#1bübs FY19 ANNUAL RESULTS 30 August 2019 personal use only SCALABLE GROWTH ASX: BUB Bubs Australia#2For personal use only TABLE OF CONTENTS 01 FINANCIAL RESULTS 02 STRATEGIC PROGRESS 03 | VERTICAL INTEGRATION 04 | KEY PARTNERS 05 | SCALABLE GROWTH 12#3bubs 3 GOAT toddler mi!! Premia gest 12-36 For person 3 Goodness hubs Very Best Creating new generations of happy, healthy bubs Honesty Playfulness bobs 3 GOAT bübs Organic Garry's Banan Bircher Moes#4For personal use only 4 A PERIOD OF SCALABLE GROWTH bubs FY19 FOUNDATIONS FOR SUSTAINABLE GROWTH + Enhanced vertical integration and increased milk pool to meet growing demand. + Advanced China expansion strategy via channel development and key partnerships. + Extended infant nutritionals product portfolio into new segments and life stages. FY20 PROFITABLE SCALABLE GROWTH تھا + Build BubsⓇ brand equity to materially grow market share in Australia and China. + Leverage key strategic partnerships to generate rapid sales growth. + Product innovation in infant nutritionals and new market segments in goat dairy. + Expansion into selective new markets in Southeast Asia. + Optimise end-to-end supply chain, product and channel mix to improve margins.#5For personal use only 01 FINANCIAL RESULTS bobs bübs. othy Rusks Organic Toothy Toothy Rusks bobs. Organic 6m+ Apple & Barley Malt by be bubs Organic 104 Baby Ancient Gran Porridge GODS Organic Blueberry, Banana & Quinoa bubs 4 Pear& White Organic Grap ps rganic b Sunec Congee Grains#66 r personal use only FINANCIAL HIGHLIGHTS Record Growth Year FY19 results are characterised by our exceptional revenue trajectory. The Company has continued to focus on building scale through channel development, gross margin improvements and further enhancing the integration of our supply chain. $46.8m FY19 Gross Revenue Up 154% pcp +153% Domestic Net Revenue Growth Up (pcp) +209% China Net Revenue Growth Up (pcp) Improved Margins Significant uplift in revenue reflects market share gains in the most profitable products across all regions resulting in margin improvement. $21.6m Bubs products net revenue +223% BubsⓇ products share of Group Revenue Group Gross Margin* vs. 14% FY18 49% 21% 35% $23.3m Strong cash reserves adequate to support FY20 operations Bubs Gross Margin* vs. 20% FY18 07 *Gross margin does not include the inventories written off.#7FINANCIAL OVERVIEW FY19 FY18 % CHANGE GROSS SALES NET $46.8m $18.4m +154% $43.9m $16.9m +160% REVENUE GROSS* $9.2m $2.3m +300% PROFIT For personal use only EBITDA STATUTORY EBITDA GROSS SMARGIN* 21% 14% +50% bübs Key Drivers 2H19 gross margin improved to 23% vs. 19% in 1H19, due to the optimisation of product and channel mix, engaging new suppliers and improvements in allocating the milk pool. BubsⓇ products delivered 35% gross margin vs. 20% in FY18. Further group margin improvement is expected in FY20, with a full year realisation of one-step nutritional blending at Tatura and in-house processing at Deloraine. Strategic investment in building scale and sales momentum: + Investment in marketing (9% net revenue) to support strong domestic presence and building brand awareness in China; + Investment to reflect capability build in core markets and corporate, with increased headcount by 175% compared to FY18; + Fixed operating and administrative costs typical of business in rapid growth. The overall statutory net loss of $35.5 million incorporates expenses incurred outside of normal business operations: NORMALISED ($5.9m) ($6.0m) +1% ($34.0m) ($65.7m) +48% + $20.4m one-off non-cash expense for equity linked transaction with Chemist Warehouse + $5.9m fair value movement payable to NuLac Foods vendors related to 2017 acquisition + $1.3m share based payments for options issued in FY18 7 *Gross margin does not include the inventories written off. + $897K corporate transaction expense associated with all FY19 M&A transactions + $719K finance costs relating to unwinding of deferred consideration payable + $404K inventories written off for discontinued products + $236K employee costs provision for the termination settlement with previous CEO#8For personal use only 8 GROUP REVENUE Quarterly Gross Sales Revenue $50,000,000.00 $45,000,000.00 $40,000,000.00 $35,000,000.00 $30,000,000.00 $25,000,000.00 $20,000,000.00 $15,000,000.00 $10,000,000.00 $5,000,000.00 $4.5M FY17 $18.4M FY18 Q1 Q2 Q3 Q4 +154% $46.8M FY19 bübs → Key Drivers Consistent strong growth since listing in 2017. Record 2H19 gross revenue: $25.8 million; +75% pcp, and +22% on 1H19. Growth predominantly driven by sales of BubsⓇ products: +196% pcp, and +58% on 1H19.