Olam Group Limited

Good morning, ladies and gentlemen.

To all who are present today with us right here in Singapore in person, to all who are on the conference line and on the live webcast right now, thank you all for being here and for tuning in to our first results briefing that is run on a hybrid format since COVID-19. I'm Hang Hung of OLAM's Investor Relations. our senior management team represented here by Olam's co-founder and group CEO, Sunny Vergis, our group CFO, Anne Mutukuma, as well as the CEO of OFI, Olam Food Ingredients, A. Shekhar, and myself are very, very pleased that we are able to convene in this form and manner to announce Olam's record results since its inception more than 30 years ago. We look forward to unveil our results and to tell you how we have been able to achieve these results amid the circumstances we faced last year. And more importantly, how we, OLAM, as an organization is transforming itself through its reorganization announced two years ago to create greater value as well as how we think this year is going to look like. To the agenda, please. Sunny will start off the presentation with an update on our reorganization, and Mutu will then explain the group consolidated financials. Following that, we will present the results by operating group. Shekhar, as CEO of OFI, will take us through the performance of OFI. Sunny, as CEO of OLAM Global Agri, now known as OLAM Agri, and the OIL operating group, will tell us about the financial performance of these two operating groups. We will further discuss the group's outlook and prospects and conclude the presentation with key takeaways before we commence the questions. As I close my introduction, I would like to invite Sunny to begin his presentation. Thank you.

Thank you, Ong Ong, and good morning, ladies and gentlemen. I will first address the progress update on the reorganization of OLAMM. As most of you would recall, in January of 2020, we had announced transformational restructuring or reorganization of OLAM in terms of splitting the company into three distinct coherent operating groups, the first of which is the OLAM Food Ingredients Business OFI, second OLAM Agri, and third OLAM International Limited, the remaining part of the OLAM Group. The objective and the reason we embarked on the restructuring program was to explore strategic options that would eliminate the current value of the various OLAM businesses and also develop new pathways that can create further additional value on a sustained basis. And we felt that we will be able to achieve that objective by reorganizing our portfolio, by simplifying it and focusing it into three distinct operating groups, as I mentioned, with businesses that are more similar in nature, constituting each of these operating groups. And they are, therefore, tied together by an underlying logic And we then have developed a compelling vision for each of these new operating groups, a distinct equity story, as well as a reliable game plan for creating additional value on a more sustained basis in these three operating groups. The logic for segregating into these three operating groups was because we felt that the underlying consumer and food business strengths and agri-business strengths that underpin each of these operating groups is quite idiosyncratic and slightly distinct and different, and therefore the potential investors who are the natural investors for these businesses could also be different, and by restructuring the business in this form and manner, we would increase focus, take these individual operating groups to full potential, attract the right kind of natural investors for each of these businesses, and thereby potentially re-rate the company. So that is the thesis. On the basis of which, we have now organized the company into these three distinct operating groups, and we completed substantially the carve-out and separation of these businesses by the end of December 2021. And the first business, the OLAM food ingredients business, we'll talk a lot more about this, when it presents the results of OFI. But we have envisaged this business to be an attractive play for the growing demand for plant-based, natural, on-trend, sustainable and healthy food ingredients and food ingredient solutions. and this business constitutes five of our business groups, which is our cocoa business, our coffee business, our dairy business, our edible nuts business, and our spices business. And OFI is organized into two reporting segments, global sourcing and ingredients and solutions. The second operating group is OLAM Agri, which is positioned as a market-leading and differentiated food, feed, fiber agri business focused on high-growth emerging markets. And because of its differentiated business model, asset-like business model, it generates superior returns. And this is catering to a different set of trends underpinning the agribusiness sector, which is the growing demand for food staples like food, feed, fiber, the living essentials of life, which is growing in terms of demand as a result of growing populations, increasing per capita incomes. as economies grow and the transition in dietary habits from a carbohydrate, cereal-based diet to a food and protein-based diet, and the emerging concerns around food security because of the global imbalance between supply and demand of food. And we have seen food price inflation once again rear its head this year. The last time we saw it was in 2011. The previous episode was in 2009. but it is getting worse and many governments are getting worried about food security, particularly in countries which are importing a lot of the food. This operating group consists of our grains business, our oil seeds business, our integrated animal feeds and proteins business, our edible oil business, our rice speciality grains and seeds business, our wood business, our rubber business, our fiber cotton business, and