Clover Corporation Limited

Thank you for standing by and welcome to the Clover Corporation Limited FY26 results briefing. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Peter Davey, Managing Director and CEO. Please go ahead.

Good morning and welcome to the FY26 results presentation for Clover Corporation. I'm Peter Davey, the CEO and MD, and with me today is Andrew Alibom, who is the CFO and company secretary. So go to the results page. a really strong year for the company. In fact, a record year for the company, which I'm really proud of everybody that works here. It's been a wonderful year, a very difficult year to meet the performance. It just really shows that we've been on a path for a long-term growth and it's delivering and that's what we've been trying to achieve and will continue to do. The year was highlighted by $97.4 million in revenue. at a 35.5% average gross margin across the business, a 4% improvement in margin. The revenue growth was slightly ahead of our guidance, which was 92 to 96 million. It was 13% improvement up on what was very good FY26 at 86 million. And the gross margin is really a testament to the innovation that we have in this business where we've further increased the product mix and getting the benefits of our vertical integration strategy which we'll talk to in more detail EBITDA at 17 million is up 4.7 on the prior year really driven by that sales growth and the gross margin improvement but also our operating costs have been really held well in line with as a percentage of our sales networking capital has increased to $49.8 million. It's up $7.5 million on the prior year and it's really driven by increasing our inventory position by $19.8 million. So to meet the increased sales that we're getting through, especially across our ARA and fish oil products, we've had to buy in more inventory to meet that forecasted demand. The balance sheet remains very strong. We've got $7.2 million in cash and pleasingly we have no more interest bearing liabilities. NPAT at $10.5 million up 50% from the prior year of $7 million with the increased drivers of lower expenses and an effective tax rate helping that number and from that the board has declared a final fully franked dividend per share of $0.25 per share. This operational highlights page, really the middle of it stands out to say exactly what we do. The adherence to our growth strategy With investment in customer diversification and our new product development is what's delivering. It's delivered improved revenue. It's delivered improved profit margins. And what it's really done is position us for long-term growth. We've got customers with unique products that have developed their solutions and they're utilizing our products in those, which is a real partnership in the marketplace that drives future long-term growth. Across the year, we've seen significantly improved demand for our high-quality ARA products from the infant formula market. Melody Dairies has delivered a profit in line with our expectations, but most of all, it's delivered a reduced cost for our business, which is benefiting our margin position. And we've expanded our distribution network globally with 30 distributors now, and we have repaid all of our debt Colleen Excel has moved along. We've gone into registration of the product. We're now looking at commercial packaging options. We've established a dedicated resource to help us enter the US nutraceuticals market and Ecuador continues to deliver for the business and we're looking at further increases in its capacity. All of which I'll go into a bit more detail. The product mix side slide which we've shown several times now really continues to show the The success of our innovation strategy, which is diversifying our sales and our customer base. Now, when you look at that graph, the second half of FY26, near two-thirds of our sales are from 18 products. And our traditional base products, which are three, one of which being oil, is now a small one-third of our business. And that's really helped drive the margins. What it's really doing is helping our customers with solutions that are driving their businesses, which improves our demand overall. Really, the story of the year has been two things. Western manufacturers, especially infant formula market, have done very well into the infant formula market of Asia and China and Greater China. And then we've seen significantly increased demand for our ARA powder products. The ARA powder is a required inclusion in infant formula. and many of their customers do the best quality product in the world. With that, we'll move on to the financials, and I'll let Andrew take those over for us. Thanks, Andrew.

Thank you, Peter. Peter's certainly highlighted the top line and the results in terms of margins over the course of the year, so I won't labour over restating those numbers. In terms of our revenue position, as it was highlighted, those 13% increase, predominantly increases in the ANZ Western manufacturers with around a $10 million movement year on year and through our European Middle East base of the $6 million increase, which offset some small declines through the Asian-Americans. So in reference to Peter's commentary there on Western manufacturers, that's where we've seen good growth Peter said, back into parts of the China, the Asia market. Again, Peter's highlighted there the margins, so I won't spend too much time on those, and there may be questions at the end of the presentation. Our operating cost growth, an 8% increase. It really reflects our continued investment in people across the business and across all areas, be it finance, sales, and research and development. That's why costs are up there. Our new market development costs increased year on year, predominantly with the USA market expansion that we're undertaking. And again, we'll talk more to that later in the presentation. So really pleased with the impact growth and our EBITDA percentage continuing to increase. For those that have the opportunity to look through the Appendix IV-E in more detail, you'd certainly see that as part of our result, we endured or had to account for FX translational losses of $1.1 million. And I'll talk to that a bit later as well. So great result in terms of EBIT. Just moving to the next slide, which is cash flow. On the back of, I guess, great performance, we'd like to see more net cash inflows from operating activities. What we've highlighted in this slide is the significant increase in inventory. With inventory, 50% of it is raw materials, 50% of it is finished goods for FY26. And the requirement for higher levels of raw materials and finished goods really translates to the supply chain, the time and length of our supply chain. We've got the demand to meet the customer's requirements, but we do need to order oil. We need to test the oil. We need to manufacture it into powder. We need to test the powder. So we end up holding larger values of inventory, and that's fundamentally where the operating cash flows have gone over the course of the year. Purchase of plant and equipment, not significant, largely matching depreciation over the course of the year. and with the performance of Melody Dairies, which is the loan to associates, there was a repayment of a short-term loan that had been created some 18 months ago. So, pleasingly, they've been able to repay back some of that assistance. And as Peter said, our interest-bearing liabilities for Clover have now been fully repaid, so we're well positioned to move forward on our capital planning program, which again we'll talk to a little bit later in the presentation. I think in the half year's result, we were certainly the AGM last year, we sought shareholder approval for the company to support an acquisition of shares to satisfy future vesting rights around our long-term incentive scheme. We purchased $700,000 of shares and that detailed more fully in the annual accounts and we'll continue to look at that position as we go forward over the course of the year. I will now move to the next slide which is the balance sheet. I've had references that it's considered a lazy balance sheet with zero debt but pleasingly the cash position we've been able to maintain Trade receivables, good collections over the course of the year and through to the end of the year. The inventories, as I indicated, certainly up to support our customers. Trade payables, a little bit of extension, more timing related as we've purchased that inventory, haven't settled debts with our trade payables suppliers. So in terms of a net asset growth, up $5.8 million year on year, a great outcome. I will now hand it back to Peter.