#9PROFITABLE GROWTH DRIVERS Half Year Gross Sales Revenue by Product Category $14,000,000 $12,000,000 $10,000,000 For personal use only $8,000,000 $6,000,000 $4,000,000 $2,000,000 Adult Dairy Revenue NuLac Foods Acquisition (Dec 2017) 1H FY17 2H FY17 1H FY18 2H FY18 1HFY19 2HFY19 9 $16,000,000 BubsⓇ Product Revenue $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 bübs +196% pcp 1H FY17 2H FY17 1H FY18 2H FY18 1HFY19 2HFY19#10For personal use only 10 BALANCED PRODUCT MIX Net Sales Revenue by Product Group 20% 0% 1% 14% 30% 43% FY18 FY19 10% 36% 40% 6% Infant Formula Baby Food Goat Milk Powder Fresh Dairy Canning Services → Key Drivers -> bübs BubsⓇ products $21.6 million, increased +223% pcp and +65% on 1H19. Adult milk powder $15.6m increased +133% pcp. Enhanced focus on high margin products: + Infant Formula sales increased +278% pcp and +80% on 1H19 + Infant Formula gross margin increased from 28% FY18 to 38% FY19 + Organic Baby Food sales increased +59% pcp GP growth will be further enhanced by vertical integration of Deloraine Dairy acquisition and full year recognition of one-step processing at Tatura.#11For personal use only 11 REGIONAL CHANNEL MIX Net Revenue by Market 15% 2% 18% FY18 83% Australia China Other International 1% FY19 bübs 81% Key Drivers Domestic sales grew +153% pcp and +41% on 1H19, driven by strong domestic presence in major supermarkets, strategic alliance with Chemist Warehouse (from June), and activation of a new corporate Daigou partnership. Direct sales to China increased +209% pcp demonstrating strong traction gain continues with Chinese consumers following the deployment of marketing resources and contract wins in cross-border eCommerce and the Mother and Baby stores distribution channel. Aggressive growth strategy to continue to increase penetration into China via strategic partnerships. Launched BubsⓇ infant formula and baby food products in NTUC FairPrice, the largest supermarket chain in Singapore in Aug 2019. Exploring entry into new emerging Southeast Asian markets in FY20.#1210 SM's CAPITAL MANAGEMENT only 80 70 S60 50 32.2 40 38.6 40 30 20 For Cash on hand FY18 12 Capital raising & exercise options Investment (Deloraine) (25.0) (8.0) Payment to Nulac vendors 35.6) Group loss before tax Non cash transactions 7.5 Working capital mvmt 13.5 Cash on hand FY19 bübs 23.3 Key Drivers Positive Q4 operating cashflow represents a significant improvement on the working capital management and cashflow management of the Group. Working capital movements are attributable to the investment in inventory to meet the growing demand and the increased trade and other receivables from the record Q4 sales. With this strong balance sheet and cash position, management believe the cashflow forecast is expected to meet all operational requirements for FY20.#1313 For personal use o 02 STRATEGIC PROGRESS hubs 2 GOAT toddler milk Premium goat mil Happier tummies Australian mage 12-3 ADVANCE PLUS TA#14OUR BUILDING BLOCKS Bubs ability to leverage our foundation building blocks is what sets us apart. We have unrivalled strategic equity-linked partnerships and end-to-end vertical integration of our value chain. For personal use only 14 JV with Beingmate, driving China channel expansion and regulatory framework. Key strategic partnerships with Chemist Warehouse and Alibaba Tmall. Bubs brand value, 13yrs of authentic heritage built on premium provenance. Product innovation in high growth segments for value creation. 100% ownership of CNCA certified infant formula canning facility. Exclusive control of Australian & NZ goat milk supply chain. Partnerships with leading nutritional manufacturers; Tatura & Fonterra. Strong domestic footprint with >2,000 stores. bübs™#15FY19 STRATEGIC PROGRESS Significant advancement on progressing our four Key Pillars critical to delivering growth. SINNOVATION AND PRODUCT DEVELOPMENT INCREASED DOMESTIC MARKET PENETRATION BRAND AWARENESS AND IMPACT For personal use only ENHANCED ASIA FOCUS <<< bübs >>> INNOVATION AND PRODUCT DEVELOPMENT INCREASED DOMESTIC MARKET PENETRATION + Bubs Organic® Toddler Snacks Bubs OrganicⓇ Grass Fed Infant Formula Bubs Goat Infant Formula enhanced formulation with Australian milk + National ranging for all BubsⓇ products in Chemist Warehouse + Launched on Amazon + Maintained or increased penetration in Coles, Woolworths, Costco, IGA, Big W and Pharmacy4Less + Increased BubsⓇ brand digital