Director retirement and re-electionBUSINESS UPDATE
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CHAIRMANS ADDRESS
AGENDA ITEM ONE
Consideration of annual financial report, directors report and auditors reportNon voting agenda item
“ That the shareholders receive the Financial Report, the Directors’ Report and the Independent Auditors Report for FY18 ”
RESOLUTION ONE
Approve change of name to Ecofibre LimitedSpecial Resolution
“ That the name of the company be changed from Ecofibre Industries Operations Limited to Ecofibre Limited ”
RESOLUTION TWO Appointment of auditorOrdinary Resolution
“ That pursuant to and in accordance with section 327B of the Corporations Act and for all other purposes, William Buck QLD ABN 21 559 713 106, having been nominated by a shareholder and consented in writing to act in the capacity of auditor, be appointed as auditor of the Company on the terms and conditions in the Explanatory Memorandum ”
RESOLUTION THREE Share split
Special Resolution
“ That, for the purposes of section 254H of the Corporations Act, clause 10 of the Company’s Constitution and for all other purposes, approval is given for the Company to, on the earlier of
(a) ImmediatelypriortotheissueofanyprospectusfortheInitialPublic Offering of the Company’s shares on the ASX; or
(b) 1 July 2019
proportionally reduce (consolidate) or increase (split) the number of shares of the Company on issue, so that the value of each share of the Company, I immediately prior to the issue of the Prospectus, is $1 and otherwise on the terms and conditions set out and in the Explanatory Statement accompanying this Notice of Meeting ”
RESOLUTION FOUR
Retirement and re-election of directorOrdinary Resolution
“ That for the purpose of clause 15.6 of the Company’s Constitution and for all other purposes, Barry Lambert, who retires by rotation as director and being eligible, having offered himself for re-election, is re-elected as director ”
Business UpdateNovember 2018
ERIC WANGManaging Director
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KEY HIGHLIGHTS FROM Q1 FY19
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Revenue growth continues in Q1
US Nutraceuticals - continued success from US Independent pharmacy channel
Expanding product lines to include Pets and Women’s health
Very high quality revenue base
Growing experience providing benefits into future years
No production capacity constraints for the foreseeable future
Still awaiting passage of US Farm Bill
Australian Food – business model maturing
Slowdown in sales from major customer for next six months - focused onacquiring new large white label and Ananda Food clients
Food facility operational with 5 of 6 core processes commissioned
Hemp Black – progressing quickly
Supply chain capability underpins the customers and products we can service
Two supply chain processes ready by December 2018. One by Q3 2019
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GROUP SALESUS Nutraceuticals continues to underpin revenue growth
US NUTRACEUTICALSSales and distribution in place - focus is on growth and serving new segments
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StrategyProductPeople
Ananda Pets launchedRegional sales structure embeddedMajor distributors onboardedAnanda Touch to be launched$5.0m$0.1mMar 17$0.1mJun 17$0.4mSep 17$0.7mDec 17 Nutraceuticals$1.2mMar 18Jun 18Sep 18Dec-18$2.3m.3Ananda Professional launchedDecision to enter US pharmacy marketMedical Director hired1st Pharmacy customerCall center builtFirst salesperson hiredHealth food, grocery, onlineWholesale team formedChief Revenue Officer hiredTincture launchedGel caps launchedTopical line launched[/table]
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US NUTRACEUTICALSAnanda Pets launched at distributor conference in Orlando this month
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US NUTRACEUTICALSIndependent pharmacy underpins a very high quality revenue base
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Ananda Hemp - websiteAnanda Hemp - wholesaleAnanda ProfessionalWhite Label Bulk & Other$0.1m $0.1mMar17 Jun 17$5.0m7%4%6%13%$2.3m$1.2m$0.4m71%Sep17$0.7m5Dec17 NutraceuticalsSep18Mar 18 Jun 18.
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US NUTRACEUTICALSExperience is improving efficiency of our growing operations
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Key points for Harvest year
2015: Initial trial crops following first legal importation of hemp seed into the USA in over 50 years.
US NUTRACEUTICALS – KG OF GREEN MATERIAL PROCESSED Processing capacity will not be a limiting factor for the foreseeable futureLab extension built
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StrategyEquipmentPeople
15,000New machine commissioned that allows full separation of moleculesConstruction of new lab completedLaboratory manager appointedDecision to construct state of the extraction facility382Mar 171,259Jun 171,259Sep 17Dec 17Feedstock Processed (kg)Jun 18Sep 18Dec 18 (estimate)3,1666,1905,8796,082Mar 18No increases in staff or hours workedOperational efficiency focus and commissioning of new distillation equipment completed7[/table]
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ANANDA FOODBusiness model maturing and expanding customer base
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StrategyProductPeople / sales
Newcastleproduction facility openedManaging Director appointedAnanda Food brand launchedDecision to insource productionCommercial crops grown in NSW$0.98mNew major customers coming on board (including Natures Way & Natures Care)Hemp Food legalised in AustraliaDecision to expand grow regionsSupply agreement signed with Integria$0.67mFSANZrecommendslegalization of hemp foodsFirst supply of white label products deliveredHemp oil sales for topical / cosmetic use$0.02mMar 17$0.04mJun 17$0.03mSep 17$0.11mDec 17 Food .$0.30mMar 18Jun-18 Sep 18Dec-188[/table]
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ANANDA FOOD2019 growing dependent on drought conditions in NSW
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Key points per harvest year 2016: Tasmanian crops for topical use.2017: Tasmanian crops increased in anticipation of legalisation of food in Australia.2018: Significant increase in Tasmanian crop (271ha) as food legalized. Began planting in NSW (152ha) to create new growing region.2019: 600 ha of planting underway in Tasmania.NSW areas being confirmed for December and March planting. Total area dependent on drought situation.2,000 ha1,000 ha25 ha111 ha423 ha2016 2017 2018Area harvested (ha)2019 (Planned) Maximum additional9
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HEMP BLACKFirst two patents to be commercialized in 2019
HEMP BLACKSupply chain resolved and clear pathway for capability and investment
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Hemp Black• •Always outsourced Strategic partner - $3m USD placement into Ecofibre• •Fully operational No supply issues• •Outsource partner in placeWill eventually bring capability in house
Outsourced on small commercial scale today
Process being brought in-house
Equipment being commissioned – ready by Q3 2019
Funding in place
11Hemp Black Nano
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HEMP BLACKCommercial focus on specific segments
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Yoga (mats, clothing, equipment, oils and food)
Athleisure and high performance clothing
US Military
Medical and hospital
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TRADING PERFORMANCE & OUTLOOK Performance tailwinds and headwinds
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••Performance against expectationsNutraceuticals profitable & cash positive in 1Q FY19 witha gross margin of 59%.On-trackFood profitable 1H FY19 and positive operating cashflow excludingsignificantincreaseincropping. Newfacilityin place will improved gross margin in 2H FY19.Off-track: Sales momentum and time-to-profitability impacted by slowdown of major client.Operating expenses primarily fixed as at August 2018. Main increases come from variable sales costs and annualised staff costs.On-track•13
