active, L , Active, L tive, Livin tive, Livin ving ving 6 6 3
Product Channel Mix He Heal He Heal althy althy Heal He Heal He althy althy Active Ac Active Ac Active Active Ac Ac Living Liv Living Living Liv Liv Liv Living Other 17.7% Canned Spreads Fruit 7% 35.4% Baked Beans & Spaghetti 10.8% Fruit Tomatoes Snacks 11.2% 17.9% SPC A SP SP SPC A C Ardm C Ardm dmon dmon ona - ona - Heal Heal Healthy, Ac Healthy, Ac , Active, L , Active, L tive, Livin tive, Livin ving ving 7 7 Strong Market Positions He He Heal Heal Heal He He Heal althy althy althy althy Ac Active Ac Active Ac Active Ac Active Living Liv Liv Living Living Liv Liv Living SPC Ardmona SPC Ardmona Australian Market Market Position Shares 65% 1 Canned Fruit Fruit Snacks 90% 1 Spreads 29% 1 Tinned Tomatoes 32% 1 26% 2 Baked Beans & Spaghetti (September 2005) SPC A SP SP SPC A C Ardm C Ardm dmon dmon ona - ona - Heal Heal Healthy, Ac Healthy, Ac , Active, L , Active, L tive, Livin tive, Livin ving ving 8 8 4
NPD has driven growth Heal He He Heal althy althy He Heal He Heal althy althy Ac Active Ac Active Ac Active Ac Active Living Liv Living Liv Living Liv Liv Living • Example – Fruit Category – Developed “Fridge Pack” for fruit category World First – Accessed snack and breakfast market, expanding usage – 0 � 22% category share in 3 years – Drove category growth – Achieved premium pricing SP SPC A SP SPC A C Ardm C Ardm dmon dmon ona - ona - Heal Healthy, Ac Heal Healthy, Ac , Active, L , Active, L tive, Livin tive, Livin ving ving 9 9 NPD has driven growth Heal He He Heal Heal He He Heal althy althy althy althy Active Ac Active Active Ac Active Ac Ac Living Liv Liv Living Living Liv Liv Living • Example – Tomato Category – Historically “low interest” category with little innovation – Consumer research said often used in conjunction with tomato paste – Combine together and add flavourings � value added and differentiated product – Priced at a premium – Cut through relatively low cost advertising campaign SP SPC A SP SPC A C Ardm C Ardm dmon dmon ona - ona - Heal Healthy, Ac Heal Healthy, Ac , Active, L , Active, L tive, Livin tive, Livin ving ving 10 10 5
“Rich and Thick” Advertising Campaign Heal He He Heal althy althy Heal He He Heal althy althy Ac Active Active Active Ac Active Ac Ac Living Liv Living Living Liv Living Liv Liv SP SP SPC A SPC A C Ardm C Ardm dmon dmon ona - ona - Heal Healthy, Ac Heal Healthy, Ac , Active, L , Active, L tive, Livin tive, Livin ving ving 11 11 Product mix to optimise manufacturing seasonality Heal He Heal He He Heal Heal He althy althy althy althy Ac Ac Active Ac Active Active Ac Active Liv Living Liv Living Living Liv Living Liv Factory scheduling * Pears * Tomatoes Beetroot * Peaches Baked Beans and Spaghetti Juice/Paste Production Spreads/Simmer Sauces/Marinades * Apples Apricots Cherries Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec * Equivalent to 65% of sales SPC A SP SPC A SP C Ardm C Ardm dmon dmon ona - ona - Heal Healthy, Ac Heal Healthy, Ac , Active, L , Active, L tive, Livin tive, Livin ving ving 12 12 6
Working Capital Seasonality – peaks in H1 He Heal He Heal althy althy Heal He He Heal althy althy Active Ac Ac Ac Active Ac Active Active Living Liv Living Living Liv Living Liv Liv 300 250 Net Debt ($m) 200 150 100 2004 50 2005 - Forecast Jan Jun Dec SPC A SP SP SPC A C Ardm C Ardm dmon dmon ona - ona - Heal Healthy, Ac Heal Healthy, Ac , Active, L , Active, L tive, Livin tive, Livin ving ving 13 13 Outlook for Growth He Heal He Heal Heal He Heal He althy althy althy althy Ac Active Active Active Ac Active Ac Ac Liv Liv Living Living Living Living Liv Liv Core business drivers: 1. Supply chain improvements 2. Customer service improvement 3. New product development 4. Product and package innovation 5. New channel opportunities SP SPC A SP SPC A C Ardm C Ardm dmon dmon ona - ona - Heal Healthy, Ac Heal Healthy, Ac , Active, L , Active, L tive, Livin tive, Livin ving ving 14 14 7
1. Supply Chain Improvements Heal He He Heal althy althy He Heal He Heal althy althy Ac Active Ac Active Ac Active Ac Active Living Liv Living Liv Living Liv Liv Living • Strong support from CCA Board with commitment to capital expenditure of $115 million over next 3 years • $15 million to new warehouse distribution centre in Goulburn Valley – Reduces warehouses from 13 to 4 – Takes cost/duplication out of system – Improves customer service – Expected completion early 2007 SP SPC A SP SPC A C Ardm C Ardm dmon dmon ona - ona - Heal Healthy, Ac Heal Healthy, Ac , Active, L , Active, L tive, Livin tive, Livin ving ving 15 15 1. Supply Chain Improvements Heal He He Heal Heal He He Heal althy althy althy althy Active Ac Active Active Ac Active Ac Ac Living Liv Liv Living Living Liv Liv Living • $100 million accelerated program over next 3 years with key areas including: – Upgrading of quality processes – Automation and expansion of Fridge Pack processing to both increase capacity and reduce cost – Optical sorting of fruit to improve quality consistency and reduce labour costs – Automation/mechanisation projects across all areas SP SPC A SP SPC A C Ardm C Ardm dmon dmon ona - ona - Heal Healthy, Ac Heal Healthy, Ac , Active, L , Active, L tive, Livin tive, Livin ving ving 16 16 8
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