reach and social currency + Growth in consumer engagement via events and KOL endorsement + Increase in channel marketing activity + Launching new brand campaign in Q2 FY20 in Australia and China + Alibaba Tmall strategic partnership + Beingmate Joint Venture in Shanghai + Launched BubsⓇ baby food products in Kidswant + Daigou Activation + Launching BubsⓇ baby food on Alibaba's Hema App + Secured ranging of BubsⓇ infant formula and baby food products in NTUC FairPrice in Singapore. BRAND AWARENESS AND IMPACT <<< ENHANCED ASIA FOCUS 15 001 <<<#16PRODUCT EXPANSION Grown BubsⓇ portfolio from 18 to 29 SKU's, now catering for all stages of development, feeding occasions and dietary requirements. Opportunity for further expansion in Adult Goat milk products. For personal use only 16 Organic Toddler Snacks Little Fingers Little Fingers Snack range to extend consumer lifecycle beyond first 1,000 days. Organic Baby Food, Cereals and Rusks NEW be Toothy Rusks büb Infant Milk Formula Australian Goat Milk 12-36 bobs bubs bübs Australian Australian goat milk todlar drink Australian 2 NEW bubs Infant Milk Formula Organic Grass Fed 0-4 bobs bobs Organic organic grass fed Organic 3 organic grass fed 12-36 bobs Organic organic grass fed NEW Improved formulation - world's only infant formula to source 100% Australian goat milk. Australia's first Organic Grass Fed Formula with Pre and Probiotics. Adult Goat Milk Products goat Cube Loc goat NATURAL GOAT MILK POWDER#17For personal use only 17 FY20 HERO PRODUCT LAUNCH Australia's first organic grass fed infant formula with advanced formulation containing prebiotics and probiotics. 0-6 bobs bobs. Organic organic grass fed infant formula 345 day on pasture мо Nustrations Made PPO+ Organic organic grass fed 3 toddler milk Prebiotics Probiotics 365 days on pasture Australian Made 12-36 刻 PPO bübs 2 PURE NUTRITION DERIVED FROM Organic PPD+ organic grass fed follow-on formula ✔365 date Austrian Made 365 DAYS A YEAR Our free-range cows graze ACO Certified Organic ACO CERT, NO. 10659 outdoors, all year round. NATURE Key Highlights Long-term supply and manufacturing partnership with Fonterra Australia. First production completed in August 2019 with national roll-out into Chemist Warehouse from September. Enables Bubs to offer both organic and goat options in the fastest growing premium segments. Leverage organic credentials inherent in brand DNA, whilst catering to all children regardless of dietary needs. bübs GRASS FED Our cows' diet is fresh green grass. NASAA CERTIFIED ORGANIC Certification No 3014P#18For personal use only 18 03 VERTICAL INTEGRATION 12-36 A2 GOAT Australian goat milk toddiy drink GOS Naturally gentle xogao#19For personal use only 19 END-TO-END SUPPLY CHAIN Providing secure, scalable vertical integration back to farm gate to deliver both traceability and flexibility. 1. 2. TATURA A BEGA CHEESE COMPANY 6. 1. Leading producer of >65% Australian goat milk products. Ownership of our goat milk pool, including 20 million litres of fresh milk from >20,000 goats in Australia and NZ. 2. 3. bobs TMA 7. 8. CHEMIST 4. BEINGMATE 10. One-step processing directly from fresh milk at farm gate to Tatura's nutritional spray dryer. Flexibility in redirecting seasonal milk flow into our adult goat dairy brands. 100% ownership of Australia Deloraine Dairy, a state-of-the-art CNCA certified infant formula canning facility. 5. Obs 10-year deep relationships with organic food. supply chain and certifiers. 6. ACO Certified Organic ADO CORT NO. 10659 5. Strategic partnerships with Chemist Warehouse, Alibaba Tmall and Beingmate, covering key retail routes-to-market. 9. Fonterra 7. Focus on increasing market share in home market as well as export to China and emerging Southeast Asian markets. 8. Organic milk sourced from Fonterra owned farms with cows fed 365 days on pasture. 9. Supply partnership with Fonterra to produce Australia's first organic grass fed infant 3. CapriLac 4. formula with advanced formulation containing prebiotics and probiotics. Deloraine 10. Bubs brand is built on 13 years of Australian heritage that also resonates with Asian consumers seeking clean and green nutritional products.#20For personal use only GOAT MILK SUPPLY SECURITY Bubs owns exclusive access to a secure, long-term premium goat milk supply in Australia and New Zealand. 