Ann: Major Goat Milk Supply Agreement, page-2

MAJORGOAT MILK SUPPLY AGREEMENTINCREASESORIGINATION CAPACITYBY 48%BY 2020

•Access to 5,200 additional milking goats•5+5 year agreementwith fixed annual average milk price

•Minimum supply volume: 2.2m litres Jan-May 2019;6.2m litres Y2destined for CapriLac®

•Enables Bubs®to become world-first 100% Australian-sourced goat milk infant formula

Sydney 21December 2018:Bubs AustraliaLimited (ASX: BUB)announces it has secured additional goat milk supply with Central Dairy Goats Ltd, representing an establishedgroup of goat dairy farmerson the North Island of New Zealand. The agreement guarantees a minimum supplyvolume of2.2millionlitres through to May 2019, and 6.2millionlitres forthe followingyear, with both parties keen to grow beyond thesevolumesin succeedingyears.The agreement runs for 5years, with a further term of an additional5years.Mrs Kristy Carr, Bubs Australia Founder and Chief Executive said: “This new partnership provides Bubs Australia guaranteed access to anadditionalmilk pool in excess of 6 million litres of premium New Zealandgoat milkper annumfor our CapriLac range of adult milk powders, which will enable Bubs infant formula to be made entirely with Australian goat milk; a world first.“The agreement,together with our existingexclusive sources, means we have now secured access to the milk supply from 30,000 goats across Australia and New Zealand,producing circa 20 million litres of fresh goat’s milk, allowing us to fulfill our increasing growth trajectoryand further reinforcing ourfarm gateto finished product provenance story,”Mrs Carr said.Tony Parlato, spokesperson for the farmers’ trading entity, Central Dairy Goats Ltd said: “This is a fantastic opportunity for our partner farmers to benefit from the growing appetite for goat dairyproductsacross Australasia and in Asia, China in particular.“New Zealand, like Australia,has a trusted reputation for product purity and quality control standards. Likewise,Bubs has an enviable reputation and we are proud to be part of the Bubs family of suppliers,”Mr Parlato said.The contract includes various risk mitigation measures; provisionsto vary offtake and resell additional supply; pricing regime; compliancewith the risk management provisions of the New Zealand Animal Products Act 1999; 12 month notice of termination by either party; and maintenance of comprehensivequality control and provenance, as well astraceability records for all product supplied to BubsAustralia.The milk will be processed to powder at a New Zealand facility ready for further processing in Australia to produce CapriLac®products. This allows for the existing Australian milk supply to be leveraged in the production of Bubs®goat milk infant formula, making it the first infant formula in the world to be based on Australian goat milk