our commodity financial services business. This business is organized in two platforms, the food and feed platform, the fiber agri-industrials and ag services platform. And within these two platforms, we have three sub-segments. In the food and feed, we have two sub-segments. One is origination and merchandising food and feed, and the second is processing and value-added food and feed business. And then the final piece is the remaining part of OLAM, which is OIL, which will cease to trade as OIL, and in place we will have OLAM Group once the scheme becomes effective, which is expected to be around the 15th of March. So everybody who owns a share of OLAM International Limited will now have share of OLAM Group Limited, OGL, and that one share will be given free of charge and without any stamp duties and taxes. So that structure will be effective from the 15th of March, expected by the 15th of March. So what is OLAM Group Limited or OIL going to constitute of? Basically four things. Firstly, it will provide stewardship during the interim period as OFI prepares to list and concurrently demerge. And then also stewardship for the OLAM agribusiness and the remaining part of the OLAM Group. Secondly, it will warehouse and responsibly divest the assets and businesses that we have earmarked for exit in our 2019-2024 strategic plan. As you will recall, we have decided to exit four business units, 17 SVUs, and about 28 assets. Of the 28 assets, we have sold roughly 11 of those assets. We have re-injected 10 of those assets back into OFI after the restructuring and OLAM agree. And therefore, what is left for us to sell now is approximately seven assets, which over the course of the next couple of years, we will responsibly divest those assets year-marked, for example. The third thing that OLAM International or OLAM Group Limited will do is really to nurture the gestating assets that we are gestating, our OLAM Palm Jibon Plantation business, our packaged foods consumer business in Africa, as well as our rice logistics and infrastructure business, which is organized into three verticals, the integrated industrial platform, which is the special economic zones, the infrastructure services and the port and logistics business. As you know, post the year end, we have already announced the full remainder sale of our stake in two of these verticals, the Arise Integrated Industrial Platform as well as the Arise Infrastructure Services. And by the end of 2022, we hope to be able to sell our remaining stake in the last infrastructure and logistics platform, which is our ports and logistics business. So that is our gestating assets. We will partially monetize or fully monetize these assets over time at the appropriate time. The next activity of the OLAM Group is to nurture and develop our engine to businesses. These are our sustainability and digital startup businesses. We are incubating six ideas as we speak and that is the other role that OLAM Group Limited or OIL will have. And finally, Thank you very much. company, this entity will be responsible for providing IT, cybersecurity and information security services, digital services, as well as back office shared services for all the erstwhile OLAM group companies, so OFI, OLAM Agree, OLAM Ventures and OGH, OLAM Global Holdings, under a long-term service agreement, which will be a 10-year service agreement. And with that, we expect this OTBS business also to look to develop third-party business opportunities in the same areas of IT and IT-related services. So that is the reorganized OLAM. It has taken us 33 years to build this company, and now it has taken us three years to plan and execute this restructuring and this reorganization. And as you can see from the results which Mutu will present very shortly in both 2020 results as well as in the 21 results that he will present today, you will see already the benefits of this reorganization. are flowing through in significantly enhanced performance for all the operating groups within NOLAM. So the focus has really yielded the results. The reorganization is really working for us. We had said that we will execute the reorganization in four steps. Three of these four steps is completed. We are now on the fourth step of execution. The first step was to resegment the business that has been done, resegmenting into three operating groups, and within the three operating groups, new reporting segments, and within the reporting segments, developing new key metrics, performance metrics in which we will communicate our results. We have done that for the 2020 first half and second half results and the full year results. We are now doing it for the 21 results along these new operating groups, new reporting segments, and new performance metrics. The second step was to reorganize our business along these three new operating groups, which included designing and institutionalizing a targeted operating model for each of these operating groups in terms of embedding the functions, embedding the country management structures, the businesses within these three separate operating groups, developing a dedicated leadership and management teams for the three operating groups, and then looking at the capability gaps to execute the new game plan for each of these three operating groups by bringing in the talent that we need to execute that plan going forward. That process is also being completed now. And we have also completed step three, which is a very complex carve-out and separation process that Muthu and his team did with great dexterity and on budget, on time. We had 250 entities across 67 countries taking all the assets, liabilities, cash, people from all of these entities together. and then deploying them into the new operating groups was a very complex and intricate program. And Mutu, as the head of separation, along with his team, did a fantastic job in completing that separation and