20 bübs Milk Pool Domination -> Bubs is the market leader in goat dairy, producing >65% of all Australian goat milk products. Our herd has grown to circa 20,000 milking goats across both Australia and New Zealand. In FY19 Bubs entered into a major new Milk Supply Agreement with Central Dairy Goats in New Zealand, securing the exclusive supply to 2.2 million litres in 2H19 and 6.2 million litres in FY20. I#21DELORAINE ACQUISITION A critical acquisition supporting our vertical integration vision. Deloraine is purpose built with advanced infrastructure and capacity to process 10 million tins per annum. For personal use only 21 22 bübs Key Highlights bübs 1 of only 15 CNCA accredited infant formula facilities in Australia. Deloraine carries SAMR brand nominations for both BubsⓇ Goat Infant Formula and Bubs Organic® Infant Formula, required for direct export to China - pending registration approval. The acquisition was enabled via a share placement to C2 Capital Partners, who now has an aggregate 15% holding in Bubs Australia. Alibaba Group is an anchor investor in C2 Capital Partners (C2). This profoundly valued partnership provides Bubs with unique China market insights and know-how. Consequently, C2's Managing Partner, Steve Lin has joined Bubs Board.#22or personal use only 22 04 KEY PARTNERS Little Fingers#23STRATEGIC PARTNERSHIPS Bubs has now established unrivalled equity-linked and/or strategic alignment with leading industry retail giants representing each of China's key routes to market. For personal use only 23 CHEMIST BEINGMATE TMALL天道 bübs CHEMIST BEIN MATE THALL THALL 天猫 bübs CHEMIST BEINGMAT THALL天道 bübs CHEMIST Domestic Retail CHEMIST WAREHOUSE BEING TMAU bobs CHEMIN BEING TMALL天猫 From left to right: Bob Bao, Beingmate CEO; Jessica Rudd, Alibaba Ambassador; Maggie Zhou, Managing Director of Alibaba Group (Australia and New Zealand); Dennis Lin, Bubs Australia Chairman; Kristy Carr, Bubs Australia Founder CEO; Jack Gance, Chemist Warehouse Co-founder and Chairman. Cross-border eCommerce ALIBABA TMALL Mother & Baby Stores BEINGMATE bübs#24INCREASED DOMESTIC PENETRATION In Q4 Bubs entered a strategic equity-linked agreement with Chemist Warehouse, securing a giant retail footprint and significant sales and marketing support for BubsⓇ full range of products in our home market. bübs bübs Chemist Warehouse bübs For personal use only 24 smile from the Inside smile from the inside bobs smile from the i bobs REAL BRANDS REAL SAVDOST REAL BRAND REAL BR übe SEAL BRANDS) REAL GARREAL BRANDA (BAL KIYINORI 2213 REAL BEAL CHEMIST Australian made real organic feed JCDeca A four-year agreement with Australia's leading pharmacy retailer, securing long-term ranging of all Bubs 29 products across 450 stores nationally. Chemist Warehouse to provide sales and marketing services for a fee to purchase up to circa 49 million shares in Bubs over 3 years, linked to aggressive sales performance targets. In accordance with accounting standards, a one-off non-cash expense of $20.4 million has been booked into the FY19 accounts. Provides a strong gateway to China, including access to the Chemist Warehouse Tmall Global store, the largest in the world by gross merchandise volume.#25For personal use only 25 B2C CROSS-BORDER E-COMMERCE In Q4 Bubs entered into a strategic cooperation agreement with Alibaba Tmall. bübs™ Growing Geners bs EEEEE FFFFF bobs 盒马 They're hungry for a better tomor 11-27 21:00 #笑由心生#从宝宝出生那天开始,他的每一个微笑, 都是一句“我爱你”。从今天起,和我一起守护宝宝 的健康和純真微笑!我是@Bube微笑贝儿微笑大使张 嘉倪。 ubs Organic organic grass fed toddler mik 网盒马鲜生 会员店 12-36 PP0+ ROVANCE bobs 3 GOAT 2 9 Alibaba Launching Bubs OrganicⓇ baby food on the Alibaba Hema App for collection in their stores across Beijing and Shanghai in Q1 FY20. Planned relaunch of BubsⓇ and Capri Lac® Tmall Global Flagship stores managed by top rating TP service providers. Innovation and distribution strategy underway to expand adult goat dairy segment in Alibaba's general trade and cross-border channels. In-channel brand marketing programs, livestreaming and event participation based on rich data consumer insights and traffic optimisation. Key sponsor at the Alibaba eCommerce expo in Sydney; 30-31 August 2019.#26IN-MARKET REPRESENTATION In Q4 Bubs established a Joint Venture with Beingmate Baby & Child Food Co., a leading Chinese owned enterprise specialising in the infant nutrition industry, with a distribution network covering 30,000 Mother and Baby stores. bübs For personal use only 26 bobs Beingmate bobs July 2019: Joint Venture team hosts BubsⓇ stand at the Children Baby Maternity Expo in Shanghai, the world's largest trade fair for infant products. The Joint Venture will manage the sales, importation, distribution and marketing of all BubsⓇ products in China. Office established in Shanghai with dedicated cross- functional team, with the ability to tap into Beingmate's extensive infrastructure and processes, serviced by 2,200 employees. Beingmate has strong R&D capabilities and regulatory expertise, with 51 of their own infant formula products successfully registered with SAMR, including the first registration ever granted under the new regulations. Together we are actively pursuing BubsⓇ brand applications and remain respectful of the process.#27CHINA MOTHER AND BABY STORES In June, the Beingmate JV entered into a strategic channel partnership with Kidswant, China's leading mother and baby retail chain with annual turnover of RMB 10 billion (AUD 2 billion). bübs™ For personal use only 27 wwwwwwx kidsWant 孩子王” Kidswant Bubs Organic® food products ranged in 275 physical stores in 123 cities, covering 60% of China's key cities with population >500,000. Expected retail sales value of RMB 30 million (AUD 6 million) in first year. Access to Kidswant's CRM program with highly active membership community of 27 million parents.#2828 rsonal use or uch Ca 05 SCALABLE GROWTH CHEEKY CHOPPERS bobs. Organic Banan Cere NO#29SCALABLE GROWTH The strategic foundational building milestones we passed in FY19 means we are well placed to pursue our goals towards delivering profitable and sustainable growth. Whilst we continue to scale the business at a rapid pace, we are confident of achieving overall profitability in FY20. For personal use only 29 VALUE CHAIN INTEGRATION OPTIMISE PRODUCT MIX NEW PRODUCT INNOVATION DRIVE CHANNEL DEVELOPMENT bubs + One-step processing (came into effect in April 2019) improves input costs. + GP improvement via in-house production at Deloraine. + Actively grow the milk pool at a controlled price. + Explore opportunities to further enhance the vertical integration of business operations, specifically key dairy ingredients. + Invest resources and marketing to support growth of most profitable product lines. + Down-weight or delete low margin products. + Extend BubsⓇ nutritional product portfolio; the most profitable sector of the business. + Continue to adapt BubsⓇ full portfolio of products to be suitable for China. + Custom goat dairy products for emerging Southeast Asian markets. + Continue to engage Daigou channel and C2C activation for highest ROI. + Progress SAMR registration application. + Target new Southeast Asian markets.#30DISCLAIMER This presentation and any materials provided (materials) have been prepared by Bubs Australia Limited (Bubs) and contains general information about Bubs activities. By accepting the Materials you agree to be bound by the below terms and conditions. For personal use only 30 ASX: BUB Bubs Australia Terms and Conditions This presentation is provided for information purposes only. The information contained in this presentation is not intended to be relied upon as advice to investors and does not take into account the investment objectives, financial situation or needs of any particular investor. Investors should assess their own individual financial circumstances and consider talking to a financial adviser or consultant before making any investment decision. Certain statements in this presentation may constitute forward looking statements. Such statements involve known and unknown risks, uncertainties, assumptions and other important factors, many of which are beyond the control of the Company and which may cause actual results, performance or achievements to differ materially from those expressed or implied by such statements. Lilli C While all reasonable care has been taken in relation to the preparation of this presentation, none of the Company, its subsidiaries, or their respective directors, officers, employees, contractors or agents accepts responsibility for any loss or damage resulting from the use of or reliance on the presentation by any person. Past performance is not indicative of future performance and no guarantee of future returns is implied or given. Some of the information in this presentation is based on unaudited financial data which may be subject to change. All values are expressed in Australian currency unless otherwise stated. All intellectual property, proprietary and other rights and interests in this presentation are owned by the Company.#31For personal use only ASX: BUB Bubs Australia INVESTOR RESOURCE CENTRE www.investor.bubsaustralia.com bübs Growing Generation Joy