carve out substantially. We have a few things to tie up in the first quarter of this year, but 95% of the separation is already done by the end of December as planned and as expected. We are now in the last phase of this execution, and that includes two things. For OFI, it basically includes planning and launching the IPO of OFI in London and concurrent listing in Singapore, expected to be in the second quarter of this year. Shekhar will talk more about that. And we are controlling everything that we can control in making sure that that we can complete that IPO and concurrent demerger of OFI from the OLAM Group in the second quarter of this year. The second part of the fourth stage is for OLAM Agri. We are exploring two main strategic options. One option is to attract and bring in substantial strategic minority investors into the company via private placement and a secondary sale of shares by OIL or the OG group to these minority investors. And or the second part of the strategic option for OLAM Agree is to prepare the company for an IPO and a demerger on a sequential basis after the OFI IPO and demerger because I think it will not be advisable to do two IPOs, two demergers at the same time. So we leave some sufficiency gap in terms of timing between the first IPO demerger and potentially the second IPO demerger. So we are currently in phase four of this execution which will complete as I just mentioned. So this is what the OLAM structure is now looking like. So the corporate structure now after the separation is the first graph on your left hand side where OFI is being separated and will be now a wholly owned subsidiary of OIL. and then the rest of the OLAM group is organized under OLAM Holdings and within OLAM Holdings, OLAM Global Agri Holdings and OLAM Global Holdings and the OLAM Technology and Business Service. OGH, OLAM Global Holdings is today holding OLAM Ventures. Eventually, OLAM Ventures will also be separated as a distinct entity and therefore that is the structure we have at the end of December 2021 or the beginning of January 2022, the one on the left-hand side. On the 18th of February, our shareholders approved our scheme of arrangement by which we are preparing the OLAM organization structure such that it will enable us to pursue the strategic options that I outlined, which is the IPO of OFI and the concurrent de-merger of OFI. So we got an overwhelming mandate from our shareholders. More than 90% of OLAM shareholders participated in the voting, and 99.99% of the shareholders, therefore with an overwhelming majority, have approved the scheme of arrangements. We have now got a court hearing date for the 3rd of March, and if the court hearing progresses successfully, then we expect the scheme to be effective from the 15th of March this year. So once that is done, we have now interposed two new companies, recently incorporated companies, between the shareholder and OIA. One is OFI Group Limited, OFI GL, which is a UK-incorporated company, today 100% subsidiary of OLAM International. And then we have incorporated a second company in Singapore called OLAM Group Limited. These two companies are now interposed between OIL and the existing shareholders of OIL. So that is the structure that we will have on the 15th of March once the scheme becomes effective. The scheme has been approved by the shareholders. It has to become effective because the court has to approve that. And then once we complete the combined transactions, which is the scheme of arrangement which has been approved, the dividend in species to deal with the structure is an essential step for the restructuring. The third is the proposed disposal, which is the permission from the shareholders to sell a secondary tranche of shares in OFI during the OFI IPO. The fourth is a potential dilution, which is to get shareholder approval to raise IPO proceeds through primary offering. And finally, it is about the proposed distribution, which is distribution in specie to the OFI shareholders, all the remaining shareholding that is being held by OLAM Group that will be transferred directly to the OLAM shareholders. Once all that is done, OFI, which will be held by OFI GL, will be completely separate, distinct, fully spun-off, independent entity from the rest of the OLAM Group. The rest of the OLAM Group Then we'll have OLAM Agree Holdings, which will own OLAM Agree. It will have OGH, which will own all the gestating assets, exiting assets, and OLAM ventures currently. And then finally, it will have OTBS, OLAM Technology and Business Service Solutions. So this is what the structure will look like. So just as a summary slide, the company has now substantially, as you've seen, as I've explained, completed the carve-out and separation of its business into these three distinct operating groups. The company now has sought and received shareholder approval to implement the reorganization by way of a scheme of arrangement and by way of these combined four transactions, proposed transactions. And once the scheme is effective around the 15th of March, OLAM Group Limited will replace OLAM International Limited as a listed entity, and the IPO of OFIGL in London will take place. And OFIGL is planning to list in both London and Singapore, as I've mentioned. and there will be a public offering of shares of OFIGL, both through primary issuance and secondary issuance. And therefore, this reorganization will serve to significantly streamline a diverse OLAM portfolio that has grown and diversified over the last 33 years. This will, we believe, provide a significant driver to Henan shareholder value and will mark a very critical milestone in our journey to deliver to our shareholders on the promise of the reorganization and transformational restructuring plan that we announced in January of 2020. With that, I would like to hand over to Mutu to walk us through the Group Consolidated Financial Results.